Italy Pharmaceuticals & Healthcare

Summary

The Italian pharmaceuticals industry is characterised by low generic penetration, high drug prices and is ripe for modernisation, despite being a relatively mature environment. Italian pharmacists' monopoly on sales of both prescription and non-prescription drugs has come under attack in recent months, with supermarkets allowed to sell over-the-counter pharmaceuticals for the first time. Meanwhile, European and Italian competition authorities have requested the enforced separation of wholesale and retail activities.

Drug spending by the Italian National Health Service increased by 10.8% y-o-y to EUR6.54bn (US$8.32bn) in the first half of 2006, according to Federfarma - the association of Italian pharmaceutical manufacturers. While not representative of the total pharmaceuticals market, the expenditure is indicative of both rising consumption and increased prices. The state spent some EUR113 (US$144) per citizen on medicines last year, the number of prescriptions increased by 5.9%, while the average spending per prescription grew by 4.6%. The cost of prescriptions also rose, due to the abolition of the 4.12% discount applied by producers on drug prices since November 2005.

Further growth is inevitable. Sales of prescribed drugs in Italy increased by 39% to 807 drug doses for every 1,000 residents in 2005, compared to the 2000 figure, according to the Italian National Health Institute. The increase in spending was primarily as a result of an increase in the number of prescriptions, which was mainly due to the country's ageing population. A total of 55% of drug expenditure was generated by people aged over 65 years, while people aged over 75 spent 10 times more on pharmaceuticals than those aged between 25 and 34.

In an effort to further constrain its burgeoning healthcare spending, Italy is contemplating a series of reforms including giving more power to doctors, nurses and patients to reduce unnecessary spending on bureaucracy. As of September 2005, hospital administrators have been involved in every aspect of running a hospital, while doctors' opinions on spending are rarely consulted. Health Minister Livia Turco has said that a quorum of healthcare professionals and citizens should be involved in the drafting of budgets because they are the ones ultimately dispensing and receiving services.

Demonstrating the influence of the authorities, Recordati lost over 10% of its market valuation and had its shares temporarily suspended in July 2006 after it emerged that three of its senior executives had been arrested on bribery charges. The Milan office of the country's financial police was leading the investigation which concerns the bribing of doctors with money, mobile phones, laptops and other gifts so that they would prescribe more Recordati products.

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Scope of Report

An at-a-glance perspective on latest regulatory developments, key forecast indicators and major corporate developments, covering the prescription, OTC and generics markets. The SWOT outlines strategic factors which affect BMI’s forecast analysis, and taken together with BMI’s Economic and Business Environment SWOTS, give a complete overview of market climate.

Outline of market characteristics, growth factors, leading therapeutic segments and a competitivness of the market.

Guide to and analysis of country intellectual property developments and pricing & reimbursement issues, which constitute the regulatory make-up of the market.

Focus on government healthcare reforms, epidemiological trends, company M&As, product launches, market entries, FDI activity, R&D and patent legislation.

5-Year Forecasts to end-2010 for all key industry indicators (see list below), supported by explicit assumptions, plus analysis of key downside risks to the main forecast, including:

• Drug market expenditure (US$bn); drug expenditure per capita (US$); as % of gdp
• Prescription drug market (US$bn)/as % of total market; sales by alimentary tract/metabolism; antibiotics, cardiovascular, central nervous system, oncology, musculoskeletal and respiratory system
• OTC market (US$bn)/as % of total market (sales by analgesic, cough and cold, digestives, skin treatments, vitamins and minerals)
• Generics market (US$bn)/ as % of total market
• Health expenditure (US$bn, % of gdp and per capita); public sector health expenditure as % of total; number of hospitals; beds, hospital admissions, doctors, births and deaths per 000 population

Forecasts based on bespoke BMI economic modelling, using historical data sets of macroeconomic and industry variables to derive rigorous statistical relationships, anchored in advanced linear regression techniques.

BMI forecasts for all headline macroeconomic indicators, including:
Nominal and real GDP, % real GDP growth, % private consumption growth, % industrial output growth, % consumer price index, % GDP price deflator, exports, imports, trade balance, current account balance, foreign direct investment, exchange rate against US$, government expenditure, external debt

Intelligence on the market position of major MNC power houses and indigenous companies. BMI profiles key research-based companies. Company SWOTS are provided for all key strategic players, complete with a company activity overview, its leading products and analysis of business opportunities.

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