The Turkish pharmaceutical market contracted significantly in 2012, in line with our previous forecasts. We continue to hold a positive long-term view on the market's potential, owing to Turkey's rapid economic growth and rising per capita spending. However, state intervention in the pharmaceutical sector continues to stifle the industry's potential and restrict foreign drugmakers' access to the country's lucrative market.
Headline Expenditure Projections
- Pharmaceuticals: TRY16.82bn (US$9.35bn) in 2012 to TRY17.92bn (US$10.10bn) in 2013; +6.5%% in local currency terms and +8.0% in US dollar terms.
- Healthcare: TRY89.42bn (US$49.68bn) in 2012 to TRY98.41bn (US$55.44bn) in 2013; +10.0% in local currency terms and +11.6%in US dollar terms.
Risk/Reward Rating: Turkeys Pharmaceutical Risk/Reward Rating (RRR) score for Q213 is unchanged from the previous quarter. This is also the case for all other countries in BMIs proprietary system that ranks pharmaceutical markets according to attractiveness to multinational drugmakers. A minor reweighting of one of the RRR components is being implemented to improve the tool, and the adjusted scores for all markets will be published in the Q313 updates of the Pharmaceuticals & Healthcare reports. Turkey has a RRR score of 53.1 out of 100, making it the ninth most attractive pharmaceutical market in the Emerging Europe region.
Key Trends And Developments
- In November 2012, global pharmaceutical firm Pfizer opened a new plant to produce pneumococcal vaccines in Istanbul, Turkey. The plant, once running at full capacity, will produce 75mn doses of vaccine a year. This is Pfizer's third pneumococcal vaccine plant, the other two located in the US and Ireland.
- In December 2012, Zentiva, part of Sanofi announced that it is planning to shift the majority of its international production to Turkey in a bid to make the country an export base for generic drugs. The announcement was made by Zentiva's President Jérôme Silvestre during an interview. The news comes as the company is focusing on production of antibiotics at its regional plant located in the Turkish city of Lüleburgaz, which is expected to export drugs from Q113.
- EastPharma, a Turkish pharmaceutical firm, reported revenues of TRY401.7mn (US$171mn) for 9M12, a decline of 18.5% compared to 9M11. Similarly, EastPharma's market share dipped to 3.7% in 9M12, compared to a value of 4.3% in the same period the previous year. The fall in revenues was attributed mainly to price cuts and a decreased sales volume of pharmaceutical products.
BMI Economic View: Fiscal data to November shows that Turkey's government will likely miss its 2012 fiscal target by some margin, in line with our forecast for the non-financial public sector deficit to reach 2.9% of GDP (compared to a 1.5% official target). Our core scenario is that fiscal consolidation under Prime Minister Recep Tayyip Erdogan will continue from 2013. However, consolidation will be less aggressive than recently outlined in the government's medium-term fiscal programme, as the authorities will struggle to boost revenue growth in 2013 and 2014.
BMI Political View: Turkey's military has stepped up air defences against the threat of potential attack from Syria by deploying Patriot missiles close to the country's southern border with Syria. The missiles, which are being installed by German soldiers, highlight rising concerns about the potential spill over from the ongoing conflict in Turkey's southern neighbour. However, the defensive rather than offensive nature of these weapons reinforces our view that without a significant escalation of violence Turkey will not launch a large-scale invasion of Syria.