Turkey: Clinical Trials And Technology Development Areas In The Research And Development World

Last Updated: 11 October 2009
Article by E. Sevi Firat and Banu Imadoglu

Research and Development ("R&D") activities are an investment field that has become more of an issue in Turkey in recent years.

In the Pre-Accession Economic Program 2008 Report recently issued by the State Planning Organization, the share of the R&D expenses in the total share of the gross domestic product of Turkey has been ascertained as 0,76 by the year 2006; however, the EU average has been ascertained as 1,84 percent and it has been pointed out that the attempts to improve the R&D activities and innovativeness will continue on 2009-2011, and the given ratio is targeted to be increased up to 2 percent by the year of 2013.

It is beyond dispute that pharmaceutical sector carries utmost importance for the continuance of the R&D activities and in this regard clinical trials are in the scope of R&D activities that must be supported.

According to the data of the Clinicaltrials.gov of September 30, 2009, 79.387 researches is being carried out in 171 countries. Considering that the number of clinical trials carried out domestically by the pharmaceutical companies is about 385.. In this environment knowing the fosterages that are provided to the R&D activities and searching for the ways of making use of these gains importance.

LEGAL REGULATIONS REGARDING R&D ACTIVITIES IN TURKEY AND THEIR AFFECT IN MEANS OF CLINICAL TRIALS

Law numbered 5746 concerning Endorsement of Research and Development Activities ("R&D Law") has been put in to force for the purpose of creating an economical environment of high efficiency and competency by supporting the R&D activities. Under the Law, as of 2004 deduction of 100 percent of the R&D expenses from the tax assessment that the taxpayers has been entitled to pay as per the Corporate Tax and Income Tax Laws has been accepted and it has been stated that the R&D Law will be valid until 2023. The Law also provides income tax stoppage for the R&D personnel, insurance premium and capital support for the entrepreneurs who seek to make investment.

It is incontestable that the clinical trials are R&D activities. However, pursuant to Enforcement and Controlling Regulation Concerning Endorsement of Research and Development Activities ("R&D Regulation") regulating the principles of application for the R&D Law "Clinical trials that has not been conducted within Turkey for at least 2 stages prior to the pharmaceutical manufacture license and clinical trials that are conducted after the manufacture license" has been excluded from the scope of the R&D's. Due to this expression, the clinical trials whose at least two stage is not conducted in Turkey will not be able to benefit from the fosterages provided by the R&D Law.

R&D Regulation, which can be referred as a source by the faculty members who seeks to carry out a clinical trial, constitutes an important step particularly for supporting the R&D activities in Turkey.

Although the concept of R&D became more popular in Turkey with the enforcement of R&D Law in 2008, the concept of R&D has already been in Turkey's agenda since the beginning of 2000 and subjected to several administrative and legal regulations that have been issued for its development. The concept of R&D has been previously defined under the 4691 numbered Technology Development Areas Law ("TDA Law") that has come into force with its establishment in the 6 July 2001 dated Official Gazette. Just like the R&D Law, the TDA Law has been issued on purpose of endorsing R&D activities and investments. The Technology Development Areas ("TDA") that the legal basis for establishment has been provided under the TDA Law, provides to the companies, which have been embodied to carry out R&D activities, various fosterages. As it is known, there are 31 TDA's constructed as of September 2008 and 18 of those constructed are active.

TDAs are the organizations that are professionally administered in the purpose of improving competency and innovativeness of the area, region in the filed of technology and the institutions and enterprises of the country that they are established in general and aim to encourage and help circulation of information and technology between the universities, research centers, companies and market, support establishment and development of innovation based companies, provide high qualified office area and support services to be used by the shareholders in their R&D activities. With regard to this definition, it is possible to say that TDAs are areas that gathers the sources of the establishment area and provides totality to the person who wants to benefit from these sources.

Nowadays, many industrialized country considers TDAs as the most important instrument for technological and economical development. For example; manufacture and service sectors of many countries such as; the United States of America, England, France, Japan, China, Korea, India, Israel, Finland owns a remarkable part of their manufactured added-value to R&D activities conducted within the scope of the TDA's.

It is clear that the pharmaceutical company that seeks to carry out a clinical trial will be in need of necessary equipment, volunteer and experienced academic personnel for clinical trial of their pharmaceutical. TDA may appear to be a center that provides human resource and responding to requirements that may arise in means of logistic support regarding the activities of the companies seeking to carry out clinical trials. Some of the TDAs appear to be appropriate places for clinical trials as they have hospitals and laboratories inside.

