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Acknowledgements

Focus Reports would like to warmly thank Alp Sevindik, Secretary General

and COO of AIFD, Cengiz Celayir, Chairman of the Board of TISD, and Turgut Tokgöz, Secretary General of IEIS, for their great support and

contribution to this report.

FOCUS REPORTS 5October 2012 5


TURKEY

Copyright ©All rights reserved. No part of this publication maybe reproduced in any form or by any means, whether electronic, mechanical or otherwise including photocopying, recording or any information storage or retrieval system without prior written consent of Focus Reports.While every attempt is made to ensure the accuracy of the informa-tion contained in this report, neither Focus Reports, neither the authors accept any liabilities for errors and omissions. Opinions expressed in this report are not necessarily those of the authors.

This report was prepared by Focus Reports

Project Director: Nicolas CarayonProject Coordinator: Solène PignetProject Publisher: Ines NandinProject Assistant: Roslan Khasawneh

ContentsAcknowledgements .................................................................................................4

Turkey: east, West and Profits! ................................................................................7

Making Universal Healthcare a reality ..................................................................8

Vision 2023 ...............................................................................................................9

Women’s Strong Pharma Presence .......................................................................10

Toward a new era in pricing ................................................................................10

Facing Market Delays ............................................................................................12

A Strategic R&D center .........................................................................................13

Merck Serono: All About Location ........................................................................14

A Growing Management Hub ..............................................................................14

Top 20 firms: value vs. volume, ims 2011. ............................................................16

M&A Activity on the Rise .....................................................................................16

Corfena’’s Global Take On Business .....................................................................17

Interview with Interview with Nihat Ergün, Turkey’s Minister of Science, Industry and Technology .......................................................................................18

Interview with Turgut Tokgöz, Secretary General of IEIS, Pharmaceutical Manufacturers Association of Turkey .............................................................................................20

Interview with Ilker Ayci, President of Investment Support and Promotion Agency of Turkey .................22

Interview with Emin Fadillioglu, General Manager, GSK .............................................................24

Interview with Güldem Berkman, General Manager of Novartis & Chairman of AIFD ............................................26

Interview with Matthieu Accolas, General Manager of Servier Turkey ......................................28

Interview with Fatih Acar, President of SGK, Social Security Institution ....................................30

Interview with Cüneyt Balıkçıoglu, General Manager of Ferring Turkey ....................................32



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TURKEYSpecial SponSored Section

octoBer 2012 FOCUS REPORTS S2

Turkey’s Turning Point

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In the global theater of business and politics, Turkey increasingly leverages its location as an ideal vantage point where actors can seamlessly move between all things West and East.

An emerging Asian market with a spe-cial relationship to the European Union and close ties with the Middle East, Tur-key’s strategic geopolitical position is a place where multinational players want to be. The pharmaceutical industry is no exception.

With a growing, aging population and a young, highly skilled workforce,

Turkey’s demographics are also a draw. Economically, the country boasts a GDP topping more than 8 percent in 2010 and 2011 and is weathering the global eco-nomic crisis better than many of its Eu-ropean neighbors.

The pharmaceutical industry has also enjoyed a wave of expansion. Accord-ing to IMS, the Turkish pharma market reached USD 9.8 billion in 2011 and ex-perienced 10 percent growth in volume. This has attracted some of the industry’s biggest players. In recent years, Novartis, Merck Serono, GSK, Sanofi, and Novo

This sponsored supplement was produced by Focus Reports.

Project Director: Nicolas CarayonProject Coordinator: Solène PignetContributor: Roslan KhasawnehProject Publisher: Ines Nandin Editorial: Rachel Marusak

HermannManaging Editor: Fred Gebhart

For exclusive interviews and more info, please log onto or write to [email protected]

Turkey:east, West and Profits!



TURKEY Special SponSored Section

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turkey report

Nordisk have made the country a regional center of operations.

Nonetheless, major national health-care reforms, drastic price reductions, and market access delays have made Turkey’s pharmaceutical market a particularly challenging place the past few years.

But with a new budget period beginning in 2013 and signs that the government may be looking to turn a corner, the industry is preparing for the day when Turkey becomes one of the next big pharma countries.

Making Universal HealtHcare a realityOver the past decade, Turkey’s healthcare system has been radically reformed. With the election of the Justice and De-velopment Party in 2002, universal healthcare became a top national priority. Sweeping reforms began the following year with the enactment of the Health Transformation Program.

First, the country’s three social security schemes were united under the Social Security Institute (SGK). Then, in 2008, the Universal Health Insurance law was passed, aiming to make healthcare widely available. Finally, in 2010, the family prac-titioner system was implemented, providing low-cost care by

local doctors to citizens across the country.According to Fatih Acar, president of the SGK, the reforms

have made “access to healthcare services easier and waiting pe-riods have been shortened.” He said that most of the popula-tion is now covered and that Turkey is considered the “most expanded healthcare provider country in Europe.”

Ayse Çetinel Sapmaz has been the managing director of Jans-sen, the pharmaceutical company of J&J, in Turkey for the past 11 years and witnessed the dramatic change in the country’s

healthcare system. “Access to healthcare has increased dramatically—and this is of course something that we view positively. People are no longer left waiting in queues; they have access to doctors, they have ac-cess to treatment. From a societal point of view, things are moving in the right direc-tion,” she said.

On the other hand, critics raise con-cerns that new healthcare policy has led to over-use of the system. Alp Sevindik, secretary general and COO of the As-sociation of Research Based Pharma-

ceutical Companies (AIFD), explained, “In 2002, Turkish citizens would visit a doctor three times a year, on average. However, the numbers of visits have now risen to eight. Of course, most of these visits result in a prescription. Hence, one of the problems we are currently facing is government induced volume or demand. If the government wants to provide this level of quality of health service, the volume of medicine usage will expectedly increase and accordingly, so should the budget to account for that. Unfortunately, that has not been the case.”

According to the SGK, expenditures on pharmaceuticals in-creased from TRY 7.8 billion (USD 2.3 billion) in 2004 to TRY 15.8 billion (USD 8.7 billion) in 2011.* " Hastaların yaşamlarını iyileştirmek için dünyanın her yerinde canla başla çalışıyoruz. "

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Nihat Ergün, Turkey’s minister of Science, Industry and Technology

Fatih Acar, president of the Social Security Institution (SGK)

0

2

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(*) 3.5% 18.1% 2.1% 2.6% 6.5% -13.3%

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2005 – 2011: TURKISH MARKET GROWTH IN VALUE (IEIS)





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Vision 2023In 2010, Turkey was ranked the 6th largest pharmaceutical market in Europe and the 14th largest in the world. According to a recent report by the Pharmaceutical Man-ufacturers Association of Turkey (IEIS) in collaboration with the Boston Consulting Group (BCG), the country could be doing a lot better.

Turgut Tokgöz, secretary gener-al of IEIS, said that in recent years, Turkey has been far too “inward-looking” to take real advantage of

the international market. “The local market was vibrant and as the pharma industry is heavily regulated, it re-quires a large amount of effort and capital to export products,” he said.

“Unfortunately, the industry has taken the easy route and has been focusing on the local mar-ket, which has been growing quite handsomely. Now that they are somewhat squeezed domestically, they are very much interested in ex-port markets. This puts Turkey in a late-comer phase and it is not easy to gain a good market share in ex-port markets. The train has already been moving, but it is still possible to catch it,” Tokgöz said.

That is just what the Turkish government and industry leaders intend to do. As the 100-year anniversary of the Turkish Republic approach-es (Atatürk founded modern Turkey in 1923), the gov-ernment has set some ambitious goals for the country, including becoming a top-ten economy, fixing the coun-try’s trade deficit, and increasing the country’s annual exports to USD 500 billion.

Specific goals have been set for the pharmaceutical industry, which accounted for 10 percent of the total trade deficit in 2010 (excluding energy imports) due to a high level of imports versus a low level of exports. That year, the sector’s imports were valued at USD 4.4 billion, while exports flat lined at USD 600 million.

The IEIS/BCG report suggests that proper measures could boost the country’s pharmaceutical ex-

Alp Sevindik, secretary general and COO of the Research Based Pharmaceutical Companies Association (AIFD)

Turgut Toköz, secretary general of the Pharmaceutical Manufacturerers Association of Turkey (IEIS)

Cengiz Celayir, chairman of the Board of TISD

Turgut Tokgöz, secretary general of the Pharmaceuti-cal Manufacturerers Association of Turkey (IEIS)




S5 FOCUS REPORTS octoBer 2012

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ports to USD 16.5 billion by the 2023 deadline.

AIFD has been working in partner-ship with government to encourage long-term policies that support innova-tion. It has developed a strategic docu-ment called the “Vision 2023” study, which recommends increasing the level of R&D and clinical research.

Toward a New era iN PriciNgWith the sweeping healthcare reforms also came a number of policies that have severely impacted pharmaceutical prices and have been widely criticized by industry leaders.

Starting in 2004, the gov-ernment estab-lished a revised reference pricing system for phar-maceutical reim-bursements. The reference price of an original prod-uct is based on

the lowest ex-fac-tory price among five EU reference countries, includ-ing France, Spain, Italy, Portugal and Greece. In 2009, the Euro/Turkish Lira ex-change rate was set at 1.9595. Critics argue that this rate is not representative of current price levels.

During September 2009, the gov-ernment also announced a price decree that led to higher discounts on innova-tive drugs. As a consequence of these pricing policies, pharmaceutical com-panies operating in Turkey experienced great difficulty maintaining profitabil-ity.

