Italy Pharmaceutical Market Overview Generic penetration set to rise

Introduction

The prescription pharmaceutical market in Italy was valued at $24.9 billion in 2009. Key growth drivers for branded pharma include the growing use of chronic high-value innovative treatments driven by a growing elderly population, the high proportion of the healthcare budget spent on pharmaceuticals, and a high level of brand loyalty among Italian patients.

Scope

*Overview of Italy's socioeconomic and demographic trends, healthcare system, regulation, pricing and reimbursement and intellectual property position

*Assesses the size of Italy's pharmaceutical market by prescribing setting, therapy area, leading brands and by leading companies

*Examines Italy's generics and biosimilars landscape in terms of regulatory issues, level of penetration, key players and degree of brand erosion

*Quantifies Italy's R&D and manufacturing infrastructure for the leading pharmaceutical companies, including key metrics and domestic M&A analysis

Highlights

Due to high pharmaceutical spend driven by limited generic usage, Italy employs a range of pricing and reimbursement tools to control costs. As a result, drug prices in Italy are among the lowest in Europe, a factor which is largely behind the country's high parallel export activity.

As a result of reforms introduced in April 2009, branded pharma companies are now forced to maintain brand prices at a higher price than the first generic product to market. This is likely to increase the level of brand erosion post patent expiry.

A number of pharma players in Italy are closing or downsizing their manufacturing and/or R&D operations in an effort to reduce costs. However, the Agenzia Italiana del Farmaco is taking steps to tackle a number of issues affecting the Italian pharma industry in order to attract investment into the country, and to ensure drugs' quality and safety.

Reasons to Purchase

*Evaluate the evolving regulatory landscape and the impact of pricing and reimbursement controls on market access.

*Quantify the size and growth of the prescription pharmaceutical market in Italy, analyzing key therapy areas, brands and companies.

*Assess drivers and resistors of generic and biosimilars uptake in Italy as well as the level of erosion brands can expect to face post patent expiry.

