New Development
Pursuant to the Turkish Competition Board’s (“TCB”) decision dated 8 December 2021 and numbered 21-59/844-M, the Turkish Competition Authority (“TCA”) launched a sector inquiry to examine the structure and competitive dynamics of the pharmaceutical sector in Türkiye and to identify potential competition concerns affecting the sector. Within the scope of the inquiry, the TCA carried out extensive information-gathering activities, including requests for information and on-site inspections involving pharmaceutical companies, sectoral associations and organizations, and independent research institutions specializing in the pharmaceutical sector. The TCA also engaged with foreign competition authorities to benefit from their experience and insights concerning competition-related issues in the pharmaceutical sector. As a result of this inquiry, the TCA published the Pharmaceutical Sector Inquiry Preliminary Report (“Preliminary Report”) on its official website on 10 August 2026.
The Preliminary Report provides a comprehensive assessment of the pharmaceutical sector and is structured around four main sections. First, it sets out an overview of the pharmaceutical industry and the key characteristics of pharmaceutical supply and demand. Second, it reviews the TCB’s decisional practice in the pharmaceutical sector and relevant product market definitions in the pharmaceutical market over the last decade and presents observations and recommendations regarding the TCA’s enforcement approach. Third, it examines the competitive structure of the sector across different stages of the pharmaceutical value chain, including manufacturing, market entry and distribution. Finally, it outlines the TCA’s overall evaluations and recommendations concerning the sector.
The key findings and observations highlighted in the Preliminary Report are provided in more detail below.
Overview of the Pharmaceutical Sector and Sector Characteristics
The Preliminary Report highlights the strategic importance of the pharmaceutical sector, noting that it is characterised by significant investment requirements, intensive research and development (“R&D“) activities and extensive use of advanced technologies. According to the Preliminary Report, factors such as population growth, increasing life expectancy and the essential nature of pharmaceutical products continue to support the sector’s growth and economic significance.
According to the Preliminary Report, the Turkish pharmaceutical market has expanded significantly in recent years, growing from TRY 56 billion in 2020 to TRY 479 billion in 2025. The Preliminary Report further states that Türkiye was the world’s 19th largest pharmaceutical market in 2024. It also notes that domestically manufactured products accounted for nearly 90% of pharmaceutical sales by volume in 2025, demonstrating the strong presence of local manufacturing in the sector. At the same time, imported products continued to account for a significant share of pharmaceutical sales by value, representing approximately 40% of total sales value. Furthermore, although pharmaceutical R&D expenditure in Türkiye has shown a consistent upward trend in recent years, the Preliminary Report notes that the level of investment remains relatively limited compared to the world’s leading pharmaceutical markets, indicating considerable scope for further development of the country’s pharmaceutical innovation ecosystem.
Regarding the sector characteristics, the Preliminary Report notes that the pharmaceutical sector differs from traditional markets in several respects. On the demand side, demand for pharmaceuticals is characterized by a multi-layered structure in which the decision-maker, the beneficiary and the party ultimately bearing the cost are often different actors. Prescribing decisions are generally made by physicians and patients are the ultimate beneficiaries, however a substantial portion of pharmaceutical expenditure is financed through public reimbursement mechanisms in Türkiye. While physicians and pharmacists do not directly bear the cost of pharmaceuticals, patients incur such costs only in certain circumstances and only to a limited and indirect extent. As a result, the demand-side actors and especially ultimate beneficiaries in the pharmaceutical market may be less sensitive to pricing considerations compared with other markets.
On the supply side, the Preliminary Report emphasises that the sector is subject to extensive regulation concerning pricing, reimbursement and licensing processes. It also underlines the role of intellectual property rights in shaping competitive dynamics and notes that patent protection is intended to incentivise innovation and allow pharmaceutical companies to recover substantial R&D investments. At the same time, the expiry of patent protection enables the entry of generic medicines and may intensify price competition. However, the Preliminary Report also emphasizes that a company seeking to launch a product in the Turkish pharmaceutical market must complete the authorization, pricing and, where applicable, reimbursement processes. According to the Preliminary Report, these factors may create barriers to entry and that they not only define the conditions under which pharmaceutical companies may enter the market but also influence the number of undertakings active in the market and the distribution of market shares among them.