The International Investors Asso-ciation (YASED), a non-governmental organization that represents interna-tional companies operating in Turkey, has taken issue with pharmaceutical

Women’s Strong Pharma PresenceWhile there may still be few women holding positions of political power in Turkey, their influence has been growing in the private sector. Increasingly, women in Turkey are taking on key executive roles.

From Novartis and J&J to Merck Serono and Novo Nordisk, when it comes to heading the affiliates of several major multinational pharma companies, wom-en are leading the way. The same goes for local firms, such as CORENA and PharmaVision, where women can also be found in top spots.

Güldem Berkman, country head of Novartis and president of the AIFD, has been named one of the country’s most influential women. For her, success has been a question of striking the right balance. “My personal definition of success is one’s ability to make a difference. This applies both in my private life and professional life. For me, being suc-cessful is creating value in whatever you are doing,” she explained.

Meltem Kurtsan, co-founder of KAGIDER, the country’s leading wom-en entrepreneurs’ association, said that she is pleased to “witness the increased presence of women leaders in the pharmaceutical sector.” As part of its mission, the association supports, trains and mentors Turk-ish women, of all backgrounds, in advancing professionally.

Ayse Çetinel Sapmaz, managing director of Janssen Turkey

Cüneyt Balikçioglu, general manager of Ferring Turkey

Güldem Berkman, country head of Novartis Turkey and president of AIFD




turkey report


cost containment policies. Ug ur Özkutlu, chairman of the as-

sociation’s Access to Health Working Group, said, “The past three years have been lost from our side. The discounts have gradually increased from 23 percent to 32.5 percent to 41 percent today. In that context, the pharma com-panies in Turkey have faced the worst setback ever. While the total market growth was 2.7 percent, multinational companies’ growth here was negative 2.5 percent last year.”

Çetinel Sapmaz of Janssen said, “The new pricing mecha-nism has enforced not only the lowest prices in Turkey, but also a high number of manda-tory discounts. This has put the country at a level that is 50-60 per-cent lower than mean European prices. We do not find this sustainable.”

Cüneyt Balıkçıog lu, general manager of Ferring Pharmaceuticals’ operations in Turkey, entered the market in 2005 with high hopes. But the hurdles he faced the past few years stunted the growth that he was hoping to achieve.

“We were not only negatively affected by the price discounts, but also by the fixed exchange rate that hasn’t been adjusted for the last couple of years and reference pricing issues. Prior to these developments, our parent com-pany was putting a lot of em-phasis and positive outlooks on our Turkish branch,” he said.

“With the impact of these developments, we were not able to live up to those expectations. In my opinion, I think that we

could have achieved at least three times the success and contribution that we have now realized, had these changes not tak-

en place. I find this both disappointing and frustrating,” Balıkçıog lu said.

For Servier, a French pharmaceutical company, the pricing constraints have led the company to focus on its core drugs in Turkey, rather than diversifying. Mat-thieu Accolas, general manager for the company in Turkey, explained, “In a

situation like this, it is critical to focus on the drugs which are sustainable. At the same time, we recently put together a team in order to identify the best and most effective ways to adapt to the needs of the patients and the doctors, to ulti-mately bring new answers and solutions to the market.”

As Turkey’s two-year Global Budget plan comes to a close, industry leaders are hopeful that negotiations of the next

Servier Turkey Team

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Matthieu Accolas, general manager of Servier Turkey

en place. I find this both disappointing and frustrating,” Balikçioglu said.

For Servier, a French pharmaceutical company, the pricing constraints have led the company to focus on its core drugs in Turkey, rather than diversifying. Matthieu Accolas, general manager for the company in Turkey, explained, “In a situation like this, it is critical to focus on the drugs which are sustainable. At the same time, we recently put together a team in order to identify the best and most effective ways to adapt to the needs of the patients and the doctors, to ultimately bring new answers and solutions to the market.”

As Turkey’s two-year Global Budget plan comes to a close, industry leaders are hopeful that negotiations of the next



TURKEYTurkey Report

S7 FOCUS REPORTS OCTOBER 2012

budget period from 2013-2015 will be more favorable.

Sevindik of AIFD said, “Our first meeting to discuss the next budget with the Social Security Institution and the Ministry of Health was a positive one where, un-like before, all of the relevant stakeholders were present. Obviously, this creates a much better environment that will allow us to build a more ra-tional and realistic budget and discuss the system for a sus-tainable financing of pharma-ceutical spending.”

The SGK has also indicated that the next budgetary period could alleviate some of the pricing pres-sures. Fatih Acar, president of the SGK, said, “As public management, we don’t desire to continue controlling the drug ex-penditures with public discount increase and reduces in price. We intend to create a stronger and more sustainable industry. I think this is very significant for the future of the sector.”

Facing Market DelaysBeyond pricing policy challenges, the pharmaceutical industry is also deal-ing with slow drug approvals and lim-

ited market access. A 2011 AIFD survey found that the regulatory approval pro-cedure in Turkey is far from reaching Eu-ropean Union standards.

According to the survey, the average waiting time for drug approval is 772 days and can be as long as 1,500 days for some drugs. In the EU, the standard timeframe for regula-tory approval is set at 210 days. Turkey had committed to make an effort to meet this standard.

For Olcay Gündüz, CEO of Münir Sahin, one of the oldest pharmaceutical companies in Turkey, many companies are trying to catch up to interna-

tional standards. “Outside Turkey, most countries have changed their registration process; they are now all fol-lowing the European Medicines Agency (EMA) or the Food & Drug Administration (FDA). As a result, they are all looking for Common Technical Document (CTD) format files.”

“Turkish companies only adopted the CTD format in 2005 and 2006. I myself start-ed to prepare CTD dossiers in 2008, and I am still translat-

ing some files for foreign managers. In general, Turkey has been very much un-prepared to international regulatory pro-cesses,” said Gündüz.

Additionally, with the application of Good Manufacturing Practices (GMP) certification rules, it is increasingly dif-ficult for companies to import products. Özbay of Daiichi Sankyo said, “If you produce a product outside Turkey, the Turkish Minster of Health send inspec-tors to your production site, who ap-prove it.”

“As the Minister of Health has a lim-ited number of inspectors, this whole process takes time. There are today 350 products in the waiting list, and with the current frequency of inspectors visiting the different sites, it is said that it will take five years to have all these products

approved,” he said.Dr. Sebnem Avsar Tuna,

Novo Nordisk’s general man-ager in Turkey, said that due to such entry barriers, the company has not been able to introduce a new product in the country for the last six years. “This has put us in a very dif-ficult and uncomfortable posi-tion not only as a business, but also as a provider of drugs. I

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Dr Sebnem Avsar Tuna, general manager of Novo Nordisk Turkey

Dr lIker Özbay, gener-al manager of Daiichi Sankyo Turkey





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believe this is a lost opportunity for the Turkish public since these are promising products for the treatment of diabetes pa-tients as well as patients with growth hormone deficiencies,” she said.

A StrAtegic r&D center As part of the country’s 2023 vision, positioning the country as a hub for R&D, production, and operations in the pharmaceu-tical industry is a central part of the government’s strategy. In this context, the Ministry of Science, Industry and Technology has prepared a “Draft Strategy Document for the Pharmaceuti-cals Industry,” which covers 2011-2015 and includes objectives and action items to encourage R&D investment in the country.

The government seems to be making a concerted effort to reach out to the pharmaceutical industry. Last June, Turkey participated in the 2012 BIO Convention, one of the world’s largest biotechnology platforms, for the first time with a minis-try-led delegation, including His Excellency Nihat Ergün, min-ister of Science, Industry and Technology. His message to the pharmaceutical industry was clear.

“Turkey can provide substantial competitive advantage for R&D and production investments of innovative pharmaceutical industry,” Ergün said during a speech at the con-vention held in Boston. So far, some concrete advantages offered by the government include income tax exemp-tions, grants, deductions for R&D en-terprises employing at least 50 people, and other incentives.

Industry leaders are convinced of Turkey’s potential. Hervé Dussart, pres-ident of AstraZeneca, agrees, “What happens today in Turkey? A few com-

panies have moved their regional headquarters in Istanbul. But what will bring revenue is R&D, and manufacturing, and probably the right combination of both.”

The Investment Support and Promotion Agency of Turkey (ISPAT) also sees great potential in the pharmaceutical R&D sector. Ilker Aycı, association president, said, “ISPAT is in accord with the pharma industry’s view that Turkey has all the qualification to be an R&D and manufacturing center for biotechnology and biosimilar products as well as a hub for pharmaceutical innovation and development with its highly qualified workforce, attractive regulatory environment and incentive structures.”

“In this regard, ISPAT’s promotion and support activi-ties focus to improve pharmaceutical industry’s international competitiveness, and position the Turkish pharma industry, as one of the global R&D and production hubs, a net ex-porter and a regional management center,” Aycı explained.

Mehmet Yusuf, founder of Altis CRO, one of the pioneer-

ing clinical research organizations in Turkey, is confident in the evolution of Turkey’s R&D environment and is optimistic for his company’s development.

“Turkey boasts an immense number of (hospital) beds, as well as an equally large number of people treated for various kinds of diseases. The annual turnover of patients visiting hospitals is also great, at about 80 million; exceeding the size of the population. Moreover, the number of potential researchers for clinical trials is also significant. This includes doctors in universities, teach-

ing hospitals and people in specialty train-ing. This leaves you with a massive pool of talent and patients for this sector which is already a very powerful argument,” said Yusuf.

