Healthcare, Regulatory and Reimbursement Landscape - Turkey, New Report Launched

Growing prevalence of chronic ailments, medical tourism, universal health coverage and healthcare reforms are boosting healthcare market growth, although a reduction in the price of medicines through discounts and increasing generic consumption is a major challenge

In 2012, the pharmaceutical market was worth approximately $12.5 billion and was the sixth-largest pharmaceutical market in Europe. It is set to grow at a Compound Annual Growth Rate (CAGR) of 7.3% from 2008 to reach $21.5 billion in 2020 (MoE, 2014; ISPAT, 2012).

The population in 2013 was approximately 76.7 million, having grown at a CAGR of 1.4% from 2008. As is the case with many developed countries, the elderly population is increasing in size and as of 2013 comprised 7.7% of the entire population. The prevalence of non-communicable diseases, such as cardiovascular disease, respiratory disease, metabolic disorder and cancer, has increased due to an increasingly sedentary way of life.

An industrial revival began in 1952, after which production began to increase with the establishment of domestic and internationally owned plants. In 1984, Good Manufacturing Practice (GMP) was introduced, and quality control guidelines for the production of foods, pharmaceutical products, and medical devices were improved as a result. The market has expanded steadily since 1952 (MoE, 2012). As of 2012, there were 94 pharmaceutical production facilities, of which 17 were multi-national companies and 18 were raw-material-producing facilities (IEIS, 2012b).

The healthcare system has entered a long period of development under the Health Transformation Program (Saglikta Donus, um Programi, HTP) 2002–2013. The implementation of the HTP resulted in social security reforms aimed at improving universal health coverage. The pharmaceutical market is also driven by a national health insurance system. In 2013, 62.8 million people were covered under government health insurance (Sosyal Guvenlik Kurumu, SGK) (SGK, 2014).

The available infrastructure for healthcare industries and the high number of healthcare institutions makes Turkey an attractive location for the manufacture and marketing of pharmaceutical products. Medical tourism is another driving factor of the pharmaceutical industry. In 2012, Turkey received 270,000 foreign patients. Services for medical tourism are primarily provided by private hospitals, and the government provides tax exemptions for private hospitals, to encourage medical tourism (MoH, 2012c).

The government is also trying to increase pharmaceutical R&D. In 2012, it introduced a new investment incentives program, which has four basic schemes for increasing foreign investment. There are 150 R&D centers in Turkey, and in April 2013 Dupont opened its 11th innovation center (ISPAT, 2013a).

The price of medicine is very low, compared with other EU countries (AiFD, 2007). Turkey uses a reference pricing system in combination with discounts for the sale of its pharmaceuticals. In 2009, to curb changes in the price of medicine, the government fixed the euro to the lira conversion rate (Bilmen, 2014). These factors greatly reduce the profit margin for pharmaceutical companies, making pricing a major challenge for the growth of the pharmaceutical market. In addition, the use of generics is high: in 2012, 53% of the drugs consumed were generics (MoH, 2012). The usage of generics is expected to grow and thus mitigate the growth of the market.

There is a large market for medical devices due to the growing elderly population and subsequent increase in demand for healthcare products and services. The medical device market was valued at approximately $1.9 billion in 2008 and is estimated to grow at a CAGR of 4.7% to reach $3.3 billion in 2020. Turkey predominantly depends on imports for its medical devices, as many of its domestic producers are involved with products that do not require high technology.

Despite universal healthcare coverage, insufficient healthcare personnel and uneven distribution of healthcare resources hinder access to healthcare services

In 2006, the Social Security Institution (SSI) law was introduced, consolidating the three existent schemes: SSK, Bağ-Kur, and GERF. In the same year, the parliament approved the Social Insurance and General Health Insurance Law Proposal, which led to the introduction of a new health insurance scheme: the General Health Insurance Scheme (Genel Saglik Sigortasi, GHIS) in October 2008. Most of the population in now covered under the GHIS.

Though government initiatives have helped to increase the number of healthcare professionals (physicians and nurses), the number of physicians and nurses per 1,000 population continues to remain lower than the OECD average (OECD, 2013a). In 2011, the number of physicians per 100,000 population was 336, in the EU, and 178, in the upper-middle-income-group countries. Turkey had only 172 physicians per 100,000 population (MoH, 2013). In 2013, Turkey had approximately 0.3 dentists per 1,000 population (MoH, 2013).

Healthcare workers are not uniformly distributed among the 81 provinces of Turkey. In 2007, the lowest number of specialized physicians per 1,000 population was 0.19, in Sirnak. The highest number of specialized physicians per 1,000 population was 2.57, in Ankara (Vujicic et al, 2009).

Turkish regulatory authority does not provide transparent and efficient regulatory system to facilitate approval of pharmaceutical products and medical devices

The regulatory decision-making and implementation bodies vary in form, structure, objectives and achievements. At the beginning of 2005, the registration process underwent a complete transformation. The first change was to make the 210-day registration period ‘‘work days’’ rather than ‘‘calendar days’’, prolonging the overall registration process to a total of 304 days. An applicant applying for registration must also apply for the price of the medication (TFD, 2012). Another concern is the lack of detailed guidelines, unlike in the EU. The registration process lacks transparency and the registration and pricing processes are confusing and intermixed, which the EU-drafted Trade Barriers Regulation (TBR) has indicated led to a loss of sales and income. The EU also stated that Turkey has not responded to certain questions concerning regulatory guidelines directed to it, further weakening its transparency. This can be rectified if the Ministry of Health (MoH) provides a detailed report on statistical data such as the number of applications received, approved and rejected in a year.

Turkey has shown tremendous economic growth over past decade but political uncertainty may restrict economic development

Since Prime Minister Recep Tayyip Erdoğan’s election victory in 2011, there have been many controversies surrounding the Justice and Development Party (Adalet ve Kalkınma Partisi, AKP) and Erdoğan’s views. As the fear of Turkey’s becoming an Islamic state spread, protests against Erdoğan grew. In 2013, Erdoğan was accused of corruption and hiding money from the police raids intended to reveal corrupt politicians and government officials. Based on these events it was expected that the AKP party will lose in the March 2014 elections. However, the AKP party won, with approximately 45% of the votes (Tisdall, 2014). This win showed that the party had not lost its popularity and that the image of Erdoğan had not been affected. Despite this, the global rating organization Moody has lowered Turkey’s Baa3 rating from stable to negative, because of the political turbulence and uncertainty in Turkey (Hurriyet Daily News, 2014).

In 1999, Turkey became an EU candidate country and, in line with EU requirements, went on to introduce substantial human rights and economic reforms. The death penalty was abolished and reforms were introduced in the areas of women’s rights, broadcasting, and Kurdish culture, language and education. After coming to power, the AKP has given assurance of the effectiveness of its “zero problems with neighbors” initiative, which aims to improve relationships with neighboring countries, particularly Arab countries. This policy has resulted in access to new markets and strategic partnerships and has contributed to the current economic boom.

With the help of the European community, there was rapid growth between 2002 and 2012. Annual Gross Domestic Product (GDP) growth was 5% higher than in most OECD countries, where it averaged 1% (ISPAT, 2013b). In May 2013, Turkey paid off the last installment ($412m) of its debt to the International Monetary Fund (IMF) (Today’s Zaman, 2013). GDP per capita was $10,815, in 2013, and is expected to increase (IMF, 2014a). Gross National Income (GNI) per capita was an estimated at $11,238 in 2013 (World Bank, 2014c). Turkey plans to implement monetary and financial policies to lower the inflation rate and increase the foreign exchange reserve.

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