Facts & Figures of Pharmaceutical Industry in Italy - Farmindustria

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Facts & Figures of Pharmaceutical Industry in Italy - Farmindustria

Facts & Figures of

Pharmaceutical Industry in Italy

January 2013

For further information: centrostudi@farmindustria.it; ph.: 06-67580345


Pharmaceutical industry activities concur to the

country development

Research &

Development

Production

Market Access

Direct output +

Allied industry

More Productivity

More Resources

HEALTH AND

QUALITY OF LIFE

INDUSTRIAL

GROWTH

ROLE IN NHS,

VALUE FOR

PATIENTS

Access to Care

and Innovation


Research &

Development

Production

Market

Access

World

Pharmaceutical

Statistics

Competitive

benchmarking

Summary

Life expentancy increases 1 month every 4 thanks to pharmaceutical innovation

Pharmaceutical sector is leader in Italy for investiments in R&D

Warning signals: drop in R&D operators and clinical trials

Pharmaceutical industry is the 1 st hi-tech sector per export and territorial

presence

More highly qualified, productive and gainful jobs

Warning signals: reduction of employment in the italian pharmaceutical sector

Healthcare public expenditure in Italy and EU

Medicines and vaccines as tools to improve NHS efficiency

Public expenditure trend for medicines and NHS sectors

Slowing down of global pharmaceutical market; growth moves to Emerging countries

Complexity and costs of pharmaceutical research

Changing geography of global pharmaceutical production

Italy: aged population, lower pharmaceutical prices and expenditure compared to EU

Lower prices and problematic access to innovation

Pharmaceutical industry in Italy: a value not be lost


Research is life


Life expectancy increases 1 month every 4,

the 40% due to pharmaceutical R&D

Italy: life expectancy at birth

(years, male and female average)

90

80

70

60

50

40

35

47

55

65

1881 1911 1931 1951 1971 1991 2011

72

77

82

Italy: percentage decrease of standard

mortality rate

(deaths per 100 thousands inhabitants)

All causes

Circulation system dis.

Cancer

Respiratory

Digestive apparatus

Other causes

Total

from 1994

-27.4

-39.7

-19.5

-23.6

-42.7

-10.4

Total

from 1978

Research is life. More than 90% of Pharmaceutical Reasearch in Italy is supported by

pharmaceutical companies

-45.6

-62.2

-16.6

-53.1

-61.7

-39.0

Source: Istat, OECD


Living better and longer thanks to innovation

generated by pharmaceutical industry

5 year survival rate and availability of

new antineoplastic medicine

Tasso di sopravvivenza a 5 anni

Altre

neoplasie

Tumore allo

stomaco,

polmone,

leucemie

Innovatività dei farmaci

Altre

neoplasie media

Tumore allo

stomaco,

polmone,

leucemie

Cure più tradizionali Cure più innovative

Altre

neoplasie

Tumore allo

stomaco,

polmone,

leucemie

Italy: % of over-65 reporting their

health to be good

1994

2000

today

1 million of

over-65

involved by care

improvement

16 18 20 22 24

Pharmaceutical R&D brings both breakthrough care and incremental innovation that

allows continuous improvements in life quality and steady progress for treatment

efficacy, side effects reduction and user-friendliness

Source: CERM, Istat, OECD


Pharmaceutical sector is leader in Italy for

investments in Research and Development

Data on R&D in Italy

Public R&D

(43%)

Non profit

(3%)

9%

Pharmaceutical

and RED biotech

Intra-muros R&S

of other sectors

(44%)

Intensity* of R&D activity in Italy

(Pharmaceutical index = 100)

Pharmaceutical

Precision and

electromedical

equipment

Telecommunication

Aeronautics and

other transports

Computer industry and

office machinery

High-medium

technology sectors

Machinery

Electronic devices

Chemicals and petroleum

Manufacturing industry

0 20 40 60 80 100

* average of ratios (R&D expenditure/turnover) and (R&D employees/total employees)

