Market growth potential in Turkey: Short & medium term evaluation. Cem Baydar, Country Principal Istanbul, September, 2010

Transcription

1 Market growth potential in Turkey: Short & medium term evaluation Cem Baydar, Country Principal Istanbul, September, 2010

2 With more than 1700 consultants, IMS has evolved since 2003 to be the #1 company globally in pharmaceuticals consulting in McKinsey IMS Consulting 2 IBM McKinsey 3 Deloitte Deloitte 4 Accenture Accenture 5 BCG IBM 6 IMS Consulting ZS Associates 7 ZS Associates BCG 8 Bearing Point Bain 9 Bain Monitor 10 Booz Allen Bearing Point Source: Proprietary Third-party Market Research rankings that exclude business in IT outsourcing and systems integration 2

3 Our selected clients include both national and international companies 3

4 In 2009 the global pharma market achieved more positive growth rates than expected Global market sales & Key regions growth forecast vs actuals Value sa ales (US $ Bn) % 20% 15% 10% 5% 0% Growth (US Const. $) Mature Markets PPG US 5.4% Japan 5.9% France 0.6% Germany 4.2% Italy 4.3% UK 5.3% Pharmerging Markets PPG China 27.0% Brazil 14.5% Mexico* 0.6% Turkey 16.5% India 18.2% S. Korea 13.6% (f) 2009 Actuals -5% Spain 6.4% Canada 6.4% Russia 14.8% Pharmerging 16.9% Global sales US growth Japan growth Global market growth Top 5 Europe growth Pharmerging mkts growth Mature 5.0% Global market 6.7% Growth > forecast range Growth in forecast range Growth < forecast range Source: IMS Health MIDAS December 2009, Market Prognosis June

5 In most Pharmerging markets top 10 has less than 40% of the market TIER 1 TIER 2 TIER 3 100% SHARE (us$) % MARKET 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 67% 69% 88% 33% 31% 12% 84% 16% 60% 53% 61% 61% 40% 47% 39% 39% 77% 23% 59% 41% 84% 16% 46% 54% 56% 44% 60% 74% 83% 40% 26% 17% 77% 23% China Brazil Russia India Turkey Mexico Poland Venezuela Argentina S. Africa Indonesia Romania Thailand Egypt Ukraine Pakistan Vietnam Global Top 10 companies Other companies Source: IMS MIDAS, MAT December

6 Changes in market dynamics drove IMS to a more hierarchical, nuanced definition of pharmerging markets IMS Tier 1, 2 and 3 Pharmerging Markets China +$40bn Growth GDP PPP P India Russia Brazil +$5 to 15bn Growth Turkey Pakistan Egypt Vietnam Thailand Indonesia Venezuela Ukraine Romania +$1 to 5bn Growth Poland Argentina S Africa Mexico Incremental Growth

7 World Ranking Turkey s rank drops due to price decree in 2011 Source: IMS Health MIDAS, Market Prognosis October Market size ranking in constant US$. 7

8 Turkey Market Dynamics Turkey s geographical location and population dynamics make it an exciting market Geography & Demographics Key Facts Population >10m >2m >1m Area: sq km Total population: ~72,5 million Population growth rate: 1,4% Age structure: 0-14 years: 26,0% years: 67,0% 65 years and over: 7,0% Median age: 28,7 years Turkey s demographics shifting to a more ageing profile Ageing segment represents the working population most at risk of chronic illnesses Source: Economist Intelligence Unit, IMS Market Prognosis; Note: Figures are as of December

9 Local players outgrowing their international competitors Top 10 International Players Value sales (US$Mn) Growth 1. NOVARTIS $ % 2. SA $ % 3. PFIZER $ % 4. GSK $ % 5. BAYER $ % 6. MERCK & CO $ % 7. ROCHE $ % 8. ASTRAZENECA $ % 9. ABBOTT/SOLVAY $ % 10. MENARINI $ % Total Int. Players $6, % Top 10 Local Players Value sales (US$Mn) Growth 1. IBRAHIM $ % 2. BILIM $ % 3. DEVA $ % 4. SANOVEL $ % 5. ECZ $ % 6. SANTA FARMA $ % 7. MUSTAFA NEVZAT $ % 8. NOBEL $ % 9. ALIRAIF $ % 10. BIOFARMA $ % Total Local Players $4, % Source: IMS Health MIDAS MAT Mar

10 YTD Dec 2009 performance Steep price erosion and volume growth uptake in Dec 2009 Total market GROWTH ABS (CON NST US$MN) MNF Source: IMS Health, MIDAS, Dec