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ABOUT DATAMONITOR HEALTHCARE 2
About the Healthcare Strategic Analysis Team 2
Country specific reports: 2
Global issue reports: 2
1. Executive Summary 3
Strategic scoping and focus 3
Key findings - healthcare drivers and resistors in Italy 4
Socio-demographic and economic analysis in Italy 7
Socio-demographic trends 7
Socio-economic trends 8
Healthcare system and drug regulatory analysis in Italy 9
Healthcare expenditure 9
Healthcare system overview 10
Regulatory issues 10
Pricing and reimbursement issues 10
Prescription pharmaceutical sales analysis in Italy 12
Pharmaceutical market size 12
Leading therapy areas 12
Leading prescription pharmaceutical brands 12
Leading pharmaceutical companies 12
Drug expiry analysis in Italy 14
Generics market 14
Brand erosion post patent expiry 14
Biosimilars market 14
Pharmaceutical industry infrastructure analysis in Italy 16
Pharmaceutical industry infrastructure overview 16
R&D infrastructure trends 16
Manufacturing infrastructure trends 17
Related reports 19
Upcoming related reports 19
Table of Contents 20
2. Socio-demographic and economic analysis in Italy 21
Key findings 21
Socio-demographic trends 21
Socio-economic trends 21
Demographic trends in Italy 22
Population in Italy expected to drop 23
Population growth rate in Italy remains low due to low birth rates 24
Proportion of elderly people in Italy expected to rise and then level off 26
Life expectancy will continue to increase in Italy 27
Disease burden in Italy - leading cause of death is heart disease 28
Neuropsychiatric conditions account for the highest disease burden in Italy 29
Political climate in Italy 31
Italy has a multi-party political landscape 31
Italian economic growth impacted by regional disparities and corruption 32
The worst part of the recession may be over, but the economy is still vulnerable 33
Italy imposes measures to reign in pharmaceutical expenditure 35
Business environment in Italy 35
Investors are somewhat deterred from investing in Italy 35
The recession has impacted export activity and unemployment levels 36
Income and corporation tax in Italy are moderate 36
3. Healthcare system and drug regulatory analysis in Italy 37
Key findings 37
Healthcare expenditure 37
Healthcare system overview 37
Regulatory issues 37
Pricing and reimbursement issues 38
Healthcare expenditure in Italy is below OECD average 39
Healthcare system in Italy 41
SSN is the main healthcare provider in Italy 41
SSN is funded through taxation 43
Healthcare policy is determined by regional governments 43
ASLs are financed by the regional governments 44
Italy's healthcare system aims to prioritize patient rights but patient satisfaction remains below EU average 45
Italy has good health outcomes in life-threatening diseases 45
Most Italians use the SSN, but many now also have private health insurance 45
In Lombardy both public and private hospitals are equally eligible for public funds 46
Primary care in Italy is provided mainly via independent general practitioners 46
Regulatory issues in Italy 48
Drug approval and regulatory processes in Italy 48
AIFA is responsible for regulating medicines 49
The EU centralized procedure is convenient but expensive 50
Decentralized procedure introduced to address disputes in mutual recognition procedure 50
The regulatory process in Italy is slow 51
Regional requirements present additional obstacles 51
Brands tend to be launched later in Italy 51
Intellectual property environment in Italy 52
Intellectual property protection lags behind other EU countries and recent court decisions reinforced its pro-generic legislation 52
Complementary Certificate of Protection extends patent life in Italy 53
Italy has used compulsory licensing to promote competition 53
Data exclusivity issues in Italy 53
Italy follows the 8+2+1 rule 53
Pediatric SPC extension provides additional market exclusivity period 54
Drug counterfeiting - Italy is one of the worst hit markets in Europe 54
Parallel trade - Italy is a major exporter 55
Pricing and reimbursement in Italy 56
Pharma companies face strict pricing pressures in Italy 56
AIFA regulates pricing and reimbursement of medicines 57
Pricing and reimbursement are interlinked in Italy - Average European Price system has been replaced by a negotiation system for determining pricing and reimbursement at drug launch 57
Reimbursement in Italy 60
Drugs are grouped into reimbursement categories 60
Regions can develop their own formularies and drug prescribing groups 61
Expenditure ceilings have been imposed on pharmaceuticals to control healthcare spending 61
Drug monitoring and risk-sharing agreements have been introduced in Italy 61
Pharma must grant rebates to hospitals in Italy 63
Patient co-payment help reduce SSN expenditure 63
Pharmacist substitution incentivized since 2009 64
