Standing at the crossroads of three continents, Cyprus embodies the beauty and diversity of Mediterranean culture. Being tucked beneath Turkey and hugging the western shores of the Middle East gives a distinct eastern feel to the island nation. Yet the country leans strongly west as a full-fledged member of the European Union since 2004 and with a very high World Bank Human Development Index rating which rivals that of any OECD country. Perhaps unmatched by anywhere in the world, however, are Cyprus’s array of sun-soaked beaches, Ottoman villages, and Byzantine churches all of which make the country a renowned tourist destination in the Mediterranean region. It is precisely through an unceasing influx of leisure tourism that the government and pharmaceutical industry are hoping to transform the country into a hub for medical tourism. With an attractive regulatory environment, a highly skilled labor pool, and top-tier infrastructure that support investment in the health sector, Cyprus is adding a new dimension to its identity as a Mediterranean destination not to be missed.
Nothing new, but something better
Traditional leisure tourism is already a well-established and thriving industry in Cyprus contributing an impressive 12 percent to the country’s gross domestic product. Over the past five years the Cypriot government has been targeting differentiation and enrichment of the sector by more actively promoting health services and medical tourism. In 2008 health services expenditures totaled €1 billion, almost evenly split between the public and private sectors, and comprised approximately 6.2 percent of GDP. Similarly, although five public general hospitals service a country only 9,000 square kilometers large, investment in new health services buildings in 2008 accounted for €19.5 million and €15.5 million in machinery and equipment, according to CIPA, Cyprus’s principal investment promotion agency.
The increasing expansion of medical tourism created the need for an organization specifically tasked with placing Cyprus on the global medical tourism map through a variety of initiatives and actions. The Cyprus Health Services Promotion Board was established in 2006 by the Cypriot Chamber of Commerce and Industry. Since its inception, the board, headed by its secretary general Christos Petsides, has been working closely with the Cyprus Tourism Organization and the Ministry of Commerce, Industry and Tourism to fulfil its goals for growing the sector. Members of the promotion board include various stakeholders of medical tourism in Cyprus such as hospitals, clinics, and doctors. Collectively, the long-run vision is to position Cyprus as the center of medical tourism in Europe and a viable alternative to contemporary industry hubs Thailand, Malaysia, and Singapore.
“Cyprus is a well- known tourist destination in the Mediterranean region and its tourism sector plays a vital role in the economy of the country,” says Petsides. “All these years, the success of Cyprus was based on the sea and sun concept – the beautiful weather, nice beaches, and luxurious accommodations. However, Cyprus is not only sea and sun. It is also an island with history and culture. It has all these so-called ‘special interests’ for tourists, and medical tourism is part of that.”
Underpinning the optimistic future and strategy to develop medical tourism in Cyprus are a combination of industrial attributes. Beyond the broad experience of catering to general tourism, Petsides explains that Cyprus has “an excellent medical infrastructure with well-equipped; technologically sophisticated hospitals; and clinics with highly qualified consultants, doctors, nurses, and technical staff. Cyprus has very high standards of hygiene and the English language is well spoken in Cyprus which helps the patients have direct contact with the staff. All these factors make Cyprus a very attractive medical tourism destination.”
A rising tide
One active step taken to further strengthen an already robust medical infrastructure is international accreditations and approved ISQUA (International Society for Quality in Health Care) standards for medical establishments. “There are a number of clinics which are in the process of obtaining international accreditation in the next two to three years,” notes Petsides. “This will upgrade the image of Cyprus as a health tourism destination and at the same time will improve the services provided to all patients.”
Cyprus’s incorporation to the European Union in May 2004 has also aided the uniformity and higher standards of medical infrastructure in the country by ensuring that all necessary EU directives have been introduced and incorporated into national legislation. Furthermore, the country’s adoption of the Euro as the national currency in 2008 has brought general macroeconomic clarity to the investment landscape with natural benefits for the medical tourism industry. Apart from achieving and maintaining key indicators to meet strict monetary union entrance requirements, membership into the Euro zone has engendered tremendous price transparency. Exchange rate risk has been eliminated and costs have been lowered thereby fostering greater competition. From the medical tourism perspective it allows patients to more easily estimate expenditures. “We have very good prices which are competitive with most of the European countries. Our unique position at the continental crossroads between Europe, Asia, Africa, and the Middle East make us easily accessible for all people whether these coming from Europe or the rest of the world,” Petsides asserts.
Location, location, location
Geography is indeed a tremendous asset which favors Cyprus as medical tourism hub. In the same way that Singapore leverages its central location to anchor service operations across a host of industrial sectors, Cyprus is in an equivalent position for the strategic European-North African-Middle East corridor. Presently most medical tourists to Cyprus come from the United Kingdom, Germany, The Netherlands, Russia, and nearby Greece. According to the Promotion Board, there has been an increase in patient requests for dental services, cosmetic surgeries, and In vitro fertilization techniques over recent years. Recognizing the demographic trend of medical tourists the Promotion Board actively promotes Cyprus as a center of excellence for medical services by participating in numerous industry related conferences in London, Berlin, and the Middle East. Additionally, as part of its outreach and education efforts, the Board continuously organizes seminars and lectures for hospital managers to promote the idea that Cyprus’s private hospitals reach international standards and new methods of management.
A central location has also produced long-term benefits for the human resources of Cyprus’s medical tourism sector. Because of the country’s limited population Petsides notes that “all Cypriot doctors have been trained overseas n the UK, USA, Greece, Germany and France. They all speak foreign languages which is an added benefit to the services offered.” Petsides estimates that Cyprus will have its own first medical school by 2013.