Turkish Competition Authority’s Activities and Turkish Competition Board’s Decisional Practice in the Pharmaceutical Sector
The Preliminary Report emphasizes that the pharmaceutical sector constitutes one of the TCA’s priority areas due to its strategic importance for both public health and the national economy. The Preliminary Report notes that the sector is characterized by high value-added production, significant R&D intensity and its role in ensuring access to healthcare products of public importance. To that end, the Preliminary Report underlines that effective competition in pharmaceutical markets is essential not only from the perspective of economic efficiency and consumer welfare, but also for ensuring sustainable access to medicines and the efficient use of public resources.
Accordingly, the TCA closely monitors concentrations, vertical relationships, potentially anticompetitive agreements and unilateral conduct in the sector in order to preserve competitive market conditions and support innovation and this is also evidenced by the number of cases reviewed by the TCB. Against the backdrop of the TCB’s decisional practice and TCA’s activities relating to the pharmaceutical sector over the last decade, the Preliminary Report identifies the following key findings:
- Evolution of the TCB’s Decisional Practice in the Pharmaceutical Sector: The Preliminary Report demonstrates the prominence of the pharmaceutical, healthcare and medical devices sector in the TCB’s decisional practice. The sector received the highest number of negative clearance and exemption decisions between 2014 and 2019 (except for 2018) and ranked among the top three sectors, out of 28 sectors, in terms of investigations into competition law infringements between 2017 and 2021 (excluding 2018). However, the Preliminary Report identifies a notable shift in the TCB’s decisional practice from 2021 onwards. In particular, the number of exemption and negative clearance decisions decreased significantly following 2021. According to the Preliminary Report, this development largely reflects changes in public pharmaceutical procurement practices and the conditions introduced by the State Supply Office (“SSO”), which substantially reduced the need for such applications. In this context, pharmaceutical suppliers participating in public tenders increasingly collaborated with specialised pharmaceutical warehouses, while the widespread use of exclusive distribution arrangements in public procurement and the SSO’s requirement to designate a single authorised distributor on a provincial basis reduced the need for undertakings to seek individual exemption or negative clearance decisions for such arrangements. The Preliminary Report also indicates that the implementation of the SSO Health Market system fundamentally altered the structure of public pharmaceutical procurement, necessitating a reassessment of exclusive pharmaceutical warehouse arrangements in light of the evolving structure and functioning of public procurement channels.
At the same time, the Preliminary Report points to a significant increase in merger control decisions in the pharmaceutical, healthcare and medical devices sector from 2021 onwards. While decisions concerning competition law infringements, exemption and negative clearance applications, and merger control reviews displayed a relatively balanced distribution between 2014 and 2020, the number of merger control decisions stood at 11, 9, 16, 13, 11, 13 and 12 in 2014, 2015, 2016, 2017, 2018, 2019 and 2020, respectively, before increasing significantly to 21 decisions in both 2021 and 2022 and reaching a peak of 24 decisions in 2023. According to the Preliminary Report, this upward trend may be attributable, to a significant extent, to the amendments made to Communiqué No. 2010/4, which introduced the concept of “technology undertakings” and exempted such undertakings from the Turkish turnover thresholds applicable to certain concentrations. Given that the definition of technology undertakings encompasses, among others, undertakings active in biotechnology, pharmacology and health technologies, the technology undertaking exception appears to have had a particularly significant impact on merger control reviews in the sector. In this regard, three transactions reviewed in 2022, and four transactions reviewed in each of 2023 and 2024 fell within the scope of the technology undertaking exception.
- Relevant Product Market Definition: The Preliminary Report reviews the TCB’s decisional practice in the pharmaceutical sector over the last decade and identifies several common principles regarding relevant product market definition. According to the Preliminary Report, the TCB has consistently relied on the ATC (Anatomical Therapeutic Chemical) classification system as a key reference point when assessing relevant product markets in pharmaceutical sector. In particular, the Preliminary Report notes that the TCB generally uses the ATC-3 level as a starting point for market definition analyses, given that products falling within the same ATC-3 category may be regarded as therapeutic substitutes. At the same time, the Preliminary Report emphasises that ATC classifications are not applied inevitably and that the relevant product market is ultimately determined on a case-by-case basis. This approach is justified by the fact that products falling within the same ATC-3 category may have different indications, as well as by the existence of other market-specific considerations that may necessitate a deviation from the ATC-3 classification. In this regard, there are also cases in which the TCB has defined the relevant market based on the active ingredient, considering the specific circumstances of the case.
