1. PHARMACEUTICAL INDUSTRY

2. INTRODUCTION Turkey’s pharmaceutical production makes it 16th among the world's 35 leading pharmaceutical producing countries. Turkey has the lowest pharmaceutical consumption rate.

3. Turkish pharmaceutical industry production is mostly realized: under licenses agreements, the industry has high added value, huge production and export capacity.

4. HISTORY OF PHARMACEUTICAL INDUSTRY Graph 1: World Pharmaceuticals Market 80% of the world pharmaceuticals production is generated by developed countries.

5. 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.

6. 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

7. 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.

8. 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.

9. The Porter’s diamond concept in a pharmaceutical setting

10. Pharmaceutical production in Turkey YearsQuantity 1998923,000,000 19991,005,000,000 20001,100,000,000 2001925,000,000 2002969,000,000

11. Raw Material Production Table 4 : Production of pharmaceutical raw materials in Turkey YearsQuantity 1998 7,076 19995,552 20004,980 20014,382 20023,909

12. 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.

13. 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.

14. 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.

15. EXPLORING CONDUCT Pricing and paying-back policies Prices are under control of the Ministry of Health

16. 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

17. 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. 2001200220032004Avr. yearly growth (%) 2004-2005 Imports1,3001,5001,7001,95015 Local Production 9001,2001,4001,60017 Exports 13214018420010 Total Market 2,0682,5602,9163,35015

18. Major export products are the ones containing Penicillin, -Penicillin, -Antibiotics, -Alkaloid 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

19. IMPORTS finished formsIn our country the pharmaceuticals industry, as in all developed countries, is importing some products in finished 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.

20. Investments Graphs 2: Investments, 2001 ( US$ Millions ) The industry is continuously in loss due to unstable pricing policies

21. 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.

22. Employment The number of the total employees working for the industry as of year 2001 is about 20,840.

23. 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.

24. 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.

25. 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.

26. 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).

27. 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

28. 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

29. 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