Italy Pharmaceuticals & Healthcare Report Q1 2008

Sales in Italy's retail pharmacy sector are continuing to fall due to the impact of price cuts enacted in 2006. However, overall growth should be reasonable over the forecast period, clocking in at around 4.3% per annum. BMI believes much of the growth will be driven by the consumer health sector, which is benefiting from the impact of liberalisation. Meanwhile, the generics sector is experiencing exceptional growth, albeit form a small base, and should account for almost 10% of the market by 2012.

However, belt-tightening from the current administration looks set to continue in 2008, as Italy attempts to reduce its sizeable national debt. This could trigger further austerities in the health and drug sectors, even though the country has been rocked by three strikes from medical workers in the past two years.

This propensity for industrial action might force the government to think carefully before implementing any deep cuts. Meanwhile, the current policy of high taxation and low public spending is proving unpopular among the public, even if designed to be a short-term contingency.

One policy that should appeal to patients is Health Minister Livia Turco's plan to scrap co-payment charges for prescription drugs. BMI believes that if pushed through, the reform will increase access to medicines and relieve some burden from consumers, although at the danger of possibly leaving a hole in public finances. This last point is a concern for some observers who point out that there are already problems with indebtedness in the system.

Meanwhile, Italy takes sixth position in BMI's Business Environment Rankings for the Western European Region. We have completely overhauled the methodology in Q108 giving greater weight to regulatory factors affecting the drug market, while utilising a more nuanced analysis of country-specific economic and political factors. Italy's position derives mainly from poor indicators for Market Risk, especially concerning bureaucracy, corruption and the legal framework.