"Digital application are more efficient and cost effective"
Pharmaceutical industry embraced digital marketing in order to deal with significant problems in supply chain, procurement of raw materials and auxiliary materials and serious increases in shipping costs. Santa Farma İlaç Sanayii Chairman Erol Kiresepi says, “We learned that those applications are more efficient and cost effective through firsthand experience in this period.”
Several pharmaceutical companies were affected negatively during the pandemic despite the critical role assumed by the industry. Going forward, changes related to foreign exchange will have an impact on the market. Santa Farma İlaç Sanayii Chairman Erol Kiresepi told us about the developments in the industry.
How did the pandemic affect the pharmaceutical industry in the world and Turkey? What changed in your life?
Covid-19 could be defined as a pandemic against which all countries fought through concerted efforts. For the first time in the history of modern states, we learned how effectively the world could fight against a pandemic through concerted efforts. Indeed, pharmaceutical companies are at the forefront in this fight and key to success in that respect. Vaccinations which were developed rapidly and Covid-19 drugs which will be launched soon are the most effective weapons in this fight. Also, the organization of pharmaceutical companies in all countries globally and rapid distribution of effective therapeutic drugs signify the critical role assumed by pharmaceutical companies during the pandemic. Despite their critical role in the pandemic, pharmaceutical companies were affected more or less negatively by the pandemic in varying degrees based on their product portfolio.
Which factors were effective in that period?
Both global and Turkish companies were affected negatively in a similar manner as pharmaceutical companies incurred sales losses due to the significant drop in the number of patients visiting clinics for routine complaints and the serious decrease in flu and similar contagious diseases which are quite prevalent normally thanks to a number of measures such as face masks, social distancing and hygiene. Significant problems in supply chain, procurement of raw materials and auxiliary materials and serious increases in shipping costs had a negative impact on all companies. Digital marketing, increasing diversity and intensity of promotional activities throughout the pandemic will probably remain important albeit at a diminishing pace. Like everyone else, healthcare professionals hope to achieve normalization and turn back to their old habits. And yet, digital applications which are known to increase efficiency of internal communications will remain in use to a great extent after the pandemic. This is because we learned that those applications are more efficient and cost effective through firsthand experience in this period.
What was the impact of the increase in F/X rates on pharmaceutical industry?
Let me begin by underlining that the effective decree on pricing of drugs does not meet the economic standards currently. Given the fact that the relevant decree was enacted at a period when there was no devaluation and Turkish Lira remained stable, the annual increase made on the basis of Euro creates a serious cost burden on pharmaceutical manufacturers due to the ongoing increase in F/X rates.
If I tell you that drug prices are currently calculated based on EUR 1.00 = TRY 4.57 and the currency rate will be around TRY 6.50 at best in 2022 notwithstanding the 90% increase in F/X rates, you will understand the gravity of the situation more clearly.
“There may be problems in drug purchases”
Since it is not possible to reflect the prices in Turkey, it will no longer be possible to sell most of the import drugs in the market due to economic reasons in addition to the fact that the prices set in Turkey based on those exchange rates sets a reference for other countries. Given the fact that most of the products marketed by global companies in Turkey are imports and their equivalents are not manufactured in our country, this may lead to a serious health crisis. Also, it will be impossible to introduce new molecules and innovative drugs to our country. As for domestic pharmaceutical companies, since most of the drugs are manufactured with the use import raw materials and auxiliary materials in Turkey, the fact that the increase in F/X rates, wages and all other manufacturing costs (such as energy) is well above the increase in the drug prices will create another important problem. The severe increase in F/X rates will have a negative effect on R&D activities and manufacturing plant investments in pharmaceutical industry. All those factors will have negative consequences for domestic manufacturing operations in pharmaceutical industry.