PARIOFORMA
Blood Glucose Market Turkey Parioforma Ltd. 55 Princes Gate Exhibition Road London SW7 2PN United Kingdom
Tel: +44 (0) 207 225 3538 www.parioforma.com
Executive Overview
Executive Overview
Turkey has a large and growing population and although the percentage of people over 65 years is increasing, in general the population is very young. According to the recent TURDEP-2 study, the prevalence of diabetes in Turkey has risen alarmingly over the last 13 years - reaching 13.7% in 2010 compared with 7.2% 13 years ago. Contributing factors to this include: • • • • •
PARIOFORMA
Increasing level of western-style lifestyles Increasing levels of obesity Decreasing levels of physical activity Poor diet Years of significant under-diagnosis
On this basis it is estimated that there are currently around 10.7 million people in Turkey with diabetes. Nevertheless, diabetes is not considered a priority for the government according to the stakeholders in the Turkish diabetes community. Government focus remains on healthcare reforms in the country - initiatives have been directed towards introducing a General Health Insurance Scheme (GHIS), a family practitioner scheme and establishing autonomous hospitals. The level of diagnosis remains poor and in most cases, diabetes is only recognised as a result of its complications – in addition, there is no fixed pattern regarding who treats or manages diabetes. Access to care and the level of diabetes management differs between the cities and the regions, mainly down to the shortage medical staff outside the big cities. Therefore, patients in the regions often go without adequate care, management and education. 2
Executive Overview
Lack of government action has meant that voluntary organizations have taken the lead in all activities and initiatives to tackle diabetes in Turkey: primarily the Turkish Diabetes Association and Turkish Diabetes Foundation There is now willingness from the MoH to more aggressively address the issues related to the treatment of diabetes and increase the role of the public authorities in the process – however, public awareness campaigns to date have focused on obesity – a major issue in Turkey. In March this year, reimbursement reform was implemented for glucose meters and strips: • • • • •
PARIOFORMA
The SGK will now pay 20TL towards the meter – previously there was no allowance for meters Patients are entitled to a prescription for a glucose meter every 2 years – any additional meter requirements will have to made out of pocket The SGK will pay 0.32 TL per strip (down from a previous 0.55 TL per strip) Pharmacies may charge the difference for meters and strips priced above the reimbursed allowance (patient co-pay) Blood glucose measurement strips and blood glucose measurement devices shall be obtained from contracted pharmacies
To gain access to reimbursed meters and strips patients need a medical report and a prescription. The medical report must be produced by a specialist in internal diseases/ endocrinologist not a family practitioner – this report states what the patient needs in terms of medication and support equipment including testing frequency. The report has to satisfy the SGK rules – which do not necessitate that the brand name be included in the report. Under the new system, whatever number of strips per day the specialist has indicated in the medical report will be prescribed. Previously there was a prescribing limit on strips – maximum 3x day for Type I. Strips will be prescribed and dispensed at quantities of a maximum of 3 months. In theory it is possible to prescribe more than 3 strips per day; but study respondents reported that some doctors may be cautious over doing this while others will prescribe what the patient needs – there is great variability in physician attitude here. 3
Executive Overview
PARIOFORMA
The new system promotes the contracted pharmacy as the only route for patients to obtain prescribed equipment – all pharmacies are contracted apart from the minority (~1-2%) that work solely with private insurance. Meters and strips are available to purchase online – but there is no internet prescription service so all online purchases would be out-of-pocket. Pharmacy respondents reported that 95% of patients utilize SGK reimbursement for support equipment; while only 5% of patients pay out-of-pocket. Respondents did not report that a hospital market exists for meters – other than the meters that are used for inpatient testing. Every major meter player used to give away meters for free – either directly to patients, or to hospitals, nurses and doctors (to be used as training) as well as to the diabetic associations. The giving away of free meters remains a grey area – while there is no express legislation forbidding it, it is not encouraged. The new reimbursement environment has undermined the “free meter” strategy – with the SGK paying 20TL per meter, patients are no longer reliant on free give-aways as there are quality meters available within this budget. Study findings were that the pharmacist has the greatest influence on the buying decision – patients place a lot of trust in this relationship. This influence has increased under the reformed system - pharmacists are present when the patient chooses how to spend their 20TL, therefore have the greatest opportunity to influence that choice. The study also found that all glucometers are viewed very much the same – they are all user-friendly and function in very similar ways – they only thing differentiating them now is the amount of co-payment. Economics is the top consideration in the patient decision - they don’t want to pay anything for the meter or strips. Having already paid their health insurance premiums they now want to see the benefit – no interest in paying extra. Wealth varies by region – so for the Western part and the big cities economics may be less critical (although still very important) – but in the rural areas economics will have a major impact. 4
Executive Overview
The more educated the patient then the more important brand becomes. If the patient has high brand awareness then that patient will pay for it - but generally the quality of meters and strips is perceived as the same. Pharmacists indicated that they would not carry products that were inferior on quality – their reputation and patient relationship is too important. In 2011, the Turkish pharmacy market for glucose strips and meters is estimated at: • •
4.55 million boxes (assuming 50 strips per box); €57.1 million (assuming an average strip price of 0.55TL) 1.4 million installed meters; €11 million meter renew market (using average price of 35TL)
Market feedback suggests that the market will grow favourably between 7 - 8% pa over the next 5 years. Market drivers include: • • • • •
PARIOFORMA
Reimbursement reform providing financial support for both meters and strips Increasing availability of brands within reimbursed allowance – therefore “free” to the patient Increased frequency of testing – physicians able to prescribe actual strip requirements Improved recognition of diabetes and diagnosis – more patients coming into the market Patients living longer – improved care and management - market attrition decreasing
There are approximately 300 distributors – but only ~15 have an economically meaningful size. The top 2 have approximately 70% market share between: • • • •
Hedef Alliance (~35-40%) Selçuk Ecza (~30-35%) Co-operatives (18-20%) - part-owned by pharmacists they have pharmacy loyalty and have been gaining market share at the expense of Hedef-Alliance The remaining market share (~10%) goes through the other smaller, regional often specialised wholesalers. Small distributors have little room to increase their market share, given the financial strength and economies of scale of the large players.
Parioforma in-country research, 2011
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Executive Overview
Pharmacies are private entities in Turkey and hospitals have their own pharmacies only to serve in-patients. Pharmacists are organized around the “Turkish Pharmacists Association”. This is a strong and powerful NGO organized in 81 provinces. Pharmacies typically work with one preferred and then an additional 1 - 2 distributors. The margin in the distribution chain depends on the number of links - the more links then the more the margin has to be carved up between the composite players: • •
PARIOFORMA
Margin between importer/ master distributor to the end price at the pharmacy is ~45%. Main distributor expects a minimum of 10%; sub-distributor will get another 10%. The pharmacy margin is around 20-25% - pharmacy margins are boosted by manufacturer promotions
Manufacturer promotions are not universally available – if they were it could cause problems with the SGK. Too many “free” meters and strips could prompt the SGK to introduce some sort of claw-back system – there are already rumors that this could happen hence “free” meters and strips have to be handled very carefully. The basis of competition is: promotions, sales force and now price. All Western brands are available on the Turkish market – Roche was first to market and has built itself a high profile and strong relationship with the diabetic organisations. The business model for Roche – and other major players - was to give away the meter and lock patients into buying their strips. However, under the new reimbursement system this model falls apart. The new environment favours smaller players and actively encourages quality, on budget machines – e.g. ACON Labs. Consequently the big players are losing market share – and some branded players could even exit or considerably reduce their marketing investments in the near-term. 6
