Turkish healthcare sector is progressing quickly. The policy of the state foresees to let the private sector the sector to get acceleration. The development in the healthcare sector affects the medical devices in a positive way. The yearly volume of the medical sector accounts for worth $6 billion.
Still we meet 90 percent of the medical devices by imports. However, Turkey takes place in 30 countries which need medical devices mostly. In other words, the market has a huge potential but domestic made production is limited. In terms of the value added of medical devices’ sector takes top-tier. For example, a pair of scissors which is used in the ocular surgery costs $5 dollar. But such a device can be sold by high brand value owners in $150- 200 dollars. For this reason, the sector, which has a high value added, features a great importance in terms of domestic production. Actually both the Ministry of Health and representatives of the sector have awareness of this reality. Even though there are no special incentives for the sector, the foremost domestic investments have been carried out in recent years. Some of them characterize as breakthrough the investments include many things…
Turkey has begun to produce the first cataract lens, first stent two years ago. In the scope of the surgical devices, the province of Samsun has achieved to be a talent. In the optical sector the investments are being carried out to cut the imports. But these are not enough. Still there is lots of way to be taken.
300 kinds of products
According to the report prepared by Medical Council of the TOBB, the medical devices sector shelters over 300 thousand products in its structure. The sub-branches of the sector consists of medical imaging system and devices, all devices in surgery department, respiratory devices, surgical devices and tools, prosthesis teeth, medicine, furniture and parts which are used in surgery and dentistry, electro diagnosis devices and parts, tools and devices in dentistry, sterilized sewing materials, medical devices and tools related with eye, dentistry revolver, X ray devices, artificial joints, prosthesis, sound and auditory devices, optical medical devices, single use consuming matters, radiotherapy systems, physical treatment devices, biochemical, molecular biology, hematology, genetic and microbiology devices. In Turkey there are nearly 1000 medical device producers. 700 of them are both producers and exporters. One of the features of the sector any state-run establishment does not take place at all, completely the sector is in the hand of the private sector. The medical material production intensifies in the provinces such as in Istanbul, Ankara, and Izmir.
According to the report of theTOBB, the medical devices sector has a great importance in Europe. SMEs carry the sector in which nearly 11 thousand producers act. 80percent of the producers in Europecharacterize as SME. Prior to the global economic crisis the growth of the sector reached up to 6 percent per annum. Still employing 530 thousand people across Europe, the sector’s total growth reached by 80 billion euro. One-third of the medical market in the hand of Germany in Europe. This is followed by the UK, France, Switzerland, Italy, Romania and Sweden respectively.
Incentive is a must
In order to enable the sector togrow, R & D studies attract a great attention. In fact, the firms in Europe spend 8 percent of their revenuesper annum in R & D investments. InTurkey, the producers, which have difficulty for the high technology,began to allocate resource for R & D. Before, while the sector which was oriented and developed by the health professionals’ wish and recommends, now the qualified engineers and designers have began to join the structures. No doubt, there is a big share of R & D incentives in this development. But, the incentives of R & D are not enough for the development of medical sector.
The representatives of the sector want installing of organized industrial zone in the health sector, as well as15 percent support in favor of the domestic producers in the public purchasing. This incentive finds its return in the application like this. For example, a domestic producer and importer firms bid for the sametender. The domestically producer even offers 15 percent higher pricein their tender; the public bodies are advised to buy from the domesticmade firm. But this incentive does not find much sympathy in application. Here are the bravest investors of the medical sector ranging from optic to stent, prosthesis to auditory device.
Problem of auditory devices is wrong perception
In Turkey, nearly 25 thousand auditory devices are sold. The turnover of it is guessed some TL 25 million. The biggest buyers of these devices are Social Security Organization, in other words the state. In fact, this is a very low figure in a 70 million populated Turkey. In Denmark where has the population of 4 million, 70 thousand auditory devices are sold. In the developed countries auditory devices are used like an eyewear as an accessory. As for us, regarded as a sign of disabling condition, its use rate is low. Of course, purchasing power parity of human beings affects buying of the devices.
