Icelandic Pharma landscape: An insight into the industry

Iceland has focussed on the development of its economy, including all sectors. It is a small country with a limited population and even more limited resources. Healthcare and the pharmaceutical industry form a key sector of the Icelandic economy. There are several world and European leaders in the pharmaceutical industry that have their production facilities in Iceland. They have also located their research and development (R&D) departments here. You have Novartis, Coripharma and Alvotech along with a dozen other companies operating out of Iceland. Other major pharmaceutical companies in the country include Johnson & Johnson, Sanofi SA, Merck & Co, Pfizer Inc, EpiEndo Pharmaceuticals EHF and so on. These are large transnational corporations and their presence in the Icelandic pharmaceutical sector is a good sign for the industry.

Huge incentives granted by the Icelandic government

It has become the norm for governments around the world to incentivise companies to invest in their countries. Iceland is no exception. Industrial companies want land to build their plants and a secure energy supply to run them without interruption. The Icelandic government claims to be able to provide both, so there are virtually no barriers for companies from home and abroad to make their investments, set up shop quickly and start their operations.

More importantly, there is a tax incentive. The corporation tax payable by companies operating in Iceland can be as high as 15%. This is an advantage for the companies as they can keep a large part of their profits. This is especially true for the pharmaceutical industry in Iceland. It is in the nature of things that pharmaceutical companies realise good profit margins. The tax saving helps these companies to put the money back into their business, including research.

Research Very Critical for Pharmaceuticals

Success in the pharmaceutical industry is based on research and more research. When a company discovers a new formula for a drug, it has worldwide rights to this technology. If the field trials with the self-developed drug are successful, the company can sell the drug at higher prices and thus make more profit. The drug must be effective in order to be sold in large quantities and ethical promotional activities are carried out to market the drug. Some companies manufacture an intermediate product in one place and finalize the drug in another.

All this is less important as long as more and more pharmaceutical companies come to Iceland and invest their dollars or euros here.

The industry has established an internal body, Frumtök (the Icelandic Pharmaceutical Industry Association). The supervisory authority overseeing the sector is the Icelandic Medicines Agency (IMA). The pharmaceutical industry in Iceland is not growing rapidly, but there is also a steady flow of investment.

Local Consumption of Pharmaceuticals Also Met

In Iceland, the government spends a large proportion of its expenditure on healthcare. Figures published by the OECD for 2018 show that per capita spending on healthcare in Iceland was around 4,350 dollars. This figure may now have exceeded the $5,000 mark.

There could be further investment in the coming years, as the COVID-19 pandemic has opened up a wide field for the industry to develop new vaccines, cures and other treatment solutions. Once the infrastructure is in place, it will be easy for companies already operating here and for new companies to set up here.

Human Resources Another Plus

Another advantage that any industry enjoys when investing in Iceland is the availability of skilled labour that can be employed in the industry. Among native Icelanders you will find a high proportion of educated and dedicated labour for various levels.

If you require any support while setting up a business in Iceland, contact Swapp Agency .