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Özet


Competition Structure of Turkish Pharmaceutical Industry and Concentration Analysis

1. Introduction

Pharmaceutical industry admitted as a subgroup of the chemical industry is related to people's health and important for national and international economy. For this reason, it is different from the other industries. The industry requires product range, high R&D, patent, license expenses and advanced technological production structure. That is why; it is a high-cost industry. Furthermore, all decision units in the market are influenced directly/indirectly or positively/negatively by the pharmaceutical industry. It is also important for decision units and policy makers that they have knowledge about the competitive level of pharmaceutical industry and market structure.

Pharmaceutical industry is different from the other industries in terms of structure. Public industry carries out a major part of the health care. However, private industry interests pharmaceutical market. Private enterprises perform all of operations from production stage to it reaches final consumers (Liu vd., 2005: 27). Manufacturer firms in the pharmaceutical industry branches as large-scaled firms and small-scaled firms. While large-scaled firms provide international market-oriented product, small-scaled firms provide regional & national market-oriented product (OECD 2003, 27).

Firms operating at the global level invest quite a number of R&D, have many patents and prevailing power in the market. Yet, small-sized firms manufacture pharmaceutical whose patent protection has expired or the products of firms operating at the global level in exchange for license (Karakoç, 2005).

95% of the world pharmaceutical market is provided by international firms. However, the drug consumption is concentrated in USA, European Union countries and Japan market (BSTB, 2013: 6).

Despite the fact that Turkish pharmaceutical industry’s capacity is at the world class production, it has not still desired competitive power in the global market. Turkey is ranked 16th in the World Pharmaceutical Market in 2015. Annual per capita drug consumption is 187.9 Turkish Liras and compared to the previous years it raises (IEIS, 2015). In Turkey, pharmaceutical industry is implemented the international standards and has the technological capacity to produce many products. Turkey prefers to import drugs not consumed too much and with high production cost (BSTB, 2013: 6).

2. Method

In the study, CRn and HHI methods are used to determine the concentration levels of the firms operating in the Turkish pharmaceutical industry and its market structure. The members of pharmaceutical industry union of employers, local and foreign origin firms’ annual sales revenue for the 2005-2015 period are used as a data set.  Concentration levels of the firms operating in the pharmaceutical industry and its market structure are analyzed using CRn concentration ratio and Herfindahl - Hrischman index methods in deference to the sales revenue.

3. Results and Discussion                                                                                                                    

According to the results of CR4 analysis, the concentration ratio of the largest 4 domestic firms operating in the pharmaceutical industry is between 19 % and 16 %. The foreign firms’ ratio is between %17 and %21. That shows the low concentration ratio. In the all years round, except 2011, foreign firms’ concentration ratio is higher than the domestic firms’ concentration ratio.   

According to the result of CR8 analysis, while the concentration level in domestic pharmaceutical industry is between 28 % and 24%, this ratio for foreign firms is between 36 % and 31%. Consequently, the concentration ratio in local firms is low, indicating a competitive structure. However, it is found that the ratio in foreign firms is higher than the local Firms’ ratio, the competition decreases and a monopolistic competitive structure is dominant.

In addition, a monopolistic competitive structure (CR4) and an oligopolistic market structure (CR8) are dominant in Turkish origin pharmaceutical industry. The same result is valid for the foreign origin drug firms in the Turkish pharmaceutical industry. According to HH index values, the concentration is low both in the domestic and in imported pharmaceutical industry.

4. Conclusion

The following conclusions are reached in this study to determine the concentration level of the Turkish pharmaceutical industry and to analyze the market structure.

The concentration ratio of the largest 4 domestic firms operating in the Turkish pharmaceutical industry is between 19 % and 16 %, the foreign firms’ ratio is between %17 and %21. It shows that the concentration is low.

Whereas the concentration level of domestic pharmaceutical industry is between 28 % and 24%, this ratio for foreign firms is between 36 % and 31% according to CR8 analysis. Consequently, the concentration ratio in local firms is low. For this reason, there is a competitive structure. Yet, the concentration ratio in foreign firms is higher than domestic firms.

According to the CR4 analysis, domestic firms’ concentration ratio in Turkish origin pharmaceutical industry is between 46 % and 51%.

While foreign origin foreign firms’ concentration ratio in the Turkish pharmaceutical industry is between %33 and %39 according to CR4 analysis, this ratio is between % 58 and %64 according to CR8 analysis. After all, foreign origin pharmaceutical industry has a moderate concentration ratio (CR4) which indicates a monopolistic competition market structure. However, according to CR8 analysis, the concentration ratio is high and an oligopolistic market structure is dominant.

According to HH Index, domestic pharmaceutical industry is between 0,079 and 0,094. There is low concentration level indicating the presence of a competitive nature. A similar result is valid for the imported pharmaceutical industry as well. 

The firms operating in the Turkish pharmaceutical industry usually import a great deal of pharmaceutical because of their high costs. However, most of these imported products at the same time creates added value. Thereby, domestic firms operating in the industry should reconsider their policies.

Leader countries in the world pharmaceutical industry have positioned the pharmaceutical industry as one of the priority industry. Turkey also should make strategic plans related to a similar policy under the leadership of regarding public institutions and increase their R & D expenditure allocated to the pharmaceutical industry.

Although Turkey has advantages in the pharmaceutical industry, it is not in a position that can compete with the world. Therefore, decision makers should form policies to support innovation and to create an investment environment.



Anahtar Kelimeler
Competition Structure of Turkish Pharmaceutical Industry and Concentration Analysis

Kaynakça

Adres :Çankırı Karatekin Üniversitesi, İktisadi ve İdari Bilimler Fakültesi, Uluyazı Kampüsü, Merkez-ÇANKIRI/TÜRKİYE
Telefon :+90 (376) 218 95 45 Faks :+90 (376) 218 95 46
Eposta :iibfdergi@karatekin.edu.tr

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