Iran is a developing country in Middle East which has experienced some political and economical turbulence during the past decades. Government of Iran, after the 1979 Islamic revolution, has devoted considerable resources on national health, including the pharmaceutical sector. As a result, health indicators have improved substantially over the past two decades and the availability and affordability of medicines have also been greatly improved. In order to fulfill the MOH mission in providing access to a sufficient quantity of safe, effective and high quality medicines that are affordable for all population, after the 1979 Islamic revolution Iran has adopted a full generic based medicine system and local production of medicines and vaccines has become one of the main goals of the national drug policy. Government of Iran has invested considerably on the pharmaceutical industry over the past decades. However, it seems that this investment, mainly due to the lack of R&D activities and unanimous subsidies, has not been proportionately fruitful for Iran’s health system. Iran drug market, especially in recent years, experienced a sharp growth and in 2004 the value of the market, including direct government subsidies to the imported medicines, became over USD1.2bn. The market has increased annually, on average more than 30% , during 1993-2003.