Beyond the favorable infrastructure, the clinical trials legislation in Turkey is in full compliance with international standards. Not only did the country have its own high standards of clinical trial regulation since the early 1990s, but it has also adopted the EU directive on implementing the Good

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Marco Caligiuri, general manager of Celgene Turkey

Mehmet Yusuf, managing director of Altis Medical Research Turkey



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Merck Serono: All About LocationFocus Reports met with Elçin Ergün, re-gional vice president and head of the intercontinental region at Merck Se-rono. Since the beginning of the year, Ergün manages 69 countries in Russia, the Caucasus, Central Asia, the Middle East and Africa, from her office in Is-tanbul. She explained why Turkey is an ideal geostrategic location.

Why was Turkey the right location for a regional management hub?Turkey is the biggest pharma market in the region by size and the most devel-oped in terms of its pharma environ-ment. The country has a very good infrastructure and an ambitious, ener-getic, committed workforce. Also, the country is a gateway to Asia and the Middle East, so excellently positioned

to serve as a hub for the region. And, thanks to the enormous development of Turkish Airlines, it is also very easy to reach sub-regional hubs such as Tu-nisia, Moscow, Dubai, and many Sub-Saharan African countries.

We are also looking to increase our R&D invest-ment in a targeted way in Turkey. Recently, Tur-key’s Minister of Science, Industry and Technology, declared that Turkey’s pharma future lies in an export-led market, R&D in-vestments and biotechnology. They are now putting incentive mechanisms to support this vision.

How have you molded Merck Serono into a global firm with a local touch?We tend to adapt our core strategy to emerging markets and in doing so, consider all needs of the population in a given market and shape our portfolio offerings accordingly. In Sub-Saharan Africa, for in-stance, we have enacted an anti-infective strategy. We are also much more open to ex-ternal business development opportunities and alliances in

emerging markets. For example, in my region, we can complement our prod-ucts and fully utilize our disease ex-pertise in areas such as diabetes and cardiovascular diseases.

Clinical Practice (GCP) guidelines in 2009.An important consideration for multi-

national companies, which are also recog-nizing the country’s potential to become an R&D center. Avsar Tuna of Novo Nor-disk said, “We are proud to support R&D and innovation in Turkey. Together with leading Turkish doctors, we currently run numerous clinical trials in Turkey and in 2011 entered into a long-term partnership with Kocaeli University to support break-through basic research projects and foster international knowledge-sharing.”

Celgene, a global biopharmaceutical company, has also in-vested in Turkey as an R&D hub. Marco Caligiuri, country manager, said, “We have initiated since 2008 an important clinical program, with both company-driven and investigator-initiated clinical trials, investing in it more than 30 percent of our revenue 2008 and 2011.”

“In fact, we have involved in our clinical program hundreds of Turkish patients, not only in haematological malignancies with lenalidomide and azacitidine, but also in immuno-inflam-matory diseases, such as Behcet’s syndrome with apremilast, a TNF-alpha inhibitor. This trial can represent an important example of our R&D commitment in Turkey, considering that here we can find the highest prevalence in the world, and more than 80 percent of patients enrolled in this international trial are Turkish,” said Caligiuri.

Servier is also committed to investing in R&D in the coun-

try. Accolas said, “Overall Servier is investing TRY 7 million (USD 3.8 million) each year in Turkey, including research. We work with numerous Turkish scientific societies and universities. Depending on which research program we want to run and in which specific field, we look for the most adapted partnership.”

A GrowinG MAnAGeMent HubAlthough pharmaceutical companies in Turkey have been struggling in the face of market challenges, multinational com-panies are increasingly choosing the country as their base for Middle East, Africa and Asia operations.

GlaxoSmithKline (GSK) recently moved its regional center from Dubai to Istanbul. Additionally, the company appointed its General Manager and Vice President of Turkey as Senior Vice President, responsible for Middle East and Africa in the Emerging Markets and Asia Pacific, a region of 30 countries.

Dr. Emin Fadıllıog lu, country president of GSK Turkey, said, “Turkey has an excellent talent profile. The country has technology, people, a large demand, and a significant geograph-ic advantage, located in the middle of Europe and the Middle East. What else do you need?”

Novo Nordisk was one of the first to make the country its regional hub. “Strategically, we have chosen Turkey to serve as the regional centre for several reasons. One attractive aspect of the country to us is its political and economic strength and stability,” explained Avsar Tuna.

Similarly, last April, Novartis selected Turkey as its head-quarters for central Asia, the Middle East and Africa and in-tends to set up a new manufacturing facility in the country.

Ayci, president of the Investment Support and Promotion Agency of Turkey (ISPAT)

Elçin Ergün, regional vice president and head of intercon-tinental region of Merck Serono



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We take on responsibility:

Together with the World Health Organization (WHO), Merck is fighting the worm disease schistosomiasis in Africa.

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Novartis board member Alexandre Jetzer-Chung noted that in recent years, Turkey has emerged as a regional center.

At Merck Serono, restructuring will put Elçin Ergün at the head of 69 countries from her office in Istanbul.

For Murat Yesildere, managing partner at Egon Zehnder

International, a global executive search firm, investing in local talent is the right strategy. “The multinational organizations in Turkey which are successful are the one which have invested a lot in evaluating and hiring the right talent at the top of the company, and then delegating extensively to this person, rather than sending an expatriated and having the most important de-cisions taken some place else,” Yesildere explained.

M&A Activity on the RiseAnother key development in recent years has been a noticeable increase in takeovers and partnerships. Somewhat of a depar-ture for a market traditionally dominated by family-owned businesses, over the past five to seven years, there has been a flurry of international interest in local industry.

Ali Akyıldız, general manager of IMS Health Turkey, said, “There has been increased activity in terms of mergers and ac-quisitions in Turkey over the past five years. Amgen took over 96 percent of Mustafa Nevzat, which further reduced the num-ber of important local players.”

One of the biggest transactions to hit the news lately, the US biotechnology giant spent some USD 700 million to gain the majority of the local generics manufacturer which was ranked 19 in value by IMS in 2011.

Although a leading Turkish pharmaceutical company, Abdi Ibrahim, occupies the number one spot, international com-panies have picked up several local companies in the top 30. Recent acquisitions include Dr Frik and Yeni Ilaç by the Ita-ly-based Recordati and Eczacıbası by the Czech generic drug maker Zentiva, which is a subsidiary of Sanofi.

As Turkey’s investment profile continues to attract interna-tional attention, some local players are planning today for fu-ture buyouts. For example, Serdar Sözeri, general manager of Biofarma Pharmaceuticals, said that the company is preparing an exit strategy in the next three year: “We are going to add www.munirsahin.com.tr

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600,000,000

800,000,000

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Top 20 firms: value vs. volume, ims 2011.



Special SponSored Section


TURKEYINVESTORS

INVESTORS

More than 30,000 foreigncompanies have already

invested in Turkey.How about you?

• One of the fastest growing economies in the world withrobust GDP growth rates of 9.2% in 2010 and 8.5% in 2011.

• 16th largest economy in the world with $1 trilllion GDPat PPP (2011, WEO IMF)

• A population of 75 million with half under the age of 30.

• Access to Europe, Caucasus, Central Asia, the Middle Eastand North Africa

• The World’s 13th most attractive FDI destination in 2012(A.T. Kearney FDI Confidence Index 2012)

• Highly competitive investment incentives as well asexclusive R&D support

• Around 600,000 university graduates per year

CR Turkey Ad HP ISPAT_1-1.pgs 08.30.2012 16:32 HCL Premedia blackyellowmagentacyan

value to the company before selling it, to reach a value higher than the average assumption of what it is worth.”

Other local companies are leverag-ing their competitive advantages to stay ahead in an increasingly crowded mar-ket. Erhan Bas, general manager of Bilim Pharmaceuticals, said, “There are 300 pharmaceutical companies operating in Turkey; Bilim is number 3, and will be number 2 in a very near future. The com-pany’s main differentiators are its flex-ibility, its ability to manage change, and its efforts in R&D.”

Dr Ali Akyildiz, general manager of IMS Health Turkey

CORENA’s Global Take On BusinessAn independent international phar-maceutical wholesaler, CORENA delivers to over 200 clients across more than 50 countries and ranks among the top three Turkish export-ers in their field. It’s a unique busi-ness model in a country where local companies typically focus on do-mestic trade. Nihal Aygün, general manager at CORENA, explained why their model works.

CORENA has only recently special-ized in pharmaceutical distribution. How would you ex-plain your remarkable success so far?Following the price cuts and the ensuing sharp increase in drug related orders we received, I decided to fully devote our full attention to this business area. Hence, in 2007, we successfully obtained a pharmaceutical wholesale li-cense, in line with European standards. This was crucial for our success since we distribute to many European countries, signaling our commitment to quality excellence to them and other clients across the world.

Moreover, as a wholesaler, it was practically impos-sible for us to grow in the domestic market. This is be-cause the wholesale market is highly saturated with two major players controlling over 70 percent of the market and approximately 500 others competing for the remain-ing 30 percent. Needless to say, this further anchored our dedication to the export market and the rest is history.

How do you intend to grow CORENA?I believe that Turkey has a great amount of untapped potential in the field of clinical trials. Approximately 10 per million people in Turkey have been subject to clini-cal trials. This is in sharp contrast to the US or Europe, where the same ratio is at about 200 per million. We are hopeful that this market will continue to develop, for the benefit of all stakeholders.

