Impact of the Domestic Production Law on Imported Medical Devices in Iran

1. Key takeaways

The Law on Maximum Utilisation of Domestic Production and Service Capacity and Support of Iranian Goods is the second gate for imported medical devices in Iran. GRZAN’s assessment: this law, layered on top of Paragraph A of Article 72 of the Seventh National Development Plan, defines the certain direction of the Iranian import environment for the coming years — tightening. Companies should not view the current blocking of imports as a cyclical phenomenon; any long-term footprint plan must include a localisation option. A strategy that only assumes today’s import conditions will persist is exposed on precisely the variable that is moving most predictably, because the two legal instruments pointing in the same direction are both standing law rather than transient measures. The two instruments were adopted years apart, which is the clearest available evidence that the direction is structural rather than tied to a single moment in policy.

2. Legal basis

1. Law on Maximum Utilisation of Domestic Production and Service Capacity and Support of Iranian Goods, passed by the Iranian parliament in the Iranian calendar year 1398 (AD 2019), consisting of 24 articles; Article 1: imports are prohibited where equivalent goods, equipment and materials exist within the country; the Ministry of Industry, Mines and Trade will not register imports that do not respect this restriction; entities subject to the law must ensure that at least 51% of total project cost is directed to Iranian manpower, materials and services; where no domestic product or service genuinely exists, the exception must be approved by the highest responsible officer of the entity and consented to by the Ministry of Industry, Mines and Trade. These four elements together describe both the prohibition and the only lawful way around it.
2. Article 72, Paragraph A of the Law on the Seventh National Development Plan of the Islamic Republic of Iran (mechanisms for self-sufficiency to be established by the end of year 1 of the Plan). This paragraph gives the 2019 law a newer statutory companion pointing at the same policy goal, which is why the direction should be read as structural.
3. Law on the Administration of Medical, Pharmaceutical, Food and Beverage Affairs, FAOLEX LEX-FAOC227692, dated 1955-06-20, Article 3. This remains the base law for the product-side approval, which operates upstream of the import gate addressed by the domestic production law.

3. Expert insights

Insight one: the blocking occurs after registration, which is why it is so easily overlooked. Article 1 targets import registration, not product registration. Companies often discover only after obtaining the IRC that the goods cannot be brought in, because the two gates are administered at different stages and by different procedures, and the second gate is invisible during the registration work that consumes all the attention. By the time the blockage appears, the registration has been paid for and the market entry plan has already been built around it, which is exactly what makes the early comparison worthwhile, and what makes the comparison result a gating input to the project decision rather than an afterthought.

Insight two: the 51% localisation requirement is a quantified hard constraint. This is not an aspirational provision but an explicit ratio imposed on entities within the scope of the law. The cost model of any localised production option must take 51% as a binding constraint, not as a reference figure to be negotiated downwards later, and every business case that ignores the ratio will fail against the actual obligations of the entity once they are enforced. Because the ratio applies to total project cost, it has to be built into the model from the start rather than checked afterwards.

Insight three: the exemption procedure is two-tiered and slow. An exception requires approval by the highest responsible officer of the entity plus the consent of the Ministry of Industry, Mines and Trade. This means the exemption is not a routine route and can only serve as a case-by-case remedy, with a lead time that must be planned for separately rather than assumed, because neither of the two approvals can be produced on a schedule the importer controls. Keeping the exemption as a separate workstream with its own calendar also keeps the main entry plan independent of its outcome.

4. Practical recommendations

1. Complete the comparison with domestic like products before committing to the project: this is the only way to identify import blocking at the low-cost stage, before capital has been spent on a route that cannot deliver, and before the company has announced market entry it cannot execute.
2. Anchor the differentiation argument in parameters: demonstrate non-equivalence with quantifiable technical indicators, not descriptive differences, since only measurable divergence can survive scrutiny and only parameters can be compared objectively by the authorities reviewing the claim, and the measurements belong in the dossier so the claim is self-contained.
3. Model localisation options against the 51% constraint: build the cost model with that ratio as a hard constraint from the first iteration, so that the business case reflects the legal reality and does not need to be rebuilt when the ratio is actually applied.
4. Schedule exemption applications separately: reserve a sufficient cycle for the two-tier procedure and never treat the exemption as the baseline path for market entry, so that the project plan survives even if the exemption is refused or delayed.

5. Verification checklist

• □ The full text of Article 1 of the Law on Maximum Utilisation of Domestic Production and Service Capacity has been obtained and archived
• □ The comparison with domestic like products has been completed and a report issued
• □ The differentiation argument rests on quantifiable technical parameters
• □ The cost model of the localisation option uses 51% as a hard constraint
• □ The two-tier exemption procedure has been scheduled separately

How GRZAN can help. GRZAN provides medical device and IVD registration, quality system, authorised representative and local testing support for the Iranian market. Our team manages adverse event reporting and recall coordination with IFDA, and supports post-market vigilance obligations. Business enquiries: info@grzanglobal.com