REPUBLIC OF TURKEY PRIME MINISTRY
Investment Support and Promotion Agency of Turkey
ISPAT
“Pharmaceutical Sector and PPP Projects
in Turkey”
Derun ÜLGEN
Direttore di Progetto Senior
The Turkish pharmaceutical sector is the 6th largest in Europe
in terms of sales
Top 20 Countries According to Pharmaceutical Sales in 2012
Source: EIU
 Great progress has been made in the sector during the last decade and thanks to a series of reforms, the
quality and efficiency of the public and private healthcare system have been increased.
 Turkey was the 6th largest pharmaceutical market in Europe and 16th largest in the world in 2012 with
USD 12.5 billion sales, which means a growth of nearly 10% between 2003 and 2012 and it is expected
to grow by 7%-10% each year
Global and Turkish pharmaceutical sector will grow
According to EIU forecasts, global healthcare and pharmaceutical spending is expected to increase in
2013 compared to the previous year by 2.4% and 4.0%, respectively, whereas in Turkey, forecasts
indicate higher growth rates than global ones. Within this context, the healthcare sector is expected to
grow by 5.8% and pharmaceutical sector by 8.9%, in 2013.
Healthcare and Pharmaceutical Spending Growth by Region,
2013 Forecasts
Turkey’s pharmaceutical sales grew 9.7% from
2003 to 2012. This is expected to increase of
8.8% from 2012 to 2017 surpassing USD 19
billion.
Pharmaceutical exports
Exports of Pharmaceuticals Sector in Turkey
 Turkey’s pharmaceutical exports increased 10% from 2007 to 2012, surpassing USD 720 million.
 For the export values, top ten countries had over 55% of the total export share. Germany is a
prominent partner of Turkey with 10% in 2012, followed by Iraq with 8%, South Korea, which is the
largest export market in Asia, for Turkey, with 7%.
 With the help of 2023 Vision Targets, Turkish pharma sector can deliver over USD 13 billion worth of
exports by 2023.
M&A market with USD 1.7 billion worth of transactions since
2006
Acquirer
Deal Value
USD Millions
Target
Date
Citibank Venture Capital Ltd; Partners in
Biofarma Pharmaceuticals Co. Ltd.
Life Sciences (PiLS)
2006
200
100%
White Swan Corporation B.V.
Taymed Saglik Urunleri Ticaret Ltd Sti
2006
N/A
100%
Partners in Life Sciences (PiLS)
Munir Sahin llac Sanayi ve Ticaret A.S.
2006
22
100%
International Pharma Ltd.
Deva Holding AS
2006
50.2
18%
Actavis Group hf (formerlyPharmaco hf ) Fako Ilaclari As
2006
20.4
10%
Eastpharma Holding
Saba Ilac Sanayii ve Ticaret A.S.
Eczacıbaşı-Zentiva Kim. Ur. San. ve Tic. A.S. EczacıbaşıZentiva Sag. Urun. San. ve Tic. A.S.
2007
10
96%
2007
602
75%-75%
Sandoz International GmbH
Roche Holding AG (Gebze production plant)
2007
N/A
100%
Eczacıbaşı Ilaç
Monrol Nükleer Ürünler
2008
43.1
50%
İş Girişim Sermayesi
Dr. F. Frik Ilaç Sanayi
2008
13.4
17%
Partners in Life Sciences
Betasan Pharmaceuticals
2008
N/A
100%
Recordati SpA
Yeni Ilac
2008
60
100%
Ebewe Pharma
2008
N/A
100%
2009
N/A
25%-25%
Alliance Boots
EBV Limited
Eczacıbaşı-Zentiva Kim. Ur. San. ve Tic. A.S. EczacıbaşıZentiva Sag. Urun. San. ve Tic. A.S.
Hedef Alliance Holding
2010
N/A
10%
Polpharma
Cenovapharma
2011
N/A
77%
NBK
Dem Ilaç
2012
N/A
N/A
Amgen
Mustafa Nevzat Ilaç
2012
669
96%
Zentiva NV
Zentiva NV
Stake
Top 10 Pharmaceutical Manufacturing Companies in Turkey
#
Company
1
Abdi Ibrahim
2
Novartis
3
Sanofi
4
Bilim
5
Pfizer
6
Bayer
7
Eastpharma
8
Glaxo
9
Roche
10
AstraZeneca
Top Ten Total
Market Share (2012)
7.5%
7.0%
5.8%
4.9%
4.3%
4.3%
3.8%
3.7%
3.4%
3.0%
47.6%
Industrial employment includes
approx.25.000 people
 Turkey has the necessary knowledge base, skilled workforce, infrastructure and geostrategic location to
attract global pharmaceutical R&D and could become a global player in the pharma industry.
