Pharmaceutical industry can perform a ‘miracle’ if provided a competitive model
19.01.2018
The senior management of the Association of Research-Based Pharmaceutical Companies (AİFD) shared their views with DÜNYA daily on the present and future of the pharmaceutical sector.
Turkish pharmaceutical industry, designated as a strategic industry as part of Turkey 2023 vision, is ready to perform a “Turkish miracle” in pharmaceuticals, if a “globally competitive model” is provided. Industry representatives say the bases on which such an ecosystem would stand include protection of intellectual property, free competition and an attractive balance of domestic market prices. For Turkey, the best model is South Korea.
The pharmaceutical industry, named among the strategic industries for Turkey 2023 goals, is ready to become a global brand, if a globally competitive model can be established. Essential to creating a robust ecosystem that will propel Turkey to a position among global giants in pharmaceuticals are affording protection for intellectual property, ensuring free competition, and establishing an attractive balance of domestic prices. The senior management of the Association of Research-Based Pharmaceutical Companies (AİFD) shared their views with DÜNYA daily on the present and future of the pharmaceutical sector. AİFD Chairman of the Board of Directors Mete Hüsemoğlu, Secretary General Ümit Dereli and Investment Policy and Corporate Communication Director Cengiz Aydın joined in a conversation to discuss industry’s problems and potential solutions.
Turkey can take off with the pharmaceutical industry, AİFD Chairman Mete Hüsemoğlu said, but added that a globally competitive model is essential to achieve this. Mr. Hüsemoğlu said Turkey has a very high potential in pharmaceuticals, with 38 multinational companies, and setting the right course can help Turkey become a hub for pharmaceuticals. According to AİFD members, South Korea could be the best model for Turkey. Cengiz Aydın said they have prepared comprehensive report with McKinsey, scrutinizing the industry and detailing the specifics of the South Korean model.
Mete Hüsemoğlu said, “South Korea first asked the question of ‘where to start,’ and identified the best answer. They have developed their own global players. They have emphasized biotechnology investments; even Samsung has investments in biotechnology. And then, they facilitated cooperation of local actors with global ones.”
Incentive should be for manufacturing innovative medicines, not generics
Mete Hüsemoğlu said the 60 percent local requirement imposed for boosting local production is a deficiency in Turkey’s route, and noted that it is not quite right to boost generic drug manufacturing. “We note a motivation in Turkey to increase generic drug manufacturing. Indeed, it is not the best approach to manufacture products which are consumed only in Turkey,” Hüsemoğlu said and added that the goal should be to manufacture in Turkey and export medicines which have not target patenting problems, are still under protection, and, if possible, are not placed on the market anywhere in the world yet. Supporting Hüsemoğlu on this point, Ümit Dereli underlined the importance of manufacturing novel drugs, and that the most valuable 20 pipeline molecules have an aggregate economic value of USD 160 billion. Dereli also said the economic magnitude generated by the top 10 most sold medicines in the world reached USD 84 billion in 2014.
Turkey has a number strengths for pharmaceutical manufacturing, said Mete Hüsemoğlu, and listed them: “We have an established healthcare system. No other comparable country, not even South Korea, has a system established to such a degree. We have an advantageous geographical location. We also have a good manufacturing history, with companies dating back 60 years. The presence of these factors position Turkey at an advantage against similar countries like Brazil, China, and Iran. Such a robust domestic market sometimes mislead some players to believe the domestic market would be enough. There is a group who say ‘7,5 billion dollar domestic market is large enough for us.’ While this may appear as an advantage, on a global scale, this is a shortcoming. What is in Turkey’s interests is to generate actors on a global scale. If we are to turnout high added value products, if we are to help Turkey take off, the pharmaceutical industry will be among the 2 or 3 industries to be designated for this purpose.”
“Medicines here are priced 30 percent lower than their lowest priced counterparts in Europe”
Ümit Dereli also said the ecosystem that will help Turkey shift up in pharmaceuticals has three pedestals: “One of these pedestals is protecting intellectual property. The new Patent Law will significantly improve the environment on this point. The second one is the government’s allowing competitiveness in the pharmaceutical industry. This is important, since countries where the government provides protection can never be a global brand. Take, for example, Indonesia, Thailand and Algeria. These countries will never become a pharmaceutical giant, as the government is too protective, intervening too often and disturbing competition, which in turn impairs the ecosystem. The third one is to ensure an attractive balance of domestic prices, in a country like Turkey where the government is the sole buyer.”
Hüsemoğlu underlined this point, saying that the drug prices in Turkey is determined based on the lowest price in 5 European countries, which is then multiplied by a Euro conversion rate of 0,70, bringing down the product price 30 percent below the lowest price in Europe. This affects both current products and innovative products, Hüsemoğlu said, and added: “We are not raising the current prices of medicines in Turkey for we care about public health. The impact on Turkey from loss of innovative medicines is immeasurable.”
Moreover, AİFD prepared a number of reports with TEPAV after the 2023 report. The pharmaceutical manufacturing and export report, an extension of the R&D Roadmap, will be rolled out on September 26 in Ankara.
Cancer drug turned into a responsibility project, instead of withdrawing from market
Ümit Dereli said, despite the low-price policy on pharmaceuticals, companies are trying to avoid depriving patients from medicines, and one of their members has turned their cancer drug to a social responsibility project, instead of withdrawing it from the market. Mr. Dereli gave an account of the company’s experience: “The price assigned to their cancer drug was far from rational. But had they withdrawn the product from the Turkish market, many would have been unfavorably affected. So they thought, ‘Then, let us not withdraw the drug, but sell it at an affordable price as part of our social responsibility.’ Of course, when the distribution rights in the product is transferred after a short time, the owner had to introduce a massive price increase, as it was impossible for them to sell it in Turkey for the current price. Thus, this pharmaceuticals policy is not sustainable. Here is our proposal: let us increase the conversion rate to 100 percent from 70 percent gradually over time. And in doing so, let us disregard Greece, who are in default, as a reference country for some time. The talks are continuing. All of the ministries concerned are sensitive to this issue. In fact, some companies who said they cannot import a certain product were granted some well-deserved privileges. We do not expect everything to be rosy overnight, but we want a workable solution that can be achieved over time.”