Italy Pharmaceuticals and Healthcare Report Q4 2009

Despite the Italian pharmaceuticals market being the sixth largest globally, its potential for expansion looks to be limited based on recent trends, including the contraction of the prescription market. The total market contracted in both 2007 and 2008, when it reached EUR18.87bn (US$27.75bn). The market is expected to contract again in real terms in 2009 and 2010, before rising in 2011, 2012 and 2013. In 2013, the market is expected to post a CAGR of just 0.11%, increasing to a value of EUR19.98bn (US$24.02bn).

Low levels of growth, which have come about largely as a result of widespread price cuts, mean (in addition to other country risk factors) that Italy sits at the bottom of our Business Environment Rankings for Western Europe for Q409, below Belgium and Portugal. Additionally, the Italian economy is one of the most vulnerable in an already shaky eurozone. High levels of public debt, poor infrastructure and a lack of competitiveness are the basis for BMI's expectations that the country will remain one of the region's laggards over our forecast period. Despite this, the sheer size of Italy's drug market, in combination with favourable policies towards innovative medicines and the recent inclusion of orphan medicines on the reimbursement list, means that it remains attractive to drugmakers, with the country placing 18th in our Global Rankings.

The Pharmaceutical Research and Manufacturers of America (PhRMA)'s Special 301 Submission 2009 holds mixed results for countries from Western Europe. Italy has been placed on the Priority Watch List as a result of the country's cost-containment measures and the effect that these policies have had on innovative pharmaceutical manufacturers. BMI has previously asserted a similar opinion, highlighting the Italian government's cost-containment measures restricting growth in 2007 and 2008. As of 2004, under Italian law, public drug expenditure (in both hospitals and the retail pharmacy sector) cannot exceed 13% of the health budget. If this price ceiling is breached, the pharmaceutical industry has to pay 60% of the excess, mainly through mandatory price cuts.

Italy's national auditor's office estimates that the country's public health expenditure will increase in 2009 and attributes this rise in spending to the cost of contract renewals and new agreements with general practitioners and specialists. The office warns that this level of spending will create a deficit of approximately EUR8.9bn (US$12.3) for 2009.

On a positive note, the Italian Medicines Agency (AIFA) and the Italian federation of family doctors (FIMMG) are to work on a joint project that studies the cost-effectiveness of medicines. The study aims to develop a series of pharmacological product profiles that physicians could use as prescribing aids. The prescribing recommendations will not focus entirely on the cost of medicines but will also concentrate on good clinical practice and patient safety.