Pricing in Italy 64
A system for evaluating and setting prices of innovative drugs was introduced in 2008 64
Reference pricing is a key cost-containment tool in Italy for off-patent drugs 66
Price cuts are a major cost containment tool in Italy 66
Pricing and reimbursement negotiations contribute to delays in drug launches in Italy 67
4. Prescription pharmaceutical sales analysis in Italy 69
Key findings 69
Pharmaceutical market size 69
Leading therapy areas 69
Leading prescription pharmaceutical brands 69
Leading pharmaceutical companies 69
Pharmaceutical market size in Italy 70
Leading therapy areas in Italy 73
Cardiovascular drugs collectively hold the largest market share but have exhibited flat sales growth 75
Musculoskeletal drugs exhibited the fastest sales and volume growth due to rapid uptake of a new first-in-class drug 75
Gastroenterology market is contracting due to intensifying generic competition 76
Leading pharmaceutical brands in Italy 77
Lipitor is the top selling brand and is set to maintain its position in Italy due to strong brand loyalty 80
Herceptin's strong sales growth is attributed to superior efficacy and unbeatable gold standard status 80
Eprex has exhibited solid growth although its future position remains uncertain due to fierce competition 80
Leading pharmaceutical companies in Italy 82
The leading international companies hold the lion's share of the Italian pharmaceutical market 83
The leading domestic companies are exhibiting faster growth rates 86
Menarini 87
5. Drug expiry analysis in Italy 88
Key findings 88
Generics market 88
Brand erosion post patent expiry 88
Biosimilars market 88
Italy generics market dynamics 91
Italian generics volume uptake 92
Italian generics value uptake 93
Italian generics market size 94
Drivers and resistors in the Italian generics market 95
The Italian generics market is experiencing strong growth that is set to continue 97
Variation in regional generic prescribing rates driven by access to funding 98
Incentives for pharmacists drive up generic dispensing but hit generics company margins 99
12% price cut further impacts generic company margins 99
Maintaining price differential between branded and generics drugs will drive growth 99
Italian cultural factors predispose brand loyalty 100
Key players in the Italian generics market 102
Opportunities for the generics industry 103
Small molecule brand erosion in Italy 105
Overview of drugs analyzed 105
Mean level of brand erosion in Italy 106
Brand erosion in the Italian retail and hospital setting 108
Brand erosion by therapy area in Italy 109
Brand erosion by drug formulation in Italy 112
Biosimilars market dynamics in Italy 115
Drivers of biosimilar uptake 115
Resistors to biosimilar uptake in Italy 115
Key players in the Italian biosimilars market 116
Biosimilar epoetin 117
Epoetin volume and value market share 117
Biosimilar epoetin market share 117
Biosimilar filgrastim 119
Filgrastim volume and value market share 119
Biosimilar somatropin 119
Somatropin volume and value market share 120
New and future biosimilar launches 122
Opportunities for the biosimilars industry 123
Branded monoclonal antibody therapies could soon face biosimilar incursion 125
Biosimilars in development internationally 126
6. Pharmaceutical Industry Infrastructure analysis in Italy 128
Key findings 128
Pharmaceutical industry infrastructure overview 128
R&D infrastructure trends 128
Manufacturing infrastructure trends 128
Overview of pharma infrastructure in Italy 129
R&D and manufacturing strategies in Italy 129
Big Pharma cut domestic R&D workforce, but drug discovery set to benefit from public-private collaborations 130
Pharma divests manufacturing sites, favoring a more outsourced model 131
Key company infrastructure in Italy 131
Pfizer 132
Pfizer divests manufacturing sites in order to shift production to outsourcing 136
Sanofi-Aventis 137
Roche 141
GlaxoSmithKline 145
Menarini 149
Merck & Co. 153
Novartis 157
Novartis acquires Mipharm's commercial and marketing operations 161
AstraZeneca 162
AstraZeneca sold its manufacturing plant although it will continue to operate as a supplier for the company 166
Bayer Schering 167
Johnson & Johnson 171
Bibliography 174
Socio-demographic and Economic analysis 174
Publications and online articles 174
Datamonitor reports and products 176
Healthcare system & drug regulation 176
Publications and online articles 176
Datamonitor reports and products 180
Prescription pharmaceutical sales analysis 181
Publications and online articles 181
Datamonitor reports and products 181
Drug expiry analysis 181
Publications and online articles 181
Datamonitor reports and products 183
Industry infrastructure analysis 184
Publications and online articles 184
Appendix 186
Exchange rates 186
Brand erosion - additional data and analysis 187
