Turkey has a thousandth share in pharmaceuticals exports worldwide. It has failed to transform its health industry over the last decade.

Turkey's health sector transformation program was launched a decade ago, in 2003. Health indicators have improved relatively since then, but the health industries have not developed at a similar rate. The statism of the 1930s failed to mobilize the creative energy of the private sector. If you want to know how, please read on.

Turkey is the sixteenth largest pharmaceuticals market in the world, but the thirty-third largest pharmaceuticals exporter. It carries out only one thousandth of the world’s pharmaceuticals exports. Even Mexico has a 0.4 percent share. It’s not that Turkey does not produce pharmaceuticals. Domestic production accounts for 65 percent of the domestic consumption. But pharmaceuticals exports are negligible. This is also true for medical products. Turkey’s share in the global medical products exports is around one in a thousand. Mexico’s share is 50 times bigger, at 5 percent. What does this mean? Turkey has a health industry, but it is not able to export what it produces. Why? Because it produces ordinary products that any country is able to produce. And the government supports the industry. This is a mistake. Getting stuck in the mediocre at the current level of development implies getting stuck in the middle income trap.

Turkey has been spending a lot on health and this bill is almost entirely paid for by the public sector. This giant public procurement program has not been able to come up with an internationally competitive domestic health industry. Does the state not subsidize the sector? It does. But the system is wrongly devised; it is not smart. The structure is defective. Have you seen the prices for the public procurement of medicine? Between 2004 and 2012, unit prices of generic drugs increased by almost 30 percent whereas the value/quantity ratios for original products were in the negatives. At the end of the day, the share of generic production has been increasing and that of original production has been bottoming out in the domestic industry. So, what are these generic drugs? They are drugs that contain a mixture of a few chemicals with a known formula. Production of original drugs, however, refers to a research-driven process and the development of new drugs in line with the needs of respective countries. Drug production no longer refers to mixing chemicals. It refers to using living organisms. That’s what we call biotechnology. I hope Turkey has not missed this transformation. For more on this you can check the studies of TEPAV’s new Life Science and Health Policy Institute.

The main challenge ahead of Turkey’s industrial sector is overcoming mediocrity. While continuing to do what anyone else is able to do on the one hand, Turkey has to start doing what only a few are able to do, on the other. Thirty-six of 43 sub-sectors in the pharmaceuticals sector and 62 of the 64 in medical devices sector subject to international trade are barely represented in Turkey. As a result, if the sophistication level of exports is 83 out of 100 for Mexico, it is 69 out of 100 for Turkey. Mexico outperforms Turkey in pharmaceuticals export. The good – and at the same time bad – news is: Amgen, a globally renowned biotechnology firm, bought a rare research-oriented Turkish pharmaceutical company, Mustafa Nevzat, last year. If a firm has a future, it has a value. If Amgen has seen a value, it definitely should have a reason.

Turkey has no place in the global health industries. It has a negligible share in pharmaceuticals exports worldwide. It was unsuccessful in the attempt to transform the health industry in the last decade. It is the statism inherited from the 1930s that is to blame.

The health system has been damaging the pharmaceuticals companies of Turkey just as the Housing Development Administration has been damaging construction companies.

This commentary was published in Radikal daily on 15.02.2013