Source: processing on Istat data


A growing pipeline of 319 biotech products

generated in network between SME and

pharmaceutical companies

Biotech pipeline in Italy, divided by studying

phases and pharmaceutical companies

Pre-clinic

and phase 1

biotech

SME

92

Phase 2 39

Phase 3 16

Pharmaceutical

companies

31

59

82

Total 147 172

TOTAL

123

98

98

319

with an additional 84 projects of discovery

Biotech SME research is concentrated in the

early stages, feeding innovation of

pharmaceutical companies, that have a

leading role in clinical development

Biotech industry in Italy is growing up,

thanks to 238 companies that invest 24%

revenues in R&D, much more than the

average of manufacturing sector (1%)

Pharmaceutical and biotech industry rely

on 7 thousands research operators and

invest 1.8 billions € in R&D, that

correspond to 9% of national research

Clinical trials of biotech products are

increasing highly and represent the

30% of total

More than 2/3 of biotech activity in Italy

is generated by pharmaceutical

companies

Source: processing on Istat, Aifa, Ernst&Young-Assobiotec data


Warning signals: drop in R&D employment and

clinical trials

6,500

6,000

5,500

5,000

4,500

4,000

R&D employees in pharmaceutical

industry in Italy

6.250

6,250

6.000

6,000

2001 2003 2005 2007 2009 2011

900

800

700

600

500

400

300

200

100

0

Number of clinical trials in Italy

2001 2003 2005 2007 2009 2011

Phase I e II Phase III e IV

Clinical trials represent an important financial sourcing for the Regions and Private

hospitals and an opportunity for Patients to benefit from highly advanced therapies

-23%

Source: Istat, Aifa data processing


Pharmaceutical companies

are the engine of hi-tech

sector in Italy


Key-figures of pharmaceutical industry:

the first hi-tech sector in Italy

165 factories, 64 thousand employees

(about 90% graduates or diplomates)

61 thousand employees in allied

industry

6,000 R&D operators, 9% of

pharmaceutical total (1.6% the

average of manufacturing sector)

25 billion euros of production value,

the 65% turned on export. Italy ranks

second in Europe for manufacturing

after Germany

2.4 billion euros on investments:

1.2 in R&D (equal to 12% of

manufacturing industry’s) and

1.2 in hi-tech manufacturing plants

70

60

50

40

30

20

10

Export as % of total pharmaceutical

production in Italy

0

1991 1996 2001 2006 2012

Share of pharmaceutical compared to

the overall hi-tech sectors in Italy

Employees

Investment (manufacturing and R&D)

Export

65%

30%

43%

47%

Source: processing on Istat, Eurostat data


Rely on pharmaceutical sector to boost

manufacturing productivity in Italy

Labour productivity in Italy

(added value per employee, manufacturing industry=100)

Pharmaceutical ind.

Petroleum

Chemical ind.

Informatics

Vehicles

Electronics ind.

Machinery

Rubber and plastic

Food ind.

Manufacturing ind.

Paper and printing

Glass and minerals

Metal products

Textiles and clothing ind.

Wood and furniture

Growth of total factors productivity in Italy

(index 1994=100)

Pharmaceutical ind.

Energy

Wood, paper, publish.

Rubber and plastic

Machinery

Informatics

Clothing ind.

Electronics ind.

Vehicles

Total economy

Total industry

Metals

Food ind.

Chemical ind.

Petroleum

0 100 200 300 0 25 50 75 100 150

Source: Istat data processing


Compared with Big EU, Italy’s share in

manufacturing is higher than in sales

Pharmaceutical

Manufacturing

Pharmaceutical

Market

(retail+non retail,

ex factory values)

Italy’s role in the EU Big5

(% on total)

18%

23%

0 5 10 15 20 25

Characteristics of pharmaceutical

industry in Italy: index per employee

(Manufacturing ind.=100)

Export

Investments in

manufacturing and

R&D

Environment

investments

Pharmaceutical Manufacturing Ind.

0 100 200 300

Statistics show that Italy is even more a big pharmaceutical manufacturer than a wide

market, with a hi-tech specialization in pharmaceuticals

100

100

100

273

268

325

Source: processing on Istat data


Pharmaceutical companies hold a leading role in

Research and Internationalization

Investments as % of turnover

Features of italian private equity

companies

(total manufacturing index=100)

160

140

120

100

80

60

40

Energia

Metalli

Elettronica

Mezzi di trasporto

Legno e

carta

Servizi

Chimica

Meccanica

Alimentare

TOTALE

INDUSTRIA

Vetro e Minerali

Petrolifero

Gomma e plastica

Costruzioni

Mobili e altri settori

Tessile e

abbigliamento

Farmaceutica

20 60 100 140 180 220 260

Internationalization Index*

* Average of export and sales generated abroad by

italian companies, compared with turnover

Foreign-owned enterprises’ investments in

Italy and export (billion of euros, investments in

manufacturing and intra-muros* R&D)

machinery

Pharmaceuticals

Electronics ind.

