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