PHARMACEUTICAL

INDUSTRY

INTRODUCTION

• Turkey’s pharmaceutical production makes it 16th among the world's 35 leading pharmaceutical producing countries.

• Turkey has the lowest pharmaceutical consumption rate.

Turkish pharmaceutical industry production is mostly realized:

under licenses agreements, the industry has high added value, huge production and export capacity.

HISTORY OF PHARMACEUTICAL INDUSTRY

Graph 1: World Pharmaceuticals Market

2001(%)

47,2

23,7

12

11,16

North America Europe Japan Africa,Asia & Australia Latin America

80% of the world pharmaceuticals production is generated by developed countries.

Turkish pharmaceutical industry • Pharmaceutical industry has become one of the most

progressive sectors in Turkey.• 1928-1950: Fabrication period • International pharmaceutical companies : Bayer

(Germany), Aventis Pharmaceuticals, Inc (US), Pfizer (US), Roche (Switzerland), Sanofi (France) and Novartis (Switzerland).

• The leading Turkish manufacturers are Eczacıbaşı, Abdi İbrahim, Fako, İlsan İltaş, İbrahim Ethem and Bilim.

• Medium level of concentration which is 33,41 CR4.

MARKET STRUCTURE Market overview

• The Ministry of Health, other government hospitals, the Turkish Social Insurance Organization (SSK), and the government's Pension Fund

• Turkey’s present population is at around 67 million• The number of people per hospital bed is 380• There are 83,200 doctors, 77,000 nurses and 14,700

dentists• The number of patients per doctor is 800• The population per dentist is 4,500

• Turkey’s annual per capita health expenditure is USD 160.

• Europe-wide per capita spending on health care goods and services is USD 2,140.

• There are 22,000 pharmacies in Turkey.• There are about 900 pharmacists graduate from university each year.

Competition

• Local competition is quite strong.• 134 fairly large-sized companies • 85 are pharmaceutical producers, 11

raw materials producers, and 38 are importers.

• 952 million units of drugs and 4,382 tons of raw materials were produced in Turkey in 2002.

The Porter’s diamond concept in a

pharmaceutical setting

Pharmaceutical production in Turkey

Years Quantity

1998 923,000,000

1999 1,005,000,000

2000 1,100,000,000

2001 925,000,000

2002 969,000,000

Raw Material Production Table 4 : Production of pharmaceutical raw materials in Turkey

Years Quantity

1998 7,076

1999 5,552

2000 4,980

2001 4,382

2002 3,909

• The production of raw materials in Turkey concentrates on many active ingredients of pharmaceuticals, primarily antibiotics and

analgesics, by using fermentation, extraction and synthesis methods.

• The Turkish pharmaceutical raw materials sector is represented by 11 plants of private sector and 1 plant of public sector.

• The major characteristics of pharmaceuticals raw materials industry are:

the investments are made at a great proportion

by privately owned companies, the existing production capacity can be easily shifted

to various production possibilities.

Quality Standards

• Investments for the development of technology in the industry have been accelerated and today production technology of the Turkish pharmaceutical industry has reached world standards.

• Turkey started recognizing patents from 1995.

• Patent protected products will only become

more common between 2005 and 2007.

Pharmaceutical Consumption in Turkey • In 2002, sales level of pharmaceuticals in Turkey

is US$ 2.6 billions.• Public sector employees including civil servants

account for almost 80% of Turkey’s pharmaceutical consumption.

• Antibiotics :18,2% Painkillers: 12,1%• The factors that affect the consumption:

Invention of new pharmaceuticals, economic and cultural level of the country, population growth, average life period, urbanization rate, income distribution.

