2021 Review of the Food, Cosmetics and Pharmaceutical Industry

Sector Professionals Evaluate Food, Cosmetics and Pharmaceutical Sectors in Life Sciences Ingredients Magazine AROMATECH TURKEY MARKETING AND COMMUNICATIONS MANAGER - GÜLİZ ÜNAL 2021 was a year in which panic and uncertainty from 2020 had somewhat diminished, yet new uncertainties and post-pandemic challenges emerged. Aromatech Food, as known, is the Turkish branch of the French-origin food flavor producer Aromatech Group and stands out with its local production capacity that enables rapid response to customer demand. In this regard, our operations have not stopped since the start of the pandemic, and thanks to the dynamism of the food sector, we achieved our numerical targets in 2021 and provided uninterrupted service to our customers. In 2021, remote work continued for suitable personnel. In cases where remote work was not possible, area restrictions were implemented and a rotating attendance system was adopted. Cleaning procedures for common areas were increased. Our audits such as FSSC 22000, ISO 9001, Halal and Kosher certifications, and available trainings were conducted remotely. Following the pandemic, healthy eating became central to consumer priorities. Within the framework of the Group's Strategic Plan, natural and organic products became the primary focus area. Although Turkey's market is at the beginning of the road regarding organic flavors, demand for natural flavors increased. In 2021, plant-based and vegan trends came particularly to the forefront. Plant-based meat and cheese flavors, in particular, became a new project area for our headquarters. Additionally, investments in our "Salty Products" category increased and our supply in this area expanded. Our goal for 2022 is to increase sales in this category. In order to address global challenges related to raw material procurement and supply chain, we conducted coordinated work with our headquarters. Our bases in production already come from France at all times. Regarding other raw materials, we believe that annual contracts with suppliers in the coming period will become more important. Customer visits had been suspended due to the pandemic; in 2021, physical visits resumed with some customers while digital meetings became more common with others. In 2021, we also established a new fund in the name of Jacques Martel, who was our company's founder and passed away four years ago, and opened a website. This donation fund, created through the initiative of Jacques Martel's children and Aromatech Group employees, aims to support associations in the fields of Nutrition, Environment, Health and Education in every way. Aromatech France, within this framework, supported the 4MyPlanet Association and sponsored French sailor and captain Alexia Barrier during the Jacques-Vabre 2021 Transatlantic race. In 2022, as all Aromatech branches, we aim to participate in projects beneficial to humanity and our planet and support sustainable development. BASF TURKEY PHARMACEUTICAL SOLUTIONS GLOBAL SALES DIRECTOR TURKEY, MIDDLE EAST, RUSSIA AND AFRICA - TANJU CEPHELİ As expected, 2021 was not an easy year for the world or our country. While we hoped vaccines would slow the virus—unfortunately it continued to spread without slowing, new variants emerged, and this affected and continues to affect all of us. Energy crises in Europe and America, logistical problems, and particularly the inability to procure certain fundamental starting materials important for pharmaceutical active ingredients and packaging made it a difficult year for both pharmaceutical manufacturers and suppliers. The extreme currency volatility in the last quarter of 2021 also complicated business and budget planning. Following the lifting of restrictions and school openings, we encountered different viruses we had known before. This led to an increase in demand for diseases other than coronavirus infection and consequently for antiviral, analgesic, antipyretic and antibiotic medicines. Therefore, the pharmaceutical industry partially returned to previous production capacities to meet this demand. This positive effect was felt among raw material suppliers and reflected in sales figures. What did we BASF do in 2021? We took successful steps in the digital world with our virtual assistants. The RegXcellence Digital Platform, a virtual regulation and quality assistant developed by the BASF Pharmaceutical Solutions team, won first place in the pharmaceutical excellence-regulation procedures and compliance category at the CPHI Pharmaceutical organization. This strengthened both our work in the pharmaceutical sector and our work with our customers. We also updated our ZoomLab virtual formulation assistant and added some modules that will facilitate the work of R&D teams during development. Beyond this, we developed another innovative product: in November we launched our new Kollitab DC 87 L co-processed product containing all the raw materials needed for tablet formulations in one package. Our product contains diluents, binders, disintegrants and lubricants together, providing the functionality required for immediate-release tablets and reducing production complexity. In particular, if the use of new drugs developed for coronavirus treatment becomes widespread and generic companies develop equivalents of these products and make them available for patient use in their own countries, this could be our new exit ticket from the pandemic alongside vaccines. The pharmaceutical sector is seeking rapid solutions; we all want to return to our normal lives. Beyond this, I believe the challenges we will face this year will be similar to those in 2021. As a result of energy crises, increases in raw material prices will be reflected in products this year. On the other hand, the shipping and raw material problems resulting from global energy crises are expected to continue throughout 2022. As BASF, we will continue to minimize these global problems, supply products to our customers on time, and of course continue to present and develop innovative products. Specifically for Turkey, if currency fluctuations can be prevented, the pharmaceutical sector hopefully can ease somewhat according to the rate of increase in drug