Brand erosion - methodology 189
Datamonitor prescription pharmaceutical definition and therapy area classification 192
About Datamonitor 193
About Datamonitor Healthcare 193
Datamonitor consulting 193
Disclaimer 195
List of Tables
Table 1: Italy - changes in the key value drivers of the Italian pharmaceutical market, 2005-09 5
Table 2: Italy - demographic indicators, 2005 and 2010 7
Table 3: Italy - key economic indicators, 2005-2012 8
Table 4: Italy - healthcare expenditure indicators, 2006-09 9
Table 5: Italy - a range of pricing and reimbursement tools are used 11
Table 6: Italy - sales and volume of the prescription pharmaceutical market ($ and IMS Standard Units), 2009 13
Table 7: Italy - key metrics for the generics and biosimilars markets, 2008-09 15
Table 8: Italy - pharmaceutical industry metrics 16
Table 9: Italy - R&D and manufacturing infrastructure data, 2010 18
Table 10: Italy - demographic indicators, 2005 and 2010 22
Table 11: Italy - top 10 causes of mortality, 2004 28
Table 12: Italy - disability-adjusted life years (DALY) rates compared to Australia, Japan, the BRIC nations, North America and other key European markets, 2004 29
Table 13: Italy - key economic indicators, 2005-2012 32
Table 14: Italy - healthcare expenditure indicators, 2006-09 40
Table 15: Italy - numbers of hospitals beds, physicians and nurses per 1,000 individuals, 2002 and 2007 44
Table 16: Order of launch for new molecules in the US, France, Germany, Italy, Spain and the UK, 2005-09 52
Table 17: Italy - a range of pricing and reimbursement tools are used 56
Table 18: Italy - reimbursement of pharmaceuticals 60
Table 19: Italy - across-the-board price cuts of reimbursable drugs, 2002-07 66
Table 20: Average number of days required to complete negotiation procedure in Italy, 2006 67
Table 21: Italy - sales and volume of the prescription pharmaceutical market ($ and IMS Standard Units), 2009 72
Table 22: Italy - pharmaceutical sales by therapy area ($m and %), 2005-09 74
Table 23: Italy - pharmaceutical volume by therapy area (SUm and %), 2005-09 75
Table 24: Italy - sales growth for top 20 pharmaceutical brands ($m and %), 2009 78
Table 25: Italy - volume growth for top 20 pharmaceutical brands (SUm and %), 2009 79
Table 26: Italy - sales growth for the leading international pharmaceutical companies ($ and %), 2009 84
Table 27: Italy - volume growth for the leading international pharmaceutical companies ($ and %), 2009 85
Table 28: Italy - sales growth for the leading Italian-based pharmaceutical companies ($ and %), 2009 86
Table 29: Italy - volume growth for the leading Italian-based pharmaceutical companies ($ and %), 2009 87
Table 30: Italy - key metrics for the generics and biosimilars markets, 2008-09 90
Table 31: Italy - comparison of generic penetration versus other major pharmaceutical markets ($ billion and %), 2007-08 91
Table 32: Italy - leading generics companies, 2009 102
Table 33: Italy - brands exposed to generic competition, 2010-12 103
Table 34: Italy - key metrics for the biosimilars market, 2009 115
Table 35: Italy - leading biosimilar companies, 2009 116
Table 36: Biosimilars approved and rejected in Europe by the European Medicines Agency (EMA) to June 2010 122
Table 37: Italy - 2009 sales of biologics both expired and expected to come off-patent in 2010-15 124
Table 38: Italy - pharmaceutical industry metrics 129
Table 39: Italy - prescription sales growth for the top 10 pharmaceutical companies ($m and %), 2009 131
Table 40: Italy - Pfizer's R&D and manufacturing infrastructure (post-merger with Wyeth), 2010 132
Table 41: Italy - Pfizer's R&D and manufacturing infrastructure data, 2010 133
Table 42: Italy - Pfizer's Italy-based M&A activity, Q1 2008-Q1 2010 136
Table 43: Italy - Sanofi-Aventis's R&D and manufacturing infrastructure, 2010 137
Table 44: Italy - Sanofi-Aventis's R&D and manufacturing infrastructure data, 2010 138
Table 45: Italy - Roche's R&D and manufacturing infrastructure, 2010 141
Table 46: Italy - Roche's R&D and manufacturing infrastructure data, 2010 142
Table 47: Italy - GlaxoSmithKline's R&D and manufacturing infrastructure, 2010 145
Table 48: Italy - GlaxoSmithKline's R&D and manufacturing infrastructure data, 2010 146
Table 49: Italy - Menarini's R&D and manufacturing infrastructure, 2010 149
Table 50: Italy - Menarini's R&D and manufacturing infrastructure data, 2010 150
Table 51: Italy - Merck & Co.'s R&D and manufacturing infrastructure, 2010 153
Table 52: Italy - Merck & Co.'s R&D and manufacturing infrastructure data, 2010 154
Table 53: Italy - Novartis's R&D and manufacturing infrastructure, 2010 157
Table 54: Italy - Novartis's R&D and manufacturing infrastructure data, 2010 158
Table 55: Italy - Novartis's Italy-based M&A activity, Q1 2008-Q1 2010 161
Table 56: Italy - AstraZeneca's R&D and manufacturing infrastructure, 2010 162
