TBY talks to Dr. Cem Bozkurt, CEO of Alvimedica, on the production of medical devices in Turkey, the potential for a focus on R&D, and the country's free zone advantages.

Dr. Cem Bozkurt
Dr. Cem Bozkurt has been CEO of Alvimedica since September 2007. Previously, he worked as Country Manager for B. Braun Aesculap from 2006-2007 and Sales and Marketing Director at Ege Group Holding from 2004-2006. He also served the position of Area Manager for ISP Turkey from 1997 to 2004. He received his PhD in 2001 and an MBA in 1991.

How do you rate Turkey in terms of local production?

In terms of health care, Turkey ranks between 10th and 14th worldwide, so it's a big market, especially in interventional cardiology—yet there is no local production. Heart attacks are the number one cause of death globally, the second being cancer—heart attacks cause almost 35% of the world's total deaths, but there is very much we can do. There is a trend on the horizon; no one wants open-heart surgery anymore. The most common treatment of cardio problems used to be bypass surgery. When interventional cardiology became popular in the last 10 years, there was a dramatic drop in the number of operations. Technology to travel inside the body without the need for invasive surgery would be revolutionary. That's what we started to work on. We are developing all of the interventional cardiology practices, and we are expanding our portfolio by treating brain diseases without opening the skull. We can mend aneurisms or tumors without open surgery. We are also innovating drug and device combinations, where you put a drug into a device that takes the drug directly to the affected area internally, instead of directly injecting it into the body. This is very important in oncology, for example, where it is common practice to deliver chemotherapeutic agents that travel around the body. However, cancer products are toxic, designed to kill cells in the body. If you administer them systematically, there are very severe side effects. Due to these side effects, you can lose the patient while trying to treat the cancer. We are working on delivering chemotherapeutic drugs directly to the location of the tumor.

How much does Alvimedica invest in R&D?

R&D is the most important factor for us. Considering that any given company's current product portfolio will disappear in five years time, we are investing a lot in R&D. We have an R&D center next to our factory in Istanbul, and we have also launched a new R&D center in the Netherlands—a significant investment from our side. We have 25 engineers working there. The number one company in medical devices in the world is Cordis, a branch of Johnson & Johnson. Cordis was also based in the Netherlands, but in 2008 it transferred all of its production facilities to Mexico and San Francisco. When we arrived, we hired the experienced engineers still living in the area who knew a lot about catheters and stents. That presented us with a significant amount of power to jump into the market with new products. We have around 30 new products, and almost 12 of them are under Turkey's control. In January, we opened a new R&D facility in Palo Alto, California, just next to Stanford University. We are developing new products with Stanford's electrical engineering department. We have invented a catheter with ultrasound technology on the very tip, which means we can take pictures of a patient's arteries. It's revolutionary. We hired around 15 engineers to work there under the supervision of a professor from Stanford. This project alone has needed investments of $5.2 million per year. Our investments in R&D totaled $6.5 million in 2011. With new projects on the horizon, we are expecting to double it in 2012.

What is Turkey's significance to Alvimedica?

The founding members of Alvimedica were investors of Turkish descent living in Scandinavia. They gathered a fund in order to invest in health care in Turkey, and wanted to start a hospital chain. I suggested that investing in a hospital was not a wise decision, as most of the investment groups had already secured their positions in the market. Instead, I proposed medical devices—my idea was interventional cardiology. After the initial brainstorming, we moved our operations to Turkey.

What are your main and developing markets?

We sell products to 42 countries. We have established ourselves as a marketing company in Shanghai, and in the coming months our country manager will start there. In India, we have taken a very significant market share. We are present in most of the Asian countries. There are 1.7 billion people living in Asia, and only 10% have healthcare coverage. China exports a lot of medical equipment, but it continues to import medical devices. There is huge potential there. Interventional cardiology is increasing 10% every year. Our goal is to be in the top five companies in the world, and we are moving toward this goal as Cordis has stepped out of the stents business. Its two blockbuster projects were rejected by the FDA once it moved to the US, so it decided to leave the industry. We have expanded geographically. We will be selling products to 75 countries by the end of 2012. We are present in all of the South American markets, claiming significant market shares. One-third of our sales are domestic, and in Turkey our market share is almost 70%.

What is the nature of the relationships you have formed with academic institutions?

Each project is different, and partnerships also differ. With Stanford, it had its technology patented but not commercialized. We launched an R&D center, hired local engineers, and made an agreement with its professors. Now we are working together to develop new products. At Radboud University Nijmegen in the Netherlands, we are developing a new product that was the university's idea, but that it couldn't develop alone. We are developing a stent that will be coated with stem cells so we can rebuild parts of the body by using a person's own cells. With different university and opinion leaders, we are working on different collaborations.

How do you assess the value of Turkey's free trade zones in terms of science technology?

The free zones are about to close down. The EU does not want free-zone incentives, so many of the free zones are about to close down and the incentives we had have been cancelled. We have been arguing with the Turkish government for the past year in order to get permission to build specialized industrial zones, and give special incentives to these zones. One of the zones would be a “biozone," which we are trying to establish in Çatalca near Istanbul. In Ireland and Singapore, they operate industrial zones where only pharmaceutical and medical device companies can conduct activities, such as product registration and sterilization. They accumulate healthcare or bio-based companies in one zone and give them special incentives, such as free land or tax exemptions. Then, those companies can work on R&D together. If we did this, we could associate our R&D centers with Istanbul Technical University or the medical faculties of other universities. This accumulation of knowledge would help us develop new products. This growth and cooperation was demonstrated by the recent growth in Boston, prompted by Harvard University and MIT. The engineers from MIT talked to doctors from Harvard, developed a product, and then tested it on patients at Massachusetts General Hospital. Almost instantly, new products began entering the market. This was the basis of how Boston became a hotspot for health care. By April or May 2012, we are hoping to mimic this success. We will announce the development of our bio-city zone in Çatalca. We will do various roadshows to entice other companies to build their production facilities in this area. Multinational companies will also bring expatriate families to the area, and they will want high-quality living quarters and schools to for children. There will be an industrial part, but we are also building an environment. We are leading initiatives to develop new residential areas and an international school.