TURKISH REGULATION OFFERS SCANT HOPES FOR DRUG FIRMS

Growth in the Turkish pharmaceutical market has been hindered in recent years by a combination of the country's poor economic climate, with a weak local currency and high inflation, and stringent government sector regulations. The government's latest regulatory activity, concerning pricing, has done little to suggest that the climate is likely to rapidly improve.

Drug pricing is already a contentious area in Turkey. The local industry claims that the government's reluctance to implement price rises, especially following the country's economic slowdown in the mid-1990s, has made their operations unprofitable.

Meanwhile, multinationals claim that their entry into the market is obstructed by policies stipulating that the country's Social Security Organisation (SSK) should purchase pharmaceuticals at the lowest possible price, which results in a large market for cheap generic products, the quality of which is unknown.

The government has implemented a series of price cuts, introducing discounts on prescription drugs of up to 8%. The move comes as part of the government's continued efforts to cap its public sector drugs bill, with it claiming that the discounts should save it between US$500-600mn each year.

Meanwhile, the government is persistently trying to improve the efficiency of the social security system, under the observation of the IMF. How far this is likely to be beneficial for the local and foreign drug manufacturers is yet to be seen. In the meantime, without meaningful, positive reform, market development is likely to be slow.