The Italian pharmaceutical sector boasts production that grows by 3% per annum and is now worth around €27.6 billion. Exports are worth €20 billion (71% of the total output), a record among all the companies operating in Italy. Annual investments in the sector are €2.3 billion in R&D, and facilities.
Italian pharma comes across as a paragon of dynamism in a country still struggling with the aftermath of the 2007 financial crisis. It is a prominent sector that over the last few years has managed to attract interest and investments from US-based Big Pharma and from the EU itself.
The sector is now expecting Italian Prime Minister Matteo Renzi to keep his word, after Renzi's recent summit with the CEOs of the main multinational companies, which have harnessed the Italian pharmaceutical skills and expertise to launch their products.
A further confirmation that this is a sector with a huge, and yet untapped, potential, comes from Bain&Company's report commissioned by Farmindustria (a lobby of Italian pharmaceutical companies).
The report acknowledges the points of strength of the industry in Italy, and its continued capacity for attracting investors, who especially value Italy's lead in the use of advanced technologies, together with the presence of a spin-off sector and more in general of a strongly integrated supply system.
But the Italian pharma sector has potential shortcomings as well, and they need to be tackled. Bain&Company's report lists them, adding in the same breath the solutions needed to buttress a sector that might wind up being key for Italy's recovery. The main liability of Italy's pharmaceutical companies are some of the items produced, since those drugs are increasingly regarded as “outdated” and no longer seen as strategically valuable by the multinational companies.
Another negative aspect, again on the production side, is the age of the facilities and the fact that they now often are working at capacity. It is self-evident that political decisions and government incentives to the sector will be key to keep attracting new investments, and stave off relocation.
Some of the problems of the sector have an distinctly Italian flavor. Too much red tape, heavy taxation, and rigid labour regulation. And a patchwork-like legal system –with too many differences among the 21 Italian regions– which is fickle due to continuous tweaks by parliament.
These conditions, at the end of the day, will make it harder for Italy to keep being attractive in the eye of pharma investors. For this reason – according to Bain&Company– a road-map must be devised by the state and the pharmaceutical companies, a plan that has to establish mutual obligations and responsibilities, but which in the same time can foster synergy. The goal is to bring about Italy's recovery, together.
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