The Ministry of Health has announced a bid for the production of medical devices, the largest one-time bid in the world. 20 companies including General Electric and Phillips have applied to compete.
While there are certain conditions towards localization of production in the bid specifications, Turkey's AKP government issues a guarantee of purchase for 10 years.
'MOST IMPORTANT CONDITION IS DOMESTIC PRODUCTION'
The Ministry of Health will initiate the bid on July 24 that includes the purchase of $10 billion worth of products along with side products. After the bid, the Ministry of Health aims to produce 50% of medical devices in Turkey within five years.
Reminding that the most important condition of medical device bid is the localization of production, Prof. Eyüp Gümüş, the Undersecretary of Health, said, "We have local firms in the field of digital x-ray and monitor. We aim to localize MRI, ultrasound and tomography devices with domestic production. The winning company in the tender will build a consortium with 25 to 30 local firms and SMEs."
"Localization rates will increase to the level of 80%. Thus, local firms will not opt out of the system. They will be able to make the high-tech production that they would not be able to under the existing circumstances. All five medical devices that put out to tender will be manufactured in Turkey," he noted.
IMPACT OF CITY HOSPITALS ON THE MARKET
350 MRI machines, 538 computed axial tomography, 7,142 ultrasound, 43,372 bed-side monitors and 3,236 digital radiography devices will be purchased through the bid. The project on city hospitals aims to revive "the health market."
WHAT IS THE NEED FOR ALL THESE MEDICAL DEVICES?
The market size of medical devices in Turkey is about $2,6 billion and 85% of this amount is met by import. While the bid issued by the Ministry of Health states that the demands of city hospitals would be met, it is estimated the bids for device purchases for a significant part of the hospitals under construction have been already initiated.
In the current situation, new investments will have to be made in order to meet the requirement of ‘domestic production’ of medical devices, which cannot be produced or produced in a limited fashion in Turkey. For this reason, production may be in only the facilities to be built because of "domestic" medical device bid considering hospitals in initial contract or project phase.
The "strategy" of the Turkish AKP government promoting the production activities of international health monopolies in Turkey under the cover of "the needs of city hospitals" has been a long-term agenda. Yet, how "domestic" the production to be made in such a way seems controversial.
It is estimated that monopolies such as General Electric, Philips and Siemens may specifically import devices containing critical, private information and technology and assemble them in Turkey in order to meet the condition of "domestic production" in the bid specifications.
KNOWLEDGE TRANSFER FOR HIGH-TECH?
Defense, aerospace and medical device productions are the sectors that generally aim to decrease current account deficit by reducing the dependency to import and to increase the level of technology in industrial production. Yet, contrary to claims, it seems that the incentives to increase production in these sectors or improvements in productions of assembly-based or low technology devices do not provide savings on resources.
However, the AKP government is creating new opportunities for both international capital markets and capital groups in Turkey.