Chemical ind.

Vehicles

Metallurgy

Rubber and plastic

Food ind.

Clothing industry

Petroleum

Paper and printing

Glass and minerals

Other sectors

Wood and furniture

* Pharmaceutical R&D net of clinical trials

Source: processing on Istat data


One employee in allied supplier industries

every one employee in pharmaceutical sector

Sectors of pharmaceutical allied industry and employees

First 3 allied sectors

Machinery

Packaging

Chemical

7,387

7,500

7,223

Employees in

pharmaceutical Industry

64,000

Employees in

allied industries

61,000

Source: Farmindustria, Pharmintec


Regional facts & figures of pharmaceutical and

linked industry

Lombardia

31,000 employees in pharmaceutical,

33 R&D centres and more than 90 red biotech

16,000 employees in linked industry

(chemical, machinery, paper)

Piemonte e Liguria

2,200 employees in pharmaceutical and

6,000 in linked industry

(machinery, chemical, packaging)

Toscana

7,000 employees in pharmaceutical

4,000 employees in linked industry

(glass, chemical)

Lazio

15,000 employees in pharmaceutical

29% of regional export (74% of hi-tech export)

5,000 employees in linked industry

(chemical, packaging)

Facts & Figures of pharmaceutical

and allied industry

125 thousand employees

36 billion euros of production

6 billion euros in wages and contributions

3 billion euros of investiment in R&D and

manufacturing

Veneto

2,700 employees, 6,900 in linked

industry (mechanics, chemical, packaging)

3,400 employess in pharmaceutical and 6,200

in linked industry (machinery, chemical, glass).

Parma ranks 3rd Emilia Romagna

for export

Campania

700 employees in

pharmaceutical and 3,000

in satellite industry

Marche

2,600 employees in pharmaceutical and linked

industry. Ascoli Piceno exports 41% of

manufacturing

Abruzzo

More than 1,000 employees in

pharmaceutical (100 in R&D) and

1,200 in allied industry

Puglia

Centres of excellence of great

international companies

(2,800 employees in

pharmaceutical and linked

industry). Bari and Brindisi

export 28% of total

manufacturing

Sicilia

About 1,000 employees in

pharmaceutical and 2,000 in

linked industry. Catania exports

23% of total manufacturing

Source: Farmindustria, Osservatorio Pharmintech, Istat


More highly qualified, productive and gainful jobs

Employees by education

(% on total)

Pharmaceuticals Manufacturing

Industry

graduates 54.8 8.4

Diploma holders 34.2 47.6

Degree or

Diploma holders

89.0 56.0

other 11.0 44.0

42% of employees are women (24% in other

sectors), with more qualified tasks, and

representing the majority (53%) in R&D

Productivity and salaries

(manufacturing industry=100)

Labour

productivity

(added value

per employee –

last two

years average)

Salaries

per employee

Pharmaceuticals

Manufacturing Ind.

50 100 150 200 250

Thanks to investments and quality of Human Resources, pharmaceuticals is sector with

high added value and higher salaries than the manufacturing average. And thanks to

these features it’s a fitting sector for an advanced economy

100

100

205

234

Source: Istat, Indagine Sistema Confindustria


The role of medicines

in the NHS


Italian healthcare spending compared to Eu countries

and the role of pharmaceuticals

Healthcare public expenditure as % on GDP

France

%

on GDP

(2010)

Growth of % of

GDP (2010-2030)

9.0 1.5

Germany 8.9 0.9

UK 8.0 3.3

Italy 7.4 0.6

Spain 7.1 1.6

Big 5 (ave.) 8.1 1.6

Other EU 15 7.4 1.6

UE 15 (ave.) 7.7 1.6

USA 8.5 5.1

Structure of National HC Financing

(% on total, year 2012)

Other

budget items

of territorial

expenditure

(39.5%)