SOCSO pays TL420 per auditory device since the beginning of 2008. However, the average price of the devices is between TL700 – 1000. In Turkey, there is not 100 percent domestic made production in
auditory devices. There is semiassembling. The certain parts of the device are brought abroad and mounted in Turkey. One of the firms which work in this way is Esenler Company Group, the owner of Odiomed brand.
Beginning the work by imports in 1983, Esenler Group produces its devices as semi-mounted since 2006 at its center in the district of Şişli. Importing various parts of the loud speakers, microphones from Germany, Switzerland and the UK and then mounts, the firm sells the devices under the name of Odiomed. The firm sells the devices not only in Turkey, but also in Cameron, Syriaand Nigeria.
Dr. Murat Esenler, Chairman of the Board of Esenler Companies Group stressed that they produce and sell peculiar to person. Esenler said, “We sell VIP auditory devices. These devices are not seemed from outside featuring computerized and digital. Their prices range between 500 and 5000 euro in the domestic market.”
Esenler Group also brings parts of the devices for tinnitus from Germany and mounts to sell. Esenler believes that the market would grow more by the increase of awareness of the devices in Turkey. “Still 25 thousand devices are sold in Turkey. The developed societies use the device as an eyewear. In Turkey many people do not use the device saying “I’m not disabled”. In Anatolia, even many people do not know this device. When the necessary awareness is provided, I guess the market will reach by 350 thousand units within 5 years. There is also newly awareness in the markets of the Mideast and Africa. Turkey will be also a sale base for these markets.
Surgical Device Base: Samsun
300 thousand kinds of medical materials are used in the healthcare sector. As for surgical devices 14 thousand kinds of products are made in 27 branches. Turkey has begun to get an outstanding way in the surgical devices’ market in recent years. Samsun has become the third surgical devices’ production base of the world. Before Samsun there are Tutlingen, Germany and Sialkot, Pakistan. In this business, the German Aeslulap is the number one producer of the world.
In Samsun, currently some 30 firms produce surgical devices. The leadership of this work has been undertaken by Bahadır Tıbbi Alet Cihaz Sanayi ve Aygün Cerrahi Aletler. In fact, these two firms’ stories are the same in this business. While their founders were master in arm making, in the course of time, they began to make medical devices. Bahadır Medical Devices Executive Board Chairman Hasan Bahadır summarize their story by saying; “We are from Trabzon. My father Hasan Bahadır was a blacksmith master. He used to make arms in Trabzon. After migrating to Samsun, maintained blacksmith work and arm work. He began this work at a workshop of 10 sq meters. He ran his works together with his nephews. In the 1980s, when device reduction began, my father had said “we make this work” and started the work. In the course of time we have expanded our production space up to 11 thousand sq meters. Currently 150 employees work at our company. As for our turnover per annum is some $6 million.”
350 kinds of scissors are used in surgical process. All of them can be produced by the masters in the province of Samsun. There is no problem in quality. However, it is not possible to say that Samsun is a brand sufficiently in this area. Especially, the German firms let their devices produce in Turkey and sells in the world by their own brands. For example, a pair of scissors which is used in the eye surgical can be made $5 dollar in Samsun. As for their retail sales reach by $150-200 dollars. so this situation makes Ahmet Bahadır, as a producer, sad so much.
“Germans are the brand in this work. We have not still become a brand. We try to make production and marketing together. But it is not possible to be both producer and seller. We work apart from university. However, the firms as us should be in the techno-park of universities. We experience lack of qualified staff. If Samsun will be a brand in this work, a healthcare organized industrial zone must be made up. In order to be a brand in this work, state, university and industrialist should work together and cooperate their power.”
