Turkey’s pharmaceutical industry has the potential to attract the kind of investments currently being made by multinational drugmakers in Ireland, China and India, according to a local industry spokesman.

Currently worth around $3 billion, Turkey’s medicines market is the largest in the Middle East and the fastest-growing throughout the Mediterranean region. Local production accounts for 90% of sales, and 80% of the industry is under foreign control. The sector has a strong industrial base and sells to over 50 countries, but exports have been well below import levels as a result of “a discouraging investment environment,” says Engin Guner, secretary general of Turkey’s Association of Research-Based Pharmaceutical Companies. However, the picture is changing, he writes in the Turkish English-language daily newspaper Zaman.

The national economy grew around 7% a year during 2002-6, and improved political stability and the European Union accession process have changed Turkey’s image on international markets, says Mr Guner. New patent legislation took effect in January 1, 1999, and data exclusivity, a particularly important intellectual property right (IPR) for the pharmaceutical industry, commenced on January 1, 2005, after a four-year delay.

Moreover, local prices have been stabilised by the reference pricing system, introduced in 2004, which has made drug prices in Turkey the lowest in Europe. Price cuts and financial sacrifices by research-based pharmaceutical companies have achieved over $600 million in savings over two years, he says.

Other sources forecast fast growth for the local market, with a recent report from Business Monitor projecting domestic sales reaching $11.1 billion in 2010, boosted by factors such as lower interest rates and the introduction of a basic universal health insurance system.

However, some disincentives remain, including government procurement policies which are biased towards generic producers - research-based drugmakers say they had to reduce prices by 20% while generics firms cut them by only 2.5%.

Also, improvements are still necessary to the country’s IPR regime. Turkey remained on the US Trade Representative’s (USTR) Priority Watch List for IPR in 2006, and the USTR’s latest review called for Turkey to strengthen data protection against unfair commercial use of undisclosed test and other data submitted by pharmaceutical companies seeking marketing approval, and to stop approvals being issued for unauthorised patent-infringing drug copies.

Highly-qualified staff

However, a major plus is the sector’s highly-qualified staff. There is a surplus of pharmacists in the country, and most of the 900 who graduate each year move into the industry, especially sales, says Murat Yesildere of management consultants Egon Zehnder International in Istanbul. Doctors, nurses and dentists also often opt for jobs with multinational drug companies, “which provide very generous compensation packages compared to those offered to public servants by state institutions,” he adds.

Mr Guner acknowledges that, in order for the industry to enter a new age of global competitive power and advanced technology, Turkey must continue the reform and EU integration processes, improve its social security system and health services, be more open in decision-making processes and protect IPR at international standards. “The Turkish pharmaceutical sector is ready for takeoff. All we have to do is open its path into the future,” he concludes. Lynne Taylor