prices to be determined. We hope 2022 brings healthier and happier days to the world, our country and everyone. PHARMACEUTICAL INDUSTRY EMPLOYERS UNION (İEİS) GENERAL SECRETARY - SAVAŞ MALKOÇ For our pharmaceutical industry, which fought hard in 2020 to prevent supply problems due to the difficult conditions of the Covid-19 pandemic, 2021 was also a difficult year, particularly in the last quarter, due to the heavy pressure of cost increases experienced both globally and locally. The inflationary pressure resulting from monetary expansion caused by the pandemic worldwide, increases in energy prices, currency exchange volatility rising to historical levels, and increases in pharmaceutical active ingredients, excipients, packaging materials and transportation costs seriously increased the costs of our industry. Entering the year with the large market contraction it had experienced in 2020; with unpredictable cost increases, the long-standing cost-focused pricing policy, continuing bottlenecks in licensing processes, the halt of localization practices that had given great momentum to our industry, and other pressing problems requiring urgent solutions, macro indicators did not progress positively. At the end of 2021, Turkey's pharmaceutical market, with 3% growth in units, reached approximately 2.3 billion packages, barely catching up to 2017 levels. The worst performance of the last four years was seen in pharmaceutical production. Looking at 2020 as a whole, the pharmaceutical industry showed better performance in production terms than both general manufacturing and the chemical industry. In fact, while manufacturing industry production increased by 1.8% year-on-year, chemical sector production increased by 6.1%, pharmaceutical industry production increased by 8.8%. However, when looking at the first 10 months of 2021, while manufacturing industry production increased by 19.6% and chemical sector production increased by 22.9%, pharmaceutical industry production increased only by 2.7%. For 2022 and beyond, our expectation as a sector is that regulations be applied exactly when determining the pharmaceutical exchange rate. Additionally, in this period when current market exchange rate volatility is at historical levels, we believe the pharmaceutical exchange rate should be announced and implemented without waiting for February, and should be updated multiple times during the year according to exchange rate changes. We hope our problems in this area are resolved as quickly and effectively as possible. Our other expectation for 2022 is that the bottleneck in pharmaceutical licensing processes continuing for 2 years be resolved. In 2020, due to delays in the formation of committees working in this area, and then the inability of these committees to be deployed quickly and effectively, the licensing process in the industry reached a standstill. So much so that the average number of licenses exceeding 740 annually before 2020 dropped to 191 in 2020. While we welcome the steps taken by the TFFDA particularly in the last quarter of 2021 in this area, it is still too early to say that the accumulated problem has been completely solved. We expect the recently issued licensing regulation to contribute to the normalization process beginning in this area. With strategic support given to our sector, which is critical in terms of public health and our country's economy, the Turkish pharmaceutical industry will reach global strength. Through the joint efforts of the public and private sectors, if we produce balanced policies and solutions that will be leverage to our industry and quickly implement them, our sector will rapidly transform into an industry with accelerated investments, allocating more resources to R&D, increased R&D competence, even developing its own molecules, strong in biotechnology, not dependent on imports, and conducting more exports. LABER KİMYA GENERAL MANAGER COSMETICS MANUFACTURERS AND RESEARCHERS ASSOCIATION CHAIRMAN - LEVENT KAHRIMAN 2021 was an awareness year for organic cosmetics. In the transformation of consumer trends following the pandemic, a change and transformation occurred to meet consumer needs. 2021 was a year full of opportunities compared to 2020, and combined with our activities in both import and export, it was a very intensive and productive year for us. Our expectations from the sector in 2022, as Laber Kimya, are that with increasing global impact on sustainability, demand for clean-ingredient and sustainable products will increase. In this context, we believe quality standards will be the most important factor expected from companies. Another point is the recycling element that will become indispensable for sustainable businesses. The innovation of recyclable packaging will be one of the important topics to be discussed in 2022. Accordingly, Laber Kimya continues to accelerate its efforts to be a leader in quality, packaging and other sustainability topics. Our R&D work, which we consider very important in this regard, will continue in 2022. While we have forecasts that consumer attention in 2022 will be drawn to more organic and local production points, it can be seen as an active year in terms of exports. As Laber Kimya, we will start exporting to 25 countries. Laber Kimya, while growing and existing in the local market through private label manufacturing, will take important steps both in the local market and in exports, particularly with its own brand IVA NATURA. It is said that cosmetic products today are renewed every 1-2 years (or disappear from shelves/market). What was the product life cycle in cosmetics 10 years ago? (This should definitely be stated as an average year) What is the fundamental reason for this change in life cycle? The cosmetics sector is primarily very fast and dynamic. There are some factors that determine the pace of the sector. The first is technological changes. As technology changes, cosmetic product formulas, packaging, and purposes are differentiated, reflected in today's every moment as it is in general. Besides, the second factor can be thought of as consumer expectations constantly changing and transforming in direct proportion to technological developments. Between these two mutually reinforcing dynamic