The surgical devices’ production is based on handiwork rather than technology. For this reason, apprentice-master relation is very crucial in this work. Actually most of the entrepreneurs in the sector first had worked in Bahadır and Aygün companies then they set up their own businesses. Just Mefa Cerrahi Aletler Industry’s owners Metin Cansu and Faruk Yıldız…
Cansu and Yıldız have experience for 17 years in this work. They established their own companies by getting credit worth TL44 thousand from KOSGEB in 2009. Currently they maintain their business at their workshop locating on an area of 270 sq meters. Metin Cansu emphasized that they work on order having production capacity of 15 thousand unit surgical devices yearly. Mefa sell ophthalmic scissors, tissue scissors to the private hospitals and medical firms. Cansu said, “As long as human beings have been in existence, our sector to be in existence. When human being lie on the surgical table absolutely these devices will be used. In the state tenders there is interest in the foreign firms, but domestically producer firms are also supported.”
Domestic-made cataract lenses
In the ophthalmic area, outstanding developments occur on behalf of domestic made production. Known by its investments in real-estate and energy, Varlıbas Holding has established cataract lens plant in 2008. The group met 55 percent of Turkey’s cataract lens need last year. Known also as “lens for inside of eye” the cataract lens is implanted into eye of patients by surgery. In Turkey, 300-350 thousand cataract lenses are used per annum. In 2007, entire of these lenses were imported. In this area, there are some 40 producers across the world. Varlıbas family was representative of the German Acritech firm for 15 years in Turkey. There is an interesting story of Varlıbas family which left the imports to direct to set up the plant in 2008. Ercan Varlıbaş is an eye doctor, elder son of Süleyman Varlıbas founder of Varlıbas Holding. Ercan Varlıbaş tells the story, “AsVarlıbas we sell for 15 year the imported products in Turkey. We were representative of the German Acritech firm in Turkey. Our market share was in some 30 percentage. When Acritech was offered for sales, we also demanded. We began bargaining with 50 million euro. But Acritech was sold to Zaiss firm by 32 million euro. We were very upset by this situation. When we asked for the reason, the respond was that the ‘Germans did not want the technology to go outside.’ Then we decided to establish our own facility.” Currently in Turkey it is known that 500 thousand cataract patients exist. When reached by those who did not get cataract surgery the domestic market expected to be bigger. SGK pays TL450 for cataract surgery. The domestic made cataract lenses are sold by TL75, imported ones are sold by TL125. As for the prices of lenses which were specially developed by Varlıbas for both myopia ana hypermetropia and middle vision are 325 euro. Dr. Ercan Varlıbaş states that when these lenses are implanted the patients do not need to use eyeglasses. Competing of Turkish businessmen in this area made European fairly anxious.
Varlıbas tells the situation Europeans, “The countries such as Germany, Spain, France did not expect that we would enter this business. They were surprised much. But it must be some fedayeen in these works. We also did this. Now we would like to produce eye laser. In this issue we wait land allocation. Once the Directorship of Istanbul Healthcare, we will launch production in this area.”
Lens market is very virgin
As the voice opened from lens it is not suitable not to mention by Anadolu Tıp Technology which produces eye hydrophobic and contact lens. Having established the province of Sivas, Anadolu Tıp Teknolojileri, which is the only and first lens plant of Turkey began production in 2005. This firms also exports to Europe and Mideast. The developments in health sector urge the foremost holdings to pose in this area. For example, Eczacıbaşı
Ilac Pazarlama has entered the market of lens and lens care products with the foremost Japanese Menicon firm. According to this, Eczacıbaşı Ilac Pazarlama has owned the rights of products of Menicon which acts over 30 countries including Europe, America and Japan with over 1000 employees in Turkey. Well, why Menico has entered Turkey? For thisit is enough to look at the figures. In our country it is guessed that 200thousand lens users are available. The lens use rate to the total population is 0.25 percent. If though that this rate reaches by 3 percent in Europe, it is putting forward that how much the market is empty.