Nihal Aygün, CEO of Corena

TURKEY



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inTERviEw wiTh: Nihat ErgüN, turkEy’s miNistEr of sciENcE, iNdustry aNd tEchNology

within the Ministry’s wide scope of activities aimed at promoting Turkish various industries and trade, what special role does the phar-maceutical sector play in these aspirations?The world we live in today is so glo-balized that only the societies, which produce knowledge/information and

are able to transform this knowledge into a technological product, can become powerful and enjoy welfare. Once we scrutinize this process, we see that the industrial sector has always been the locomotive of advancement.

Industrial sector has a special role especially on the determi-nation of the level of development in a country. Without a solid industrial sector, we cannot speak of growth or advancement. If a country aspires to have a sustainable, balanced and stable economy, then it is a must that the country has a powerful industrial sector.

There is one important issue that we have frequently ex-pressed: The only way to bring sustainable and long-term wel-fare to a country is to own a powerful industrial production. Looking from a broader perspective, we can confidently say the pioneering sector, which established a bond between Turk-ish economy and the world economy, is the industrial sector. Today, the share of industrial products within the overall ex-ports is over 95%, which is a great success.

As it has been the case in all the developed countries, Turkey can achieve its goals for 2023 through a remarkable increase in industrial production. As the Ministry of Science, Industry and Technology, we have significant duties to perform in the realization of 2023 Vision. There is a need for shift from labor-intensive and energy-intensive production processes to infor-mation and technology-intensive production. Several strate-gies must be adopted in order to increase the added value.

As for the role of pharmaceuticals industry; the pharmaceu-ticals sector requires a great deal of R&D work. This requires the employment of qualified labour force and a well-educated staff on graduate and post-graduate level. The pharmaceuti-cals sector is considered as a priority sector in many developing

countries, since the sector paves the way for the creation of qualified products with high added-value, introduces competi-tive advantage in the international level, and contributes to the sciences of medicine and pharmaceutics technologically and scientifically.

Can you explain why Turkey and pharma are such a good match?Turkey has become a significant market in the world, thanks to its ever-increasing national income and young population. The growth in the domestic market has attracted the attention of investors throughout the world.

One can reach 52 countries from Turkey within a three-hour flight distance. Turkey has the infrastructure that is necessary for investment or engaging in commercial activities. Turkey’s geographical position, natural beauties, cultural and historical heritage, co-existence of different religions and civilizations, democratic and legal state structure as well as its successful real sector have transformed the country into a center of at-traction.

As to why Turkey is attractive for the pharmaceuticals indus-try; the macroeconomic balance has been ensured in Turkey. The markets enjoy stability. In addition to this, the universities in Turkey have qualified academic and physical background. All of these provide a strong basis for the pharmaceuticals industry which requires dense R&D activities.

how do you see the role of the pharmaceuti-cal and healthcare industry in fixing Turkey’s trade deficit?First of all, I believe it makes sense to have a look at the for-eign trade figures related to the sector. According to TÜİK data, exports volume realized in the “Manufacturing of Basic Pharmaceutical Products and Materials” in 2002 is 263 million USD and the imports volume is 1.7 billion USD. The ratio of exports meeting the imports is only around % 9.5. If we look at the first six months of 2012, we see that exports amount to 324 million USD and imports amount to 2.1 billion USD. These figures state that the ratio of exports meeting the imports is



TURKEY

If a country aspires to have a sustainable, balanced and stable economy, then it is a must that the country has a powerful industrial sector.

Current deficits can only be solved

with production and technology in the

long term.

15.4%. Figures of import and export have tremendously in-creased in the last ten years. The ratio of exports meeting the imports has also increased which is good news!

These figures cannot be considered sufficient though. Phar-maceuticals industry is one of the industries in which we have largest deficit.

Turkey aims to realize 500 billion USD of export and be-come one of the top ten economies in the world by 2023. However, 500 billion USD of exports in itself is not sufficient if the imports amount to 700 billion USD. Balance between imports and exports must be ensured and the problem of cur-rent deficit must be solved. Current deficits can only be solved with production and technology in the long term. By enhanc-ing the production capacity and improving technological infra-structure, Turkey can increase the exports and substitute the imported goods with domestic production. The new incentive package has been drafted in way to address current deficit.

In order to prevent the current deficit in Turkish pharma-ceuticals industry and reverse the situation (turning it into a sector which creates surplus), there is need for sound and solid cooperation between the universities, public sector and private sector. The sector should focus on more R&D, promote invest-ments and ensure that imported drugs and pharmaceuticals are produced in the country. On the other hand, we must strive to make use of domestic resources in the provision of raw ma-terials and hence take another step towards eliminating the foreign trade deficit.

in your view, what is the outlook for Turkey’s pharmaceutical sector to become a world class player and hub that serves as a model to other developing countries and how quickly can this be realized?The turnover for the pharmaceuticals industry in Turkey is over 10 billion TL and the sector focuses on the production of ge-neric drugs. Many countries which are advanced in the pro-duction of generic drugs allocate large amounts of financial resources to R&D activities. A new drug/pharmaceutical creates significant opportunities for its producer. Companies, which

develop a new drug/pharmaceutical, thus enjoy new finan-cial resources and this cycle continues like that.

Within the framework of the licensing agreements made with the foreign companies, the pharmaceuticals industry in Turkey has the capability of realizing a significant amount of production and exports. There are 300 pharmaceuticals company in Turkey employing 25 thousand employees. The Turkish pharmaceuticals industry has the knowledge, infra-structure and strategic position to compete with the world, produce R&D – intensive products with high added value and hence meet the increasing demands in health sector.

“Transformation in Health Program” has been imple-mented for the past 9 years and has proven to be a very good example for many countries. Along with its large domestic market, Turkey shall also become one of the significant des-tinations in health tourism. For this reason, the Department of Pharmaceuticals and Medical Devices has been established within the Ministry.

The ministry has also initiated the drafting of the Road Map for the sector. Two workshops have been held so far with the representatives of the private sector. The Industrial Strategy Document and Action Plan for the Pharmaceuticals Industry will have been prepared by the end of this year. Our objective is to transform Turkey into a global player in the world in terms of pharmaceuticals industry with a competi-tive power at international level and receiving a larger share in the exports.

Final message from nihat Ergün, Minister of Science, industry and Technology, to our au-dience:Through this interview, I’d like to make a call for all the companies in the pharmaceuticals industry: In a time when even the most developed countries faced significant chal-lenges, Turkey has managed to offer important opportuni-ties to the investors thanks to its ever-growing economy and the trustworthy environment it provides. We wish that the R&D and investment incentives will be very beneficial for all the investors.



TURKEY

inTERviEw wiTh: turgut tokgöz, sEcrEtary gENEral of iEis - PharmacEutical maNufacturErs associatioN of turkEy

The line between generic and innovator companies is less and less relevant, due to the growing trend of in-novators integrating gener-ics products in their port-folio through acquisitions. how is this trend reflected in today’s iEiS membership structure, strategy, proposi-

tions?Since the last time we met, the role of the association has also changed. We were the representative of generic businesses, as well as the local manufacturers. This has changed; we now represent the full spectrum of business models present in the market. We represent both local and multinational manufac-turers; we have sole importers, companies with only generic portfolios, others with hybrid portfolios where they not only produce generics but also originator products under licensing and contract manufacturing.

Previously we had around 30 members; now we represent 54 companies.

The 20+ new members came as a result of diversification. The distinction between generic and innovative industries is dissolving. Research-based companies are increasingly realising the value of generics which are growing world-wide. This is a commercial reality now. Given the hardships with their pipe-lines and their innovative structure, they are increasingly rely-ing on generics to get a bigger share in that business line. We cater to everyone as an association. There is a research-based association AFID and there is TISD, primarily concentrating on some local producers. We stand somewhere in the middle.

what have been for you the most striking regu-latory improvements implemented in the past few years?The most important thing is that efforts to contain drug spend-ing in the country have been elevated. Back in 2005 it was the initial phase of restructuring and healthcare reforms. Access to medicines has been increasing ever since, which put enormous

pressure on public finances. Although the adverse effects of the problems in the world economic arena have been relatively mild for Turkey, these problems still triggered a more compre-hensive effort towards containing healthcare spending and resulted in huge pressure being put on pharmaceutical prices in the country, either through direct price controls or through elevated discounts for the reimbursement category. Those have been the most important items on our agenda for the last few years.

how do you see the evolution of generic pen-etration in the country, what would constitute a balanced ratio? The 50% volume of penetration has not been increasing. Five years ago, the value penetration was around 32%, 6% lower than it is now. This is not as a result of a price increase on generics, but rather a decline in originator prices as a result of cost-cutting measures. That is why the government was very careful to make the cost-cutting systematic. They realized that there were a lot of savings to be made in this area, and they have pursued these savings. In most of the European countries

Unfortunately, the industry has taken the easy route and has been focusing on the local market, which has been growing quite handsomely. Now that they are somewhat squeezed domestically, they are very much interested in export markets.



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regulator’s approach to generic medicines is simply a policy tool to suppress originator prices. This does not work. Unless one possesses very specific tools to get generics prescribed or dispensed, no progress will be made, as preexisting brands will simply benefit from their well established status in the market. Regulators do not possess such tools.

Most of the pharma markets run on private or public so-cial security schemes, so people are under coverage. Patients want to make sure that they make use of the premiums they have paid for their coverage to the fullest possible. Brands and brand loyalty are very important, people do not want to use generic medicines simply because they are cheaper, unless they are obliged to spend large amounts of money out-of-pocket.

