The Middle East Africa (MEA) region will gradually emerge from the challenges brought by COVID-19, growing at 4% YOY in 2021, up from a contraction of 4.3% YOY in 2020. While the Sub-Saharan Africa region includes some smaller markets that have been more insulated from the global economic and pandemic crisis of 2020, all major economies in MEA have seen significant disruptions to their economies. The recovery in 2021 will be very gradual; Q2 2021 should see some uptick in activity as COVID-19 restrictions are lifted and confidence and pent-up demand begins to return. However, a more substantial economic recovery is likely in late 2021, with most economies turning to their pre-pandemic levels of economic size in 2022. Scenario planning, close monitoring of financial risk and enhancements to the offering will be essential to outgrowing market conditions in 2021.

Our analysts are working to bring you our latest insights on the MEA region, preparing you for uncertainty, volatility, and uneven recovery throughout 2021. In this series, we do a deep dive into the key MEA markets that have the largest impact on your business so you can stay ahead of the curve this year. Check out our insights on Nigeria and Israel and keep an eye on our LinkedIn page for even more insights through the end of January. Keep reading for more on our current view of Turkey’s healthcare outlook in 2021.

Turkey’s healthcare market faced a persistently challenging environment in 2020, with the healthcare sector mobilizing against COVID-19 as the government confronted another upswing in macroeconomic volatility.  While an economic recovery will begin to gather strength toward the middle of 2021, the fiscal outlook will remain challenging, putting persistent pressures on both the Ministry of Health (MOH) as well as the Sosyal Güvenlik Kurumu (SGK). Healthcare companies should continue to expect a challenging procurement environment, with the potential for state discounting and aggressive pricing measures over the medium term, while the government continues to double down on localization measures.

Explore three key emerging trends in Turkey’s healthcare sector from Director of the Middle East & Africa Research, Zeynep Kosereisoglu, with specific actions for businesses to take now to win later in 2021.

Trend #1: Government budget is likely to prioritize City Hospitals and therapeutic healthcare services

The 2021 proposed budget, due to be passed in late December, will provide a nominal increase in overall healthcare spending, but a growing share of that spending will be driven by City Hospital payments and support for the SGK. A slow economic recovery will also slow relaxation of pricing conditions and payment delays across the public healthcare system.

  • Align 2021 targets with government budget priorities and spending levels.
  • Pressure-test current payment terms and debt levels with key customers across the public health value chain, especially early in 2021.

Trend #2: Rising debt levels and payment delays will remain a chronic challenge for manufacturers

The MOH and the Ministry of Finance have demanded significant discounts on receivables from medical device and pharmaceutical manufacturers. While the level of take-up on these credit agreements has been mixed, suppliers should not expect these challenges to be ameliorated over the medium term, given persistent fiscal pressures and other spending commitments for the MOH.

  • Pressure-test the financial conditions of domestic partners, particularly in the medical device space, given the impact of state discounting measures.
  • Proactively engage government stakeholders for alternative reimbursement programs given the high likelihood of persistent receivables challenges.

Trend #3: New Economy Program mandates the MOH to prioritize drug costs and medical tourism in the short term

The Turkish government will prioritize boosting medical tourism and driving down drug costs to bolster the economy and reduce fiscal pressures in 2021. Other strategic initiatives, including a growing focus on elderly care and telemedicine, have more long-term completion goals, as the government will have limited fiscal space for expansive new healthcare initiatives until a recovery takes shape.

  • Engage MOH stakeholders to better understand their strategies to implement these New Economy initiatives.
  • Track progress on medical tourism arrivals and policy implementation to ensure preparation for any upside benefit.

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