11 The year of challenges Turkish market decreased 1,4% in unit sales in the first half of 2010 compared to % 140 8% Unit Sales (m millions) % 4% 2% 0% -2% Gro owth Rate (%) 40-4% -6% 20-8% 0 January February March April May June 2009 Sales 2010 Sales Growth Rate -10% Source: IMS Dataview 11

12 The year of challenges Parallel to decrease in unit sales, Turkish market fell 2,7% in value in the first half of % % illions) TL Sales (m % 4% 2% 0% -2% Gro owth Rate (%) 400-4% -6% 200-8% 0 January February March April May June 2009 Sales 2010 Sales Growth Rate -10% Source: IMS Dataview 12

13 Market Fundamentals and Government Initiatives to Maximize Patient Access

14 Coverage of the current consolidated Social Security Insurance scheme is estimated to be still below 90% Private Percent Of Population Covered as of January 2009 Uninsured *Green Card SSI (UHIS) As of January 2010 the figure has been calculated to be 81% Insurance Category Organization Notes UHIS SSI Universal Health Insurance Scheme (UHIS) combines three previous state-run insurance schemes* Private Uninsured Scheme for low-income people being phased out Will be fully integrated into the SSI by Jan 2011 Access to this scheme was restricted to those in most need Private Insurance Companies None out of pocket In October 2008, the benefits package was standardised for all UHIS beneficiaries. A small percentage of patients have supplementary private health insurance Private orgs provide the best coverage for hospital products but retail products are mostly paid as 100% out-of-pocket. Very remote locations Those who don t pay their insurance premiums (e.g. recently unemployed, selfemployed) 14

15 Operationally Turkey is a highly complex market, with multiple overlapping decision-makers Patient Reforms encourage patients to visit Family Practitioner for primary care prescriptions & referral to specialists Family Practioner System is expected to be in effect by the end of 2010, however, Referral System is not yet fully functional Family Practitioner Patients referred to specialists from Family Practitioners receive reimbursement and a lower appointment fee In practice patients still go direct to hospitals and pay the fee in some cases still receive drug reimbursement. Specialist / Internist In addition, it is common practise for patients to obtain new and repeat prescriptions at the pharmacy level 24,575 Independent Pharmacy Outlets (March 2010) Wholesalers influence pharmacy outlet stocks and dispensing preferences through a bonus goods system Physician prescriptions can be substituted at the pharmacy level 2 Major Wholesalers: Hedef-Alliance & Selçuk Ecza (70% of market) 15

16 In 2006, a public universal health insurance scheme was born out of a merger of former state-run schemes Since 2006 the UHIS combines the three previously separate state-run insurance schemes The Civil Service Retirement Fund (Emekli Sandigi) for the retired The Free Enterprise Scheme (Bag-Kur) for the self employed The Social Insurance Scheme (SSI) for public employees The Ministry of Health retains responsibility for planning and management, as well as health regulation and promotion In October 2008, the benefits package was standardized for all the Universal Health Insurance Scheme (UHIS) beneficiaries The Universal Health Insurance Scheme (UHIS) The Green Card Scheme In 2008, the government financed the green card scheme which had provided the lowincome uninsured with access to free healthcare also became part of the SSI The SSI (Social Security Institution, SGK for Turkish) is the main healthcare funding body, dispersing public funds through contractual arrangements with public and private providers Around 70% of healthcare is financed through public funds of SSI (derived from a combination of taxation and income-based health insurance contributions) In addition to public funds, healthcare expenditures are also disbursed via private insurance, copayments, out-of-pocket payments, etc. 30% of healthcare expenditure is financed through private spending Source: IMS Health Pharmaquery Turkey

17 Turkey Market Dynamics Turkish healthcare market has been undergoing major changes upon introduction of Sağlıkta Dönüşüm Programı (Health Transformation Programme) of MoH Turkey: Key Pharmaceutical Market Events from 2005 till present Introduction of positive list Family Physician system pilot runs initiated Merger of three former payers to form SGK New pricing decree in effect resulting in increased cost controls. Further cost containment expected due to budgetary constraints Introduction of Health Transformation Programme SSK Hospitals transferred to MoH, SSK pharmacies closed Reimbursement levels set at +15% of cheapest generic and generic price cap at 75% Structure Regulatory Pricing & Reimbursement Prescribing 17

