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GÜVEN SAK > Why Amgen chose Singapore over Istanbul

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Amgen is a U.S.-based multinational biotechnology company known for its clinical and commercial manufacturing of biotechnology-based medicines. The company started its Turkish operation in 2010.

Last April it bought 95.6 percent of a rare research-oriented Turkish pharmaceutical company, Mustafa Nevzat, for $700 million.

That is the sort of thing we would like to see more of in Turkey. Amgen was signaling that it wanted to have a manufacturing and research and development facility in Turkey – a good sign perhaps, for a new wave of biotechnology investment. Then, about two weeks ago, Amgen announced plans to build a new manufacturing facility in the Tuas Biomedical Park area of Singapore. Not in Istanbul.

Are you following the growing number of multinational offices in Istanbul? It looks good on the face of it. It certainly helps the ongoing construction boom. Yet all those fancy offices focus on marketing.

Turkey is considered a good pharmaceutical customer, not a manufacturer. Nobody considers research and development investment here. One absent sector could be a blip, two a coincidence but more than that could only be a trend. It is a trend now, if you ask me. Now with the new 10th five-year development plan period, we have got to change our attitude. Developing countries are getting an increasing share of research and development investment, and Turkey cannot afford to be left behind.

Let me explain.

In terms of biotechnology and pharmaceutical FDI into Turkey, the numbers doubled between 2003 and 2006 and again in 2007-2010. But the figures are still in the millions of dollars here, and not in the billions seen in China, India and Singapore. Those three come right after the U.S. in attracting bio-investments. So the direction in biotechnology is toward developing countries. When it comes to biotechnology investments in China and India, one-third to one-half of investments are in research and development. Not so in Turkey, though we desperately need biotechnology investments to upgrade our production capacity. Look at the export sophistication level of Turkish industry: If Switzerland is 100 in terms of sophistication, Turkey is at 69 in comparison to the 80+ rankings of China and India. Why do China and India have more sophisticated production facilities? It’s thanks to investors like Amgen.

So what is wrong with Turkey? Why is our investment environment not conducive to high-tech choices? First, a few rankings from the Global Competitiveness Report between 2006 and 2012: Our justice system declined from 56th to 83rd place, our tax regime from 95th to 117th and our education system fell from 58th to 74th place. All this indicates a general deterioration in Turkey’s global competitiveness.

Secondly, look at the public procurement priorities of the government, which is the largest buyer of medicine. The government allows price increases only for generic products. This has pushed Turkish companies to divert their activity from research to generic production. Bad incentive. Thirdly, the Ministry of Agriculture has made biotechnology research impossible by yet another misguided communiqué. That was the unintended consequence of another populist move. Just follow TEPAV’s Life Sciences and Health Policy Institute bulletins to get updates.

Why does Turkey obstruct investment despite its desperate need for it? It is the silent effect of an uncoordinated and misguided industrial policy. Time to enhance coordination.

January/26/2013

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