Health & Education

On the Table


An increasing focus on R&D and the attraction of FDI will shape the development of Turkey's healthcare sector in the years to come. Improving quality will also result in higher numbers of medical tourists.

The government has made it a priority to encourage foreign investment into Turkey’s healthcare industry, just as the private healthcare sector undergoes a period of rapid expansion. Lower costs than those found in Europe and the Middle East are also encouraging an influx of foreign patients.

Since Turkey’s Health Care Transformation Program was launched in 2004, the impact has been clear; physician consultation per capita has increased from 1.7% in 1994 to almost 8% in 2013, while the average lifespan is now 74 years. The Ministry of Health is in charge of 850 public hospitals, while the country now boasts 500 private hospitals. This figure has grown 50% over the last five years, with the total set to reach 604 once all projects licensed by the Ministry of Health are complete.

The number of yearly patient visits is 300 million, while spending has reached $45 billion per year, a figure expected to reach $80 billion in 2015, according to PwC. Healthcare spending amounts to just over 6% of GDP, still below the figure in some Western European countries, such as France with over 11%, and Germany at over 10%.

Moving forward, the government is hoping FDI will help to shape the development of the sector. To that effect, it has been working to improve the investment environment. Under a new law on public-private partnerships (PPPs) passed in February 2013, the state will rent city hospitals built and run by the private sector for 25 years. There are currently three hospitals under development in a PPP framework, with another 15 in the pipeline, which overall willadd 28,000 beds to Turkey’s current capacity of 200,000. As part of government plans to make Turkey one of the world’s top-10 economies in health services by 2023, it also aims to increase R&D spending to 3% of GDP.

As quality increases the number of health tourists is also on the rise. Approximately 270,000 health tourists arrived in the country in 2012, generating $1 billion in revenues.

Despite a 2.8% increase in packages sold, the pharmaceutical industry shrank by 5.9% in 2012 to TL12.9 billion as government price restrictions continued to squeeze profits. The country’s large population and easy regional access, however, has kept investors keen on the pharmaceuticals sector.


Despite rising health spending, set to reach $80 billion by 2015, the government is still keen to see the private sector, and foreign investors especially, play a larger role in the development of the industry. Health care has long been popular with private equity investors, tempted by a tripling in the nominal per capita GDP over the last decade and a young population of 75 million. Integrated Healthcare’s purchase of 75% of Turkish hospital operator Acıbadem in 2012 from Abraaj Capital and the Aydınlar family for $1.26 billion is indicative of the attractiveness of the sector.

The new PPP law will only compound the sector’s investability, granting investors peace of mind as the government now offers to rent city hospitals built and operated by the private sector for 25 years. The new regulation aims to cut down on bureaucracy and provide government guarantees for international project financing investments of TL500 million or higher. Projects currently under construction under the PPP model, as well as those on the drawing board, total 18 and will increase the nation’s bed capacity to 228,000.

Another government initiative is the launch of free health zones in 2014. The zones are designed specifically to attract foreign investment by removing red tape and providing tax exemptions. “Our country’s existing high-quality and cost-effective healthcare services will become even more advantageous through these free zones,” said Mehmet Müezzinoğlu, Minister of Health. The zones are also aimed at attracting health tourists, with estimates that as many as 85% of visitors to the zones could be foreign.


Turkey’s healthcare sector has seen an influx of medical tourists in recent years, from those with serious ailments to those seeking cosmetic procedures, such as liposuction and moustache implants, the latter of which has grown in popularity in parallel with the growing fame of mustachioed Turkish stars in the Middle East. Approximately 270,000 of the total 37 million tourists came for medical procedures in 2012, with 186,000 seeking treatment at private hospitals and the rest attending public institutions. Overall, they generated $1 billion in revenues, a figure the government wants to boost to $7 billion in two years by attracting 500,000 health tourists to higher-margin health care.

Turkey boasts 47 healthcare institutions with Joint Commission International (JCI) accreditation, the highest figure in the world outside of the US according to the Ministry of Health. The top three private receivers of health tourists are Anadolu Medical Center Hospital, Hospitalium Çamlıca Hospital, and Dünya Göz Ataköy Hospital, an eye hospital. Dünya Göz Group has 14 eye care clinics in Turkey and branches in Western Europe, with 10% of its patients, around 35,000 a year, coming from abroad. The allure is undeniable; plastic and corrective eye surgery, including travel and accommodation, can cost up to 60% less than in Western Europe. Istanbul’s Emsey Hospital, which opened its doors in May 2012, is an example of a medical institution created to take advantage of the rise of the health tourist in Turkey. “Right now, 40% of our patients are international. However, in the near future, we expect more than half of our patients to be foreign,” said Cengiz Bozca, General Manager of the hospital.

The development of free health zones will also provide a boost to the sector, with 85% of their visitors expected to be foreign. “We’re [also] creating free healthcare zones to develop health tourism further and cater to the healthcare needs of visitors from abroad,” said Minister Müezzinoğlu, adding that, “we plan on providing strong healthcare service to a regional population of nearly 1 billion people.”


Regulations introduced in 2009 have slowly eaten away at profits in Turkey’s pharmaceuticals sector, despite rising consumption. In 2012, profits sank 5.9% to TL12.9 billion, while consumption increased by 2.8% to 1.56 billion packages, a consumption per capita ratio of 20.62 packages. Consumers paid an average of $106 in 2012, down from $121 in 2011, while it was $133 in 2010, $132 in 2009, and $136 in 2008. Industry insiders warn that falling profits could mean that Turkish pharmaceutical firms may not be able to spend as much on R&D as their international counterparts. In import/export terms, the country imported $4 billion worth of medicine 2012, a 14.9% decrease compared to 2011, while it exported $662 million worth, a 16.8% increase.

The latter figure could go a long way to explaining the intense foreign investor interest seen in the sector, despite falling profits. MN Pharmaceuticals, a local manufacturer of medicine that has been producing since 1919, was acquired by US-based Amgen in a deal worth $700 million in 2012. Following the acquisition, Amgen moved its regional office from Zurich to Istanbul. “Amgen is trying to create a hub for the region in Turkey; MN Pharmaceuticals is that hub,” said M. Levent Selamoğlu, CEO of the firm. Another major development in 2012 was the announcement by Novartis that it would build a new plant in Turkey, regarding the country as a regional hub to expand its operations in Central Asia, the Middle East, and Africa.

Foreign investment and PPPs will shape the coming years for the Turkish healthcare sector, with the country’s large, young population and close proximity to regional markets key in attracting attention. With R&D spending set to expand, increasing quality across the board will be vital if the country is to meet its goals.

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