Over past decades, Iran’s petrochemical industry has rightly been recognized as one of the main engines of the national economy, leveraging its relative advantage in feedstock to secure a substantial share of non-oil exports and foreign exchange revenues. However, global experience and Iran’s specific economic conditions indicate that sustaining this role is no longer achievable solely through upstream capacity expansion. A shift from the logic of “commodity production” to the creation of targeted value chains has become unavoidable. Within this framework, the petro-pharmaceutical chain stands out as one of the most strategic development pathways for the country, carrying dual importance from both economic and public health perspectives.
Linking Two Strategic Industries
At first glance, the petrochemical and pharmaceutical industries may appear distinct. In practice, however, a significant portion of pharmaceutical raw materials, solvents, intermediates, and auxiliary inputs originate from the petrochemical value chain. Alcohols, glycols, amines, aromatic derivatives, and specialty compounds sit precisely at the intersection of these two industries. In recent years, many of these materials—despite the potential for domestic production—have been supplied through imports, exposing the country to currency volatility, trade restrictions, and sanctions. This vulnerability has elevated the development of a coherent petro-pharma value chain from a developmental option to a strategic necessity.
Development Governance as a Prerequisite
Experience in petrochemical development has shown that expanding production capacity without regard to downstream needs and economic considerations does not necessarily generate sustainable value. Unlike basic petrochemical products, completing the missing links in the petro-pharma chain cannot be achieved solely through market forces or individual corporate initiatives. High capital intensity, technological complexity, and regulatory risks make this segment dependent on targeted and intelligent government support.
Global experience confirms that even in liberal economies, pharmaceutical industries and their intermediate inputs are developed with varying degrees of policy support. The role of government and sovereign institutions, however, is not direct project execution, but rather the creation of an enabling environment for investment. This includes setting clear development pathways, ensuring stable access to feedstock, designing tax and credit incentives, reducing regulatory uncertainty, and facilitating technology transfer.
Such support—particularly in the early stages of new value chain formation—is essential for attracting private investment and achieving viable economic scale. Conversely, the responsibility of companies and investors lies in conducting rigorous feasibility studies, selecting appropriate technologies, and executing projects professionally. A clear separation of these roles prevents excessive state intervention while enabling effective synergy between policymakers and the private sector, transforming the petro-pharma chain from a rhetorical ambition into an actionable development program.
A successful petro-pharma chain must be designed from the outset on a sound economic basis—from product selection and production scale to technology choice and integration with domestic and export markets. This approach not only reduces the final cost of pharmaceuticals but also enables competitive entry into regional markets.
The Role of the Private Sector
The development of new industrial value chains invariably requires pioneering players willing to adopt a long-term perspective and invest in higher-risk, higher-value segments. In recent years, the emergence of industrial groups with a chain-oriented approach in the petro-pharma domain reflects a gradual maturation of this mindset in Iran.
Among these, Kimia Group has positioned itself as a notable example by deliberately entering the field of active pharmaceutical ingredients, semi-finished products, and the interface between petrochemicals and pharmaceuticals. Its focus on value chain completion, higher value-added products, and synergy between chemical and pharmaceutical expertise illustrates a forward-looking model that could be replicated by other industry participants.
Conclusion
The development of the petro-pharmaceutical value chain represents a rare opportunity for Iran’s economy. With sound policymaking, a clear division of roles, and a balanced reliance on economic logic and technological advancement, this pathway can reduce dependency, enhance industrial resilience, and create sustainable value.
The future of this chain will not be shaped by rapid or indiscriminate expansion, but by smart, targeted development grounded in effective industrial governance. If pursued correctly, the petro-pharma value chain could become one of the foundational pillars of Iran’s knowledge-based economy.
درباره زنجیره ارزش محصولات پتروشیمی و انواع پلیمرها با تمرکز بر پلیاتیلن سنگین
The Wealth Chain: Mapping the Petrochemical Value Chain with a Focus on HDPE
TEHRAN, January 28 (PGPIC) — Iran’s petrochemical industry, leveraging its feedstock advantage, holds significant potential to complete high–value-added polymer chains—particularly heavy-duty polyethylene (HDPE)—as a pathway to sustainable growth and global competitiveness.
The chemical and petrochemical industries—now commonly referred to collectively as the petrochemical sector—have been among the most prominent industries of recent decades, attracting sustained attention from many countries and driving global expansion. While chemical substances have been produced and used throughout human history, their commercial-scale production dates back to the Industrial Revolution. Historical records indicate that in 1736 sulfuric acid (hydrogen sulfate) became one of the first chemicals to be industrially produced in large quantities by Joshua Ward.
Globally, the petrochemical industry is relatively young, with commercial production beginning toward the end of World War I, when the first petrochemical products were produced in 1918. In Iran, the Chemical Fertilizer Enterprise was the first relatively organized institution to introduce petrochemicals, launching the construction of a fertilizer plant in Marvdasht in 1958. This facility—now part of the Shiraz Petrochemical Complex—came on stream in 1963, marking the country’s first commercial petrochemical output.
The petrochemical industry possesses one of the world’s largest and most complex value chains. Completing this value chain and expanding downstream industries can generate higher added value, greater employment, sustainable development, and enhanced economic resilience for the country.
