In the world’s 18th largest market, recent pricing struggles have pushed some companies to revaluate their investment approach. Multinational organizations are complying with localization policies but are divided between having their own plant or partnering with a local CMO provider – although all of them appear to agree on one thing: the importance of clinical trials.
On the other hand, Turkish companies are doubling down on their own niches to compete and guarantee a successful future, some investing in biosimilars, others in rare diseases, and one company is going all the way, partnering with a Dutch early-stage biotech to develop its own Alzheimer’s molecule.
Here are the views of 5 executives from Big Pharma companies and the contrasting perspectives of local Turkish CEOs regarding investment decisions:
Big Pharma’s View
A specific rare disease policy to attract investment
Takeda’s Seyda Atadan argues that having a specific rare disease policy in Turkey will foster innovation by attracting investment in clinical trials.
“The objective now should be to implement policies in areas like rare diseases so that we can expedite access to innovative medicines for diseases with high unmet medical needs. As an R&D driven organization, Takeda is determined to tap into this to foster innovation; we believe that having a specific rare disease policy in Turkey will also positively impact this environment.
“This can also help to increase the investment of the pharma industry in the country. Turkey has the potential to generate investment in clinical trials via developing an innovative medicines pipeline. With around 521 clinical trials in 2019, Turkey ranked 26th globally, a relatively low position considering the size of the healthcare market, the economy, the harmonization of legislation with the European Union and the strong academic ecosystem.”
“European perfection at an affordable cost”
Avinash Potnis of Novartis, as an outsider, strongly believes in the potential of Turkey to become both an innovation and investment hub.
“[Turkey] is a place where the company can invest, build, and create a global export hub. Turkey has a unique value proposition, bringing European perfection at an affordable cost, and Novartis has made investments to make the country a quality export launchpad.
“The global industry should not only look at Turkey as a problem child; the large population, good healthcare infrastructure and universal coverage make it one of the advanced pharma markets. It will become a more attractive market if we welcome innovation and incentivize existing and new investors. Hence, Turkey has the opportunity to become both an innovation and investment hub.”
On board with localization investment
Bayer’s Ingrid Drechsel explains why the German company supports localization investment in Turkey and leaves an open door to make the country an export hub for Bayer.
“Bayer is a very innovative company that has invested in Turkish talent and ideas. We have a crop science production and development site as well as a strong local manufacturing footprint for pharma products here, producing 40 percent of the products sold in the local market through partners; a testament to our commitment to Turkey.
“Besides our headquarters in Istanbul, we currently have eight regional offices in order to serve the whole country adequately.
“[The company’s latest localization project] followed the Turkish government’s strategy to introduce more local production to the country. Headquarters agreed to invest and decided that it made sense for the organization. Since Bayer does not have its own production facility for pharmaceuticals in the country, we are producing and investing through partners. The initial idea is to supply local demand, but you never know what the future holds.”
A different Amgen affiliate
Güldem Berkman of Amgen also boasts about supporting localization initiatives, albeit with a different approach. Instead of going for a CMO partner, Amgen chose to acquire a big Turkish player.
Amgen opted to establish a direct presence in Turkey in 2010, before that, the company worked through distributors. In 2012, we acquired Gensenta, with its renewed identity, a 90-year-old Turkish company that specialized in generics, with an investment of USD 700 million. The investment is among the top 10 foreign direct investments across all sectors in the country.
After the acquisition, Amgen positioned itself to compete across two pillars: biotechnology and generics. Amgen Turkey is the only affiliate, apart from Brazil, to have such a model. As of today, we have 820 people working in Gensenta and two manufacturing facilities, one for biosimilars fill-and-finish and another for active substance production – mainly penicillin and over a dozen small molecules.
Five years full of launches
Boehringer Ingelheim’s Evren Özlu coincides with the overall optimistic view of the market’s future, supports localization and expects many product launches in the next five years.
We see tremendous potential within the Turkish market, especially considering the size of the population – around 85 million – and the country’s demographic trends. There is increasing awareness of disease areas among the wider public, as well as a desire at a policy level to implement comprehensive healthcare coverage for over 95 percent of the population. This is particularly encouraging, as 10 percent of the population is expected to be over the age of 65 in the next few years. Moreover, a recent report by IQVIA projects that Turkey is set to become the 14th largest pharmaceutical market in the world.
We will continue to invest further in Turkey, as we strongly believe in the bright future of the market. Based on the country’s registration timelines and activities, the next five years will see us introducing products in line with our organization’s global investment and portfolio.
Turkish Locals’ Takes
Going public and partnering with a Dutch biotech
Abidin Gülmüş, CEO of GEN, believes that going global calls for investment in true innovation R&D. The company, which recently made its public debut at the Istanbul Stock Exchange, signed a collaboration and license agreement with a Dutch biotech for an Alzheimer’s asset.
