First-Half Performance in the Pharmaceutical Industry

24 Eylül 2019

The Sectoral Perspective study conducted by KPMG Turkey to measure the first-half performance of the Turkish pharmaceutical industry shows an upbeat growth trend taking hold since the beginning of the year.

Real sales in the pharmaceutical market have been growing relatively moderately for some time and growth is largely due to price increases. Data on financial turnover growth in the pharmaceutical industry point towards a strong performance in line with expectations.

While the move towards local production and strong export figures support this process, it is highly important to ensure the continuity of these trends by having the industry start producing certain active ingredients to curb dependence on foreign resources.

To achieve that, the industry should give even more weight to R&D and increase the share of fixed investments.

Highlights of the report can be summarized as follows:
Upward Trend Continues

• In 2018, global pharmaceutical spending amounted to one trillion and two hundred billion US Dollars with demand and investment trends expected to continue at high levels over the next 5 years. However, public intervention in business processes and high R&D spending emerge as the main challenges facing the industry.

134 New Medications on the Market

• In the first three months of the year, 134 new drugs entered the market, 114 of which were generic drugs manufactured domestically.

Production of Basic Pharmaceutical Products Grows by 15.6 Percent

• The production of basic pharmaceutical products and pharmaceutical supplies in the industrial production continues to benefit from the increasing tendency to use domestically manufactured products. In this context, the industry’s average growth rate of 7.3 percent in 2018 continued strongly into the first five months of 2019.

The annual growth rate of the industry, which was 13.2 percent in the first quarter, averaged 15.6 percent in the first five months.

Turnover Increases by 31 Percent

• The Turkish pharmaceutical industry grew by 26.1 percent in 2018 making it worth 30.94 billion Turkish Liras.

On the box scale, box sales rose by 3.6 percent to a figure of 2.30 billion. In the first quarter of 2019, a value growth of 27.5 percent as opposed to a growth of 0.4 percent in terms of box sales were posted compared to the same period of the previous year.

• The domestic annual turnover growth of the industry, which was 24.1 percent in 2018 and 31.0 percent in the first five months of 2019, indicated a strong increase in real terms.

Health Tourism Gains Importance

• A steadily growing health tourism industry also supports the Turkish pharmaceutical industry.

Turkey Dazes with it is Huge Potential

• In the medium term, the industry’s dynamics are constrained by complicated licensing processes, growing consumer awareness with regards to responsible use of drugs and stringent regulations by public authorities.

That being said, advances in technology coupled with high R&D expenditures are inevitably putting pressure on costs. Yet, especially emerging markets like Turkey (pharmerging markets) still have a high potential owing to their demographics.

Hakan Orhan

Pharmaceutical and
Healthcare Sector Leader
KPMG Türkiye