The agreement – announced on the Bombay Stock Exchange (BSE) – will see Cipla’s Netherlands-based subsidiary take a 75% stake in the Iran-based JV for €16.8m ($17.5m).
Under the deal, Issat Company, which is owned by Ahran Tejarat, will become the joint venture entity. The firm holds an Iranian manufacturing license, but does not currently produce medicines or generate revenue.
Cipla has been interested in the Iranian pharmaceutical since at least 2014.
In October of that year, the India headquartered drug firm announced its intention to set up a manufacturing plant in Iran in collaboration with a distributor in the country.
Pharmaceuticals and medical equipment are not restricted under international sanctions imposed on Iran after the 1979 revolution. Despite this, drug production in the country is limited with few international manufacturers involved.
A 2013 report by the Woodrow Wilson International Center for Scholars suggested that, despite humanitarian provisions included in the sanctions, some pharmaceutical products are in short supply.
The authors wrote that: "Sanctions are affecting the supply of the most advanced medicines, providing relief in the most dire cases of illness, including cancer, multiple sclerosis, and hemophilia."