Prevention

(5.0%)

* Including a share of private expenditure

Territorial

pharmaceuticals(*)

(13.1%)

Hospital

pharmaceuticals

(2.4%)

Other

budget items

of hospital

expenditure

(40.0%)

In Italy expenditure as % on GDP and per capita is lower by 10% compared with the other

big european countries (about pharmaceutical the difference reaches 25%)

Source: estimates on Oecd, Ministero Salute, FMI data


Medicines and vaccines are tools for reducing

NHS expenditure

The proper use of medicines can

determine savings for the NHS by:

preventing

Reducing risks of crippling diseases

avoiding unnecessary surgeries

(eg. gastroduodenal ulcers)

slowing down the degeneration or

easing the symptoms of some ageing

related diseases (eg. Parkinson’s and

Alzheimer’s)

shortening the time of hospitalization

(eg. in case of chemotherapy) or avoiding

unnecessary hospitalization (eg. in case of

chronical diseases)

One day of hospitalization costs 1,000

€, more than 5 times the per capita

public expenditure for medicines in

pharmacy.

Use of medicines for chronic deseases: a

cost/benefit analysis

(cardiovascular, respiratory, depression, Alzheimer)

Expenditure in medicines 6.3

Savings for NHS expenditure

(less hospitalization,

unnecessary surgeries,

reduction of diseases’ degeneration)

Non-NHS savings

(avoided leave,

less expenditure in social assistance)

Savings achievable thanks to vaccines

1 euro spent on vaccination can

amount to 24 euro to cure patients

billion €/year

6.1

5.6

Source: CER-Nib, Aifa


90% of market is composed of off-patent

medicines, with high growth of generics

Sales of reimbursable medicines

by patent coverage

(% on total, in units, Jan-Nov. 2012)

IN PATENT 9%

Sales percentage change

(channel of pharmacy, public and private)

OFF PATENT 91% TOTAL MARKET -5,4% -0.4%

Off patent-

branded

Unbranded

generics

Other

% on total

65%

21%

5%

Branded

(in and off patent)

Unbranded

Generics

2012

Jan-Nov

-6.7%

+14%

2006 – 2011

annual average

-1.3%

+15.7%

90% of packs sold are off-patent medicines, more than lists of transparency’s data. There are

molecules without patent coverage that could become generics; nevertheless, they are only

branded, where there are no generics (25% of off-patent packs)

Source: Farmindustria processing on IMS Health data


Off-patent market share in Italy is aligned with

other European countries

Percentage composition of pharmacy market

(volumes)

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

EU ITALY SPA FRA GER UK

Off patent In patent

In all major European countries the

share of off patent market (accessible

by generics) is 90% of total

pharmaceutical market

In Italy what is different is the

composition between generics and

off patent branded, but this:

has no effects on public

pharmaceutical expenditure (NHS

reimburses lowest price)

does not penalize the Patient that

even before the active ingredient

prescription could choose generics

Source: Farmindustria processing on Assogenerici and IMS Health data


Identify waste areas and spread best practices

to recover resources for innovation

Incidence of Caesarian section

in OECD Countries (% on total)

South Italy

Mexico

Italy

Turkey

South Corea

Portugal

North-centre of Italy

Swiss

Germany

OECD Average

Spain

UK

Danmark

France

Finland

The Netherlands

0 10 20 30 40 50

Features of Regional Health Administration

Caesarian section

(% on total)

Standard rate of

hospitalization

(standard admission for acute

diseases per 1.000 inhabitants)

% of dismissed with

diagnosis related group

% of hospitalization only

for medical check

Max Min Average

62.2 23.8 38.4

154.9 97.3 124.6

47.8 25.7 35.3

24.9 5.4 16.9

Source: OECD, Istat, Ministry of Health


It is necessary a sustainable management of expenditure

items, without penalizing the pharmaceuticals

cumulative % change 2006-2011

Other goods and

services purchased

by NHS

Total public

healthcare

expenditure

NHS Personnel

and medical fees

Total public

pharmaceutical

expenditure*

+6.5%

+2.3%

+10.1%

+17.5%

Inflation

(+11%)

