The right prescription for Turkey

Author: | Published: 27 Apr 2016
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Salah Mostafa and Yevgen Bobyk of Takeda Pharmaceuticals outline the investment landscape in the country’s healthcare sector


Turkey's healthcare sector is reforming itself. In March 2015, at a total cost of around €1.2 billion ($1.36 billion) the Turkish Ministry of Health (MOH) launched the Bilkent PPP in Ankara. Covering over 1.2 million square metres, the Bilkent campus is the largest greenfield healthcare scheme in history. It's the third healthcare financing in Turkey to reach financial close following Adana and Mersin.

The projects are all part of a drive by the government to transform the country's means of providing healthcare to its citizens. Such reforms are likely to impact Turkey's pharmaceutical industry, so IFLR spoke to Salah Mostafa and Yevgen Bobyk of Takeda Pharmaceuticals about the situation in the country.

What are the most important aspects of Turkey's healthcare and pharma regulations?

The country has a fairly advanced healthcare and pharma regulatory framework compared to its peers in the Middle East. This is mainly driven by Turkey's attempts to align its institutions and legislation with the EU and has its origins in the MOH's Health Transformation Project that was launched in 2003.

There are a number of laws worth highlighting: the R&D Law provides tax incentives for companies setting up R&D centres. There is also the legislation that allows for the establishment of private cord blood banks in Turkey.

"Investors will need to invest substantially in understanding how their local partners conduct business"

However, despite the potential, there are a number of challenging regulations that international pharmaceutical companies need to be aware of. Notably, the approval process for the marketing of new drugs is problematic in Turkey. Although the regulations stipulate that the Ministry of Health (MOH) should register a new product within 210 days, the process takes substantially longer in practice mainly due to the MOH requirement that its own personnel has to conduct a GMP audit of manufacturing sites.

Pharma pricing is also a big concern. Even though Law 1262, on Pharmaceutical and Medical Preparations, states that the MOH is empowered to confirm and approve the price of the drugs, the MOH has construed the law to also extend to fixing prices.

The reference price system is becoming irrelevant given that the periodic euro value used in the calculation of referenced drug prices is determined by the Price Evaluation Commission (PEC) which has the discretion to maintain or change the foreign exchange rate and it was fixed at the 2009 levels until last year. This was recently challenged in Turkish courts and the matter is under review by the MOH.

What are the most pressing corporate regulatory developments that affect investors looking into Turkey?

Turkey generally has a strong FDI regulatory framework. The issue now is more geo-political in nature.

How has the Foreign Corrupt Practices Act (FCPA) been deployed in Turkey?

Turkey is a signatory to the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The Convention allows signatory states to introduce into local laws a legally binding framework to criminalise bribery of foreign public officials in international business transactions. Turkey amended Article 252 of its Criminal Law to allow for the extraterritorial application of certain foreign laws such as the FCPA.

Are there other anti-corruption points to be wary of in the country?

The legal framework in Turkey is robust when it comes to anti-corruption. More on the practical side, when dealing with local businesses, international investors will need to invest substantially in understanding how their local partners conduct business and putting in place robust compliance programs.

How has Turkey's competition law developed over the past 18 months following the moves to bring the country's regime more in line with streamlined EU standards?

The Draft Law concerning Amendments to the Law on Protection of Competition was included in the proposals list pending before the Turkish Grand National Assembly by the beginning of last year. The most significant matters that the Draft Law and the amendments to the secondary legislation aim to introduce (especially in terms of aligning local legislation with the EU legislation) can be summarised as the de minimis rule which allows the Competition Board to disregard competition infringements that are below a certain value in order to better allocate the Board's resources to more significant infringements.

In addition, the removal of negative clearance mechanism is crucial. It may not be welcomed by those practicing competition law and the relevant undertakings, but it is still in line with the EU practice. Lastly, the Draft Regulation on Administrative Monetary Fines brings calculation of the base administrative fine fully in line with the calculation method in the EU legislation and introduces serious amendments to the calculation of monetary fines.

However, considering that the Draft Amendment Law and the Draft Regulation on Fines are still pending before the Turkish Grand National Assembly haven't been enacted, it is worth noting that the efforts to align Turkish primary and secondary legislation on competition with the EU legislation have not paid off yet.

How would any future entry of Turkey into the EU affect general counsel role at major corporates such as yours?

This will probably change the dynamics of how we provide legal support in Turkey and – following a transition phase – we will look into bringing in other EU counsels to support our work in Turkey. This is looking quite unlikely now though.

Could you explain how the Government Action Plan 2016 will affect the pharmaceutical industry?

Under the plan, the Turkish Government has established a number of localisation goals to promote the establishment of a local and innovative pharmaceutical industry.

In this respect, the relevant local administrative bodies are likely to enter into special reimbursement arrangements, off-set agreements. In the near future in order to provide certain incentives to the pharmaceutical companies who undertake to localise production of their relevant products (by way of technology transfer, employment of local technical workforce).

On the other side, although the action plan also includes delisting of import products from reimbursement list as an action point, the Turkish Government has not yet taken any steps to this end and has also recently issued an announcement to reassure the industry that the current steps taken do not aim to delist any products from the reimbursement list and are only intended to localise production of pharmaceuticals to the extent possible in order to minimise trade deficit in the future.

About the author

Salah Mostafa
Director, head of legal NEMEA


Salah Mostafa is a dual-qualified lawyer in Egypt and in England & Wales with a broad experience in corporate commercial work. During his career, he has worked and lived in Cairo, Oman, Dubai, London and Jeddah both in-house (PepsiCo & Takeda) and in private practice (Trowers & Hamlins, Simmons & Simmons and King & Spalding).

Mostafa has advised and worked closely with international clients in the Pharmaceuticals, telecoms and investment banking sectors on a broad range of matters spanning from M&A transactions, commercial work, regulatory matters, general advisory work and corporate governance. He is currently the head of legal of Takeda's Near East Middle East & Africa Region and supported Takeda in an acquisition in Turkey in 2015.

About the author

Yevgen Bobyk
Head of legal, Ukraine, Turkey & Moldova

Takeda Ukraine
T: +38 (0)44-390-0909 3524

Yevgen Bobyk joined Takeda Ukraine as head of legal, also responsible for legal support of Takeda companies in Turkey and Moldova.

Before joining Takeda Bobyk worked with AstraZeneca in Ukraine for over three years as senior legal counsel, also covering company's activities in Belarus, Georgia and Kazakhstan.

He also has experience working for various law firms, both local and international. He holds a master's degree in European business law from Lund University, Sweden and master's degree in International Law from the National Law Academy of Ukraine, Ukraine.