How a timely policy contributes to technological capability building: insights from Iran's biopharmaceutical sector.

This article examines the co-evolution of government policies and technological capability building in Iran's biopharmaceutical sector from 1995 to 2022. Using a qualitative case-study approach based on thirty-nine interviews and secondary data, it identifies three distinct periods: initial basic operational capabilities developed mainly through lab-level research in public institutes without coherent policy support (1995–2005); a phase of import substitution and large-scale production by state-owned firms relying on technology transfer but limited innovation due to ineffective policies (2005–2010); and a recent period marked by private firms advancing to basic innovative capabilities supported by a coherent policy mix including drug pricing reforms, R&D incentives, and partial export promotion (2010–2022). The study proposes a six-level framework distinguishing operational and innovative technological capabilities and highlights that effective policy tools—supporting local manufacturing, promoting R&D, and encouraging exports—must be tailored to firms' capability levels. It further emphasizes the importance of international collaboration and dynamic policy assessment for latecomer countries aiming to enhance their biopharmaceutical technological capabilities.