0% 5% 10% 15% 20%

* territorial+hospital exp., including vaccines, excl. copayment e payback

During last 5 years

public pharmaceutical expenditure has

stopped at 1.1% on GDP; other goods

and services have increased from 2.6% to

2.9%

companies have paid more than 11

billion euros for public finance

public pharmaceutical expenditure

per capita is dropping (-0.8%)

In 2011

Public pharmaceutical expenditure: -4%,

against, for example,

• laundry, canteen, cleaning +4.2%;

• maintenance and repair +2.8%;

• leasing and renting +4.4%;

• general costs +6.3%

• specialistic exhamination NHS reimb. +3.3%

In 2012 pharmaceutical expenditure

still dropping: -3.7%

Source: Farmindustria processing and estimates on Aifa, MEF, Istat data


The global changing

scenario of pharmaceutical

industry


While the global pharmaceutical market slows

down, growth moves to Emerging Countries

BRIC +

rest of

the

World

EU

JP and

South

Corea

North

America

Global pharmaceutical market

(% on total)

20

26

11

11

43

43

27

26

24

24

11

13

36

38

38

19

11

33

32

2006 2011 2016

16

14

12

10

8

6

4

2

0

Pharmaceutical market trend

(annual average % change, US dollars)

7.8

7,1

World Advanced

Economies

14.4

5,3 5.8

4,8

4.0

BRIC + rest

of the world

0.6

13,0

11.3

2006-2011 2011-2016

Source: IMS data processing


Italy drops in the international ranking of

pharmaceutical market

Rank 2006 Rank 2011 Rank 2016

1 Stati Uniti 1 Stati Uniti 1 Stati Uniti

2 Giappone 2 Giappone 2 Cina

3 Francia 3 Cina 3 Giappone

4 Germania 4 Germania 4 Brasile

5 Cina 5 Francia 5 Germania

6 Italia 6 Italia 6 Francia

7 Regno Unito 7 Brasile 7 Italia

8 Canada 8 Canada 8 Russia

9 Spagna 9 Regno Unito 9 Canada

10 Brasile 10 Spagna 10 India

11 Australia 11 Russia 11 Regno Unito

12 Messico 12 Australia 12 Spagna

13 Corea del Sud 13 India 13 Australia

14 Russia 14 Corea del Sud 14 Corea del Sud

15 India 15 Messico 15 Argentina

Population growth and better economic conditions are increasing Health’s demand in

emerging countries. Advanced Economies market slows down due to cost containment

measures

Source: IMS


Investments are raising, but new molecules are

annually decreasing due to complexity and

costs of pharmaceutical Research

R&D pharmaceutical investments in

Europe and USA (index 1990=100)

500

450

400

350

300

250

200

150

100

50

0

1990 1995 2000 2005 2009 2010

45

40

35

30

25

20

15

10

5

New molecules launched into the

international market

Specialistic

care

Primary care

0

1998 2000 2002 2004 2006 2008 2010

Research is heading toward more personalized therapies, which are more effective but

also more expensive, not least because only 1 molecule out of 10,000 is able to pass all

tests required to become a new medicine

Source: processing on Efpia, CERM data


R&D costs are increasing while patents are

expiring within 50% of branded market

R&D cost dynamics per innovative

medicine at global level (estimate in

billion dollars)

1400

1200

1000

800

600

400

200

0

market launch

phase III

phase II

pre-clinic

discovery

2001

market launch

phase III

phase II

phase I

pre-clinic

discovery

today

Italy – expiring-patent molecules:

cumulative value compared to in-patent

market (base year=2009)

100

90

80

70

60

50

40

30

20

10

0

Retail Total market

(inc. non retail)

2010 2011 2012 2013 2014

Rising costs and decreasing revenues (related to patent deadlines) are causing a global

structural change in pharmaceutical sector

Source: processing on Phrma, CERM


The changing geography of global production

in pharmaceutical sector

550

500

450

400

350

300

250

200

Manufacturing value of global

pharmaceutical industry

(index 2000=100, US dollars)

BRICS and other

Emerging Countries

World

150

100

Advanced Economies

2000 2005 2010 2015

Shifting of demand causes the rilocalization of global manufacturing capacity.

