A global shift has been taking place in the pharmaceutical
industry as the Pharmerging countries have increasingly started to
play a more prominent role in the sector's growth rates. During
the period between 2007-2011 the pharmaceutical industries in the
United States and Japan had only grown by 3-4% whereas Pharmerging
countries experienced growth rates bordering around four fold of
the well established markets. For the next five years it is
expected that the 50% of the global growth in pharmaceutical
markets will be recorded in emerging economies.
300 pharmaceutical companies operate in Turkey and the country
has 68 drug production facilities out of which 15 are foreign
based. The volume of the domestic pharmaceutical market in Turkey
is 9.1 billion dollars. Turkey ranked as the 6th largest in Europe
and 16th largest in the world in terms of market scale. Generic
drugs comprise the 38.1% of the total market value and the branded
drugs comprise the rest 61.9%.
Even though Turkey has increasingly been associated with those
pharmerging countries and experiencing higher growth rates during
the last decade compared to previous decades, there still remains
some problems to be fixed. The most critical problem for the
pharmaceutical industry in Turkey is the issue of pricing. The
market is regulated by the relevant state bodies. The change that
was adopted in 2012 on the regulation that deals with the pricing
of the pharmaceutical products reaffirmed the reference pricing
system that dates back to 2004 which determines the pricing with
reference to the lowest price offered to the warehouse in Turkey by
the foreign drug provider and the lowest price in the country that
the pharmaceutical product was produced or imported.
In 2009 the Euro-TL exchange for the public purchases in
pharmaceuticals was fixed at the exchange rate of 1.96 and no
further changes in the exchange rates has been made despite the
fact that as of November 2013 the Euro-TL exchange rate stands
around 2.73. This is a serious issue for the industry that
complains that the difference between the 2009 and the current
rates translates in to financial losses for the pharmaceutical
companies operating in the Turkish market. This problem is not only
related with the producers of the pharmaceutical products but also
connected with the public access to new medicine since the
pharmaceutical companies refrain from introducing new drugs to the
Turkish market due to the problem of pricing. Especially the
difficulty in access to new drugs leads the Turkish
Pharmacists' Association to look for other alternatives and to
import those drugs elsewhere. This costs an additional 700 million
dollars to the Turkish consumers.
However despite the problem of pricing for the pharmaceutical
industry in Turkey, a positive step for the sector has been taken
by governmental bodies. Turkey's new incentive scheme that was
adopted in 2012 included VAT exemptions and exemptions from customs
duties for pharmaceutical investments that worth at least 50
million Turkish Liras. Also the Turkish government envisages
increases in R&D investments amounting to 3% of the GDP. In
real terms R&D in pharmaceutical industry in Turkey is expected
to jump from 60 million dollars to 150 million dollars in 2015.
Hence especially for the investors who are looking to invest in the
Turkish pharmaceutical sector and set up R&D centers, there is
challenge in the sense of pricing but also there is an opportunity
presenting itself in the sense of incentives and Turkish
state's eagerness to develop R&D centers in Turkey.
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