Preliminary Report on the Pharmaceutical Sector Inquiry of the Turkish Competition Authority
Introduction
On 10 August 2026, the Turkish Competition Authority (“Authority”) published on its website the Preliminary Report[1] on the Pharmaceutical Sector Inquiry (“Preliminary Report”), which constitutes the first output of the sector inquiry initiated by decision of the Turkish Competition Board (“Board”) dated 8 December 2021 and numbered 21-59/844-M, for the purpose of identifying structural competition problems in the pharmaceutical sector and putting forward competitive solution proposals. Within the scope of the Preliminary Report, the process extending from the development stage of the medicine to its distribution to patients in the position of final consumer has been examined. In this respect, findings have been made regarding the competitive structure of the sector by evaluating the medicine supply process in addition to the general outlook and structure of the pharmaceutical sector. In addition, within the framework of the Preliminary Report, solution proposals concerning the identified risks have been presented as part of the Authority’s competition advocacy activities.
Outlook And Structure of the Pharmaceutical Sector
Within the scope of the Preliminary Report, the pharmaceutical sector is defined as a sector based on invention and innovation, and it is stated that labor, capital and time burdens must be borne to carry out these intensive R&D activities. In addition, due to the field of use of medicine, the pharmaceutical sector is regarded as one of the sectors of strategic importance, also as a requirement of the principle of social state.
It is pointed out that, unlike traditional markets, in the pharmaceutical sector neither the doctors who form demand on the demand side nor the patients who benefit from the medicine bear the price cost, and for these reasons it is stated that price sensitivity and elasticity are at a low level. When the strategic importance of medicine and the atypical demand structure are considered together with the need for medicine of the aging population, it is set out that the pharmaceutical sector is on a growth trajectory on a global and local scale.
The supply side of the sector is defined as being subject to intensive regulation due to multiple reasons such as quality standards, supply security, public budget policies. As a result of these regulations, the fact that parameters such as the price or profit margin of the medicine cannot be freely determined, together with the fact that entry into the market is subject to numerous controls and permits, causes the competitive structure on the supply side differs from that of traditional markets.
Competition Dynamics of the Pharmaceutical Sector
Within the scope of the Preliminary Report, the competition dynamics of the pharmaceutical sector, which are set out as diverging from traditional markets, are examined by dividing them into three main parts, namely the production, market entry and distribution stages. In this respect, the competition dynamics and risks of the sector are set out by evaluating patent protection which is determinant in the production process of medicine, the licensing requirements and the process of inclusion within the scope of reimbursement sought at market entry, and finally the multi layered distribution structure.
Competition at the Production Stage
Inventions and developments are under patent protection so that innovation can be encouraged, as a requirement of the pharmaceutical sector, by rewarding the burdens that undertakings must bear in R&D processes. In the Preliminary Report, it is emphasized that patent protection, which grants a monopoly right to its holder and prevents competitors’ entry into the market, coincides with competition law in terms of its purpose of supporting innovation and invention. In this context, it is stated that holding a patent right does not create competitive concern, but that the abuse of the patent right by undertakings may prevent competition in the market.
In the Preliminary Report, examples in which the patent right may be used for purposes restricting competition are examined through domestic and international case law and academic studies, and attention is drawn to the competitive risks in this regard. In this respect, the creation of patent clusters or the making of divisional patent applications for the purpose of continuously extending patents (ever greening) have come to the fore as practices. In addition, obtaining unjust patent protection by providing false information to patent authorities and the bad faith use of the right to litigate are also counted among the examples of anti-competitive practices involving the patent right.
Assessments concerning patent rights have particularly concentrated on pay for delayed agreements. It is emphasized that pay for delay agreements, defined as an undertaking whose patent right has expired making a payment to its competitors in return for their not entering the market or entering late, are contrary to competition, and in this context, approximately 350 cases in Turkey have been examined since 2015 on suspicion that disputes concluded by settlement or waiver might indicate a pay for delay agreement between the parties. Within this scope, 26 cases were additionally scrutinized in detail, but no infringement was identified.