It is funny to see regulators suppressing generic prices and then trying to devise public campaigns to promote generics and then having them prescribed and dispensed. People do not believe in them. It is a down-grading approach and people question the efficacy and every other aspect of the medicine that is reflected in its price.

iEiS’s report, done in collaboration with the BCG, seems to argue that Turkey may have missed the opportunity to become a major global pharma player. in a country that seemed to have all the cards in hands with an existing large pharmaceutical manufacturing base, a large population and incredible success stories in the sector, how could the country “miss the train”?The country was too inward-looking. The local market was vibrant and as the pharma industry is heavily regulated, it re-quires a large amount of effort and capital to export products. Unfortunately, the industry has taken the easy route and has been focusing on the local market, which has been growing quite handsomely. Now that they are somewhat squeezed do-mestically, they are very much interested in export markets. This puts Turkey in a late-comer phase and it is not easy to gain a good market share in export markets. The train has already been moving, but it is still possible to catch it.

As a late-comer, what should be done to miti-gate against the disadvantages that such a

position bestows? how should Turkey position itself in relation to manufacturing giants such as China, india, even Brazil? Or should it strive to be an innovative hub, such as Singapore or South Korea?First of all, the fact that we lack vertical integration does not put us in a favorable position when it comes to tapping large markets such as the US. The simple role that generic produc-ers are assigned from a regulatory point of view, is to devise a product that is as good as the existing product, not better.

The expectation is that generic companies will make some-thing as good as the existing product, but cheaper. As a conse-quence, there is little R&D in the generics side of the business. In other high tech industries late-arrivers develop products that are superior to the existing ones. There is higher innovation and product improvement. This does not happen in the phar-maceutical industry. There is a very open niche area in value-added generics that could be exploited by simply going further and improving existing products rather than spending large amounts of money on a highly innovative structure and trying to seize a role in the innovative industry.

Due to the production culture that we have, Turkey could fill this role.

Do you believe that your members are ready to take the necessary steps in terms of invest-ment in order to address the country’s current trade deficit? That is why we have built up an alliance of pharmaceutical exporters that currently has 22 member companies. With such a platform, we are going to be present at the upcoming 2012 Bio International Convention in Boston in June. We are most probably going to be participating in the CPhI Events in Octo-ber in Madrid. These are events which we were not present collectively before.

Companies were being represented on an individual ba-sis, however, a collaborative effort is now taking place. The change exists; we have to reap the yield in the coming years. If changes are not made, the situation deteriorates. We are cur-rently making the U-turn, at the bottom of the U.

why should companies still view Turkey as a great prospect for investment, as opposed to a great place to import?They will not be able to import as comfortably as they did before. The government has a very clearly-defined policy that anything which can be produced here should be produced here and anything that will be produced here will have some sort of preferential treatment.

We are currently making the Uturn, at

the bottom of the U.



TURKEY

inTERviEw wiTh: İlkEr ayci, PrEsidENt of isPat - iNvEstmENt suPPort aNd PromotioN agENcy of turkEy

Currently, what are the main priorities and goals of iSPAT related to the health-care and Pharmaceuticals sector, and what are the overall strategies designed to achieve these objectives?As an agency we aim to attract high quality FDI to Turkey. With “high quality” we mean investments that

would enable technology transfer, that would fortify and di-versify this country’s exports and increase our competitiveness in global markets. High quality FDI would also help decrease the current account deficit, and create employment for an ever-increasing young and dynamic population.

Turkey intends to become one of the 10 top economies of the world by 2023, which is the centennial anniversary of the republic. To accomplish this, the government has decided on a target export volume of $500bn, which currently stands at $135bn (2011).

There is no doubt that the health care and pharmaceuti-cals sector as well as the medical devices sector are among high priority industries where we would like to see a greater growth of FDI that would bring in new technologies, help domestic products to move up in global value chains, and increase exports. On the other hand, through promoting FDI and providing support to investors ISPAT is responsible for en-dorsing the national goals of other government agencies and ministries including the health institutions in Turkey. In this context, the pharmaceuticals and healthcare sector is on our radar screen in view of national health policies which make sustainability of health services a key goal.

ISPAT is in accord with the Pharma industry’s view that Tur-key has all the qualification to be an R&D and manufactur-ing center for Biotechnology/Biosimilar products as well as a hub for Pharmaceutical Innovation and Development with its highly qualified workforce, attactive regulatory environment and incentive structures. In this regard, ISPAT’s promotion and support activities focus to improve pharmaceutical industry’s international competitiveness, and position the Turkish Phar-ma Industry, as one of the global R&D and production hubs, a

net exporter and a regional management centre.

Could you provide our readers with an over-view of the Turkish pharmaceutical market and its potential for growth?With its 74 million people, Turkey is the 18th largest country in the world by population size. 50% of this population is between 0 and 29 years old and the share of people between 30 and 65 years old is 42%. By 2025 it is expected that the population will increase to 85 million people and the popula-tion between the ages of 0 and 29 will decrease from 50% to 44%. With this aging population, healthcare services will become a more significant budgetary concern for Turkey in light of the fact that the government is the largest provider of healthcare and the only public provider of preventive services in Turkey. The SGK (Social Security Institution) is responsible for public pharmaceutical expenditure, which represents the vast majority of the total market. Therefore access to pharma-ceuticals and provision of healthcare services are particularly crucial for the country.

The Turkish pharmaceuticals market, which includes pat-ented, generic and non-prescription drugs, has a turnover of US$10bn; while annual healthcare expenditure is around US$50bn. Turkey was ranked 6th largest market in Europe and 14th in the world by the end of 2010. To put it in perspec-tive, the Turkish pharmaceuticals market is currently larger than the Indian market and close to the South Korean market in terms of size.

With growing demand the Turkish pharmaceuticals market is projected to expand to 55bn while the healthcare market will reach 80bn by 2023 (Boston Consulting Group projec-tion). If you consider that the number of applications to hospi-

Turkey intends to become one of the 10 top economies of the world by 2023, which is the centennial anniversary of the republic.



TURKEY

tals has increased by 207% and total healthcare expenditure has risen from 18bn to 58bn between 2002 and 2008, the importance of health policies becomes clearer. As GDP per capita (currently at $10,000) grows healthcare spending is ex-pected to follow.

Turkey has the technical capability to produce a wide range of pharmaceuticals, but relies heavily on foreign companies for expensive hi-tech treatments and vaccines, cancer drugs and hormones. Turkey is also dependent on imports for APIs (Active Pharmaceutical Ingredients). On the other hand, the Turkish pharmaceutical industry is mainly centred on the pro-duction of non-innovative drugs including antibiotics, anti-rheumatics and analgesics, but also provides contract manu-facturing services for multinationals.

Therefore, the Turkish pharmaceutical industry needs to further enhance its innovation capacities. This relates to de-veloping new processes, formulations and combined products while, in the long run, focusing on building a capability to develop new molecules. However, as the industry is still evolv-ing it does not yet have sufficient funds to spend on product development, although the government has launched certain incentives to encourage R&D.

Currently there are approximately 300 pharmaceutical entities operating in Turkey, 53 of which are multinational drug companies. These include leading multinationals such as Pfizer, Novartis, Bayer and Roche which maintain a market share of 4-6%, each. With respect to production, there are 49 manufacturing facilities in country of which 14 are foreign owned. Multinationals with manufacturing facilities include Sanofi-Aventis, Baxter, Bayer, GSK, Novartis, Pfizer and Roche, with EastPharma being the latest to enter the market.

how would you describe Turkey’s current posi-tion with respect to pharmaceutical trade and how do you see it developing in the medium term?In 2010, Turkey imported US$4.24bn and exported around US$560mn worth of pharmaceuticals, resulting in a nega-tive pharmaceutical trade balance of US$3.72bn; making the

pharmaceutical industry responsible for 10% of the Turkish trade deficit. In terms of value, imported drugs in 2010 con-stituted 52% of the Turkish market. Moreover, this deficit is expected to grow in the coming years given continued import dependency and increasing domestic demand.

Looking into the future, however, AIFD (The Association Research-Based Pharmaceutical Companies) has an ambi-tious yet realistic vision set for the Republic of Turkey’s Cen-tennial - Vision 2023. In a little over a decade, AIFD aims to increase total R&D investment to $1.7bn from US$61.4mn in 2010. Moreover, AIFD aims to more than quadruple local pharmaceutical production to US$23.3bn with the produc-tion of high value added, innovative and high-tech drugs in Turkey. Through these initiatives, AIFD intends to export phar-maceutical products and services worth US$8.1bn – including a clinical trial services amounting to US$782mn compared to current total exports of US$587mn.

Ultimately, these plans will shape Turkey as a net exporter with a pharmaceutical export surplus of more than US$1bn.

what would your recommendation be to mid-sized pharmaceutical and biotech companies seeking to take advantage of the opportuni-ties here and enter the Turkish market?My first recommendation to them would be to cooperate with the variety of SME’s (small medium enterprises) available in Turkey that are also keen to form partnerships and share information with foreign companies as well. If they success-fully find the appropriate business partner, they can minimize their risks by quickly gaining an insight into local expertise and business culture. This can serve as an ideal starting point for foreign entrants promoting a win-win situation for both parties.