Chinese threat to surgery yarn
In Turkey, many medical materials are produced ranging from surgery yarn to blood bags. For example, Kansuk Laboratory which was established in 1982 the first domestic firm producing blood bags. Established at the beginning of the 1970s, Doğsan headquartered in the province of Trabzon produced first surgery yarn of Turkey. In this area the firm made a breakthrough in the Mideast and Balkans. The company of Saruhan family produces 11 kinds of yarn by polymer. 6 of them are absorbed by body, in other words there is no need to get off yarns after surgery. The market share of Doğsan rises by 30 percent.
There are more domestic firms in this area. SSM, Medeks, Katsan and Orhan Boz from these firms act for years. Nakipoglu family’s company Ipek Plastik Saglık Urunleri located in Gaziantep produces surgery yarn since 2004…
Deputy General Manager Cağan Karal of Doğsan Cerrahi Dikis Malzemeleri, said that the imported products dominate 60 percent of the market. Indicating that consumption of the surgery yarn in Turkey, was at least 2 million boxes, Karal said, “The Chinese firms have entered the market within the last 5 years. There are also European firms that produce in China. One box of the domestic yarns is sold between TL20-200. As for the Chinese products can be sold half, even, one fourth of these prices. This put us into difficulty in competition.”
Dogsan produces annually producing 800 thousand boxes surgical thread. 120 employees work in factory of the company in Trabzon. 30 employees are on duty of sales. Dogsan exports 20 percent of production to many countries such as Germany, Iran, Iraq, Saudi Arabia, Lebanon and Spain through 50 dealers.
The world’s largest surgical thread manufacturer, Johnson & Johnson, American company is very active in the market of Turkey. Number of firms participating in both private and public hospitals auctions of surgical thread is 28 in our country. We do not manufacture the Biochemistry device Biochemistry devices are quiet important products for the health sector. Biochemistry laboratories are needed to make the dozens of test such as blood sugar, hemoglobin and cholesterol tests. A biochemistry laboratory can be installed with 25 different devices and over 500 different materials. There is an interesting form of business. For example, the firm, that take place in hospitals auctions, supplies hospital’s equipment free of charge but the firm sells the kit.
Biochemical systems are under the domination of imported brands in Turkey as all the world. Four major companies such Roche, Beckman Coulter, Abbott and Siemens achieved $ 400 million turnover last year. The products sold in laboratories of Turkey are $ 1.5 billion turnover.
Bizim Medical is representative of well-known brands such as Biorad, Roche, and Beckman Coulter in the Eastern Black Sea, Central Anatolia, and Eastern Anatolia.Omer Sen, owner the firm, is also president of the Eastern Black Sea Medical Association. Bizim medical is distributor of Kansu blood bags and Medapex surgical thread. The company taking place in about 300 both private and public hospitals auctions per year has turnover of 40 million TL.
Omer Sen informs that the device is not produced; only a small amount of kit is produced in Turkey. Stressing that even the definitions of the medical sector has not been fully made, Sen says, “I wish we could sell
the domestic product.” By the way, to set a biology lab of a university hospital with the latest technology needs 2-3 million Euros.
Single Pistol in Native Heart Stent
To produce the first heart stent in Turkey was only possible 6 years ago. Alvimedica Medical Products is a multi-partner company owned 100 percent of the Turks, like Ishak Alaton, Chairman of Alarko Holding. Alvimedica founded a catheter factory with the largest ‘clean-room’ (germs-free production area) in Europe in Catalca in 2005. Recalling that they are the first and only manufacturer of heart stent in Turkey, Dr. Cem Bozkurt CEO of Alvimedica, said that they established the factory with an investment of $ 22 million.
Bozkurt stated that they produced 120 thousand stents with 40 thousand drug-coated stents, 80 thousand balloon catheter, 250 thousand guiding catheters and 750 thousand angio catheters last year. According to the information given by Bozkurt, 250 thousand Angiomas have been done in Turkey every year. About 10 thousand stents are inserted to the patients during these Angiomas. Currently, 65 percent of the stents used in Turkey have Alvimedica patent. The Company is dominated on the half of the market catheter used.
