Turkey had a population of around 80.1 million in 2014. The Ministry of Health (MoH) is the largest provider of healthcare and the sole public provider of preventive services in the country. Nationally, MoH is responsible for drafting and implementing health policy and health services in the region. All targets and objectives for improving capacity, quality and distribution of health services are set by the MoH, which is also responsible for bringing in sustainable, as well the latest infrastructure and technology. The MoH is also responsible for ensuring accessibility, safety, efficacy and the effective use of medical devices in Turkey.
Turkey’s healthcare system has witnessed a huge transformation since 2002, with the MoH encouraging investments by the private sector in healthcare and renovating or rebuilding a majority of the 900 hospitals that it operates. The Health Transformation Program implemented by the MoH has led to social security reforms, which have improved universal health coverage for the country’s citizens. In FY 2014, around USD 9 billion was allocated to the MoH’s budget, while per capita health spending increased from $330 to $780.
Turkey has become an attractive location for the manufacture and marketing of medical devices due to its available infrastructure and large number of healthcare institutions in the country. Currently, 1,453 hospitals and 194,000 hospital beds operate in the country, out of which 840 hospitals, also known as “state hospitals,” are built and operated by the MoH, constituting 57 percent of the present hospital stock and 62 percent of the existing hospital bed capacity. There are also 503 “private hospitals” and 65 “university hospitals” in Turkey.
Turkey’s medical device market has been growing gradually and is ranked as the largest in the Middle East and Africa, and also figures among the top 20 largest in the world in value terms. Over the period 2008-2013, the market is estimated to have grown at a CAGR of 2.4% to US$2,421.6mn, or US$32 per capita, in 2013, driven by sustained public health expenditure, and a growing older population requiring sophisticated healthcare. In Turkey, family physicians, and private and public hospitals purchase medical equipment and devices, or lease them from the private sector through a competitive tendering process.
Turkey meets 90 percent of its medical device requirements through imports, which grew at a CAGR of 2.9% over 2008-2013 to US$2,058.4mn in 2013, up 6.8% over 2012. There are a large number of medical manufacturers in the region, though they are mostly small-scale and focus on producing cheap, low-technology items, like bandages and syringes. Turkey manufactures medical device worth over US$700mn and its exports grew at a CAGR of 17.2% over 2008-2013 to reach a new high of US$366.9mn in 2013, up 26.0% over 2012.
Current market scenario
Private and public hospitals in Turkey already have state-of-the-art and innovative medical devices across all categories. However, there is still potential for growth in some types of medical devices, such as advanced pre-screening, imaging and diagnostics devices, advanced point-of-care devices, advanced surgical devices using robotics technology, implants used in orthopedics and trauma, and remote patient monitoring devices.
Presently, around 6,000 companies operate in the Turkish medical equipment and devices market. Out of the 100 medical equipment manufacturers in the country, a majority are active in manufacturing disposables, surgical tools, stents, prosthetics and hospital furniture. Around 15 percent of Turkey’s medical device imports are from the US, followed by the European Union, particularly Germany, Italy, United Kingdom, France and the Netherlands, and China and India.
The expansion in Turkey’s healthcare infrastructure is driving the need for high technology medical devices. The region’s growing middle class population is also willing to spend more on health services. The average OECD country per capita healthcare spending of $2386 in 2012, coupled with its rising income levels and government programs, will drive a significant growth in the market. Turkey’s healthcare spending per capita has been targeted to triple to USD 2000 by 2023.
Public and private hospitals have invested in all major categories of medical devices and are now looking for state-of-the-art, minimally invasive or non-invasive solutions, including advanced imaging and diagnostics devices, point-of-care devices, surgical devices using robotics technology, implants used in orthopedics and trauma, and remote patient monitoring devices.
The MoH has proposed 29 integrated health campuses to be built and managed under a Public-Private- Partnership (PPP) model, through which approximately 45,000 beds will be integrated into the country’s healthcare system. The construction of integrated health campuses will provide significant opportunities for medical device companies that have been assigned the task of equipping these facilities.