18 On the whole, Turkish pharmaceuticals market faces challenges caused by healthcare professional shortages and limited access to healthcare Health Care System Healthcare provision is dominated by the public sector The healthcare system is undergoing transformation with the introduction of a universal health insurance system and expansion of primary care Social Trends There is a low rate of presentation to physicians due to limited education and health consciousness especially in rural areas, and lack of trust in the health system This results in diagnoses at later stages of diseases Physicians treat aggressively when they see patients because compliance is low Health Care Expenditure The increase in the UHIS-covered population leads to a rise in public expenditures on health, contributing to a deficit in healthcare budget Medicines are 44% of the SSI budget, making drugs a key target for savings Professional Trends It used to be common for specialists in outpatient departments to have private clinics in parallel with state employment Full time regulation now restricts doctors practicing in both public and private sectors For public hospitals, MoH issued a decree in 2009 that doctors cannot see representatives in working hours (if patients waiting) This will likely reduce sales calls and push promotion investment to alternative means such as congresses There is a shortage of doctors and nurses Source: IMS Market Prognosis 18

19 2010- Change and therefore uncertainty dominates market with more major transformations expected in the near future Turkey: Key Pharmaceutical Market Events to 2012 & beyond Turkey Market Dynamics Possible expansion of reference basket to include more countries (i.e. Poland & Hungary) D-Barcode system introduced 2011 Potential introduction of an official OTC Category 2012 Plans to introduce pharma-economic evaluation to new products 2013 Health Campuses are expected to change modus operandi for PharmaCos MoH officials to inspect manufacturers for GMP practices; registration process has been halted for products that have no GMP certificate issued by MoH Family Practitioner (FP) Programme planned to be in place countrywide (except in Istanbul) Possible introduction of EU Biosimilars legislative framework Potential E-Rx monitoring triggers policy responses, but requires fully FP and functional Referral System Structure Regulatory Pricing & Reimbursement Prescribing 19

20 Innovative vs. Generics

21 YTD Dec 2009 performance The end of 2009 brings high volume growth for generics Generics GROWTH ABS (CON NST US$MN) MNF Source: IMS Health, MIDAS, Dec

22 MAT TL Sales Of Generics & Originals Originals still dominate the marketplace However generic growth dominates 7 35% 6 29,71% 30% 27,20% 5 23,64% 25% 4 21,68% 20% Billions 3 15,24% 15% 2 10,72% 9,53% 10% Original 1 5% Generic 0 4,07% 0% Original Growth MAT '06 MAT '07 MAT '08 MAT '09 MAT '10 Generic Growth 22

23 MAT Unit Sales Of Generics & Originals Generics are closing the gap % 18,33% 18% % ,44% 11,63% 14% 10,55% 12% Original Generic Million ns ,32% 10,51% 7,23% 6,53% 10% 8% 6% Original Growth Generic Growth 50 4% 2% 0 MAT '06 MAT '07 MAT '08 MAT '09 MAT '10 0% 23

24 Market Shares Of The Generics In Top Ten Therapeutical Areas C10A is growing 100,00% 90,00% 80,00% 70,00% 60,00% 50,00% 40,00% 30,00% 20,00% 10,00% 0,00% MAT '06 MAT '07 MAT '08 MAT '09 MAT '10 Turkey Pharmaceutical Market Review 24

25 Yearly Number of Launches Generic Launches almost double originals in 2010 (2010 figures include first 6 months) Original Generics

26 To Sum Up: Turkish pharmaceutical industry is undergoing major changes along three key dimensions Three Fundamental Shifts in Turkey Market Landscape New price decree Physician access Structural change The new decree announced on September 18 th is the last in a series of containment initiatives Maintaining profitability is becoming a major problem for pharmaceutical firms with decreased prices and strict cost-control mechanisms Price cuts will drive negative growth in 2010 and result in cost cuts by pharma to protect bottom line Generic drugs are also affected from this price decree announcement, yet not as severely as 20 year old original drugs Access to physicians is becoming more of a challenge under the conventional sales force models Especially state-owned institutions are restricting access to specialists by sales reps GP prescribing is limited in some specialty therapy areas making the traditional large GP team sizes to be reconsidered An important new stakeholder is emerging in the form of the Family Physician (FP), requiring pharma companies to assess and adjust their traditional goto-market approach Social Security Institute has emerged as the single payer in the Turkish healthcare industry Growth is shifting from primary care to specialty care New financial model New access dynamics New decision makers 26

27 Future Outlook Market is expected to grow at 9,4% (TL CAGR ) Multinationals & generic companies continue expressing interest in entering the market Mergers & acquisitions leading to fewer incumbent Multinationals and further consolidation of market share Generic companies search for alternative areas of growth, such as specialty areas New pricing decree and higher cost containment & restructuring reduce the number of reimbursed products and pharmacy sector revenue Due to recession, reduce costs, realign organization, move towards more specialized/hospital teams 27