Competition at the Market Entry Stage
Following the assessments concerning the production of medicine, the market entry conditions required for the produced medicines to be offered in the market are examined. In this context, undertakings must hold the necessary licenses to be able to operate in the market. In addition, it is stated that, because that inclusion of an undertaking’s medicines within the scope of reimbursement has on doctors’ preference to prescribe them, being included in the reimbursement list may also constitute a barrier to market entry. In the Preliminary Report, attention is drawn to the fact that the regulatory framework concerning licensing and reimbursement may be used by undertakings as a strategic tool in a manner preventing or delaying competitors’ entry into the market.
The product hopping practice is examined as a part of the said strategy relating to the licensing obligation. This practice can be summarized as the withdrawal, by the undertaking holding the license, of the license for a medicine whose term has expired or is about to expire, following the redirection of demand for that medicine towards a new and patented medicine. In this way, equivalent manufacturers who apply for a license by referring to the said license can be prevented from entering the market.
Similarly, it is stated that the legislation concerning the reimbursement system may also be used in a manner constituting a barrier to competitors’ market entry, and the Board’s decision[2] concerning the economic unity composed of Avixa and Avigem is given as an example. In the decision, it was determined that the product with the higher discount rate was kept below the 1% market share threshold, which is one of the criteria of the reimbursement system base price calculation affecting all medicines in the market. According to the Board’s findings, through this practice, while the undertaking gains the opportunity to offer its higher priced product to the market, it creates an obligation for competing products to offer a lower price, thereby preventing competing products from entering the market.
Competition at the Distribution Stage
The medicines produced by pharmaceutical manufacturers are delivered to patients through pharmacies or hospitals, and the supply of the produced medicines to pharmacies or hospitals is largely provided through pharmaceutical warehouses. In the Preliminary Report, it is determined that, due to differences in commercial and logistical structure, the medicines supplied to pharmacies and to hospitals form two separate channels. Since public and private hospitals procure medicine through tenders, the pharmaceutical warehouses serving this channel are defined as tender pharmaceutical warehouses, while the warehouses that supply medicine to pharmacies on a retail basis form a separate channel. Although there are pharmaceutical warehouses operating in both channels, it is assessed that such warehouses remain exceptional and that pharmaceutical warehouses generally diverge between the two channels.
As in every stage of the pharmaceutical sector, pharmaceutical warehouses are also subject to intensive regulation, and their profit margins cannot be freely determined. As a result of this, competition among pharmaceutical warehouses is shaped through service quality, payment terms, discounts and the efficiency of the distribution network rather than price. In the Preliminary Report, it is determined that there is a concentration arising from economies of scale in the parameters that can affect competition among the market shares of pharmaceutical warehouses.
Assessments concerning tender-based and retail pharmaceutical warehouses, which are set out as two diverging channels, have also been addressed separately. In this context, tenders and exclusive distribution relationships are examined first. On the public hospital side, the effect over time of tenders opened for the procurement of needed medicines on Board decisions has been evaluated. It is stated that, following the Health Market Application, which was implemented in November 2018 and centralized the tenders opened by public hospitals, the benefits obtained from exclusive agreements between medicine suppliers and pharmaceutical warehouses were achieved inherently, and attention is drawn to the decrease in the number of the Board’s exemption and negative clearance decisions concerning such agreements.
On the other hand, according to the regulations concerning the Health Market Application, the condition of being the sole authorized distributor among tender participants is sought within geographical boundaries determined on a province or intra province regional basis. In this respect, it was assessed that an exclusive regional allocation is made by the legislation, and the nature of participation in public tenders was examined. In the Commission of the European Union decisions examined, it was set out that participation in public tenders is regarded as passive sales within the scope of the Vertical Block Exemption Regulation (VBER), and it was emphasized that the prohibition of passive sales constitutes a hardcore restriction. In this context, it was determined that the sole authorized distributor condition under the Health Market Application restricts competition more than necessary to achieve the intended benefit, and it was proposed that a shared exclusivity model allowing cooperation with up to five pharmaceutical warehouses be adopted instead.
In private hospital tenders, which constitute the other side of the tender channel, exclusive relationships between the supplier and the pharmaceutical warehouse have similarly been brought to the fore. In this context, although it is accepted that, unlike public tenders that do not take place through a central channel, exclusive relationships may give rise to certain efficiencies, it has been determined that exclusive agreements are quite limited in practice. In this respect, it is stated that in exemption applications, efficiency claims differing from what the existing market structure shows are expected to be substantiated with concrete evidence.