There are totally 10 companies producing stent in the world. the largest of them are Johnson & Cordis, Abbott, Boston Scientific and Metronic. Prices of the medicated stents of these companies were 3-4 thousand dollar in Turkey. That price falls to 1000 TL as Alvimedica enter to the sector. Alvimedica products also are exported to Western Europe. Preparing to open an office in Russia, Iran and Brazil the company exports 40 percent of production. Declaring that they received 20 patents from foreign universities, Bozkurt said, “We spent61 million dollars for R & D activities and patents. We would like to enter to India too. We will produce the stent for the brain the next year. We would like to establish a Biomedical Specialized Organized Industrial Zone in Catalca. Talks with Catalca Municipality continue on this subject.”
Orthopaedic Products develop
The power of domestic producers on orthopedic surgery is increasing. Though the ruler on the orthopedic market in the World is still Johnson & Johnson Orthopedics, Zimmer, Stryker, Smith & Nephew, Biomet, and Wright, they have also 75per cent market share of Turkey. Turkey orthopedic implant market is estimated over $ 260 million in volume to hospital purchase price in Turkey. Product prices are between 4 and 4 thousand dollars. Butsupportive orthopedic products such as neck, kneepad are not involved in these prices.
The number of local companiesin the field of orthopedic surgerycurrently is not two fingers of the hand. These companies are Ortopro, Tipsan, Hipokrat, Tibmed, Tasarimand TST. Starting by importingin the sector, Ortopro Medical Instruments, which was founded by a medical doctor Tolga Yalcinkaya and Mehmet Tanyolac in 1995, hasbeen continuing its operates as a manufacturer in Aegean Free Trade Zone in Izmir since 2002. Knee and hip prostheses used in degeneration of the joints, platinums and screws used in trauma like fractures are among 50 kinds of Ortopro product. Is Girisim Sermayesi bought a 30 percent of Ortopro in early 2008. With 130 employees the company exports to around 30 countries worldwide as well as domestic market. Tolga Yalcinkaya, Chairman of Ortopro, declares that they aim to export 8 million dollars this year.
To Yalcinkaya the required media to develop the product in this field is now available. Recording that scientists and doctors have very creative ideas in this field, Yalcinkaya supposes to benefit of the R & D incentives of SANTES and TUBITAK. Yalcinkaya said, “We expect hospitals to use the option of 15 percent price advantage for domestic property in Turkey. If the state encourages this app, the medical sector grows faster.” $ 150 million investment
Recognized real estate and energy investments, Varlibas Holding started R & D activities in 2008 to develop a cataract lens. Proving qualified leads, the group won the 9th TUBITAK Technology Awards leaving behind 221 companies. Then it started to invest. VSY Varlibaslar Health Investments established its first factory an investment of $ 100 million in Atasehir. Now the group founds a new factory with an investment of $ 150 million in Tuzla. Trial production is expected to start in the second factory in June. VSY Varlibaslar Health Investments will reach to produce 1 million cataract lenses annually. Currently 165 employees work at Atasehir facilities. Investment in Tuzla is expected to make an additional employment for 70 employees.
VSY produced 500 thousand lenses in Atasehir plant last year. 165 thousand were sold in Turkey and rests of it were exported to 26 countries. Dr. Ercan Varlibas, General Director of Health VSY Varlibaslar Investments, said that they plan to increase sales by 10-15 per cent in the domestic market this year, rest of it to export. Declaring that they prevent imports of 20 million dollars last year, Varlibas said, “We do not care to earn money in this business. We could have manufactured revolution cars but not continue. I wish we are not so in the field of health. We both our people and doctors unfortunately have a complex against our own products. Need to overcome them.”