factors, products on online sales platforms as well as retail shelves face a shelf life situation that has dropped by nearly half compared to 10 years ago (approximately 2 years). Consumers have adapted to this situation. Frequently encountering new products and new brands on shelves, consumers looking for "better" products and services struggle to choose a roadmap for themselves and establish strong relationships with brands. In this situation, brands also need to take quick actions in order to connect with consumers and conduct marketing activities. Here, reading the market and carefully developing brand strategies against these fast-moving brands is of great importance. Cosmetic products with short shelf lives continue advertising and marketing activities at full speed, continuously expanding their product ranges with new elements, adding differentiated products to their brands to remain in this fast-moving cosmetics market wheel. In this regard, companies and brands' R&D departments have a lot of work to do. We as Laber Kimya continue our work without slowing down through both our innovative solutions and our R&D investments. At this point, what the brand promises to the consumer is very important. The brand should communicate to the consumer the quality and effectiveness of the product in the way and direction it wants to convey. As Laber Kimya, we use the right marketing channels to convey the right message to consumers in the right way. We try to make our market and shelf presence, our shelf life, permanent. After all, consumers and what goes through consumers' minds choose brands shaped in a way that will best serve their benefit and give them confidence. REİS GIDA BOARD CHAIRMAN - MEHMET REİS As Reis Gida, we left behind our 40th year of establishment and bade farewell to 2021 together, and said hello to 2022, which opens doors to new hopes. Each ending year allows us to account for the previous year, update our future plans, learn from our mistakes, and use these lessons to make the next year more productive. Of course, the road to success has a beginning and also a destination it wants to reach. The most reliable way to predict the future is through designing it, building it. For a more livable world and a sustainable future, we must produce more than we consume and leave a living space that will enable future generations to continue their existence. We are living through times when improving while producing, and thinking about the future while consuming, have become a necessity rather than a choice. Food requires soil, water, seeds, sunlight, energy and labor to grow. Allowing food to be wasted means the waste of natural resources, increases in food prices and many people's inability to access food. A consumption mindset based on waste leads to the further depletion of limited resources. Researchers say that human activities threaten the world's ecosystem. Approximately 10 percent of global greenhouse gas emissions come from wasted food. Greenhouse gas emissions cause global warming and climate change. Since the Industrial Revolution, humanity has focused on how to produce more, but for the world's sustainability, it is now necessary not just to increase production, but to use what is produced without waste and ensure fair distribution. As Reis Gida, having a presence in the food sector from 1981 to today, we have always been and will continue to be part of all steps that need to be taken and all work that needs to be implemented to prevent food loss and waste that occurs from field to table. As Reis Gida employees who have leaned a ladder for half a century, we proudly represent our country in all corners of the world today. Guided by the values we possess, through our labor, dedication, understanding rooted in traditions but innovative thinking, and strengthened by our working colleagues, we will continue forward. Wishing never to give up hope for better times to come, here's to many years filled with health, peace and abundance. KOÇAK FARMA GENERAL MANAGER - HAKAN KOÇAK During nearly two years of the pandemic affecting the entire world, we in the pharmaceutical sector have all gone through a difficult test and continue to do so. As in 2020, in 2021 Koçak Farma maintained uninterrupted pharmaceutical and serum production, ensuring continuous drug supply without any interruption. During this period, as Koçak Farma, we domestically produced almost all of the products listed in the Ministry of Health Covid-19 Treatment Algorithm, providing important support to our country's fight against Covid-19 and continue to do so. We continue work on the production of inactive Covid-19 vaccine and hyperimmune serum in BSL3/ABSL3 laboratories, which are equipped with Ministry of Health GMP certification within the Koçak Farma R&D center approved by the Ministry of Industry and Technology and certifications obtained from international certification organizations. Producing biotechnological drugs as well as other value-added drugs in Turkey, providing savings to public finances, reducing imports and increasing exports are of great importance. As Koçak Farma, our efforts to reduce dependence on biotechnological products and other conventional products that will provide added value, particularly in oncology, continue to increase. Currently, one in every two boxes of cancer medicine used in Turkey is produced by our company. For this purpose, we have important expectations from the authorities, particularly in licensing, pricing, localization and reimbursement processes. In 2021, Koçak Farma rose 14 positions compared to the previous year and reached 137th place among the ISO's 500 largest industrial companies in 2021, ranked by production-to-sales. With this result, we maintained our status as one of Turkey's 2 largest pharmaceutical companies. Additionally, according to IQVIA data, we completed 2021 as the company with the highest growth rate among the top 15 companies in the pharmaceutical market distributed to pharmacies through distribution channels. In 2021, the total pharmaceutical market, excluding hospital sales, reached TRY 61.5 billion with 31% growth in net sales figures. Koçak Farma's growth was 47% on an annual basis. We plan to continue our current growth trend in 2022.