CPhI Worldwide’s Pharma Insights report on Turkey shows Turkish manufacturers moving beyond domestic market export has led to growth, niche products and biologics development. The comprehensive analysis of the Turkish pharma market was conducted among all major Turkish manufacturers, evaluating conditions for both foreign and domestic companies, and was compiled with the help of research partner Global Business Reports.

The report concludes that pricing challenges domestically have had a parallel effect of increasing the dynamic in the market and improving overall competitiveness of the sector. As a result, the country now has a price-efficient manufacturing industry 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.

If reimbursement conditions improve, the report said it should provide the right environment for a burgeoning healthcare industry, with Turkey having seen GDP per capita triple in the last 10 years alone. However, beyond the domestic reimbursement market, niche products and export led growth also is providing a significant avenue for greater revenues.

Investment in new facilities now is taking place across the market, which CPhI concludes will see Turkey establish itself as the definitive player and supplier of drugs across the MENA and CIS regions, with exports even as far reaching as the Baltic states. Ultimately, the country’s manufacturers now are aiming to begin supplying directly into Europe and even the U.S. For example, Nobel Pharmaceuticals last year accrued over $100 million in sales to foreign markets and growth at Onko Koçsel is predicted to be 38% in 2014. Mustafa Nevzat is forecasting similar near-term growth to $50 million in international sales across 40 countries.

An increasingly prosperous population and a growing healthcare economy, coupled with a manufacturing base that has many FDA and EMA approved sites, means foreign direct investment is increasing.

Vefik Koral, owner of Farkim, said, “The foreign/multinational companies now dominate with the larger Turkish firms acquired. There are only a few large-scale Turkish companies left in the market.”

As such, those that remain will increasingly form collaborations and partnerships that will be an essential driver of Turkey’s R&D sector, and international companies are again showing an increased interest in the Turkish market. For example, Mustafa Nevzat is partnering with Amgen to increase its work in biotechnogy.

The government also is helping to reduce the trade deficit and increase innovation by offering corporate tax relief, access to institutions including Tubitak and R&D expenditure support—which for accredited R&D centers covers 60% of staff expenditures.

One conclusion is that the country has a very robust IP protection environment, with many Turkish-owned manufacturers regularly patenting their own processes. In fact, in the recent International IP Report, published in January by the Global Intellectual Property Center (GIPC) under the U.S. Chamber of Commerce, Turkey now ranks 10 out of 25 countries in terms of patents, related rights and limitations. International companies now are catching up with this reality, and a significant increase in manufacturing R&D work and contract manufacturing is being observed.

A major obstacle for growth (experienced universally) in the Turkish pharmaceutical industry is the government’s price referencing system and a fixed euro-lira conversion rate, with low prices consequently putting increasing pressure on profit margins.

However, this has seen a dynamic approach emerge within the industry and manufactures are looking to new horizons like biologics, niche products and the export market, particularly in central Asia and CIS regions. This new R&D focus is exemplified by the significant investment made in manufacturing facilities with Pharmactive ($120 million), Onko Koçsel ($95.3 million), Beko pharma ($81.7 million) and Centurion ($27.2 million) having committed to huge facility developments.