In light of the Preliminary Report, there appear be two main reasons why the relevant product market was defined at the active ingredient level in the decisions concerned. First, several of these cases relate to public pharmaceutical procurement conducted through tender procedures, where procurement is organized on the basis of active ingredients. Second, the relevant markets were defined at the active ingredient level due to distinctive characteristics and highly segmented structure of the pharmaceutical sector.
In summary, the Preliminary Report suggests that, although the ATC classification serves as a general starting point for defining the relevant product market, other factors should also be taken into account, including therapeutic properties of the medicine, the stage of the disease for which it is indicated, the existence of medicines with off-label uses, and the economic comparability of the products concerned.
- Merger Control and Technology Undertakings Exception: The Preliminary Report identifies the technology undertaking exception as one of the notable developments in the TCA’s recent practice. As of 2021, there has been a notable increase in the number of merger control decisions in the pharmaceutical market due to the technology undertaking exception and the Preliminary Report links this increase to amendments to the Turkish merger control regime regarding technology undertakings, which also include undertakings active in biotechnology, pharmacology and health technologies. As a result, the TCA has adopted a heightened focus on acquisitions involving innovative pharmaceutical companies, particularly where transactions may eliminate future competitive constraints or innovative pipelines. In line with this approach, the Preliminary Report specifically highlights the importance of assessing pipeline products, pending patent applications and ongoing R&D activities.
- Continued Focus on Competition Advocacy: The Preliminary Report underlines the importance of competition advocacy in the pharmaceutical sector. In this regard, it notes that the recommendations set out in the TCA’s 2013 Pharmaceutical Sector Report have continued to be monitored in light of subsequent sectoral developments and emphasises the TCA’s openness to cooperation and dialogue with other public authorities regarding measures and practices affecting the sector. For completeness, within the scope of the TCA’s 2013 Pharmaceutical Sector Report, the TCA highlights the need for institutional cooperation particularly regarding patent transparency, generic entry conditions, reimbursement mechanisms and regulatory reforms affecting market access.
Competition in the Pharmaceutical Sector
The Preliminary Report devotes a substantial part of its analysis to competition issues arising throughout the pharmaceutical value chain. In this regard, the Preliminary Report separately examines competition concerns at the production, market entry and distribution stages, and assesses a broad range of structural, regulatory and competitive dynamics affecting each stage. The key findings and recommendations identified by the TCA are explained below.
- Production Stage
The Preliminary Report identifies the interaction between intellectual property rights and competition law as one of the principal competition issues at the production stage of the pharmaceutical sector. While patent protection is recognised as an important mechanism for promoting innovation and pharmaceutical R&D, the Preliminary Report emphasises that competition concerns generally arise not from the existence of patent rights themselves, but from the way such rights are exercised. In this regard, the Preliminary Report indicates that competition concerns may arise where intellectual property rights are exercised in a manner that extends beyond their legitimate objective of incentivising innovation, particularly where certain patent-related practices (e.g. evergreening and patent clustering) affect market entry and competitive conditions in pharmaceutical markets.
Accordingly, the Preliminary Report emphasizes certain potentially anticompetitive uses of patent rights, such as evergreening and patent clustering, which are regarded as particularly effective strategies for preventing or delaying the entry of substitute products into the market. Such abusive practices may also be manifested through the creation of dense patent portfolios and the raising of barriers to market entry, including through the use of divisional patents, the bad-faith exercise of patent litigation rights, and the submission of misleading information to patent authorities. The Preliminary Report discusses divisional patent applications as a mechanism that may in certain circumstances increase legal uncertainty and delay generic entry, while noting that such practices do not currently appear to be widespread in Türkiye.
The TCA has also examined the legal application for patent cancellation cases and concluded that although patent disputes between originator and generic pharmaceutical companies are often resolved through settlement or withdrawal rather than a final court judgment, such settlements are not free from competition law concerns. In this context, the TCA reviewed approximately 350 patent disputes initiated since 2015, conducted an in-depth assessment of 26 selected cases and carried out on-site inspections to determine whether such disputes and their resolution mechanisms could give rise to competition law concerns. In particular, the TCA has assessed that settlements that result in the delayed entry of generic medicines or discourage a generic manufacturer from entering the market after challenging a patent’s validity may raise antitrust concerns.
However, based on its review of the cases examined, the TCA did not identify any indications of pay-for-delay arrangements or similar competition-restricting practices involving compensation in exchange for delayed market entry, as recognised in EU competition law. Nevertheless, it emphasizes that patent settlement agreements should be assessed carefully from a competition law perspective.
