BMI View: Turkey's pharmaceutical and healthcare markets will continue to grow over the long term due to underlying fundamentals driving demand for healthcare services, its population dynamics, increasing urban migration and the burden of disease in the country . In contrast to European markets where manufacturers can expect to achieve higher prices, but with a stagnant growth outlook, Turkey offers strong growth potential if drugmakers are able to accept prices that are considerably below the European average and turn a profit on the low margins available.
Headline Expenditure Projections
Pharmaceuticals: TRY18.72bn (USD8.56bn) in 2014 to TRY20.66bn (USD7.80bn) in 2015; +10.3% in local currency and -8.9% US dollar terms.
Healthcare: TRY96.01bn (USD43.89bn) in 2014 to TRY105.98bn (USD39.99bn) in 2015; +10.4% in local currency and -8.9% US dollar terms.
Turkey's pharmaceutical Risk/Reward Index score for Q315 is 49.9, down from a score of 55.9 in the previous quarter. The country is ranked the tenth most attractive business environment out of the 20 markets surveyed in Emerging Europe. Turkey's large drug market, coupled with the sector's long-term growth potential, means the country scores higher than the average for the region on this indicator, albeit by a smaller margin than in previous quarters on the back of a downward revision to the growth potential of the pharmaceutical market. In terms of risks, several rounds of pricing reforms mean the country scores less favourably, and below the regional average for this indicator.
Key Trends And Developments
BMI has revised its healthcare expenditure forecast for the Turkey following the recent release of confirmed data from the World Health Organization (WHO) and incorporation of the latest macroeconomic data. Spending on healthcare is now expected to increase from TRY96.01bn (USD43.89bn) in 2014 to TRY212.61bn (USD63.00bn) in 2024.
In April 2015, German drugmaker Boehringer Ingelheim opened its Stroke Academy to establish a base for its comprehensive stroke management practices across the MENA region. The launch was held at Istanbul, Turkey, between April 9 and 11. The initiative aims to bring together leading international experts, cardiologists and neurologists to identify treatment challenges and develop effective measures.
BMI Economic View: We have revised down our real GDP growth forecast for Turkey in 2015, from 3.5% to 3.2%, on the back of very weak economic data in Q115. Most prominently, the manufacturing purchasing mangers' index (PMI) fell to 48.0 in March, the lowest reading since April 2009, and has remained in contractionary territory (below 50) for the entirety of Q115. We have been below consensus in our 2015 Turkish real GDP growth forecasts since Q313, and while aggregate forecasts have converged towards us we are now once again below Bloomberg consensus estimates.
BMI Political View: Turkey's ruling Justice and Development Party (AKP) will assuredly win the general elections in June 2015, and at the same time, maintain its parliamentary majority. We expect broad policy continuity in the pharmaceutical and healthcare sectors, with privatisation expected to continue and public healthcare expenditure to remain tight. However, we are concerned over the implications that a transition to an executive presidency might hold for the Turkish economy's outlook, and consequently, the pharmaceutical and healthcare sectors.