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Europe is facing a challenging economic contest due to the growing strength of the competitive forces of the United States & the Far East

The Italian pharma industry can prosper through a platform of effective dialogue

Europe is facing a challenging economic contest due to the growing strength of the competitive forces of the United States on one side, and the emergent economic power of the Far East on the other.

To respond to these challenges, Europe has fixed the Lisbon Agenda with the target of becoming the most competitive and dynamic economy in the world by 2010; in this context, the pharmaceutical sector could play a crucial role.

Italy is very important for the pharmaceutical industry, being one of the world's largest markets (Ä15.2bn) and of even greater importance as a manufacturing country: the third largest in Europe and the fifth largest in the world.

Key data on the Italian pharmaceutical industry show that it is a large sector and a leading resource for the national economy. It directly employs over 73,000 workers, a figure which rises to moe than 200,000 when the work forces of related industries are included.

The pharma industry operating in Italy is also very important for the qualitative contribution it makes to the economic growth, which, in turn, is the result of its specialisation in activities typical of advanced sectors (R&D, investments, internationalisation and added value, to name but a few).

Thanks to these features, the Italian pharmaceutical industry is fully able to compete in international markets, as well as grow and contribute towards the economic and social development of the country (since 1990, the Italian pharma industry has registered a growth rate 30 per cent higher than that of the domestic economy).

The Italian pharmaceutical industry is made up of many companies, each with a different profile, but all with an important role to play: the large multinationals that invest in Italy, the larger Italian groups that successfully operate in international markets, and small and medium-sized companies, whose vitality and innovative approach have not failed to catch the eye of foreign investors.

R&D productivity

Despite all their differences, pharma companies have many crucial aspects in common. Firstly, they all attach great importance to innovation and pay great attention to foreign markets. Then there is the quality of their human resources and their capacity to reach high levels of productivity, which is guaranteed by the high levels of investment they provide.

Such investment ensures that pharma companies always remain at the cutting edge of technology and that the quality of their employees, who are the most highly qualified of the entire industrial panorama, is of the highest order.

But the aspect that most characterises the pharmaceutical sector, especially in Italy, is its strong link with R&D activities, to which companies earmark enormous financial resources (10 times the average in Italy), as well as a considerable portion of their human resources.

The figures speak for themselves:

1) Ä839m was spent on R&D in 2004
ï 9.7 per cent more than 2003, double the growth of overall research spending in Italy
ï representing 9 per cent of overall industrial R&D spending
ï representing 4.7 per cent of overall Italian R&D spending

2) 4,314 employees in R&D, representing 6 per cent of the work force, much more than the industrial average of 1.1 per cent.

With R&D spending on the rise, Italy can count on a considerable number (about 35) of medicines in an advanced experimental phase that have the support of many research centres with a proven track record of excellence in healthcare research. Ever stronger ties between the academic and business worlds have already given life to several biotechnology clusters that are drawing the interest of investors.

The quality of research is borne out by a high rate of scientific output, continually increasing spending on R&D, and a large and wide-ranging network of universities. In addition, both public and private Italian institutes are actively involved in the fields of vaccinations, oncology, genetic therapy, cardiovascular diseases, infections and immunology.

Many important medical breakthroughs originated in Italy, including recombinant vaccines for a number of diseases (eg, pertussis, meningitis), the development of vaccines for HIV, as well as discoveries of the oncogenes connected to longevity and the molecular mechanisms that develop the cerebral cortex.

The Italian peninsula has many research hot spots such as the San Raffaele Scientific University Institute and the European Institute of Oncology, both in Milan. The latter is collaborating with esteemed partners such as the Mario Negri Institute, at its headquarters in Milan, on important research projects.

There are several leading universities including the University La Sapienza in Rome, the University of Tor Vergata and the National Nanotechnology Laboratory in Lecce, which is one of the few centres in Europe capable of controlling this powerful technology.

Yet, while all of this evidence proves that the pharmaceutical sector in Italy is making a huge effort to increase its propensity for R&D and it has the potential to succeed in this, international comparisons show that R&D spending is still far below the average of other developed nations.

In order to fill this gap, companies have committed themselves to fixing research as a major priority, and to invest an ever larger proportion of resources in R&D.

A Positive approach

In order to do this, pharma companies' efforts need to be encouraged by the positive approach of policymakers, in the form of incentives for innovative drugs (such as a premium price) and attracting investments in new production and research sites (the so-called 'Accordi di programma'). These themes are currently being debated in Italy and represent one of FarmIndustria's top priorities. To reach this goal we are currently working on a new strategy of dialogue with government institutions and our efforts are already achieving results.

We are working together with the Minister of Health, Francesco Storace, the Minister of Education, Universities and Research, Letizia Moratti, and the Minister of Production Activity, Claudia Scajola, to establish some measures to support the pharmaceutical sector, while at the same time respecting budget requirements.

We are convinced that the dialogue has to involve not only companies and policymakers but all the stakeholders in the healthcare systems. We hold the firm belief that medicines are essential for our society and must be accessible to everybody, independently of social class.

To recover confidence and optimism in the sector, we have to share with the other stakeholders the same vision - a positive attitude, the will to enhance the expert skills we have and to act for better integration of the health system.

To empower this dialogue, FarmIndustria has just begun a new communication and awareness campaign aimed at reaching people directly, showing them with simple examples how pharmaceuticals have a major impact on the everyday lives of millions of Italian people, helping to heal them from diseases and improving their quality of life.

The simple message is: research is life.

Within the campaign, we have underlined that 90 per cent of Italian R&D expenses are sustained by pharmaceutical companies, representing a fundamental asset to society through their economic and social contribution to everyday life.

The Author
Sergio DompÈ is president of the Italian pharmaceutical industry association, FarmIndustria

2nd September 2008

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