Inside Italy’s pharmaceutical industry

So why is the sector growing so quickly, and what is it about the country that appeals to foreign trading partners? 

The first thing to bear in mind is how exceptional this growth really is. As of 2017, Italy’s pharma industry was the only manufacturing industry to have risen above pre-crisis levels. It had jumped 13.2% since 2007, despite a 5.5% dip in GDP. With most other industries still flatlining, pharma has been an important driver of economic regeneration. 

On one hand, Italy’s pharma sector has never received huge amounts of government backing. This may explain why the country doesn’t play host to any pharma behemoths to rival the likes of Bayer, Merck and Boehringer-Ingelheim in Germany. 

What it does have, however, is an impressive confluence of small and medium sized companies, both Italian and foreign-owned. This has led to something of a virtuous circle – startups have attracted investment, meaning the country has boosted its reputation as a pharmaceutical hub. This in turn has encouraged more investment. 

According to Massimo Scaccabarozzi, president of the trade body Farmindustria, the growth over the past few years highlights the ‘quality of the Italian system’. 

“It has had many positive effects – greater employment for young people, more investment, and the development of clinical studies that has improved the quality of medicines and brought important resources to the national health system,” he said at the Public Pharmaceutical Assembly last July. 

Brunello adds that the country plays host to a highly qualified and productive pharmaceutical workforce. As of 2017, Italy’s pharma industry employed some 65,400 people, 90% of whom were graduates. 

“That is why one in five clinical trials in the EU is conducted in Italy,” he says. “Over the next few years, investment in R&D and new partnerships between public and private companies will increase. This will be beneficial for the companies that have the best human resources, and will also be beneficial for the economic growth of the country.”

Many of Italy’s most successful startups work within biotech, with an emphasis on personalised therapies, advanced therapies, vaccines and orphan drugs. 

Italy is also the European leader in contract development and manufacturing organisations (CDMOs) – a particularly important accolade at a time when the pharma industry is undergoing immense structural change.  

As Brunello explains, the sector has benefited from recent advances in information technology and automation. Because Italian pharma companies are generally small and agile, they are well placed to harness innovations of this kind. 

“Over the past five years, thanks to the digital revolution and Big Data, there has been a change in the way therapies are seen,” he says. “Therapies are seen not as just products, but as part of a more complex process of treatment that is linked with precision diagnostic, medical devices and support services.”

According to Farmindustria, more than 7,000 medicines under development globally have benefited from research conducted in Italy. 

Many foreign markets are catching on to Italy’s innovative potential. This applies above all to the United States. According to Ken Roberts, a trade expert writing in Forbes, the US has come to see Italy as a powerhouse for disruptive startups. 

“Three of the top five US exports to Italy this year are related to health,” he wrote. “Two of the top ten imports are. That means high value. It means innovation. That means it is a gold mine for the rest of us, too, who will benefit from incredible solutions to the world's most-pressing health problems.”

As of 2017, the US was Italy’s third biggest trading partner, just behind Germany and France. With overall exports to the US standing at $45.8bn, pharmaceutical and medicinal products constituted the largest category of exports.

“The export of pharmaceutical products to the US has increased over 20%,” says Brunello. “This is due to the highly specialised nature of Italian SMEs and their capacity to attract more US investment.”

As an example, he cites the Human Technopole project, which began life in 2015. 

“At the closure of the 2015 Milan Expo, Italy launched a project for building a new national cross-disciplinary research institute focused on life sciences, called Human Technopole,” he says. “This offers strong opportunities for both US and Italian companies. Its mission is to contribute to the development of personalised medicine in the treatment of cancer and neurodegenerative diseases.”

Moving forward, Brunello says the Italian pharma industry is likely to face a few challenges. In particular, the country’s ongoing political and economic turbulence may have implications for the life sciences.  

“Another challenge is the Italian system known as payback, which enables the National Health Service to curb overspending and reduce budget overruns,” he says. “It requires all the players in the supply chain to pay back a certain amount if national ceilings on drug expenditure are not respected. This has created much litigation between the Italian government and the pharmaceutical companies that had to pay for the excessive use of therapies in public health.”

All this said, he is optimistic about the industry’s continued potential for success. With international trade booming, and innovation at an all-time high, the Italian pharma sector will continue to play a strategic role in the country’s economic growth.