Access to a diverse range of feedstocks is regarded as Iran’s primary competitive advantage in realizing value flows across the petrochemical supply chain. According to estimates by leading international institutions, if uncertainties surrounding global growth and petrochemical prices—such as the energy transition, development of new feedstock sources, declining global energy prices, price volatility, and environmental risks—are managed effectively, Iran is likely to remain among the world’s profitable petrochemical producers.
From a feedstock perspective, Iran’s petrochemical industry is broadly divided into gas-based and liquid-based complexes. Gas feedstocks include rich natural gas, ethane, methane, and ethylene, while liquid feedstocks comprise LPG, gas condensates, naphtha, pyrolysis gasoline, and platformate.
Classification of Petrochemical Materials and Products
Petrochemical materials and products are classified using various approaches, including feedstock type, chemical structure, conversion pathways, and end-use industries. A consolidated classification includes:
- Primary resources: Crude oil, natural gas, and coal serve as the main raw materials for petrochemical feedstock. In Iran, vast oil and gas reserves position these resources as the principal feedstock sources, processed in upstream refineries to extract light hydrocarbons for basic units.
- Primary feedstocks and upstream products: Raw hydrocarbons such as ethane, propane, butane, naphtha, gas condensates, and natural gas supplied directly from refineries or other processes.
- Base and intermediate products: Olefins (ethylene, propylene, butylene, acetylene), ammonia, butadiene, methanol, and aromatics such as benzene, toluene, and xylene, produced through thermal cracking and other processes in olefin and aromatic units.
- Downstream products: Materials such as LDPE, HDPE, ethylene glycol, ethylene oxide, vinyl chloride, styrene, and isobutylene, which serve as inputs for polymer and chemical production.
- Final products: Polymers, specialty chemicals, plastics, compounds, and composites used across automotive, textile, packaging, household appliances, construction, medical, pharmaceutical, and consumer goods industries.
The Value Chain Concept
A value chain comprises sequential processes and activities that collectively create value within an industry. In petrochemicals, it refers to the transformation of raw materials into final products usable by downstream and end-user industries. Among the most important branches is the polymer value chain, which begins with ethylene and propylene production and extends to advanced polymer grades.
Polymers are no longer merely a segment of the petrochemical industry; they have become the backbone of modern civilization, spanning applications from basic packaging to aerospace components, medical equipment, and clean energy technologies. Consequently, transitioning from commodity exports to high–value-added production increasingly depends on polymer industry development.
Polyethylene, the world’s most widely used polymer, was first synthesized industrially in 1933 and later commercialized as LDPE in 1939, followed by HDPE and LLDPE in the 1950s and 1960s. Today, global polyethylene production continues to rise, rebounding strongly after a temporary decline in 2020 caused by the COVID-19 pandemic.
HDPE in the World and Iran
Polyethylene accounts for the largest share of global polymer production, with HDPE representing the dominant segment due to its mechanical strength, chemical resistance, and processability. Global HDPE market value is estimated at USD 87.3 billion in 2025 and is projected to reach USD 129.3 billion by 2035, reflecting an annual compound growth rate of approximately 3.5–4.0 percent.
Demand in 2025 is led by packaging, agriculture, construction, and automotive sectors. Global HDPE production is estimated at around 65 million tonnes in 2025, rising to 115 million tonnes by 2035, with demand growth lagging slightly—raising concerns over potential oversupply and margin pressure for higher-cost producers.
Iran, endowed with vast oil and gas reserves, occupies a strategic position in the petrochemical and polymer value chain. Under the country’s Seventh Development Plan, polymer production capacity is targeted to reach 20.2 million tonnes per year. Polyethylene, PVC, and polypropylene remain core contributors to Iran’s domestic consumption and export portfolio, particularly to East Asian markets.
Gachsaran Polymer Industries’ HDPE Project
A prominent example of value chain completion is the HDPE project of Gachsaran Polymer Industries, a subsidiary of Persian Gulf Petrochemical Industries Holding (PGPIC). Designed to utilize ethane feedstock from upstream complexes, the project aims to produce 300,000 tonnes per year of various HDPE grades.
The project employs Hostalen-ACP technology under license from LyondellBasell, producing three-modal HDPE in a series of slurry reactors. Detailed engineering has been carried out entirely by domestic experts, while more than 83 percent of equipment and materials have been localized. Commissioning is scheduled for the second half of 2026 and is expected to significantly contribute to industrialization, job creation, and sustainable development in Kohkiluyeh and Boyer-Ahmad Province.
Conclusion
A comparison between Iran and global polymer leaders shows that while Iran benefits from strong feedstock resources, geographic advantages, and competitive production costs, further progress is needed in technology, product diversity, productivity, and global market integration. As international petrochemical leaders rapidly adapt to future imperatives—such as clean energy, recycling, and digitalization—Iran must adopt a strategic, forward-looking approach to overcome challenges including global overcapacity, environmental regulations, price volatility, sanctions, and infrastructure constraints.
Only through completing its petrochemical value chain and shifting toward advanced, sustainable, and high–value-added polymer products can Iran evolve from a semi-raw material exporter into a key global player in finished polymer markets.