As recently as 2001, Turkey was on the brink of financial collapse, with nearly three-digit inflation and massive national
debt. Investment conditions looked dire, mired by a period of political and economic turbulence and a history of systemic
volatility. But a set of sweeping reforms turned Turkey into one of the world's most dynamic economies. A flagship of that
recovery has been the pharmaceutical industry, with approximately 300 companies selling 1.3 billion units of pharmaceutical
products per year.
(All photos are courtesy of EC Reviews.)
Since 2001, the industry has grown in value from $3.7 billion to approximately $9 billion in 2007. Behind this transformation
stand a steadily growing economy, a young workforce, and increased healthcare expenditures from both the government and consumers.
As a "pharmerging" market operating within a population of more than 70 million people, Turkey could surpass pharmaceutical
sales of $11 billion by 2010, likely putting it among the world's top 10 pharma countries.
The country stands to benefit from a growing national population with additional consumer spending on drugs and health improvements.
Just as critical will be a surge in foreign investments, brought by economic consistency and recent government healthcare
reforms that have improved public access to medicine and created a medical system that is closely aligned to the standards
of European Union nations.
"As the Turkish market has become a lot more stable, a lot more predictable and with better transparency, the international
purchasers can begin to understand the benefits of doing business in Turkey," says Zinta Krumins, managing director of Boehringer
Ingelheim in Turkey. In the past decade, Turkey has unified its Social Security system, implemented critical patent legislation
(1995), and created new laws for generics registration (1996), reference pricing (2004), and data exclusivity (2005).
Investors have noticed, beginning in 2000 when the Menarini Group, Italy's largest drugmaker, purchased I.E. Ulagay, Turkey's
first pharmaceutical company. The deal was viewed with extreme skepticism until I.E. Ulagay increased its value by $200 million
within seven years. A spate of strategic partnerships followed: Icelandic company Actavis's takeover of Fako (2004); EastPharma's
(Istanbul) acquisition of Deva (2007); Citigroup (New York) and Pils' (Austria) co-purchase of Turkish player Biofarma (2006);
and the highly touted deal between Zentiva (Prague) and Eczacibasi (2007). In the latter agreement, the Czech pharma giant
took a 75% stake in the Turkish pioneer's generics division, a move that not only symbolized the attractiveness of the market
but also the ease that multinationals have had in imposing themselves on a burgeoning sector. Six international companies
rank among Turkey's top 10 pharmaceutical sellers, including market leader Novartis (Basel) ($800 million), Sanofi-Aventis
(Paris) (nearly $600 million) and GlaxoSmithKline (London) (about $450 million). With broad product portfolios, deep prescription
drug pipelines and economies of scale, multinationals have quickly asserted their dominance.
Turkish companies are prospering as well. Eighty-five local manufacturers, many with family roots and post-World War II origins,
have built a branded market in Turkey where generics account for more than half of total volume. Antibiotics are market bestsellers,
but the main growth-drivers are products in chronic disease sectors, especially cardiology, central nervous system, and gastro-intestinal.
But with intensifying generics competition and regulators committed to containing drug costs, several Turkish manufacturers
are looking to high-tech, niche products, and overseas markets for future fortune. Mustafa Nevzat, Turkey's only FDA-approved
company for finished products, is nearing completion on a production facility for oncologicals that could be exporting to
the United States by 2009. Fresh off new capital investments, Biofarma plans to add 13 new export territories and begin construction
on a production site for cancer drugs by the end of next year.
But for all the strides made, significant obstacles lie ahead for Turkey, chief among them government inconsistency and political
instability. While health regulations are nearly harmonized with those of Europe, company executives complain about poor applications
of current laws, including the 210-day product registration period and a reimbursement list that is seen as biased and incomplete.
"What we would like from the government is a more effective cooperation with the industry," says Murat Barlas, chairman of
Liba Laboratories. "What we are waiting for is a centralized and independent drug authority like the FDA."