From Innovation to Profit: Exploring the Relationship Between Research Activities and Economic Performance in Iran’S Pharmaceutical Industry Using System Dynamics Publisher



Pirjamadi H ; Asl A A ; Nikfar S ; Yousefi N
Source: Iranian Journal of Pharmaceutical Sciences Published:2026

Abstract

Iran’s pharmaceutical industry faces challenges such as low returns on R&D, lack of market exclusivity, and strict pricing regulations, which limit profitability and reduce incentives for innovation. Addressing these issues requires a strategic approach to managing the entire drug development cycle, balancing research and marketing efforts to drive sustainable growth. This study uses system dynamics modeling to evaluate the financial outcomes of pharmaceutical R&D activities in Iran. Through a comprehensive literature review and Delphi method, twelve key indicators related to R&D and marketing were identified. These indicators informed a validated system dynamics model developed in Vensim PLE, simulating company performance over 25 years. Results show that profits positively reinforce research activities, creating a feedback loop that supports growth in profitable products and intangible assets. Sensitivity analysis highlights the importance of business size and cash cow products in financial performance. While marketing boosts short-term sales and product profitability, long-term success relies on sustained R&D investment. Excessive marketing without innovation yields diminishing returns, whereas combined investment in R&D and marketing produces synergistic effects, significantly increasing sales and new product development. In conclusion, integrated strategies aligning R&D and marketing efforts are essential for fostering innovation-led growth and improving financial sustainability in Iran’s pharmaceutical industry. © 2026, Pharmaceutical Sciences Research Center at Shahid Beheshti University of Medical Sciences. All rights reserved.