Domestic Pharmaceutical Industry Fights for Survival

Structural problems in the pharmaceutical pricing system that have persisted for years and a pharmaceutical exchange rate disconnected from current economic realities are driving the Turkish pharmaceutical industry into one of the most severe bottlenecks in its history. As production contracts in the sector, many companies are fighting for survival. Savaş Malkoç, Secretary General of the Pharmaceutical Industry Employers' Association (İEİS), warned that Turkey's domestic pharmaceutical production capacity is under threat and that permanent damage is inevitable unless urgent measures are taken.

Turkey's pharmaceutical market shrank by 3.9 percent by volume last year, and this contraction continued in the first quarter of 2025, with the market declining 3.1 percent. The most striking data came from the production side. While pharmaceutical industry production fell 7.3 percent in 2024, by April 2025 this decline had reached 10.8 percent on an annual average basis.

İEİS, facing increasingly irreversible serious threats to the production capacity, employment and export potential of the Turkish pharmaceutical sector, which has over a century of experience, has called for the pharmaceutical exchange rate—last updated on 24 October—to be urgently revised and the pricing legislation to be reformed in line with current conditions.

Industry demand is clear: urgent exchange rate update and pricing legislation reform
Pharmaceutical prices are currently calculated based on a pharmaceutical exchange rate determined only once a year, derived from 60 percent of the previous year's average euro exchange rate. When the reference pricing system was implemented, the pharmaceutical exchange rate corresponded to 100 percent of the market rate, but currently it corresponds to only 46 percent of the current rate. When average discounts of around 27 percent given to the Social Security Institution are taken into account, this ratio drops to around 32 percent.

In the policy recommendations submitted to public authorities by the Pharmaceutical Industry Employers' Association, it is stated that the 60 percent coefficient used in determining the pharmaceutical exchange rate should be increased back to 70 percent as it was before 2019, and in line with this ratio, the pharmaceutical exchange rate should be updated in July to reflect developments in the exchange rate and cost increases.

Pointing out that the pharmaceutical exchange rate needs to be updated four times a year and that changes to the pharmaceutical exchange rate in line with current conditions should be reflected in the system without delay, İEİS Secretary General Savaş Malkoç drew attention to the serious supply security problems that would arise if this situation persists, continuing his remarks as follows: "The economic pressure that our pharmaceutical industry has endured for years has now reached an unbearable point. The widening gap between the pharmaceutical exchange rate and the market rate, rising costs and high credit interest rates are dragging companies to the brink of bankruptcy. Today many companies are considering filing for concordat, while some are in the sales process. Under these conditions, Turkey risks losing the capability to produce 92 out of every 100 medicine units it currently produces, as a result of investments made over many years. Due to the current pricing system and cost pressures, let alone making new investments, it has become impossible to continue even existing pharmaceutical production. This means not only our industry but also public health is directly under threat. If urgent measures are not taken, drug shortages will be inevitable in the near future."

Either we become an import paradise or a production and export hub
Another critical issue for the sector is idle capacity in biotechnology medicines. As of 2024, while biotechnology and biosimilar medicines accounted for 25 percent of the Social Security Institution's budget, Turkey's 13 biotechnology production facilities are not operating at full capacity. Noting that this situation is not sustainable, Savaş Malkoç emphasized that it is necessary to rapidly operationalize these facilities through public procurement guarantees, preferential treatment and production incentives.

Malkoç continued his remarks as follows: "Turkey has the facilities necessary to produce biotechnology medicines. However, the support mechanisms needed to realize this potential have unfortunately not been put in place. For this reason, these national facilities are unfortunately idle and companies investing in this area are suffering losses. A system where imports continue to increase and production declines will inevitably lead to self-sufficiency failure. Public support in this field will protect not only the sector but also the country's economy and public health. Either Turkey will become an import paradise for medicines or, in line with the vision set out by the President, it will transform into a regional and global production and export hub. The choice is not ours; it will be that of policies. From this perspective, public procurement guarantees with predetermined prices and timeframes, reasonably priced and long-term loans for product development including clinical research will play a vital role."