 Strong production facility infrastructure; 76% of drugs consumed in Turkey on a box basis and 49% on a
value basis are locally produced.
 Under current budget framework, Turkey’s local pharma production will reach 23.3 billion USD by
2023 through the production of innovative and technologically advanced products (as compared to local
production of USD 5 billion USD in 2011).
Foreign companies play an important role in manufacturing
phase
Multinationals with manufacturing facilities that
operate in Turkey include Sanofi, Baxter, Bayer,
GSK, Novartis, Pfizer and Roche, with the most
recent foreign entrant on the market being
EastPharma. Leading multinationals such as
Pfizer, Novartis, Bayer and Roche command
market shares of 4-6% each. Baxter runs a 50:50
JV with Eczacıbaşı.
International companies are represented by the
Pharmaceutical Manufacturers Association of
Turkey (IEIS)has 60 members, which also includes
domestic firms.
Regulation
 Turkish Drug and Medical Device Institution, a part of the MoH, is in
charge of the regulation and control of pharmaceutical prices.
 The data protection liability generated by TRIPS entered Turkey’s
regulations in March of 1995. In this context all of the confidentiality
of information submitted for the purpose of obtaining a license is
protected. With this development, laws that are related to data
protection in Turkey got closer to standards in Europe.
Clinical research
• Turkish Drug and Medical Device Institution is the regulatory authority in drug discovery and R&D
and monitors clinical research and R&D activities in Turkey. The institution has prepared a
legislation related on Clinical Research in August 2011, which is compatible with European Union
directives.
• Turkey is ranked as the 35th country in number of clinical research conducted in the world and 19th
in Europe. Turkey conducted over 1,200 clinical researches in 2013 and took a share of 0.6% in
total clinical research conducted in the world.
• Companies who want to conduct research in following areas must take permission from Ministry
of Health:
• Pharmaceuticals, medical products, herbal medical products that will be tested on human
subjects; observational pharmaceutical studies; bioavailability and bioequivalence studies;
observational medical device studies and medical device clinical research; stem cell
transplantation research; organ and tissue transplantation etc
• One of the goals of the government is to increase R&D spending in the sector to 3% og
GDP, thus, in turn it aims to increase the total number of clinical research conducted.
Technology Development Zones also contribute
significantly to research and development of
manufacturing industry
 Entrepreneurs are exempt from income
tax until 2023 over income made from
R&D operations and software. Taxes
over wages of R&D personnel are
exempt until 2023.
One TDZ
More than one TDZ
Underconstruction
 50% of the social security premium
support for 5 years for R&D personnel
will be supported under the law no. 5746
named R&D Operations Support.
• TDZs are organized research centers where universities, research institutions and industrial foundations work
together for innovation and technology transfer; increasing product quality and standards; product development;
commercializing know-how; supporting technological investments and entrepreneurships.
• Every year, 4 new TDZs are opened in Turkey and the goals for 2023 are 5.500 companies, 65.000 employment,
and 10 billion dollars of exports.
• 55% of the firms in TDZs are engaged in Software and Informatics business. Other areas of focus are electronics
and defense industries.
• Number of projects reached 5,717 in April 2013 and total export reached USD 893 million at the end of 2012.
• A total of 322 patents were applied by the firms in TDZs.
• Employment in the TDZs consists of 15,960 R&D and 3,536 support personnel, with a total of 19,496.
Turkish Investment Incentives Programme
General Inv.
Regional Inv.
Large Scale
Inv.
Strategic Inv.
Vat Exception
x
x
x
x
Customs Duty Exemption
x
x
x
x
Tax Deduction
-
x
x
x
Land Allocation
-
x
x
x
Interest Support
-
x
-
x
Vat Refund
-
-
-
x
Employer's Social Security
Premium Support
-
x
x
x
Support Measures
Only For Region 6
 The investment incentive program of 2012 comprises 4
different schemes: general, regional, large scale and
strategic. Moreover, specific priority investment subjects
are supported by measures of Region 5 even they are
made in Regions 1, 2, 3 and 4.