TDA AND THE OPPORTUNITIES PROVIDED FOR THE CLINICAL TRIALS

In accordance with the TDA Law, business companies and persons active in the area and benefiting from the services and opportunities of the area are defined as "entrepreneurs". A company or person that aims to become an entrepreneur may be located in the area by applying to the director company responsible from management of the TDA, fulfilling the related and administrative procedures and in case the TDA facilities enable so.

There is no obstacle for the sponsors and for the contractual research organizations (CRO), who provide supportive services to sponsors in the clinical trial procedures, to be an entrepreneur in the TDA as long as they proceed with the conditions set forth by the TDA. Besides, it is known that there are such companies established within the TDAs.

According to provisional Article 2 of the TDA Law, regardless of the date of initialization of the activity, the profits acquired from the software and R&D activities of the entrepreneurs active in the TDA are excluded from the income and corporate tax until 31 December 2013. It must be mentioned that, it is not important whether or not the tax payer is a foreign-based or a full fledged taxpayer and is subjected to income tax or corporate tax in order to benefit from such exception. Therefore, the entrepreneurs who are active within the TDA and research personnel supporting the R&D activities may benefit from several taxational and non-taxational fosterages arising from the TDA Law.

Also, the income acquired from other activities carried outside the area by the tax payers active in the area will not be able to benefit from this exception even if they have been acquired from software development and R&D activities. In case the entrepreneurs are active with similar activities outside the area, this income will not benefit from the income exception provided with this provision.

THE EXCEPTIONS APPLIED TO SALARIES OF THE RESEARCHER, SOFTWARE DEVELOPER AND THE R&D ACTIVITIES PERSONNEL WORKING IN THE AREA WITH REGARD TO THEIR ASSIGNMENT

Article 4 of the Regulation on TDA Implementation ("TDA Regulation") provides the definition of the researcher personnel, software developer personnel and R&D personnel. TDA Law and Regulation stipulate provisions concerning the fosterages provided to the R&D personnel who falls within these definitions.

It will be possible for particularly the part time working doctor or the dentist working in the clinical trials center and the personnel working at the hospital or similar centers established within the TDA and which the TDA enables to make clinical trials, to benefit from the fosterages provided with the TDA provisions.

As known, the salaries to be paid to the public corporations and the institutions which act as an investigator at a clinical trial and the university personals as a result of their contribution to a clinical trial, can only be paid by the pharmaceutical companies upon the approval in scope of the budgets submitted to the Ministry of Health and the Ethnic Boards. The salaries could only be paid to the revolving funds in the university hospitals and to the Ministry of Health funds in the public hospitals. This brings up one of the much argued issues in agenda. Thus, with the TDA Law, incomes that the part time working faculty members, faculty personnel, fellow investigator and experts will obtain in result of their services as a Researcher Personnel, are excluded from the scope of the university revolving funds. Besides, the faculty members will be able to establish companies in these areas or become a partner of a previously established company and/or take part in management of these companies in the aim of commercializing the outcome of the researches they have conducted upon the allowance of the University Administrative Board. Besides, in accordance with provisional Article 2 of the TDA Law, the salaries of the researcher, software programmer and R&D personnel who have contributed to the TDA activities are excluded from all means of tax until 31 December 2013.

PROGRESS FIELDS AND EXPECTATIONS

The TDA Law and the TDA Regulation does not regulate cooperation of TDAs, and does not restructure TDAs as separate areas from each other. Besides, it is clearly stated that the activities outside the TDA cannot benefit from the fosterages that are provided with the Law. In this regard, in the multi-centered activities carried out in different TDAs and centers that are not within a TDA, situations like working with different service providers, preparing different budgets, making different distribution of tasks and pursuits for process will have to be conducted. Therefore TDAs may not be the most appropriate places for multi-centered activities.

In order to overcome these difficulties, it is important for the actors of the clinical trials to work in cooperation with each other. It is also aimed in the Pre-Accession Economic Program 2008 to make some attempts in order to achieve university-industry cooperation and endorsement of the R&D activities. In this regard, it seems possible to provide same quality and efficiency for single or multi centered clinical trials that are in the scope of the R&D activities carried out by the Ministry of Health, administrative organizations, director companies and other actors together in the TDA. In the future it is expected to make new regulations that will ensure new fields of work and motivation to the young and smart human resource that is required to support clinical and pre-clinical trials.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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