With the "Board of Ministers’ Decree to Amend the Decree on the Pricing of Medicinal Products for Human Us" becoming effective, many in the sector expect contraction in the pharmaceutical industry, where revision of investment plans is already underway, layoffs have begun and a higher number of pharma employees are expected to lose their jobs next year. .

Istanbul, December 10, 2009. Friday, December 4, the effective date of the new pricing decree, marks the beginning of a period of decline in the Turkish pharma industry where initially a contraction of about 25% is expected. In preparation for difficult times, pharma companies are reconsidering their investment and employment plans, beginning layoffs, with projections of a higher number of university graduates losing jobs in 2010.

Warning that the new pricing decree carried serious risks for the future of the pharmaceutical industry, Engin Güner, Vice-Chairman of the Association of Research-Based Pharmaceutical Companies (AİFD), said “It is not possible to see an improvement in the provision of drugs and health-care service by further restricting available resources”.

AİFD industry survey shows poor outlook for 2010

A recent survey of the senior executives of the AİFD members, an umbrella organization of 40 research-based pharmaceutical companies, disclosed expectations that the industry would face formidable difficulties during year 2010. 90% of executives who responded to the survey stated that their operations would be adversely impacted. 37.5% of the respondents voiced concern that layoffs in the pharmaceutical industry, which employs about 25,000 people totally, could exceed 10%, while 31.3% predicted that dismissals would be beyond 20%. When asked about the decree’s impact on R&D investments, 50% of the respondents expressed view that R&D investments next year would be down by more than 10%, while 12.5% predicted a contraction beyond 20%. Finally, 81.3% of the executives surveyed stated that the legislation introduced with the decree could have a negative effect on the entry of novel drugs into Turkish market.

Improvement in drug and health-care service is impossible without allocation of resources

Giving his assessment of the effectiveness of the new decree, Engin Güner, Vice-Chairman of the AİFD, remarked that the industry selflessly supported the Government’s health reform efforts since 2004, and said:

“We have selflessly given our continued support for our Government , in order to bolster patients’ access to drugs and other health-care services, to consolidate stability, and to help ensure that transparency and ethical practice dominates our national pharmaceutical industry. Today, Turkey is one of the countries that has the lowest drug prices in Europe. With the new decree, the drug prices in Turkey are now reduced to about 45% below that in countries which have the lowest drug prices. The drug and health expenditure in Turkey is still far below the OECD average. More resources need to be allocated to enhance our patients’ access to drugs. Yet, our Government is trying to improve access to drugs without incurring extra costs. The new pricing decree is expected to cause about 25 percent contraction in the industry, with a cap imposed on total drug expenditure next year of 14.6 billion TL, which is to say that the spending next year would be below this year’s level. Unfortunately, improving drug and health-care service by restricting resources is not possible.”

Future of pharmaceutical industry is at risk

The new pricing decree treats research-based pharmaceutical companies, who, spending up to 100 billion dollars annually in R&D investments worldwide, develop innovative drugs to improve quality of human life, with generic manufacturers who do not incur any R&D cost, said Güner.

“This approach will greatly complicate advancement of innovation in the country. Although the agreement that we have managed to reach at the last moment, just before effectiveness of the decree, is received as a favorable step, it fell far short of resolving our problems totally. This accord helped reduce the projected contraction to 25% from over 30%. Although it provides us assurances that in the next 3 years we would not see substantial changes that would further corner the industry, we must not forget that the industry shall have to operate under challenging conditions, undergoing contraction during this period to remain afloat. Obviously, the current situation is far from an environment of stability and predictability which have always been the foremost priorities of the industry. Regretfully, serious risks are facing the pharmaceutical industry, where things are headed for the worse. We have already started seeing partly the bad signs, such as the decline in investments and the employment levels, and, unfortunately, we expect to see more of it next year. The AİFD shall maintain its constructive stance and remain available for cooperation and dialogue to help solve the industry’s problems, to consolidate patients’ access to high quality drugs and health-care services, and to help ensure sustainability of these services. We trust that we shall see the same posture in our Government and in all sector stakeholders”.

About the Research-Based Pharmaceutical Companies

Established in 2003, the Association of Research-Based Pharmaceutical Companies is an umbrella organization of 40 biotechnology and R&D oriented companies, including Abbott, Actelion, Alcon, Astra Zeneca, Amgen, Astellas, Bayer, Boehringer Ingelheim, Bristol-Myers Squibb, Celgene, Chiesi, Daiichi-Sankyo, Eczacıbaşı–Baxter, Ferring, Fresenius Kabi, Fresenius Medical Care, Gilead, GlaxoSmithKline, IBSA, İ.E. Ulagay, Indentis, Johnson&Johnson, Lilly, Lundbeck, Merck Serono, Merck Sharp & Dohme, Nestle, Novartis, Novo Nordisk, Nutricia Klinik Beslenme, Pfizer, PharmaSwiss, Pierre Fabre, Reckitt Benckiser, Sanofi Aventis, Schering-Plough, Servier, Solvay İlaç Türkiye, UCB Pharma, and Wyeth , who account for the majority of new drug research globally.