 All investment types, except the ones that are specifically
excluded from investment incentives program, will be
supported by General Investment Incentives Program. In
this scope, the minimum fixed investment amount is TL 1
million in Region 1 and 2 and TL 500 thousand in Regions
3, 4, 5 and 6.
Income Tax Withholding Support
x
x
x
x
Employee’s Social Security
Premium Support
-
x
x
x
REGIONAL INVESTMENTS INCENTIVE SCHEME MEASURES
Region
OIZ
1
2
3
4
5
6
Out of OIZ
15
20
25
30
40
50
Within OIZ
20
25
30
40
50
55
Out of OIZ
2
3
5
6
7
10
Within OIZ
3
5
6
7
10
12
Tax Reduction (%)
Employer's Social
Security Premium
Support Period (years)
Pharmaceuticals and medical equipment are incentivized
 Investments with a minimum amount of 50 million TL are considered as Large Scale
Investments.
 Strategic investment incentives are given to the production of intermediate and final products with
high import dependence with a view to reduce current account deficit. The criteria to gain this
support would be: to be made for production of intermediate and final goods with high import
dependence of which more than 50% of these goods are supplied by imports, to have a minimum
investment amount of TL 50 million, to create minimum 40% value added and to have an import
amount of at least USD 50 million for goods to be produced in the last one year period (not
applicable to goods with no domestic production).
 More specifically, investments in the fields of biotechnological and oncological drugs, and blood
products are considered as strategic investments benefiting from the incentives implemented in
the fifth region provided that the fixed investment amount is above TL 20 million.
Strategic Plans
The Ministry of Health in its Strategic Plan for period of 2013-2017 is aiming to improve,
monitor and evaluate quality standards for pharmaceuticals, biological products and medical
devices; to develop, monitor and evaluate standards for medical devices used for treatment
purposes; to increase the number of inspections for GMPs; to improve the evaluation of
applications and licensing processes and to ensure the rational use of drugs and medical
devices.
The Ministry of Science, Industry and Technology has identified strategic goals on its Strategy
Paper which are the improvement of regulations to meet the demands of public health and
improve investments; the investment on qualified human resource; the improvement of the
cooperation among public sector, private sector and universities; effective planning of R&D
operations to produce high value added products.
Source: Ministry of Health Strategic Plan 2013-2017
2023 Goals
Selected Key Performance Indicators from Action Plan
Key Performance Indicators
Current Status
Vision 2023
Innovation Capacity
71.
Top 20
The quality of scientific research centers
89.
Top 30
Retaining scientists and engineers
35.
Top 20
Global Innovation
74.
Top 30
0
At least 1
Pharmaceutical R&D expenditures/GDP (2011)*
0.02%
0.1%
Pharmaceutical R&D expenditures/total R&D expenditures (2011)*
0.04%
3.6%
1,267
≈3600
10%
107%
3
20
Global Competitiveness
59
Top 25
Ease of doing business (2013)
71
Top 35
350 days
‹210 days
Number of new local molecules
Number of clinical trials conducted throughout a year (2013)
Pharmaceutical exports as a percentage of pharmaceutical imports
(2010)
Number of multinational pharmaceutical companies, that have
established regional management centers in Turkey (2011)
Duration of GMP certification (2011)
Source: AIFD, Vision 2023 Report; Ministry of Scince, Industry and Technology, Turkstat, Deloitte Analysis
*: Includes manufacture of basic pharmaceutical products and pharmaceutical preparations
Note: Status is out of 142 counties
HEALTH CAMPUSES
Turkish PPP Program
• Turkey has undertaken an ambitious Healthcare PPP
Program through which a total of 35 health campuses
and city hospitals are intended to be built using the buildlease-transfer model.
• Each campus will house 2,000 to 4,000 beds divided
among general and specialized hospitals and
laboratories
• The health campuses and city hospitals will add between
40,000 - 50,000 beds to Turkey’s existing healthcare
infrastructure.
• It is estimated that the lease payments for the planned
health campuses and city hospitals will be between TL
80,000 and 85,000 per year per bed, amounting to a total of
TL 3.2 to 4 billion per year.