Acoustics Salary £ 3 thousand
Otikon, Phonak, Starkey, Siemens, GN Group, Videx, Ear Teknik are popular hearing aid producers. Ear Teknik operates with 100 percent Turkish capital since 2001. But history in Germany is related the date 40 years ago. Mehmet Emin Agac, Turkish entrepreneurs, bought the company 10 years ago. Establishing a new factory in Corlu, Agac family now competes with the global giants. Mehmet Emin Agac was born in 1965. He went to Germany for training in the early 1980s. After studying philosophy, he became an acoustics (hearing specialist), then he entered to the sector. Being founded Si-Ser Hearing Center in 1996, began to import hearing aids to Turkey. He founded Ear Teknik with the Germans in 2001. He purchased all the shares of the company in 2005. Bringing know-how and technology of the German company to Turkey, Agac said, “We invest in our business how much we earn.”
According to Agac, Ear Teknik has 30 percent of the market in Turkey. The company’s factory in Corlu
European Free Trade Zone produces 70 thousand the hearing aids annually. Some parts of the production are exported to 20 countries. Mehmet Emin Agac said that Turkish people are used to imported hearing aids for many years, so in the beginning they have difficulty to adopt the domestic appliances for both patients and health care workers. “Now we are writing ‘Made in Turkey’ on devices proudly” saying Agac that they are distressed to find a hearing aid specialist (acoustics). Agac said,
“Most of the buyers are not satisfied hearing aid in Turkey. That is why there is no enough (acoustics) to adjust devices. Currently, the market needs 1,500 acoustics. Therefore, we as the Academy Acoustical Society of Hearing Aid (ICADD) have signed a partnership agreement with leading academy of the hearing sector, German Bundesinnung der Hörgerate-Akustik Körperchaft des öffentlichen Rechts Deutschland (BIHA) in order to train acoustics in the sector. Young people graduated from high school will apply to the training, which will start in September. Acoustics certificate will be given to the trainers after two years training with training of four months and 8-month internship. Those who completed three years training will be employed as master acoustics by the society. Those who succeed the mastery exam at the end of the theoretical and practical training of the academy will start to work with 3 thousand TL monthly salary. If the awareness of the hearing aid devices developed in Turkey, 450 thousand devices would sell today. Only one quarter of potential can be used in the market.”
Medical products manufactured in Turkey
* operating tables
* anesthesia devices
* gynecological tables
* surgical aspirators
* oxygen devices
* X ray devices
* injections, needles
* steam and dry air sterilization devices
* blood taking armchairs
* Medical gas systems
* elastic bandages
* patient beds
* dentistry units
* surgical tools
* Stent, catheter and drills
* stone breaking devices
* blood and blood products, receiving donating sets
* blood bags
* operation and examination gloves
* patient monitoring
* orthopedic prosthesis
* orthopedic repair materials
* operation covers and centrifuge
* surgical gauze and cotton
* electrocautery, x ray bath solutions
* surgical yarns
* dentistry repairing materials
* Medical masks
* blood saving cupboards
* bio carriers
* serum sets
* stainless steel products
SWOT analysis of medical sector
Strong sides of the sector
• Featuring a high added value sector
• Taking place in the 11 sector which are vital for Turkey
• Increasing of Product quality day by day
• Progressing of quality awareness
Poor side of the sector
• High technology is not prevalence in Turkey and lack of establishments based on new technology due to being expensive
• Costs of the production are high regarding intermediate goods and investment goods are not produced in Turkey and imported
• Lack of university-industry and research institution cooperation
• Qualified staff need is not met
• Production potential cannot be used fully
Opportunities of the sector
• Being a big market of Turkey and meets big part of need by the imported goods
• Having cheap labor force
• Production is supported by the government with new health policies
• Development of the international cooperation
• Market bigness in Turkey
• Increasing of the global competition
• Domestic producers are not known in the world
• Cheap and poor quality production is not hampered
• High foreign dependency of the producers