The development of medical tourism in Turkey is also driving investments by the private sector in healthcare. Turkey’s affordable medical costs is resulting in an increasing number of patients from Europe and the Middle East visiting the country for treatment. The region’s medical tourism market is estimated to be worth about USD 500 million. The growth in medical tourism will lead to a higher demand for medical devices, which will benefit manufacturers in the US and Europe.
Over 2013-2018, the Turkish medical device market is estimated to grow at a CAGR of 3.4% to US$2,865.3mn, or US$36 per capita by 2018, led by the expansion of healthcare facilities, increasing health expenditure and higher imports.
There are a limited number of domestic manufacturers of medical devices in Turkey, as a result of which, a majority of the region’s requirement is met by imports. However, the modernization of Turkey’s healthcare system, integration of EU standards and expansion in healthcare service providers will drive an increase in the region’s domestic production. Moreover, the Turkish government is making efforts to strengthen domestic manufacturers, and promote medical device exports. There could be a decline in the region’s medical device imports over the coming years, though it will still remain an attractive market for advanced and innovative products.
Currently, Abbott and Siemens have set up production and R&D centers in Turkey, while Bayer and Alvimedica have established their corporate offices in the region. GE has shifted its headquarters for the EAGM region to Turkey’s capital, Istanbul, while Siemens has set up a new production plant in the Gebze Industrial Zone at an investment of USD 76 Million.
Some globally renowned companies who are suppliers in Turkey’s medical device market are Johnson & Johnson, Boston Scientific, CareFusion, Becton Dickinson & Company, Covidien, 3M, Philips and Olympus.
Manufacturers of medical devices can open their own offices in Turkey and manage their own sales and marketing force. They also have the option of appointing national and exclusive distributors with a strong reseller base for providing marketing and servicing across the country. These distributors usually track the tenders floated by family physicians, and private and public hospitals, and also have the required knowledge regarding shipping products into Turkey. Generally, multiple distributors are not required for most medical equipment and devices, and a single distributor for managing a reseller channel to market the products it represents is sufficient to cover the entire region.
With 95 percent of Turkey’s population covered under the government’s public health insurance plan, reimbursement remains the key to accessing the region’s medical devices market. “Universal healthcare insurance” holders can receive treatments at any of the hospitals in the country and their entire medical expenses are reimbursed by the Social Security Institute (SGK), based on the treatment type and medical device listed in the Healthcare Implementation Communique (SUT). Every few years, the SUT goes through a revision to include new medical technologies, equipment, techniques, and an updated reimbursement price list. Manufacturers who wish to list their medical equipment in SUT must register their products in the National Databank, either by themselves or through their distributor. The MoH manages the National Databank in order to track the devices that are being used in the market and recall them in case of any post-sales problem through its manufacturers.
Being an accession country to the European Union (EU) and part of Customs Union with the EU from the early ‘90s onwards, most of the medical rules and regulations applicable in the EU are also applicable in Turkey. This alignment has made Turkey’s regulatory environment more complex and its processes more comprehensive in comparison to any other region in the Middle East.
For U.S. companies looking to export medical devices to Turkey, an FDA certification is insufficient and they must meet the requirements set by the EU. Manufactures from the EU are exempt from paying customs tax on exports to Turkey due to Customs Union rules, though medical equipment and devices imported from non-EU countries, including the U.S., are subject to customs tax. If a U.S. company appoints a local distributor in Turkey to distribute its products and completes the required export certification and documentation, then the distributor must register the products in the National Databank managed by the MoH.
In order to list its medical device products in SUT, a U.S. manufacturer must agree on the reimbursement price established by SGK for the particular product group. In case a specific product group is not listed in SUT, then the U.S. company and its distributor must convince the SGK to include it by highlighting the need for the product and the technology. If a U.S. medical device company does not wish to be a part of SUT, then it will not be allowed to sell to the large public sector and can only sell its products to the private sector.