Drawing on international case law and academic literature, the report suggests that patent settlements are less likely to raise concerns where they:
- genuinely resolve uncertainties regarding the patent and the underlying litigation;
- are supported by legitimate commercial or technical justifications, such as fair licensing arrangements;
- do not produce effects disproportionate to the remaining term of patent protection;
- do not result in a temporarily delay in generic entry into the market;
- do not involve unjustified payments, transfers of value, or ancillary benefits beyond what could reasonably be explained by litigation costs or ordinary commercial arrangements; and
- are narrowly limited to the patents in dispute and the geographic markets covered by those patents, thereby avoiding the appearance or effect of a disguised pay-for-delay agreement.
The Preliminary Report also identifies compulsory licensing, patent transparency and accessibility of patent-related information as areas warranting further attention. In this regard, the Preliminary Report discusses compulsory licensing as an important mechanism for balancing the exclusive rights conferred by patents with broader public interest and competition considerations.
The Preliminary Report explains that compulsory licences may be granted under Turkish law in limited circumstances, including where patented inventions are not sufficiently exploited, where public health or national security considerations arise, or where patent rights are exercised in a manner that may give rise to competition law concerns. It further emphasises that compulsory licensing serves as a safeguard against market foreclosure, barriers to entry and other adverse effects that may arise where patent rights are exercised beyond their legitimate scope and purpose.
In addition, the Preliminary Report notes that issues relating to supplementary protection mechanisms, the application of the Bolar exemption (i.e., an exception that permits generic manufacturers to conduct tests, trials and regulatory approval activities before patent expiry in order to facilitate market entry upon the expiration of patent protection) and certain patent-related disputes should be assessed within the broader balance between intellectual property protection, healthcare policy and competition policy. The Preliminary Report further highlights the potential benefits of closer cooperation between the TCA and the Turkish Patent and Trademark Office, as well as possible improvements aimed at increasing transparency and facilitating access to patent information.
Overall, the TCA concluded that undertakings should refrain from conduct that goes beyond the legitimate exercise of intellectual property rights, including, but not limited to: (i) engaging in practices aimed at preventing the entry of generic medicines through the misuse of intellectual property mechanisms, such as divisional patents; (ii) providing false or misleading information to patent authorities during the process of obtaining intellectual property protection; (iii) submitting incomplete information capable of creating a misleading impression in judicial proceedings with the aim of preventing competing products from entering the market; and (iv) abusing administrative or judicial mechanisms, such as objections, complaints, cease-and-desist letters, requests for interim measures, and litigation, against competitors by exploiting information asymmetries or superior financial and organizational resources for purposes other than those for which such mechanisms are intended.
- Market Entry Stage
The Preliminary Report examines that pharmaceutical markets are subject to extensive regulatory intervention and notes that licensing, pricing and reimbursement mechanisms may, in certain circumstances, affect market entry conditions and competitive dynamics. In particular, the Preliminary Report discusses practices that may delay or hinder the entry of competing products through the strategic use of regulatory frameworks, while emphasising that compliance with sector-specific rules does not necessarily preclude competition law concerns.
The Preliminary Report also addresses product-hopping practices in the context of market entry in the pharmaceutical sector, emphasizing that strategies involving the discontinuation of a medicine whose patent protection has expired or is about to expire, combined with attempts to shift patients to a new patented version of the same medicine, may give rise to competition law concerns unless objectively justified.
The Preliminary Report further notes that the existing legal framework generally seeks to facilitate timely generic entry and does not appear to create systematic barriers to market entry. At the same time, The TCA mentions that certain pharmaceutical regulations, while proportionate and legitimate, may nevertheless facilitate strategic conduct that restricts competition. In particular, it identifies (i) licensing rules that may be exploited in the context of product-hopping strategies to hinder generic entry, and (ii) reimbursement listing rules that may be manipulated to distort price benchmarking and reimbursement processes. The TCA further emphasizes that compliance with sector-specific regulations does not automatically preclude competition law scrutiny, particularly where conduct is aimed at delaying or preventing competitors’ market entry or expansion.
- Distribution Stage
The Preliminary Report concludes that pharmaceutical distribution in Türkiye is highly regulated, with medicines distributed through wholesalers (pharmaceutical warehouses) at the wholesale level and pharmacies at the retail level. The wholesale market is divided into retail pharmacy distribution and tender-based distribution, both of which exhibit notable levels of concentration.
