Turkey Pharmaceuticals Market SWOT - part "W"
After starting with the bright side (strengths) of the Turkey pharmaceuticals market, right now it is the time to share the disfavors of the market and create 180 degree angle (there are still “opportunities and threads” parts for 360 degrees view) for the ones who are interested to enter the country, expand the businesses or on the edge of a new investment verdict.
With its monopsonic market dynamic (single buyer structure), the Turkish Government sets the prices for all pharmaceutical products (not applicable for the OTC products, food supplements) and reimbursed them accordingly. Thus, the drug spending per capita is very low comparing its peers in terms of GDP which ultimately limits the usage of new health care interventions and pharmaceuticals.
The extreme cost containment price legislation period seems over after one decade of its anniversary (after the period of implementing reference pricing scheme, requiring mandatory state discounts, fixed exchange rate introduction) and as of today, the rules of the price setting have been drawn clearly. At the moment, Turkey is the cheapest country in the EU (but better not forget its big potential of >80 million population).
Awarding the innovation and new technology, there are improvements and increased transparency in terms of IPR (no Supplementary Protection Certificate-SPC-period). Besides, Turkey remained on the "Watch List" of the 2016 Special 301 Report of the US Trade Representative (USTR). Having said that, patent protection does not cover marketing authorization applications or other activities to obtain a marketing authorization under Article 85/3-(c) of the Industrial Property Code (known as the Turkish Bolar exception). Thus, the only available route is to apply data exclusivity provision which is also six years period from the date on which a product received marketing authorization for the first time in the EU-Turkey Customs Union area.
On paper, the Turkish Medicines and Medical Devices Agency (TITCK) evaluates the license application in a 210-day period (Article 15, Licensing Regulation). However, in practice, this period can be extended even to two or three years, due to the workload of the Agency. Additionally, as a prerequisite, the Good Manufacturing Practices (GMP) certificates required after an on-site examination conducted by the Agency officials. This creates a lot of delays especially in the authorization of imported products. According to Research-Based Pharmaceutical Companies Association (AIFD) report, the median period of receipt of marketing authorization of an imported drug is 681 days which still seems very short in reality especially for import (non-prioritized) drug applications. This creates a delay for market entries as well as heavy paperwork burden for all stakeholders.
Due to the lack of real innovation in terms of new molecule research and development activities, the local industry keeps its focus and efforts on the development of “innovative generics” in the form of new combinations of well-known molecules. This impuissance seems not to improve in the short or mid-term unless this matter is taken as a policy subject and a solution like creating bilateral arrangements on the authorities level such as between Turkish Agency with another country agency is arranged to create molecule libraries or real research hubs creation.
Last but not least, economic uncertainty and its effect on both due to the gap between fixed exchange rate for pharmaceuticals and real currency in the country and as well as sharp depreciation of Turkish lira during the 2nd half of 2018, the companies deal with profitability issue as well as weak growth in US dollar terms (while market continues to increase in terms of both value and units).