Competition among Advanced Economies to consolidate and attract investments are

increasing

100

80

60

40

20

0

Share of new investments in the

global pharmaceutical industry

(% on total)

41

59

2000 2002 2004 2006 2008 2010 2015

Advanced

Economies

BRICS and other

Emerging Countries

72

28

Source: Global Insights


A structural changing of pharmaceutical

industry all over the World

Population ageing in

advanced economies

Growing role of Emerging

countries

Patent deadline

(50% of in patent market)

Increasing R&D costs

New needs of care

(e.g. rare disease)

Innovative technologies

Interdisciplinarity of

research and

development

Consequences on other

sectors

Lower prices

Growing costs

Increasing of business

competition

Reduction of profit margin

Necessity of more resources

for R&D

Customized care

(from 500 to 10.000 molecular

targets in next years)

Increasing number of

specializations

Changing

of reference

scenario

+

Technological

“shock”

Research developed more on

=

network than in laboratories

Radical changing in business organization

with sharp restructuring


The competitive

benchmarking of

pharmaceutical industry in

Italy


Prices lower compared with UE countries, both in

pharmacy and in hospital, in patent and off patent

Ex-factory prices of prescription medicines

(bilateral comparisons, total market, Italy index=100)

140

130

120

110

100

90

80

∆ Ita vs Big Ue

100

115

104

107

111

132

Italia Big Ue SPA UK FRA GER

Total

market

-15%

Pharmacy channel

Total in-patent off-patent

-19%

-19% -17%

Hospital

-8%

Source: Cergas Bocconi on IMS data


Access to innovation at regional at national level

Number of days to include medicines in the first

pharmac. codex after the national one, per Region

(medicines with AIC during the period 2006-2011)

max.

min.

217

0 100 200 300 400

530

Italy (average): 305 days

• AIC 2006-2008: 246

• AIC 2009-2011: 350

500 600

70 days is the average time in which

medicines become available in hospital

structures

12

10

8

6

4

2

0

% of retail sales – medicines launched on

market in the last 3-5 years

(% on 2011 total)

1.5

3.9

3.3

8.2

3.5

8.9

3.1

8.3

5.3

10.8

ITALY Other Big

Euro Area

GER FRA SPA

In-patent medicines

launched in the last 3 years

In-patent medicines

launched in the last 5 years

Sourcee: Farmindustria processing on IMS data


New medicines have conditions

(prices, reimbursement, population target)

not comparable to Eu standards

Market share of in-patent medicines brought

out between 2008 and 2011

(% on 2011 market)

Pharmacy

channel

Hospital

channel

ITALY Other

Big Ue

1.5% 3.3%

4.9% 6.6%

Biological medicines consumption in main

European countries on 2011

(Standard units per capita, Big Ue index=100)

Germany

UK

Spain

France

Big Ue

(excl. Italy)

Italy

72

86

99

100

104

108

60 70 80 90 100

60 70 80 90 100 110

Source: Farmindustria, IMS data processing


In Italy innovation obstructed by penalizing

conditions and access dealys

Community

authorization

More than

2 years

Necessary total time for

medicine’s access

To improve access at regional

level, “Health” Decree Law is to

be effectively implemented

12-15

months

National

authorization

12

months

Inclusion in

Regional

Positive List

2

months

Before effective

use in hospitals

Source: Farmindustria, FAVO, Cittadinanzattiva


Increasing payment delays from Public

Administration reduce resources for investments

Payment delays from PA to pharmaceutical

companies

(days, quarterly data)

290

270

250

230

210

190

set

2008

set

2009

set

2010

set

2011

set

2012

“Payment terms equal to France, UK and

Germany could release an amount of

resources equivalent to 2, 3 and 5 billions

respectively. More resources for investments

could strengthen middle/long term

competitiveness of pharmaceutical companies

in Italy” (Prometeia)

7,5

6,0

4,5

3,0

1,5

0,0

Average payment terms are about 250 days,

and some Regions register over 700 days.