Being a major global player is not possible without substantial investment in R&D; global companies must be innovative. GEN is committed to developing novel molecules, from phase I to phase III, as part of our quest to become an innovative organization. A few weeks ago, we announced our exclusive collaboration and license agreement with Sulfateq BV, a Dutch early-stage biotech company, for the development and commercialization of SUL-238 as a therapy against Alzheimer’s Disease and other neurodegenerative diseases. This is a great milestone for the company, but we are fully aware that it will be a long journey.
Walking before running
Abdi Ibrahim’s CEO, Süha Taşpolatoğlu, outlines the company’s internationalization strategy, going to countries where market entry was relatively easy, that had high profits but also high risks, before aiming for developed markets that offer a predictable business. Also, he explains why the Turkish giant is all in on biotech products.
When we decided to be an international player, there were two different options: to invest in markets where market entry was relatively easy, that had high profits but also high risks, or go to markets where market entry is difficult but allow you to have a predictable business. In order to learn how to do business abroad, we chose to go to North Africa, the Balkans, Azerbaijan or Georgia.
We could try to enter those markets alone as Abdi Ibrahim or by doing joint ventures with local companies. In the end, we decided to do it both ways depending on the market. Today, we are confident in our capacity to do business internationally and are ready to go to more difficult markets like the United States and Europe.
We know that biotechnology is the future of the pharma industry as it currently has around 25 percent of the global pharma market in terms of revenue and is projected to reach 40 percent soon. A few years back Abdi invested in its own biotechnology production and R&D facilities and recently obtained GMP approval for the factory which includes vaccine production. Because of our timely investment, we are now able to produce almost all kinds of biotech products. But in order to be a strong player, you must be able to bring new products to the country and we have registered biosimilars in Turkey already, our objective is to continue bringing products via in-licensing.
Investing in vaccines, plasma and orphan drugs
Centurion’s Ersin Erfa shares his strategy of localizing vaccines and plasma. The company, similar to GEN, is going for niche products instead of mass production.
We are one of the oldest companies active in plasma and vaccines in Turkey; it is our core business and we want to localize the production of both in Turkey. We are in talks with the authorities because regulations are a big hurdle for us.
For vaccines, we want to do local production starting from antigens which will require further investment. Orphan drugs are another critical part of our product portfolio, and we are investing heavily, mostly working with in-licensing schemes, partnering with global companies and R&D centers in Europe, Asia and the United States.
We are not interested in mass production products, rather focusing on niche generics where there are far more opportunities worldwide. Centurion is in a good position and today we export generics to more than 20 countries which is quite good but not enough for us. After our EMA approval, we how to begin production for European countries; that is where much of our investment is focused on. I hope that we will double the countries we export to in the next two years, both with niche generics and plasma products. This strategy will help us become a semi-global pharma company.
Parenteral solutions leader going for biosimilars
Ufuk Kumrulu of Polifarma also believes in the future of biosimilars in Turkey but has chosen not to focus on monoclonal antibodies.
Around 12 years ago, the company shifted to become a pharmaceutical company focused on parenteral solutions. We started producing those products in 1996 and became market leaders in 2015. When Baxter, our main competitor, stopped producing in Turkey, we consolidated our position as the leader in parenteral solutions, serums. Over the last six years, Polifarma invested in generic products for hospital use, including ascetic areas and finished phase II investments last year; today, we have a 2,000 square meters ascetic production area and more than 500 products.
In my view, biosimilars are without a doubt the future of our industry. Fortunately, we began investing in the space four years ago. Of course, not all the projects came to fruition, but we have now partnered with companies that have been doing technology transfer.
In Turkey, everybody is focusing on monoclonal antibodies, but we are focusing on the future products, the ones that will be patent free in the coming years, and vaccines.
Devaluation putting investment at risk
Ali Raif’s Muzzafer Bal speaks about his wish to scale of manufacturing but is concerned about the impact of the Lira’s devaluation. He also revelas why Ali Raif is not currently boarding the biosimilars train.
As a small to medium-sized family company, we are flexible and can organize ourselves for a product to enter the market and be an important player in that space. Currently, we are operating in select areas, predominantly therapeutics associated with gastroenterology, cardiology, and diabetic CNS. Furthermore, we are building a new plant to increase the scale of our business. This will be FDA approved and increase our capacity for local production to further shift the focus to exports.
At the moment, we have strong financial capacity to make these investments however the challenges stem from the rapid devaluation of the infrastructure. The cost and maintenance of new machinery and the fluctuations of the Turkish lira also present challenges. However, the benefit of these investments is to centralize the business and move away from third party manufacturing.
We decided not to move into biosimilars because the margin was low from our point of view. We did not have certain tools for manufacturing nor the expertise to produce them. For now, we do not have any plans to involve biosimilars into the business and would prefer to stay where we are and be ready to move into new therapeutic areas which we believe will offer more opportunities for us in the long term.