In the Preliminary Report, the pharmaceutical warehouse channel is characterized by a high degree of concentration, with the two largest wholesalers accounting for approximately two-thirds of the market and the five largest players collectively holding around 90%. The Preliminary Report attributes this market structure primarily to economies of scale, purchasing power, logistics infrastructure, and financial strength. However, pharmacist cooperatives and smaller regional wholesalers are considered to exert a degree of competitive pressure.
The Preliminary Report also focuses on the SSO Health Market System, which serves as the principal framework for public pharmaceutical procurement in Türkiye. Under the current system, pharmaceutical suppliers are required to designate a single authorised distributor in each province for the supply of medicines to public healthcare institutions. While acknowledging the efficiency benefits associated with this model, the Preliminary Report expresses concerns that limiting distribution to a single authorised distributor at the provincial level may restrict competition more than necessary. Referring to recent developments in the EU vertical restraints regime, the Preliminary Report therefore recommends replacing the existing framework with a shared exclusivity model, under which up to five authorised distributors could operate within the same province, while maintaining appropriate safeguards to prevent conflicts of interest.
The Preliminary Report reviewed exclusive distribution arrangements in both public and private procurement channels. Although it did not identify evidence at this stage that exclusivity arrangements have restricted competition between pharmaceutical manufacturers or wholesalers, it cautions that extensive use of such arrangements could raise concerns if they become concentrated among a small number of distributors. The Preliminary Report further emphasizes that efficiencies arising from exclusive distribution arrangements should not be presumed. Any claim that an exclusive distribution arrangement satisfies the conditions for exemption should be supported with concrete and verifiable efficiency gains, rather than general or theoretical claims, suggesting that it may be difficult to demonstrate efficiencies sufficient to outweigh the benefits associated with intra-brand competition.
The Preliminary Report further identifies the public institution discount (“PID“) system as another area requiring attention. In particular, it notes uncertainties regarding both the party responsible for bearing the discount and the stage at which the discount should be applied. To address these issues, the Preliminary Report proposes greater regulatory clarity, improved coordination between existing pharmaceutical data systems and the establishment of mechanisms aimed at addressing cases where the PID is not applied or is applied incompletely.
The Preliminary Report also notes that certain PID verification mechanisms may create access to competitively sensitive information and therefore warrant careful assessment from a competition law perspective.
To address these concerns, the TCA recommends:
- limiting the application of PID to prescriptions reimbursed by the Social Security Institution and verified through the MEDULA system[1];
- clearly assigning financial responsibility for PID obligations to the supplier undertaking;
- implementing an integrated verification system between MEDULA and the Pharmaceutical Track and Trace System.
The TCA also highlights concerns regarding the incomplete or non-application of mandatory discounts, which may ultimately harm consumers. To mitigate these risks, it suggests establishing guarantee mechanisms and strengthening sanctions, including reimbursement-list delisting and administrative fines for non-compliant suppliers.
Conclusion
The Preliminary Report provides a comprehensive overview of the pharmaceutical sector, examining competitive dynamics across the pharmaceutical value chain from production and market entry to distribution and identifying a number of areas where regulatory or practical improvements may be considered.
In addition to analyzing the TCB’s decisional practice and the structure of pharmaceutical markets, the Preliminary Report sets out a broad range of recommendations relating to the interaction between competition law and intellectual property rights, market entry conditions, pharmaceutical procurement mechanisms and the operation of the PID system. In this respect, the Preliminary Report provides a useful indication of the issues that the TCA currently considers particularly relevant from a competition law perspective.
While the recommendations set out in the Preliminary Report are not binding on other public authorities and the report itself remains subject to consultation prior to the publication of the final report, the observations and policy proposals contained therein may nevertheless influence future regulatory and enforcement discussions concerning the pharmaceutical sector. The Preliminary Report also reflects the TCA’s increasing interest in the interaction between competition law and intellectual property regulation, including enhanced cooperation with sector regulators and patent authorities.
Furthermore, the Preliminary Report not only identifies areas that may warrant closer scrutiny by the TCA, including patent-related strategies, market entry restrictions and regulatory practices, but also highlights a number of practices that undertakings should avoid in order to mitigate potential competition law risks.
Accordingly, the Preliminary Report offers valuable insight into the TCA’s evolving approach to pharmaceutical markets and is likely to serve as an important reference point for both market participants and practitioners seeking to anticipate the TCA’s future enforcement priorities.
[1] MEDULA is the national electronic claims and reimbursement infrastructure that forms the backbone of the Social Security Institution’s pharmaceutical and healthcare reimbursement processes.
