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%.