Moreover, should they require any further assistance, com-panies are welcome to approach us at the ISPAT. We can coor-dinate all and any of their activities, meeting, applications and permits with any of the governmental authorities. Similarly, our assistance will also help to shorten their transition into the Turkish market and help to protect their investments.

The Turkish pharmaceutical industry needs to further enhance its innovation capacities. This relates to de veloping new processes, formulations and combined products while, in the long run, focusing on building a capability to develop new molecules. However, as the industry is still evolv ing it does not yet have sufficient funds to spend on product development



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inTERviEw wiTh: EmiN fadillioglu - gENEral maNagEr - gsk

Mr Fadıllıoğlu, after a previ-ous position at Abbott, you were recently appointed head of GSK Turkey. how different is GSK as an or-ganization? Both companies have their own strengths. What truly impresses me at GSK is the importance given to emerging markets. GSK has become

an important player in emerging markets over the last few years thanks to a deep understanding of the stakeholders’ needs in emerging markets.

Turkey’s former General Manager Yiİit Gürçay is running Middle East and Africa (MEA) as senior vice-president in the organization, and the regional headquarters have moved from Dubai to Istanbul. This reflects GSK’s full commitment to emerging markets and, especially, to Turkey.

Over the past three years, the industry has faced harsh market conditions in Turkey. nev-ertheless, the business environment may also have been perceived by companies as an ex-cellent opportunity to review their model and strategy. To what extent is today’s GSK model adapted to its environment? We need to look at this aspect of the market from two differ-ent perspectives. On one hand, when the industry signed the global budget agreement in 2009, total drug consumption was over 1.6% of the country’s Gross Domestic Product (GDP). The target was to bring it down to 1.35%. Instead, in 2012, it will be around 1.1%, which is not representative of a sustainable pharma model.

As a typical pharma approach, in Turkey or anywhere else, cutting drug prices is the first step in cost containment meas-ures. In Turkey, it is fair to say we reached the limit. Having the right budget for pharma is therefore the number one priority of the whole industry.

From GSK’s perspective, we are always committed to our patients, to our stakeholders. Under any difficult condition, we

make sure that patients using GSK products, the doctors pre-scribing GSK products, or the services we are providing to the society, won’t be impacted by these external developments. We are sensitive on that and will continue to be responsible.

what mission were you assigned when taking over GSK’s Turkish operations?As the vice-chairman of the Association or Research-Based pharmaceutical companies (AIFD), my duty is to coordinate preparations for the next three years global budget. I work with the Strategic Management Committees (SMCs) to come up with a solid proposal based on the value for every stake-holder, which we will submit to the government.

At GSK, before talking about sales and growth, we first make sure that we work in alignment with the company’s core values, i.e. Respect for People, Focus on the Patient, Trans-parency, and Integrity. We are going to announce a strate-gic development process for the next five years, whereby all strategies will be based on our stakeholders. We select the stakeholders and we identify the best ways to create value for each and every stakeholder.

In terms of performance, with the innovative drugs we are going to launch, along with the branded generics we may launch in the future, we will continue to be competitive in the market, and will serve a wider range of patients, while keeping high standards in our products and services.

The regional headquarters have moved from Dubai to Istanbul. This reflects GSK’s full commitment to emerging markets and, especially, to Turkey.



TURKEY

Our reason of being here are those external and internal stakeholders. In the future, who will be the winners? Those who manage to help patients with their diseases, within the regulatory framework.

We talk too much about pricing; we should talk more about value. As an industry, we should start looking at the bigger picture, rather than focusing on units and prices. Before talk-ing about the cost of treatment, first we need to talk about the cost of disease. We need to help shift the mindsets of the industry and the decision makers from a per pack calculation approach to pure disease management.

what were the first initiatives you took as Gen-eral Manager of the Turkish operations?First, I put in place ’Project YOL’, which stands in English for Innovation Focused Leadership. Under this project, we will be studying each and every stakeholder trend in the next 5 years, assessing who the new stakeholders are, what our internal ca-pabilities are, and how we can develop these capabilities to serve them in the best possible way.

In addition, in line with the YOL initiative, we are launching a cultural workshop, which includes development plans and brainstorming sessions tackling different questions: what are the magic words that bring people together? What are the platforms we need to create to make sure we work in an envi-ronment with full harmony?

I have the intention to make GSK the best workplace in the whole pharma industry by 2015.

what are some of GSK’s strategic priorities in Turkey you would like to highlight? One of GSK Turkey’s top 4 priorities in the next 4 years is to have a local manufacturing partner. Secondly, even though we plan to bring 17 new molecules to Turkey in the next 4 years in many different therapeutic areas, we do not only rely on the innovative products, we are also highly interested in the branded generic business. The third priority is the de-velopment of a stakeholder-based structure. Lastly, I will pay special attention to increasing efficiency in all areas of busi-ness.

in your view, what are the main reasons to be-lieve in Turkey’s pharma industry?Turkey has the fastest ageing population among all OECD - Organisation for Economic Co-operation and Development - countries. The average life expectancy of 75 years is increas-ing every single year. People over 65 years of age represented 3.5% of the country’s total population from 2005 to 2010; it will be 4.2% from 2015 to 2020; it could even reach 10% in 2025. Infant mortality is dropping drastically and converges to the OECD average. The number of yearly visits to doctors per patient reached 7.7 from 1.4 over the last decade. Most chronic diseases are significantly under-diagnosed and under treated. Looking at the recently published Boston Consulting Group (BCG) analysis, drug consumption in Turkey has an extremely low volume per capita.

Looking at it from every angle, Turkey is an attractive mar-ket because of the demand compound.

Now, why is Turkey an attractive industry? Pharma should be a strategic partner in shaping Turkey’s future economic development. First, there is no reason why Turkey should not be an R&D hub. International R&D spending amounted to USD 144 billion in 2011; in Turkey, USD 61 million. Today, Turkey is the world’s 15th largest economy , aiming to be in the top ten by 2023; therefore, R&D spending in the country is completely disproportionate.

Turkey should also be a hub for distribution. There are many local manufacturing facilities in Turkey, and the coun-try’s total export in pharma today is only USD 600m, which makes it the 36th exporting country of pharmaceutical prod-ucts in the world, which is also disproportionate considering the power of the economy. Thirdly, Turkey has all the ingre-dients to become a centre of management for companies’ regional operations, like GSK has already done.

Turkey has an excellent talent profile. The country has technology, people, a large demand, and a significant geo-graphic advantage, located in the middle of Europe and the Middle East. What else do you need?

Before talking about the cost of treatment, first we need to talk about the cost of disease. We need to help shift the mindsets of the industry and the decision makers from a per pack calculation approach to pure disease management.



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inTERviEw wiTh: güldEm BErkmaN, gENEral maNagEr of Novartis & chairmaN of aifd

Focus Reports are of course about the industry but also about the people making it happen. So before anything would you like to introduce yourself to our readers and expose the career path that has led you to take the helm of Turkey’s leader in the pharmaceutical market?

First of all, I am a chemical engineer. I have started my profes-sional life in 1991, and for the first ten years of my career, I have worked in the Fast Moving Consumer Goods (FMCG) industry, which is a bit different from pharma and in this sense offered me a diverse background.

From 2001 onwards, I have been working for Novartis. I have had many different positions within the group, mainly in the commercial teams, in Marketing and Sales. In 2007, I was appointed at the head of the Hungarian affiliate of Novartis as the General Manager, position that I have occupied only for a year. Lastly, from the end of 2007 until today, I have been lead-ing Novartis’s Turkey operations.

Furthermore, in the last elections of AIFD, the Association of Research Based Pharmaceutical Companies in Turkey, I became the chairman, which I will be for the next two years. I also have other responsibilities in different important associations such as YASED, the International Investors Association, and TUSIAD, the Turkish Industrialists and Businessmen Association.

The Turkish pharma market does not seem to deliver its promises especially hit by tough governmental measures over the past few years. In your eyes is there a risk that Turkey loses its attraction shine as an industrial investment destination if the government continues tightening its grip on the industry?

In Turkey, there are already very limited investments in the pharmaceutical sector. By investment, I mean financing full research and development (R&D) activities. R&D investments made by international pharmaceutical companies are approxi-mately USD 40m per year in Turkey versus USD 120b invested globally every year. Moreover, the trade balance of the phar-maceutical sector in Turkey is critical: whereas exports repre-sent USD 0.5b in 2011, imports exceeded USD 5b.

It is clear that Turkey is not getting the level of investment that the country deserves.

There are a few fundamental issues that explain this. In or-der to attract more investment, you first need to be more com-petitive in other parts of the world, and you need to create a more secure environment. As AIFD, we are planning to work as a partner with our government and align on the government’s vision for 2023, 100th anniversary of the Turkish republic. We believe that the pharmaceutical industry can be a very impor-tant contributor to this vision.

Can you give our readers an overview of the im-portance that Turkey has in terms of novartis industrial and exporting strategy, as novartis has become the country’s largest exporter of pharmaceutical products, exporting to over 70 countries around the world?We have currently 4 production facilities in Turkey, including 3 facilities for finished products and 1 for active substances. Last year, exports generated around USD 125m, which is one fourth of the country’s total pharmaceutical export revenue.

Novartis has been present and active in Turkey for the last 60 years. The company is looking forward to investing more, a strategy that I personally hold as a mission. Unfortunately, the price fluctuations between 2010 and 2012 have put a limit to my efforts. I am looking forward for the situation to improve in the following years.

It is clear that Turkey is not getting the level of investment that the country deserves.