Companies are creditors for nearly 4 billion of

euros

Investment in production and R&D

(billion euros)

ITA FRA UK GER

growth with payment terms:

Real level ITA=FRA ITA=UK ITA=GER


Per capita pharmaceutical expenditure and

international comparison across Eu countries

Public pharmaceutical expenditure per

capita in Italy and other big Eu countries

(territorial+hospital, average other Big Ue=100)

Germania Germany

France Francia

Average

Totale Big Ue

(excl. Italy)

Spagna Spain

Regno Unito UK

Italia Italy

76

74

96

-26%

100

115

127

50 60 70 80 90 100 110 120 130

Cumulative costs of pharma industry

due to cost-containment measures in

pharmaceutical spending (€ billions)

12

10

8

6

4

2

0

11.4

2007 2008 2009 2010 2011

In addition to 11 billions of 2007-2011

period, after the spending review there will be

4.2b/year in average in the 2012-2014 period.

Source: estimes on Aifa, Istat, MEF, Cerm, IMS, Cergas Bocconi data


Some evidence on competitive benchmarking

Benchmarking for logistics, bureaucracy

and energy (Italy=100)

100

90

Logistics

100

Italy European

Countries

100

76

Bureaucracy Energy

Tax burden on pharma. sector: differences

between Italy and EU (percentage points)

20

15

10

5

0

EU15 Big EU FRA SPA UK GER

71

Competitiveness Index –

World Economic Forum 2012-2013

(overall index and some components)

Overall competitiveness

Business sophistication

Health

Infrastructures

Institutions

42

Market size 10

28

- Value chain breadth 12

- Local supplier (quality&quantity) 22

25

- Life expectancy 4

28

97

- Property righs and protection 69

- Efficiency of legal framework 139

- Burden of Government regulation 142

TO BE

NOTICED

Italy 42°, Germany 6°, UK 8°,

France 21°, Spain 36°, Swiss 1°

Source: World Economic Forum, Prometeia, Other sources processing


Pharmacetical employment is decreasing

Employees in pharmaceutical industry in Italy

(thousands)

75

71

67

63

59

-13%

(~ 10,000

dismissals)

1997 1999 2001 2003 2005 2007 2009 2011

Pharmaceutical employment in Italy

(cumulative % var. 2006-2011)

-30% -20% -10% 0%

In 2012 employment is still decreasing (-1%): currently, pharmaceutical sector faces a

risk of new sharp reorganization in the next years

-28%

-13%

-3%

-5%

Total

R&D

Manufacturing

and Staff

External

network

Source: Farmindustria, Istat


Export can not offset decline in internal market

18%

16%

14%

12%

10%

8%

6%

4%

2%

0%

-2%

-4%

-6%

Italy: pharmaceutical market and

its components

(% var. compared to previous year)

retail

totale

non retail

+4%

2002 2004 2006 2008 2010 2012

For the first time since 2002,

domestic market is declining

During last 3 years manufacturing

activity were supported only by

export, without which manufacturing

would be decreased by 8%

A further contraction of domestic

market makes this process unaffordable

Production drop predicted for

next two years: -1.5% yearly in

average

Source: Farmindustria, Istat, IMS


Investments slow down and foreign balance declines:

two trends to be met

Investments in pharmaceutical

manufacturing and R&D in Italy

(period’s average % change)

7%

6%

5%

4%

3%

2%

1%

0%

2,0

1,5

1,0

0,5

0,0

-0,5

Medicines and vaccines foreign balance

(export-import) in Italy (billion euros)

export medicines =12bln €

export vaccines=0.4 bln €

Medicines

Vaccines

-1,0

2003-05 2005-07 2007-09 2009-11 2000 2003 2006 2009

2011

During last years overall growth rate has been decreasing, but it has been still positive

thanks to relevant investments in hi-tech manufacturing with significant impact on export

(average value of exported medicines has grown by 7% from 2008 to 2011)

Source: Farmindustria, Istat


The pharmaceutical industry in Italy

16

14

12

10

8

6

4

2

Direct contribution and linked sectors of pharmaceutical industry

Public expenditure for reimbursable medicines – 2011 (billion euros)

Pharmaceutical industry

Linked industry

2.9

2.4

Investments

Output and

R&D

5.9

4.0

Salaries and

contributions

3.7 12.2

3.4

Direct tax,

other tax

and VAT

12.5

Effective

contribution of

pharmaceutical

and linked

sectors

15.3

Export

Public expenditure for

medicines and vaccines

at ex factory prices

(territorial+ hospital excl.

payback)

4.3

Contribution

of pharmaceutical

industry with mere

commercial presence

Source: processing and estimes on Aifa, Farmindustria, Istat data

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