Invest with confidence
A modest population of barely one million people, which includes the controversial de-facto state of North Cyprus that is recognized internationally only by Turkey, naturally invites foreign investment to develop any sector.
Accession to the EU launched a new era of growth in Cyprus through foreign direct investment opportunities in strategic economic sectors. Specific priorities are highlighted by the country’s Strategic Development Plan 2007-2013 and figures from the Central Bank of Cyprus for the end of 2010 show FDI is impressively on the rise. In 2009, Cyprus attracted a total of €4.1 billion in FDI compared to €2.7 billion in 2008 and €1.6 billion in 2007. By no surprise, Cyprus’s strategic location at the crossroads of three continents has been a major factor in shaping its development into a major eastern Mediterranean trading post with a reputable international business and services centre. As a key outpost in the eastern Mediterranean which facilitates partnerships between Europe, Africa, and Asia, CIPA describes Cyprus as a “perfect gateway for businesses to penetrate new markets.” Having the lowest corporate tax rate in the European Union at just 10 percent gives CIPA another reason to describe the country as a “heaven for modern business.”
Indeed, the government is fully cognizant of its inability to grow medical tourism and develop medical centers. Cyprus enthusiastically welcomes investor interest in health services with CIPA noting that substantial FDI opportunities exist to build and transfer or operate care centers in fields such as pathology, cardiac operation, ophthalmology, obstetrics, gynecology, urology, and orthopedics.
Eyes on Europe
A strategic geographical location and small domestic population also makes export-oriented growth the winning strategy for the few mainstream pharmaceutical companies directly present in Cyprus. With most multinational pharmaceutical companies working through local agents for marketing and distribution to supply the domestic market, the local Cypriot players naturally have their eyes fixed abroad. Such is the case with Remedica, a 50year old generics giant and manufacturer in the Cypriot pharma sector. “Ninety percent of our production is exported, simply due to the small size of the domestic market,” says Charalambos Pattihis, Remedica’s CEO. Commencing the same year that Cyprus gained independence from the British Empire, Remedica’s growth as a company has paralleled and substantially contributed to the development of the country’s pharmaceutical sector. “We have always invested the profits back into the company, very carefully selecting where to invest and how to move forward,” explains Pattihis. “From the beginning we focused our attention on quality and we became the first company that was every inspected and approved by an EU member state, Germany, in 1986.” Pattihis believes that Remedica’s rich history rooted in quality and exports has helped establish Cyprus as an origin of high-standard, safe, and efficacious pharmaceutical products. Today, Remedica embodies Cyprus’s export connectivity to foreign market being present in more than 100 countries worldwide. Its manufacturing capacities have evolved to presently produce over 20 million tables and five million capsules per day.
Notwithstanding Remedica’450 products and over 1,600 licenses that allow for global distribution of medicines for oncology, cardiovascular treatment, and central nervous system disorders, numerous challenges confront the export market in Cyprus. Competition from other low-cost eastern European countries is a continuous threat. The absence of a medical university and domestic pharmacy school does prompt Cypriots to go abroad for high quality education, but also exposes looming shortages of scientific and research staff for the large section of the population unable to pursue studies abroad. However, the most pressing challenges, according to Pattihis, are with regulatory burdens on pharmaceutical pricing that minimize financial incentives for exporters. As Pattihis explains, “In Cyprus the price of pharmaceutical products has been reduced and has remained at 2004 levels for low end products (below five Euros) whereas more expensive products have been allowed an increase. Only viewing prices increases by percentages can be misleading. For example, a 10 percent increase might sound reasonable but when it is a 10 percent increase on a €50 product, it is another €5, which is more expensive than the price of any cheap product. On the contrary, if a cheap product goes from 50 cents to €1, it is a 100% increase but with no real difference to the end user, as we are only talking about 50 cents more.” As the President of the Cyprus Pharmaceutical Manufacturers Association, Pattihis disagrees with the freezing of low end products because of its detrimental effect for exports. As Cyprus is a reference country for other EU pharmaceutical markets, Pattihis believes that the prices for low-end pharmaceutical products should be liberalized allowing for Cypriot manufactured medicines to still compete on cost while letting high quality manufacturing more strongly dictate terms of trade. “Our suggestion is to liberalize the price of pharmaceutical products below €5. In that sense, if somebody wants to go from €3 Euros to €3.20 or from 50 cents to €1 euro, it should be allowed, and this will not really affect the local market but it will have a positive impact on exports,” he posits.
Despite present challenges, Pattihis notes the government’s commitment to the pharmaceutical sector. “The government has stated on many occasions that healthcare and education are areas where Cyprus can have a competitive advantage.” In terms of regulatory procedures and efficiencies, various governments have been trying to develop a national health system that would change the way pharmaceuticals are prescribed, procured, and dispensed in order to reflect more contemporary methods. By comparing system regulation to other European markets Cyprus is looking at alternatives to its current tender-based system for generics which potentially leave some companies better off than others.
Through strategic planning Cyprus is redefining its traditional value offering for EU markets. A small island by geographic size, the country’s healthcare and medical services industries have big planning and ambitious developments to look forward to over the coming years. The same natural endowments that have created a thriving tourist industry and export-oriented economy are in turn positioning Cyprus to become a regional hub for medical tourism and a more prominent player in EU generic pharmaceuticals. “Cyprus has proven that it is a country which knows how to welcome all tourists who want to have a good time,” says Petsides. “Why not consider coming to Cirrus and having treatment that would combine a holiday and a medical treatment? This is something that we offer in Cyprus.”