In the pharmacy channel, emphasis is placed on the possibility that the economic scale of independent pharmacies may create a power asymmetry against pharmacies, in the face of the high level of concentration among pharmaceutical warehouses and the presence of strong players. In this context, it is assessed that, in the long term, the bargaining power of pharmacies may decrease, and that, due to the absence of countervailing buyer power, a risk of coordination among pharmaceutical warehouses may also arise.
Another competitive concern set out in respect of the pharmacy channel is the risk of information exchange arising in practice from the ambiguities in the legislation concerning the Public Institution Discount (“PID”). There is no clear regulation as to when the PID, which can be defined as the discount amount that medicine suppliers are obliged to apply to patients within the scope of the Social Security Institution (“SGK”), is to be applied. In practice, medicine suppliers may apply the PID to medicine prices in the sale made to pharmaceutical warehouses, which constitutes the first sale in the supply chain, but in that case, medicine suppliers may suffer a loss because they apply the PID also in final sales to patients outside the scope of the SGK, that is, sales for which there is no obligation to apply the PID.
To prevent this situation, some medicine suppliers make sales without applying the PID and pay the PID difference on sales made by pharmacies within the scope of the PID. For medicine suppliers to be able to confirm that a sale has been made by pharmacies within the scope of the PID, certain information or access to a database is requested from pharmacies. In the Preliminary Report, it has been determined that the information or data access requested for this confirmation mechanism may contain competitively sensitive information belonging to competitors. In this context, it has been proposed that the relevant institutions review their regulations concerning PID payments in a manner that eliminates the competition problems.
Activities of the Competition Authority in the Pharmaceutical Sector and Competitive Assessments of the Sector
Within the scope of the Preliminary Report, the Authority’s activities in the pharmaceutical sector are summarized, and the Authority’s assessments within the framework of the sector inquiry are set out.
It is emphasized that, in the 2014-2024 period during which the Authority’s activities were examined, the pharmaceutical, health and medical supplies sector was one of the sectors with the highest number of decisions rendered. In this respect, it is assessed that exemption and negative clearance decisions were in the majority in the first half of the ten-year period examined, whereas merger and acquisition decisions constituted the majority in the second half.
This shift in weight among decisions is explained by the decrease in the need for exemption and negative clearance following the Health Market Application, and by the inclusion of the concept of technology undertaking in the merger and acquisition legislation. The fact that pharmacological activity was also counted among the activities within the definition of technology undertaking constituted a factor increasing merger and acquisition decisions relating to the pharmaceutical sector.
In the assessments set out within the Preliminary Report, attention is drawn to competition law risks such as the possibility that the regulatory framework concerning the pharmaceutical sector may, in certain circumstances, be used in a manner restricting competition, that a risk of coordination may arise in markets showing concentration within the supply chain, and that practices creating information exchange among competitors may be developed due to ambiguities in the legislation. In this context, certain solution proposals have been presented by the Authority to eliminate the said risks.
Conclusion
Within the framework of the Preliminary Report, which constitutes the first output of the sector inquiry initiated by the Authority for the purpose of identifying structural competition problems in the pharmaceutical sector, assessments have been made specifically in respect of each of the stages of the pharmaceutical supply chain. In this context, the possibility of medicine manufacturers using the patent protections they hold and the regulatory framework at the market entry stage as a tool preventing competitors’ entry into the market has been brought to the fore. In addition, the possibility that concentration at the distribution stage may create a risk of coordination among competitors, and the risks of information exchange arising in practice due to the ambiguity as to when the PID payment is to be made, constitute the structural competition problems set out within the scope of the Preliminary Report. Although the Authority has, at this stage, confined itself to merely shedding light on the practices that it has assessed as capable of creating risk, it is anticipated that more detailed preliminary investigations and investigations concerning the sector may be carried out in the short term.
- Preliminary Report on the Pharmaceutical Sector Investigation by the Competition Authority, dated August 10, 2026.
- The Board’s decision dated 23.07.2026, numbered 26-26/748-308.
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