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Looking at fastest growing therapeutic ar-eas, Turkey seems to present some aspects of emerging markets and some aspects of more mature markets, as specialty care is the area with the most potential, especially Cv, Diabe-tes and Oncology, and primary care is still a growing area. how tailored is novartis’s prod-uct portfolio to the medical needs of the Turk-ish population?When you compare Turkey with the European markets, prima-ry care therapies are dominating the market much more signifi-cantly. Nevertheless, in the next five years, I am convinced we will witness a shift toward more specialty categories, because the needs of the population are changing.

Novartis has a highly diversified portfolio, allowing us to be dominant both in primary care and in specialty care. Novartis has therefore a unique positioning and footprint in the Turkish market. We aim at maintaining our success in both categories in the future thanks to our portfolio.

in a market with increasing complexity how important it is to be creative and offer differ-ent solutions at a management level and how useful is your experience in a non pharma com-pany to try and think differently? The largest difference that I see between the pharmaceutical sector and the FMCG sector is that that the pharmaceutical sector is much more regulated and controlled by the govern-ment. The system is based on a few fundamentals, whereby the government defines the prices, limits the promotions, and controls the consumption. In the future, this system should be based more on the outcomes of their decisions - not only the prices, but also what will be the usage of each product, and the importance of each product. Having said that, I believe that the government should definitely continue to intervene in the pharmaceutical sector.

Otherwise, the commercial rules are the same across all sec-

tors: you need to define your target group, the market needs, create the best products that will respond to those needs, and then explain to all stakeholders why you have the solution for their problem. I am using the same kind of commercial instincts and reflexes in FMCG and in pharma. Only my target group is different.

in addition to leading the largest pharmaceuti-cal company in Turkey, you are currently both the president of the AiFD and executive board member at YASED, and an active TUSiAD mem-ber. This surely comes at a very important cost when it comes to workload and agenda com-mitments. what advice do you give to younger professionals on how to manage a heavy and multitasking agenda?First of all, you should have a big will to win. I feel the need to take the lead in order to explain our sincere case to the gov-ernment, because the situation is critical. I accepted all these responsibilities because I thought this would put me in the best position possible to address the industry’s concerns to the government. For that, you also need to believe in what you are doing .

In the execution, you need to be very organized. This could sound classical, but I am even organizing my private life like a business case. Always, you need to plan your priorities and timeframes, and etc. Otherwise, with such a heavy agenda, you can get lost very easily.

what in your view is the meaning of success?The definition of success is indeed multiple. My personal defi-nition of success is one’s ability to make a difference. This ap-plies both in my private life and professional life. For me, being successful is creating value in whatever you are doing.

I think it is important that anyone finds its own definition of success in life and then go after it!

When you compare Turkey with the European markets, prima ry care therapies are dominating the market much more signifi cantly. Nevertheless, in the next five years, I am convinced we will witness a shift toward more specialty categories, because the needs of the population are changing.



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inTERviEw wiTh: matthiEu accolas, gENEral maNagEr of sErviEr turkEy

As a manager, what specific skills developed during your tenure in Poland are you ap-plying in this market?In both countries, you have to adapt fast to the environment. Despite nu-merous similarities, the markets are different in the sense that Turkey pre-sents much more a Western profile, especially looking at the percentage

of drug reimbursement.In both cases, we are talking about very positive and fast

growing economies and an increased access to healthcare, which makes those countries highly interesting and under per-manent development. On the other hand, in Turkey just like in Poland, we face the same difficulties for patients’ access to innovative drugs on the market. Turks are eager to adapt in a fast changing environment. Leadership and creativity are key skills for a manager to succeed in Turkey.

Can Turkey afford to have a westernized health model in your opinion?There is a natural growth of drug consumption, but the health budget remains stable. Drug prices have been dramatically de-creased and are now among the lowest in the world. At the same time, Turkish patients have access to innovative drugs many years after other European countries and with more re-strictions.

The pharmaceutical industry is struggling now, and I believe that Turkey has to invest more for the health of the popula-tion to adjust to western countries and adapt the healthcare budget accordingly.

Servier Turkey was the third world leading subsidiary in 2009. Three years later, to what extent has the company been affected by the crisis, and what have been the main strategies you have put in place to maintain growth?As with many companies we haven’t been able to grow our turnover since 3 years.

This difficult environment was in fact an opportunity for us to adapt and review our own model. We made many internal changes over this time period, such as, resources and organiza-tion optimization in order to be more effective in the market place.

Overall, we have been able to strengthen our position in cardiology and diabetology. We have a broad product portfolio for the treatment of coronary artery disease, heart failure and hypertension - in 2011-2012 Servier Turkey has successfully launched a new fixed dose combination in hypertension.

when a market shrinks like it has been the case for Turkey last year, to what extent is it impor-tant to focus on the core drugs of a company’s portfolio versus diversifying it?In a situation like this, it is critical to focus on the drugs which are sustainable. At the same time, we recently put together a team in order to identify the best and most effective ways to adapt to the needs of the patients and the doctors , to ulti-mately bring new answers and solutions to the market.

In this context, we have increased our partnership with en-docrinologists, internists and cardiologists. Each year we are rewarding the Turkish cardiologists for their publications in an international scientific journal. The first award was given in 2011, and we are proud to contribute and support science and education of the Turkish doctors.

We have also adapted to the market conditions in the sense that we have significantly developed our investment in R&D in Turkey over the last years. We believe that integrating Turkish doctors within international studies is beneficial for them to be globally recognized.

This difficult environment was in fact an opportunity for us to adapt and review our own model.



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How much R&D is done in Turkey and what are the most important partnerships for Servier in this area? Servier is a foundation investing 25% of the turnover for re-search activities. As the company is not listed on the Stock Exchange, there is no pressure from the shareholders. This eventually gives Servier a unique advantage to invest more in research.

Overall Servier is investing 7 million Turkish Liras each year in Turkey including research. We work with numerous Turk-ish scientific societies and universities. Depending on which research program we want to run and in which specific field, we look for the most adapted partnership. For example, we have recently decided to develop a new drug for the treatment of the Behcet disease, an orphan disease that causes chronic inflammation of the blood vessels or vasculitis among other complications that result in damage to various organs. This disease was discovered by a Turkish doctor, Dr Hulusi Behcet. Servier group has decided to give to Turkey the world leading role as the main international coordinator is Turkish: Prof. Dr. Ahmet Gul.

How challenging is it to retain the brightest minds within the company?In the changing environment, the way Servier has been able to adapt fast and provide solutions has increased our reputation in Turkey. Servier is known for the quality and the loyalty of its employees. This applies all over the world, and all the more in Turkey, where 56% of our employees have over ten years of service. Besides, 93% of our employees are University gradu-

ates, mainly from scientific disciplines. Therefore we have em-ployees with a very high level of education.

Our people are keen to work in a foundation for research, driven by science, providing career opportunities and with good working conditions.

What is the company’s scope of activities with regard to production in Turkey?For the past 26 years we have established a strong production partnership with a leading local pharmaceutical company. This cooperation is answering to our highest international produc-tion quality standards. We are producing more than 6 million boxes each year in Turkey.

What role will play Servier in shaping Turkey’s future pharmaceutical and healthcare market?We have been working in Turkey for 34 years and established our own subsidiary 26 years ago. Turkey is a very important country for the group. We are continuously working to bring new drugs to the patients and to the doctors. We communi-cate in a highly ethical and scientific manner. We have suc-ceeded to increase our performance, keeping our high levels of standards. We are proud of these achievements.

Last year, more than 3 million patients have benefited from our drugs. 5 out of our 16 products are in a leading position in their respective indications.

We have increased our investments in Turkey over the past years, mainly in research. I see a positive future for Servier in Turkey, given the market potential, the quality of our drugs, and of our staff. I am convinced that Turkey will play a major role in the global pharmaceutical market, and will find a way to adapt to its own needs in order to give to all patients a bet-ter access to innovative drugs.

Recent change in position: François Vilette (right) is the new general manager of Servier Turkey’

In a situation like this, it is critical to focus on the drugs which are sustainable. At the same time, we recently put together a team in order to identify the best and most effective ways to adapt to the needs of the patients and the doctors, to ulti mately bring new answers and solutions to the market.



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inTERviEw wiTh: fatih acar, PrEsidENt of sgk - social sEcurity iNstitutioN

would you like to compare the Turkish public health budget with its European counterparts?Turkey, classified as middle income country by World Bank, is among the countries which spent below the OECD average on health. However in recent years total health expendi-tures and its share in GDP changed

significantly.From the aspect of development, the quality of services you

provide to your citizens is as much as important as how much you spent on health. In the recent years this is the new topic on our agenda. Till then comparisons are based on basic indica-tors such as GDP ratios.

To evaluate the effect of the reform we should discuss the ratios pre and after; Regarding the last figures there is a big difference between years of 2000 and 2007. However we are also aware of the fact that our share is still far below the OECD average. On the other hand health expenditure per capita in OECD countries in 2009 is $3223, whereas in our country it is $902. At this point, the share of the population over 65 years old should also be considered in order to evaluate the health

expenditures. According to Eurostat figures, the ratio is 7% for Turkey, whereas it is above 15% in most of the European countries.

Looking at the composition of financing, as the mix of the sources has many implications for health systems, particularly in terms of access, equity, efficiency and financial sustainability, we can say that our financing system mainly depends on public like most OECD countries.

