Over the past six years, Turkey has consistently lowered its drugs prices and guided its companies to greater efficiency.
“Reference prices in Turkey are constructed from the lowest price in France, Greece, Italy, Spain or Portugal, converted to Turkish Lira at a rate of TRY 1.9595 per EUR,” says Cem Baydar, senior principal consultant for IMS in the Turkey and Near East region. The prices are then “converted to Turkish Lira at a rate of TRY 1.9595 per EUR, and then the public payer, the SGK, pays a discounted price, which was set with the industry’s consensus in 2009 at 11 percent.”
But since that arrangement was made in 2009, the discount rate has been increased.
In December 2009 the government arbitrarily raised the discount rate to 23 percent, then to 31.5 percent in December 2010, and again to 41 percent in November 2011; the exchange rate was not changed at all until June 2015, when it was raised by 2.07 percent to TRY 2.00 per EUR, and in July it was increased by another 3.9 percent to TRY 2.0787 per EUR. As a result, Turkish pharmaceutical prices are now at approximately 38 percent of the lowest prices in Europe, save in a few special circumstances where alternative pricing arrangements are in place.
Ümit Yaldiz, head of Greater Turkey for Merck Millipore, argues that “with the change in the pricing model… companies were forced to restructure their businesses and overhaul their operating models; as such, the industry has become much more efficient, and much more competitive in the global arena, and from this perspective cutting prices was the right move and the policies have had a positive impact.” Cem Baydar of IMS explains that “companies had to adapt and implemented change management programs that are now mostly completed,” detailing how the top ten companies have reduced their sales forces by 44 percent over the last five years. “The pricing situation is now a fact of life,” says Baydar.
In terms of Turkish Lira, pharmaceutical spending returned to above inflation growth in 2014, rising 10.1 percent to TRY 16.3 billion (USD 7.45 billion) in 2014, after actually falling 4.1 percent in 2012, according to IMS and TurkStat.
However, local manufacturers are quick to point out that this growth is not distributed evenly across the industry. Cengiz Celayir, president of the Pharmaceutical Industry Association of Turkey (TISD), points out that “original imported products make up only three percent of the market by volume, but have a market share of 27 percent in terms of value, and this is the segment that is seeing some revenue growth at present.” As such, Santa Farma chairman Erol Kiresepi believes “the future of local producers will lie in specialty products, OTC, and exports, in all of which we are building up our capabilities.”