Added Bed Capacity
50,000
Average Lease Period
25 Years
Lease Payments per
year
TL 3.2-4 billion
Planned PPP Projects
35
Current PPP Projects
20
Total Lease Payments
TL 80 – 100 billion
• Assuming the MoH will lease the facilities for 25 years, the
total amount of lease payments for healthcare campuses
• International tenders are being opened for the
and city hospitals will reach TL 80 to 100 billion.
contracting of each of these hospitals to consortiums
(composed of construction companies, architectural
designers, operators, and medical technologies
companies). The winning consortium of each project
will finance the construction and will operate the
campus for 25 years against guaranteed annual lease
payments to be made by the MoH.
Turkish PPP Program
Policy Framework
Legal Framework
Institutional Framework
• 2003-2013 Health
Transformation
Program
• Vision 2023
• MoH 2013-2017
Strategic Plan
• 10th National
Development Plan
• Supreme Planning
• Law no.6428 published in the Official Gazette
on 9 March 2013 decreases the burden and
risk undertaken by companies involved in
PPP projects. It brings legal certainty and
introduces a mechanism through which lease
payments can be adjusted according to
changes in foreign exchange rate.
• The Supreme Planning Board is involved in
a limited number of decisions with
fundamental importance, while the MoH
assumes bulk of the work to be done for the
initiation and realization of Healthcare PPP
Projects. The MoH selects relevant PPP
projects, prepares feasibility reports and
tender
documentation.
The
Under
Secretariat of the Treasury, in most cases,
procures the land for the PPP project
provided that it is determined the land will be
treasury-owned land.
Board
• MoH, Department of
Public Private
Partnership
• Under Secretariat of
the Treasury
Healthcare
PPP Project,
build-leasetransfer
Healthcare PPPs in Turkey use the Build-Lease-Transfer (BLT)
Model
Under the BLT model, the project company contracts or renews healthcare facilities, and subsequently leases it to the
government for a set amount of time. During the contract period, in addition to getting regular lease payments from
the government, the project company also has the right to develop and operate non-healthcare facilities. If the
company is renewing the facility it receives the right to provide non-healthcare services and a service fee in return for
its investment. If new facilities are built the following procedure is followed:
Projects are awarded through one of the following procedures:
Tender
Phase
- Open Bid Procedure (preferred)
- Open Bid Procedure among bidders selected through a pre-qualification process
- Negotiated procedure (only allowed in a limited set of circumstances)
-
Build
Lease
-
Transfer
-
The project company secures the financing required for the completion of the project.
If the land on which the facility will be built is treasury-owned, MoH arranges for the land to
be used by the project company, free of charge, for the project period.
During the investment period, the transactions between MoH and the company are exempt
from stamp tax.
Once the health facility is built according to the contracted standard, MoH will lease the
facility for a maximum period of 30 years.
MoH will pay the project company a yearly lease adjusted annually on the basis of the
Turkish Producer Price Index and the Turkish Consumer Price Index.
During this period, the project company also has the right to operate non-healthcare
facilities.
At the end of the contract term, the project company returns the healthcare facilities built to
the MoH in good working condition and without any encumbrances.
If the land on which the facility is developed is not treasury-owned, the MoH takes
necessary steps to adequately compensate related parties.
PPP Projects in Healthcare as of December 2013
Projects in the Pipeline…
Pre qualification tender
announcement phase
Istanbul Bakırköy Integrated Health Campus
1,043 beds
Istanbul Üsküdar Public Hospital
425 beds
Pre qualification phase
Eskişehir City Hospital
1,060 beds
Kocaeli Integrated Health Campus
1,180 beds
TPHA + TPMDA Campus
N/A
Bursa Integrated Health Campus
1,355 beds
Isparta City Hospital
755 beds
Izmir Bayraklı Integrated Health Campus
2,000 beds
Adana Integrated Health Campus
1,539 beds
Elazığ Integrated Health Campus
1,038 beds
Gaziantep Integrated Health Campus
1,867 beds
Konya Karatay Integrated Health Campus
838 beds
Manisa Education and Research Hospital
558 beds
Mersin Integrated Health Campus
1,253 beds
PTR, Psychiatry and High Security Forensic Psychiatry
Hospitals
2,400 beds
Yozgat Education and Research Hospital
475 beds
Istanbul İkitelli Integrated Health Campus
2,682 beds
Ankara Bilkent Integrated Health Campus
3,660 beds
Ankara Etlik Integrated Health Campus
3,566 beds
Kayseri Integrated Health Campus
1,583 beds
Bid phase
Final Bid phase
Contract phase
Construction phase
THANK YOU