As you know on one hand, public shares of the total health expenditure provide a tool to evaluate how active the govern-ments are in the financing of basic public health care services, protecting the poor and facilitating risk pooling. On the other hand, private expenditures, specifically out-of-pocket pay-ments, are also as important as they are the key measures of the potential inequities in health care financing.

The newly formed SSi has generated more prescriptions and offered a greater access to drugs to the population, which has eventually increased its drug consumption and visits to doctors. how challenging is it for the institute to find the right balance between ensuring the overall well being of the Turkish population and controlling the healthcare budget?

While the Universal Health Insurance System extends of the coverage to include the whole population and expands the spectrum of healthcare services payable, at the same time it enhances the quality standards of the healthcare services and ensures the effective use of resources as well.



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While the Universal Health Insurance System extends of the coverage to include the whole population and expands the spectrum of health-care services payable, at the same time it enhances the quality standards of the health-care services and ensures the effective use of resources as well.

SSI procures health-care services from MoH hospitals, uni-versity hospitals and private health-care service providers in-cluding independent pharmacies by contracting with them. In this period several measures have been taken in order to control the health care budget at any field of health system.

Since January 2009, our institution and the MoH has con-cluded a Global Budget Agreement concerning the total health care services supplied from MoH Hospitals. This budget based on a lump sum payment depending on the previous years’ visit volumes, health investments and other indicators.

In addition, the pharmaceutical sector in 2009 have under-taken to abide a global budget agreement starting from 2010.

Over 85% of the total pharmaceutical consump-tion is being paid by the SSi. what is your as-sessment of the benefits of this model to the population and its sustainability? In the last years, our citizens’ access to health care services and especially to the medicines had increased to the great extent with the reform of health and social security. During this period, we had implemented some decisions with taking the opinion of the sector’ representatives for the purpose of maintaining the budgetary displacing. As public management,

we don’t desire to continue controlling the drug expenditures with public discount increase and reduces in price. We intend to create a stronger and more sustainable industry. I think, this is very significant for the future of the sector.

Looking at the last ten years, we can say that the spectrum of the social security has been enlarged and SSI became an institution serving 74 million citizens. As we all know, the num-ber of the hospitals and doctors have increased significantly in the last 10 years, with this it is seen that the number of visits also increased. The increase of the drug expenditures is continuing and it is predicted that the market of the drugs in Turkey will expand more.

In the next term, we will take into consideration the growth in medium-term financial plan and we will also act in a manner that gives required share to the sector due to the growth.

Also stated in the reports of IMS, one of the biggest moni-toring company for the drug sale, we predict that Turkey’s drug market will enlarge more rapidly between 2010-2015 compared to the other countries of the world and the aver-age of the growth will be 8.1% in five-years period. Recently, the drug sector grows 2-4% in all the world, while it enlarged more in Turkey. We express that this growth slowed down slightly after global budget agreement in 2009.

If we look at the proportion of public drug expenditures to the GDP, we can say that though there was not great in-crease in GDP, the drug expenditures increased in great pro-portion. The increase was 1.41% in 2004, 1.34% in 2005, 1.33% in 2006, 1.32% in 2007, 1.36% in 2008 and 1.69% in 2009. This drastic increase was resulted in global budget period. Looking at these statistics, it is clear that the propor-tion of public drug expenditures to the GDP is not reducing, in contrast it is increasing slightly. However with the result of the decisions taken in 2009 covering the 2010-2012 periods, there had been partial declines in the share of drug expenditures in GDP.

In this framework, lastly, we believe that the institutions in-vesting on R&D have to be strengthened and supported. The allocated amount for the investment is TRY 35 million and we target to increase this amount up to 1.5 billion TRY. Our coun-try is growing, developing. The drug sector, we perceive as one of the strategic sector, will take its own share from this growth. All that matters, this has to be provided properly. We are on behalf of the proponents of all instructions that will contribute to the development of the drug sector and will invest to the sector.

“As public management, we don’t desire to continue con-trolling the drug expenditures with public discount increase and reduces in price.

We intend to create a stronger and more sustainable in-dustry.”

As public management, we don’t desire to continue controlling the drug expenditures with public discount increase and reduces in price



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inTERviEw wiTh: Cüneyt Balıkçıoğlu, General ManaGer of ferrınG turkey

The company entered the Turkish market in 2005, and made important product launches in 2008. Can you come back on the positive and negative ex-periences for you during this time?

I believe that Ferring’s start in 2005 was at a very opportune time, ahead of the looming global financial crisis. Then, the industry was undergoing a positive structural and regulatory shift; with the on-going discussions on the reference pricing system, the patent laws as well as the universal healthcare system during that time period. The industry as a whole was supporting and looking forward to these new systems that were being developed along with the authorities.

In fact, before Ferring’s entry to the Turkish market, we already had some products available here through a local company. They were responsible for the marketing and dis-tribution of some of our products; however we gradually took over these products and operations by 2008. Overall, it was a good but slow start for Ferring due to the bureau-

cratic hurdles that we had to overcome in taking over these products. At the time this was difficult to achieve, however now it is even more so.

In all irony, I was the first and only employee in the Turkish branch of Ferring, starting the 1st of April; April fool’s day. Looking back it was a challenging but enjoyable beginning for me because I like to think that in a way, I helped built this company having even been responsible for purchasing the door knobs for our offices. As I mentioned, those times were not that difficult and we were on the right track, until the global crisis emerged in 2008. That was when the chal-lenging times started with new healthcare structural changes came into play including the new institutional discount sys-tems and the resulting price pressures, among others. Simply put, this had an adverse effect on our growth ambitions and potential.

We were not only negatively affected by the price dis-counts, but also by the fixed exchange rate that hasn’t been adjusted for the last couple of years and reference pricing issues. Prior to these developments, our parent company was putting a lot of emphasis and positive outlooks on our Turk-ish branch as a result of the growth we had achieved since

I believe that Ferring’s start in 2005 was at a very opportune time, ahead of the looming global financial crisis. Then, the industry was undergoing a positive structural and regulatory shift; with the ongoing discussions on the reference pricing system, the patent laws as well as the universal healthcare system during that time period.



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2005. However, with the impact of the above mentioned developments, we were not able to live up to those expecta-tions. In my opinion, I think that we could have achieved at least three times the success and contribution that we have now realized, had these changes not taken place. I find this both disappointing and frustrating.

how tailored is Ferring’s portfolio to the Turk-ish population and market needs, and what have been the most performing products here?The three largest and best performing product areas include urology, female healthcare (mainly infertility) and gastroen-terology. In fact, in our infertility line, we are offering one of the best and cost-effective alternatives which make those products that we offer highly recommended and pursued.

In addition, we are enthusiastic about new products such as Firmagon. It’s a new medication indicated for the treat-ment of advanced hormone-dependent prostate cancer, which we expect to allow us to be more active in the Uro-Oncology field.

Turkey has a young, large and ageing popula-tion, therefore it is a very attractive market for pharmaceutical companies, which have made it a highly competitive market. what are Ferring’s main strengths to stand out and grow its market share?Although there is no accurate measure, we are estimating that the population is growing by almost a million each year. In addition, the population is also becoming more elderly. Therefore, Turkey does represent a growing market with a large young as well as aging population and this does repre-sent an opportunity for us when you consider the changes in the healthcare structure.

In line with our company’s strategy, I think it is a clever strategy to be in the niche areas that we are focused on. This is because in the alternative segments, such as antibiotics or cardiovascular, there is a large degree of competitiveness and there is no miracle compound in the near future, making the sustainability of the companies from a price perspective very challenging. That is why I believe that Ferring’s niche strategy is the correct one and we will extend and apply this policy in the Turkish market as well.

You have been General Manager of Ferring Turkey for over 7 years. what explains your loyalty to this company?What most attracts me to this company is probably Ferring’s corporate culture. That is, they provide me with a certain de-gree of freedom in my decision making process. I also enjoy the excitement of growth as well as the interrelationships among people within the company.

Also, being a part of the Middle Eastern group, we have formed a very close business as well as personal relationship among each other and perhaps that too adds to my loyalty. This may seem somewhat emotional, but I think that some level of this is required to be devoted for so long.

what are your ambitions to grow Ferring Tur-key in the next few years?Ferring as a whole has set itself a vision for 2019 where we intend to double our sales and double our profitability. Therefore, As Ferring Turkey, I would like to consider the cir-cumstances such as structural changes and additional insti-tutional discounts in order to be able to be in line with the 2019 vision. As an organization, Ferring has invested and believed in us and I want to be able to give that back.

The three largest and best performing product areas include urology, female healthcare (mainly infertility) and gastroenterology.



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Alp Sevindik, Secretary General and COO of AIFD - Research Based Pharmaceutical Companies Association

Güldem Berkman, General Manager of Novartis & Chaiman of AIFD

Mehmet Yusuf, Managing Director of Altis Medical Research Turkey

Dr. Sebnem Avsar Tuna, General Manager of Novo Nordisk Turkey

Elçin Ergün, Regional Vice President and Head of Intercontinental Region of Merck Serono

Turgut Tokgöz, Secretary General of IEIS - Pharmaceutical Manufacturers Association of Turkey

Fatih Acar, President of SGK Ilker Aycı, President of ISPAT - Investment Support and Promotion Agency of Turkey

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Nihal Aygün, CEO of Corena Nihat Ergün, Turkey’s minister of Science, Industry and Technology

Ayse Cetinel, Managing Director, Janssen Turkey

Dr Ali Akyildiz, General Manager of IMS Health Turkey

Ayse Çetinel Sapmaz, Managing Director of Janssen Turkey






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