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Italian pharma market set for continued downturn

Will fall $1.6bn in value by 2020, says analyst GlobalData

Italian pharma market set for continued downturn

Government support for low cost generics and a strict pricing policy are set to keep the value of the Italian pharmaceutical market on a downward spiral for the foreseeable future, according to a new report.

Analysts GlobalData forecast pharma revenues in Italy will drop $1.6bn by 2020 – down from $25.1bn in 2012 to $23.5bn – as the government shows no signs to relax its plans to tightly control healthcare spending.

Joshua Owide, head of GlobalData's industry dynamics team, said: "Like its European neighbours, Italy is struggling to cope with high levels of national debt. Budgetary constraints are impacting the country's healthcare spend, and costly pharmaceuticals appear early on the list of things to be affected.”

Pharma companies might, he added, be forced into retreating from the market, as they have in Greece, if Italy's “commercial viability” becomes too problematic.

Last year a joint OECD-EC report found that overall health spending in Europe fell for the first time since 1975. Although Ireland, Estonia and Greece reported the greatest declines, signs of difficulties have also emerged in Italy, with Lilly accusing some Italian regions of delaying payments.

GlobalData also highlighted the role of the Italian Medicines Agency (AIFA), which negotiates drug prices through a combination of internal and external referencing. If the AIFA and a manufacturer can't agree on a price for a particular drug it becomes non-reimbursable - substantially restricting market potential.

Meanwhile, as the government's focus on costs continues, the analysts expect to see another damaging trend for the pharma sector in the form of significant growth for the generics sector in Italy.

An austerity package introduced in 2010 made the reimbursement of the lowest priced generic alternative mandatory and has consequently boosted the country's burgeoning generics market.

Owide said: "Although Italy's generics market is significantly less developed than those in other major EU countries, recent government reforms could result in a dramatically altered landscape and see the volume of generic prescribing increase from their current low levels towards to those seen in the UK and Germany, where generic prescribing is much higher.

"This shift would help reduce the growing healthcare budget deficit, while hurting branded pharmaceutical companies operating in Italy - both domestic like Menarini and Recordati, as well as major multinationals.”

But he adds: “It is clear that Italy's historical prescribing model is unsustainable given the country's recent economic difficulties."

22nd May 2013

From: Sales, Healthcare

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