Despite a current lack of investment incentives; Turkeys geographical location, market size, large and aging population, universal healthcare, potential future spending, and stage of economic development mean that it is already an immensely attractive destination for international pharma investors and will continue to be so for the foreseeable future.

“Turkey is already an attractive investment destination for multinational pharma companies for a variety of reasons, including geographic location, market size and composition, the aging population of 75 million people and likely healthcare spending escalation in the future,” explains Ümit Dereli, secretary general of the AIFD. “More importantly, the timing is right as Turkey is still in a phase of fast economic growth relative to developed economies. The timing will not remain this favorable for long, and there are a number of factors that are discouraging investment in the industry, from Turkey or abroad, at present.” Dilek Bayraktar, secretary general of the innovative medical devices industry association (ARTED), adds that “the average Turkish person is still [getting] used to having access to publicly reimbursed healthcare services, so healthcare demand will certainly rise on both a per capita and aggregate basis. Economic growth is also expected to continue at a rate above that of the developed economies… and Turkey continues to be the most stable country in the region. Novartis Turkey’s country president Peter Catalino is clear that Novartis “would need to see much stronger investment incentives that were more competitive with those offered in other countries,” before considering large scale investments in Turkey. On the whole, investing in Turkey makes sense; the remaining challenges are making it attractive for medical device manufacturers.”

“Turkey is already an attractive investment destination for multinational pharma companies for a variety of reasons, including geographic location, market size and composition, the aging population of 75 million people and likely healthcare spending escalation in the future.”

Ümit Dereli – Secretary General, AIFD.

Recordati recently made the decision to develop a second production plant in Turkey, with a planned investment of USD 50 million. “Turkey’s entrepreneurship-friendly environment is one of the two main reasons why it is the right time for Recordati to invest here,” explains İsmail Yormaz, VP and regional director for Recordati’s southeast region. “The other reason is the demand, the need that currently exists in Turkey and will grow in the coming years.” He continues, saying “I do not know what will happen in the short term for the Turkish pharmaceutical environment, but I am quite certain of what will happen in the mid to long-term; the Turkish pharmaceutical market will continue to grow, because Turkey has a growing population, one of the youngest populations in Europe, and as this population ages its medical needs will increase, particularly in chronic areas. For the last 12 months Turkish pharmaceutical consumption has grown in the double digits. Furthermore, Turkey has strong human resources for pharmaceutical production with a lot of expertise, experience, and know-how. Lastly, the surrounding region also has growing needs for medication, and given the political situation in some nearby countries, Turkey is optimally positioned to supply these markets.”

Feliz Balcay, general manager for Chiesi Turkey, echoes Yormaz, explaining that Chiesi’s “aspiration is to position Turkey as a hub for management and manufacturing; Turkey is already positioned as a regional management center for many multinational pharmaceutical companies. However, there is still a need for a better framework for potential investors in manufacturing in the country.” These multinationals include GSK, who relocated their regional management hub for their pharma business for the Middle East, North Africa and CIS regions to Istanbul in 2012. Other companies have since followed. Ilker Özbay, general manager for Daiichi Sankyo Turkey, explains that “since 2012, we have expanded our business to cover markets such as Azerbaijan, Kazakhstan, Algeria, and soon Ukraine and Nigeria… We prioritized this geographic expansion in 2012 because it was apparent that the Turkish market was unlikely to grow… [and this strategy] helped us achieve revenue growth in a stagnant market, and increase our profitability.”

Thus far, the Turkish government has not introduced any meaningful incentives to encourage such investments, but due to the current market access situation in Turkey, there are certain advantages to developing local production. Products manufactured in Turkey are given significant advantages at the reimbursement stage, strongly demonstrating the government’s aim to achieve a local production rate of 60 percent by 2023. Yadigar Gökalp İlhan, president of the Social Security Institution (SGK), explains that the institution encourages “companies to produce medications in Turkey instead of importing by providing an easier payment system… With respect to incentivizing local manufacturing, some arrangements were made for adding locally produced products to the SGK’s reimbursement list, and these products will have the privilege of getting reimbursement first.”

The standard of pharmaceutical reimbursement is quite high, as Novo Nordisk Turkey’s general manager Şebnem Avşar Tuna affirms. “Turkish universal health insurance provides a very strong foundation for healthcare treatment in general; … we are able to provide modern insulins for the treatment of people with diabetes; established insulin products are fully reimbursed.” Yet, for highly innovative products, “market access is the main barrier of growth for innovators, to the extent that one of our combination products was submitted for reimbursement 960 days ago and still hasn’t been approved,” says Ilker Özbay, general manager of Daiichi Sankyo Turkey.

However, Tuna Yavuz, general manager of Abdi Ibrahim Otsuka, a 50-50 joint venture between the Japanese innovator Otsuka and the leading Turkish pharmaceutical company, Abdi Ibrahim, argues that this strong “reimbursement system poses other challenges, as reimbursement payments are currently made according to the product class, meaning that the social security institution will buy and pay for illegal generic copies of patented drugs; the responsibility of enforcing a patent falls on the patent holder, who must sue the patent violator, resulting in costly and extended legal battles.”

GMP requirements and inspection timelines also indirectly encourage local production. Daniel Lucas, managing director of Lilly Turkey, explains “that since 2009, a Turkish GMP certificate is required prior to an application for marketing approval, which requires an onsite inspection and thus has significantly delayed the registration process.” Yavuz claims that “to expedite product approvals, we decided to establish local production of our products using Abdi Ibrahim’s facilities; this accelerated the GMP certification process significantly.”

Many other firms have and are utilizing the option to localize production through toll-manufacturing agreements with local manufacturers. “Lundbeck is very proud to have taken action, and has transferred technology and brought innovative manufacturing activities to Turkey,” affirms Şebnem Girgin, the managing director of the company’s Turkish affiliate. “With our local manufacturing partner, Pharmavision, we have completed the technology transfer necessary to produce our innovative antidepressant product and we obtained marketing authorization for this molecule as a locally manufactured product at the end of 2014.” According to UCB Turkey’s managing director Özdemir Şengören, “93 percent of our sales by volume are produced in Turkey, mostly in our established brands. This is very critical for a small company like UCB, and for our size we have made some very effective investments in partnerships with Pharmavision, Bilim, and Adeka. In terms of 2023 objectives, we have efficiently localized production and helped to increase the Turkish manufacturing capacity utilization rate.”

However, it is important to recognize that Turkey does recognize foreign GMP certificates in theory, if there is mutual recognition of Turkish GMP certificates in the country in question. At present, Turkish GMP standards are not widely recognized, and this is limiting the export potential of the Turkish industry, for both Turkish producers and multinationals considering investing in the country. According to Özkan Ünal, president of the Turkish Drug and Medical Devices Agency (TITCK), this situation is in the process of being resolved. “Turkey applied to become a full member of PIC/S in 2013… At present, we are aiming to become a full member of PIC/S in one year.” The expectation is that as a fully accredited PIC/S member, Turkey will be able to establish mutual recognition agreements with other members more easily, and in Ünal’s words, “once this accreditation comes through it will bring many new opportunities to our pharmaceutical manufacturers in export markets.”

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