EXPLORING CONDUCT Pricing and paying-back policies

Prices are under control of the Ministry of Health

THE PAYING BACK APPLICATIONS FOR PHARMACEUTICALS OF…

• Emekli Sandığı: Medicine expenditures of civil servants, their relatives, widows and orphans

• Has aggrements with 16,000 pharmacies • SSK: It has 261 pharmacies in its structure• Bağ-Kur: It has its own pharmacies and health

institutions• Medicines can be bought from contractual

pharmacies• Complementary social security foundations:

Ordu Yardımlaşma Kurumu, Amele Birliği and İlksan

Foreign Trade • Exports: In 2003 total value of pharmaceutical industry exports

reached US$ 220 million.

• Imports: Turkey's pharmaceutical industry imports have shown an

increase by years and reached to US$ 2,296 million in 2003.

2001 2002 2003 2004 Avr. yearly growth (%)

2004-2005

Imports 1,300 1,500 1,700 1,950 15

Local Production

900 1,200 1,400 1,600 17

Exports 132 140 184 200 10

Total

Market 2,068 2,560 2,916 3,350 15

•Major export products are the ones containing

-PPenicillinenicillin, ,

--AntibioticsAntibiotics,,

--AAlkaloid medicamentslkaloid medicaments. .

•Turkey is now exporting various pharmaceutical products to 50

countries including developed countries like ,

Germany, the United States, Austria, Belgium, Finland,

the Netherlands, the United Kingdom, Switzerland,

Italy and Japan.

EXPORTS

IMPORTS

• In our country the pharmaceuticals industry, as in all developed

countries, is importing some products in finished formsfinished forms.

• Major import products of the industry are medicaments

consisting of mixed or unmixed products.

• Major countries from which pharmaceutical products imported

are the United Kingdom, Germany, France, the United States,

Switzerland and Italy.

Investments

0

10

20

30

40

50

60

70

80

Year

Investments

US $ Mio. 45,4 68,8 65,8 68,6 77

1997 1998 1999 2000 2001

Graphs 2: Investments, 2001 ( US$ Millions )

• The industry is continuously in loss due to unstable pricing policies

R&D Strategies and Its Importance • The pharmaceutical industry does not

have enough funds to transfer on R&D activities in Turkey.

• In Turkey, the R&D activities for pharmaceutical industry should start immediately for the competition in foreign markets .

Employment • The number of the total employees working

for the industry as of year 2001 is about 20,840.

Marketing Strategies • Medical representatives,

advertisements in medical, direct mail, academic meetings, exhibitions and other similar activities organized during such meetings, distribution of samples to doctors and pharmacists, gifts and printed promotional materiel.

• The advertising of medicinal products in newspapers without prior permission by the Ministry of Health is prohibited.

PERFORMANCE Growth

• If Turkey gives importance to the growing up in the market and rearranging plans, future of the industry seems to be hopeful.

• The developments concentrating on bio-technology is expected to provide important contributions into the

economy and sector.

CONCLUSION AND FUTURE EXPECTATIONS

• Turkey needs to make both technical and marketing

investments.• It is expected that total pharmaceutical market by 10

percent increase each year will reach to 8.292 million dollars in 2013.

• After 2005, the number of the original pharmaceuticals patented in Turkey and introduced to the market will increase.

SWOT ANALYSIS

• Strengths

- Availability of the capacity to meet the domestic market in conventional products,

- Availability of the conventional drug production technologies that all basic drugs can be produced,

- Availability of qualified human source, - Production of high quality products, - Growth of domestic market development

(%10 annually).

• Weaknesses

-Inability to use the full production capacity

-No R&D activity for new pharmaceuticals

-Government interference

-Weak financial resources

-Insufficient investment level

-The limited number of patents taken by national industry

-Inability to develop new technologies

-Inability to create funds necessary for expensive research

• Opportunities -Rapid development of information and

communication technologies and the easy access to information

-Increase in the technology transfer possibilities

-Positive changes in population and demographical structure

- As a result of globalization, the availability of capital seeking for investment opportunities

- The potentials gained by the our fellow citizens in foreign countries for new technologies

• Threats

-The exponential increase of science and technology in the world

- Low purchasing power - High inflation rate - High cost of and limited credit

resources, - Insufficient research consciousness

and appreciation - Insufficient government resources

allocated to health and education