Pharma Manufacturing Growing Strong In Turkey, Study Reveals

CPhI Worldwide, part of UBM Live's Pharmaceutical Portfolio, has released initial insights from its comprehensive analysis on Turkey's pharmaceutical manufacturing industry. The full report will be made available at CPhI Istanbul, taking place June 4th to 6th. As part of the research, analysts surveyed Turkish manufacturers concerning the conditions for both foreign and domestic companies. The results were compiled in conjunction with Global Business Reports.

Healthy growth

As it turns out, Turkey's pharma manufacturing market is quite strong. Along with already housing 300 pharma companies that produce 8000 drugs and employ 30,000 people, Turkish manufacturers plan to invest big money into biologics and niche products and are eyeing the export market, especially into central Asia and CIS regions. For example:

• Onko Koçsel is investing €70 million in a new oncological manufacturing facility
• Beko Pharma is opening its third production site,
• Pharmaceutical wholesaler, Pharmactive has entered into the market through a $120 million investment

On top of these domestic drug manufacturing investments, Big Pharma companies from around the world have their sights set on Turkey. The study found that foreign investment within the country will boom in the next five years. Here are a few reasons why, according to the analysis:

• IP protection is a highly underrated strength, with many generics manufacturers now patenting their own processes
• Government assistance aims to reduce the trade deficit and offer corporate tax relief, access to institutions, and grants to encourage R&D and domestic manufacturing innovation
• Export-led growth throughout MENA and East Europe regions seen as major driver of sales
• Overall growth forecast at 6 percent per annum, with Turkey's largest exporters seeing double digit sales growth

"This comprehensive market report of the Turkish pharma economy is launching alongside the first ever CPhI Istanbul and the outlook both for the near and long term points strongly towards an increasingly prosperous and innovative marketplace," said Chris Kilbee, Group Director Pharma. "Growth domestically and as key regional hub for pharma products supply has firmly put Turkey on the global pharma map."

One surprising conclusion from the research was Turkey's significantly robust IP protection environment.  Many domestically run manufacturing facilities patent their own processes. In fact, in a January 2014 IP report by The Global Intellectual Property Center (GIPC) under the U.S. Chamber of Commerce, Turkey ranks 10th out of 25 countries in terms of patents, related rights, and limitations.

Obstacles to overcome

Even though the country has experienced pricing challenges domestically, research showed this actually increased the dynamism in the market, improving Turkey's overall competitiveness. "As a result, the country now boasts a highly price-efficient manufacturing industry far cheaper than those in the West, coupled with comparable regulatory standards, providing an ideal mix of factors to establish Turkey as the key regional pharma economy," CPhI Worldwide revealed.

Success, however, does not come without its challenges for the country's pharma market, including:

• The need for manufacturers to diversity product portfolios to prevent their facilities from being acquired
• The Turkish government's price referencing system and a fixed euro-lira conversion rate[in]-with low prices places pressure on profit margins.

However, the government is coming to the rescue by reducing the trade deficit, providing corporate tax relief, access to institutions, including Tubitak, and R&D expenditure support in order to emphasize and encourage innovation, the study found.

In a statement to the Pharmaceutical Manufacturers Association of Turkey Ordinary General Assembly, chairman Nezih Barut said “If the Turkish Pharmaceutical industry is supported with the correct strategic planning, the industry will use its experience for improving R&D know-how and getting into the position of  one of the leading manufacturers and exporters of the world."