Turkey's healthcare market a delight, but outlook bittersweet
This article was originally published in Clinica
Turkey’s healthcare market is seen as a hot spot in the EMEA region but the government has to tread a fine line between ensuring continued economic growth while managing a high budget deficit. If not, the rapid expansion of the country’s healthcare system could come to a grinding halt and exporters could face a further squeeze on margins from their Turkish sales.
Prices for drugs and devices have already been pushed down, with bulk bidding in the medical device tender process opening up the market to cheap, poor quality imports, according to Frost & Sullivan analyst Hilal Cura.
Despite continued pricing pressure, the Turkish healthcare products market is still forecast to see growth of 8% per year to 2015. The device market is set to grow to $2.45 billion by 2015, with IVDs $0.57 billion and diagnostic imaging systems $0.28 billion. F&S says the growth will be driven by a 50% increase in healthcare spending to $62.7bn as the Turkish government implements ongoing healthcare reforms, which among other things, aim to increase health insurance coverage from 50% to 86% of the population, boost hospital building and co
This increase in healthcare spending, coupled with a stable political and economic environment, has led some large healthcare companies to invest heavily in Turkey in the last year or so. These have included Philips Healthcare, Otsuka and Amgen. What’s more, the country’s regulatory system is developing in line with that of EU countries. When the revised EU medical device and IVD regulations enter into force, they will be directly applicable in Turkey.
Turkish economic growth remains robust compared with debt-choked Europe and much of the Middle East, and state finances are relatively strong. The government is aiming for a budget deficit of just 2.2% of national output this year and state debt is seen at around 35% of GDP, well below most Eurozone states.
The World Bank said this week that economic growth in Turkey will pick up this year to 4% or more and inflation will fall. However, it warned that the country was facing a wider current account deficit.
Turkey's current account deficit, a measure of a country's competitiveness and fiscal stability, is expected to widen to 7% of national output this year from 6.8% in 2012. It is seen narrowing again to 6.8% in 2014. The country is dependent on heavy inflows of foreign capital to pay for that gap.
While the inflows continue, Turkey can live comfortably with its deficit. But if they dry up, the country could be in for “external shocks” such as a plunge of its currency which would push up inflation and interest rates, ratings agency S&P warned in May 2012. This in turn could put the brakes on government spending.
Turkey is certainly a growth market for healthcare firms. Whether the country’s economic environment is sustainable is far from clear.
If you are a subscriber and have a question arising from our news and analysis coverage, or would like us to do some research for you, use the free Ask the Analyst service by emailing us at