Italy

Italy is not only great for pizza and pasta; it also boasts a large phar­ma­ceu­ti­cal mar­ket, which, in recent years, has invested a lot of money in research and devel­op­ment. Like its Euro­pean neigh­bours, Italy is strug­gling to cope with high lev­els of national debt, and the sharp drop in health­care spend­ing has depressed Ital­ian phar­ma­ceu­ti­cal com­pa­nies. Bud­getary con­straints are impact­ing the country’s health­care spend­ing.

Costly phar­ma­ceu­ti­cals have been one of the first things to see cuts. But Italy is no stranger to cri­sis, and R&D invest­ment was very high in the years before the crash.

The coun­try has shown strengths in invest­ments, and in APIs and pack­ag­ing sub­sets most of all. Ital­ian phar­ma­ceu­ti­cal com­pa­nies are typ­i­cally medium-sized, with staffs rang­ing from less than one hun­dred to sev­eral hun­dred for the most significant orga­ni­sa­tions. Some are part of large inter­na­tional com­pa­nies; oth­ers are national com­pa­nies or inde­pen­dent. Most man­u­fac­tur­ing— 86%—is sit­u­ated in the north. Italy is one of the most impor­tant active phar­ma­ceu­ti­cal ingre­di­ent providers in the world. The rea­son lies in its cul­ture: the coun­try is known for high-calibre uni­ver­sity teach­ing, flexi­bil­ity and cre­ativ­ity.

• Italy pro­duces as much as 29% of the world’s active phar­ma­ceu­ti­cal ingre­di­ents for an annual rev­enue of US $3.5 billion.

• Ital­ian exports make up 85% of the pro­duc­tion in more than 90 coun­tries.

• The Italian pharmaceutical sec­tor employs 9,000 peo­ple.

• The coun­try main­tains many R&D facil­i­ties with­out gov­ern­ment grants.

Since 2006, all OTC prod­ucts can be sold in super­mar­kets as long as a phar­ma­cist super­vi­sor is present. There are also phar­ma­cies in mass-market out­lets throughout the coun­try. Although Italy isn’t grow­ing fast, the OTC mar­ket there is advanc­ing with an annual growth rate of 2.2%, and the mar­ket is expected to reach nearly US $3.19 bil­lion. The OTC share in Italy amounts to 10%, and Ital­ians pay an aver­age of US $80 per year for OTC prod­ucts in phar­ma­cies. There are 14,000 phar­ma­cies in the coun­try total, with a den­sity of 3,400 inhab­i­tants per phar­macy.

Italy’s birth rate is lower than that of most other devel­oped Euro­pean mar­kets. Com­bined with the high national debt, this will result in chal­leng­ing eco­nomic con­di­tions. Italy’s health­care spend­ing is com­pa­ra­ble to other OECD coun­tries, but lower than the aver­ages for France, Ger­many, Spain and Scan­di­navia. Pub­lic health­care, deliv­ered through 20 regional health­care agen­cies, accounts for the vast major­ity of spend­ing.

Italy has some of the low­est lev­els of gener­ics usage by both vol­ume and value. Health­care pol­icy is del­e­gated to regional agen­cies, which has led to significant vari­a­tion in generic intake across the coun­try. How­ever, cost-­cut­ting reforms, includ­ing price cuts, have been intro­duced to increase generic usage nation­ally.

A num­ber of Pharma play­ers in Italy are clos­ing or down­-siz­ing their man­u­fac­tur­ing and/or R&D oper­a­tions in an effort to reduce costs. How­ever, the Agen­zia Ital­iana del Far­maco is tak­ing steps to tackle a num­ber of issues affecting the Ital­ian Pharma indus­try in order to attract investors to the coun­try, as well as to ensure drug qual­ity and safety.

If the country can maintain market confidence, we do not believe Italy will remain in cri­sis. Although pub­lic sec­tor debt equals more than 120% of the country’s GDP, a decade of stag­na­tion has allowed the coun­try to avoid the imbal­ances that are now wreak­ing havoc along the Euro­pean periphery. According to BMI Polit­i­cal View, former Prime Min­is­ter Mario Monti has suc­cess­fully passed three key motions since tak­ing office in Novem­ber; aside from shoring up fiscal accounts, these mea­sures are aimed at boost­ing the country’s medium-term growth out­look. Nev­er­the­less, the results of the so-called ‘Monti cure’ will take years to mate­ri­alise and could prove detri­men­tal to employ­ment and growth in the short term. We there­fore fore­cast annual growth from 2014–2018 at 1.1%.