The world's largest biotechnology company Amgen announced that it will buy over 95% of Mustafa Nevzat Pharmaceuticals of Turkey (MN Pharma) on Wednesday. The deal is worth $700m, reports the FT.
MN Pharma is a privately-owned company specialising in generic injectable drugs with revenues of $200m in 2011. The company employs about 1,200 people. Experts estimate that in the future generic drugs will account for an ever larger piece of the pie of Turkey's $10bn pharmaceutical market.
In the past five years, MN Pharma's revenues have increased by more than 10% annually, while the more general Turkish pharmaceutical market been mostly sluggish.
According to MN Pharma, the company's exports are growing rapidly. Amgen sees this an opportunity to spread its presence in Turkey and the region.
It is not a surprise that Amgen wants to invest more in Turkey. Turkey's pharmaceutical sector is growing rapidly. One in every five drugs sold in 2020 will be purchased in China, Russia, Brazil, India, Mexico, Indonesia and Turkey, according to a report by international auditing and consulting company PricewaterhouseCoopers.
The report highlights Turkey and and India's markets for the pharmaceutical sector.
Turkey has around 300 pharmaceutical companies and 42 manufacturing facilities, 13 of which are run by multinationals. There has been an increasing interest by foreign companies to invest in Turkey's pharmaceutical sector and there has been quite a few recent acquisitions by foreign companies. In September 2011 Italian Recordati bought Turkish Dr F Frik Ilac, in May 2011, Poland's Polpharma acquired a majority of shares in Cenovapharma and in April 2011, European pharmaceutical company Nycomed entered into several agreements with various Turkish pharmaceutical firms to replace Biomeks Ilac as the marketing authorisation holder and distributor for the majority of the company's product portfolio in the country.
Political reforms are making the Turkish market even more tempting for many foreign companies. The government has carried out large-scale health reforms, which have increased many people's access to medical services. Around 98% of the population is currently covered by social security.
Turkey's healthcare spending has been about 6% of the GDP in recent years. And since the country's GDP has increased rapidly in the last year so has healthcare spending.
Since Turkey has a huge social security deficit to deal with, the government is pushing to increase the use of generics as a cost saving measure. Currently, over half of all drugs sold in Turkey are generics.
"Generics provide an opportunity for savings," he says. "Also generics are not wholly but mostly manufactured in Turkey and this local content is also something that the government cares about; they see the pharmaceutical sector as a strategic sector that needs to be developed in Turkey," says Can Buharali at the consultancy Istanbul Economics, to the FT.