The share of procurement in the total MOH budget will decrease in 2024. Multinationals will see price pressures in Turkiye, requiring them to provide evidence of cost savings, efficiency gains, and long-term value. Focusing marketing budgets on and increasing HCP training on rare diseases and oncology will increase profit margins. Multinationals should consider patient access programs or tiered pricing to ensure broader market penetration for their innovative products in these therapy areas.
In Turkiye’s high inflationary macroeconomy, multinationals should analyze the performance of their portfolios under different inflation scenarios and make strategic price adjustments or hedging strategies. They should seek partnerships with local providers to expand market presence and tailor their products and services. These collaborations will provide continuous insights into the specific needs and preferences of the Turkish healthcare market, allowing multinationals to tailor their products and services throughout the year.
Multinationals should increase engagement (e.g., training) with HCPs in primary healthcare facilities, as they will play a larger role in screenings for cancer and non-communicable diseases (NCDs) in 2024. Multinationals should also take advantage of the MOH’s increasing budget for senior citizens’ care through home care, healthy aging centers (YASAMs), and telemedicine applications. They should consider offering long-term partnerships by supporting HCPs’ training in the YASAM centers and developing/providing telemedicine applications to be used in homecare.
Multinationals should be monitoring opportunities arising from infrastructure investments in the earthquake region. They should help in efforts to identify and support healthcare infrastructure needs in the earthquake area, positioning themselves as reliable partners for infrastructure investments. Tailoring marketing pitches to highlight how their products or services can be rapidly deployed and contribute effectively to the rebuilding efforts in the earthquake-affected regions will help multinationals to exploit these opportunities more effectively.
Overview
Turkiye’s Vice President Cevdet Yilmaz announced that TRY 1.65 trillion will be allocated to public healthcare expenditures in 2024. While the 2024 MOH announced a budget at TRY 732.52 billion, the initial budget for the Social Security Institution (SSI) healthcare budget is TRY 851.26 billion. These allocations point to 136% and 56.3% nominal increases in MOH and SSI health expenditures, respectively. The 2024 budget allocation for family GPs will go from TRY 41.95 billion in 2023 to TRY 77.47, indicating a 84.7% YOY nominal increase.
Highlights of the MOH budget in 2024:
- The MOH budget will see around a 136% YOY increase in 2024, going from TRY 309.5 billion in 2023 to TRY 732.56 in 2024.
- The most important increase in the 2024 MOH budget will be noted in personnel costs, going up from 46.8% of the budget in 2023 to 55.1% of the budget in 2024.
- The share of the procurement budget in the total MOH budget will decrease, going down from 24.4% of the budget in 2023 to 18.3% of the budget in 2024.
- The share of CAPEX in the MOH budget will be 19.4% of the 2024 budget, down from 20.6% in the 2023 MOH budget. The lion’s share of the 2024 CAPEX budget will be spent on the construction of 12 city hospitals that are planned to be operational in 2024 and 2025.
- The 2024 MOH budget allocates TRY 83.7 billion for the expenditures of city hospitals, creating further pressures on the procurement budget of the MOH.
- While TRY 518.3 billion is allocated for curative health services, another TRY 202.5 billion will be spent for preventive care in 2024.
- An additional TRY 38.2 billion, in addition to the MOH budget, is allocated to infrastructure investments in the earthquake region. The focus of these investments will be Hatay, Kahramanmaras, Gaziantep, Adiyaman, and Malatya, which have been heavily affected by the disaster.
- The MOH will allocate TRY 8.58 billion for healthy aging programs in 2024, which will be used for the expenses of new and existing healthy aging centers serving senior citizens.
Highlights of the SSI healthcare expenditures in 2024:
- SSI healthcare expenditures will see a 56.3% YOY nominal increase, going from TRY 544.66 billion in 2023 to TRY 851.26 billion in 2024.
- SSI expenditures for the reimbursement of healthcare facilities (public + private) will go from an estimated TRY 218.4 billion in 2023 to TRY 341.1 billion in 2024.
- The SSI’s prescription expenditures will increase from an estimated TRY 197.71 billion in 2023 to TRY 308.8 billion in 2024.
Our View
- Fiscal conditions will prevent improvements in procurement conditions in H1 2024, though conditions may somehow improve near the end of 2024.
- The estimated increase in SSI healthcare expenditures is significantly lower than the increase in the MOH budget. This is a result of the chronic budget deficits that the SSI has been experiencing in recent years, which increased from TRY 21.6 billion in 2021 to an estimated [TRY 59.2 billion in 2023](https://www.haberturk.com/sgkya-4205-milyar-tl-butce-transferi-3533435-ekonomi#:~:text=Sosyal%20G%C3%BCvenlik%20Kurumu’nun%20(SGK,tutar%C4%B1%20420.5%20milyar%20liraya%20ula%C5%9Facak.). Multinationals should expect the budget deficit to expand further in 2024, due to a new legislation (EYT) allowing early retirement for at least 2.25 million Turkish citizens.
- The large allocation for curative care in the MOH budget indicates that, in 2024, the public healthcare expenditures will continue to be concentrated in the secondary and tertiary hospitals. Expenditures for city hospitals will remain particularly large, requiring multinationals to concentrate their marketing activities on city hospitals. Monitoring tenders for the new city hospitals and offering comprehensive packages for long-term contracts will help multinationals to unlock the market’s potential in 2024 and 2025.
- Multinationals will also see opportunities due to the increasing emphasis on palliative care and senior citizen care. Seeking public-private partnerships in these therapy areas will provide continuous access to public resources despite low-par procurement conditions.
- The significant increase in the MOH’s personnel costs reflects the effect of ongoing inflationary pressures as well as the MOH’s attempts to curb healthcare practitioners’ emigration abroad. Despite these measures, the number of doctors leaving Turkiye may exceed 3,000 for the first time in 2023. Multinationals will not see a major slowdown in HCPs’ emigration in 2024, as inflationary pressures and political pressures will persist in 2024.
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