Table 57: Italy - AstraZeneca's R&D and manufacturing infrastructure data, 2010 163
Table 58: Italy - AstraZeneca's Italy-based M&A activity, Q1 2008-Q1 2010 166
Table 59: Italy - Bayer Schering's R&D and manufacturing infrastructure, 2010 167
Table 60: Italy - Bayer Schering's R&D and manufacturing infrastructure data, 2010 168
Table 61: Italy - Johnson & Johnson's R&D and manufacturing infrastructure, 2010 171
Table 62: Italy - Johnson & Johnson's R&D and manufacturing infrastructure data, 2010 172
Table 63: Currency exchange rates, 2010 186
Table 64: ATC (anatomical therapeutic chemical) classification codes assigned to a given therapy area within the prescription pharmaceutical market 192
List of Figures
Figure 1: Italy - key value drivers of Italy's pharmaceutical market, 2009 4
Figure 2: Italy - drivers and resistors facing branded pharmaceutical companies 6
Figure 3: Italy - population and population growth rate, 1950-2050 23
Figure 4: Italy - population growth compared to the other seven major markets, Australia, Japan, the BRIC nations, North America and other key European markets, 1950-2050 24
Figure 5: Italy - birth rates per 1,000 individuals compared to Australia, Japan, the BRIC nations, North America and other key European markets, 1950-2050 25
Figure 6: Italy - proportion of population over 65 years compared to Australia, Japan, the BRIC nations, North America and other key European markets, 1950-2050 26
Figure 7: Italy - life expectancy compared to Australia, Japan, the BRIC nations, North America and other key European markets,1950-2050 27
Figure 8: Italy - GDP per capita growth rate compared to Australia, Japan, the BRIC nations, North America and other key European markets, 2005-09 33
Figure 9: Debt trap rankings for Italy, France, Germany, Spain, UK, US, Canada, Australia and Japan, 2010 34
Figure 10: Unemployment rates in Italy, France, Germany, Italy, Spain, UK, US, Canada, Australia, Japan, Brazil, India, Russia and China, 1990-2008 36
Figure 11: Italy - the proportion of GDP expenditure on healthcare is lower than that of most other developed nations, 2007 39
Figure 12: Italy - structure of the healthcare system, 2009 42
Figure 13: Italy: Routes to obtaining marketing authorization 48
Figure 14: Italy - the structure of the Italian Medicines Agency (AIFA) 49
Figure 15: EU: the 8+2+1 market exclusivity rule 54
Figure 16: Italy - pricing and reimbursement negotiation procedure 59
Figure 17: RFOM's web-based approach for the management of oncology patients 63
Figure 18: Italy - categories for evaluating prices of new drugs set out by AIFA 65
Figure 19: Italy - relative sales and volume of the Italian prescription pharmaceutical market (indexed against volume or value in 2005), 2005-09 71
Figure 20: Italy - pharmaceutical sales by therapy area (%), 2005-09 73
Figure 21: Italy - sales growth for the leading pharmaceutical brands ($m and %), 2009 77
Figure 22: Italy - sales growth for leading pharmaceutical companies (%), 2005-09 82
Figure 23: Italy - comparison of generic volume uptake versus other major pharmaceutical markets (%), 2007-08 92
Figure 24: Italy - comparison of generic value uptake versus other major pharmaceutical markets (%), 2007-08 93
Figure 25: Italy - comparison of generics market size versus other major pharmaceutical markets ($ billion), 2007-08 94
Figure 26: Italy - drivers and resistors to generic uptake before and after 2009 reforms 96
Figure 27: Italy - historical and forecast growth in the Italian generics market, 2001-2011 97
Figure 28: Italy - number of physicians prescribing generics (000s) against total number of physicians (000s) in Italy, 2003-07 98
Figure 29: Italy - generics and off-patent drugs as volume (%) and value (%) of the Italian pharmaceutical market, 2008 100
Figure 30: Italy - branded sales at risk of generic erosion ($m), 2010-2012 104
Figure 31: Italy - mean erosion (by value and volume) of branded small molecules during the first 2 years of generic competition (%) 107
Figure 32: Italy - mean erosion (by value and volume) of branded small molecules by prescribing setting in Italy market during the first 2 years of generic competition 109
Figure 33: Italy - mean erosion (by value and volume) of branded small molecules by therapy area during the first 2 years of generic competition 110
Figure 34: Italy - mean erosion (by value and volume) of branded small molecules by formulation during the first 2 years of generic competition 113
Figure 35: Italy - biosimilar epoetin market share by value and volume (%), 2008-09 118
Figure 36: Italy - biosimilar somatropin value and volume uptake, 2006-09 121
Figure 37: Italy - 2009 sales ($m) by product class of biologics expected to come off-patent in 2010-15 123
Figure 38: Drivers and resistors to biosimilar monoclonal antibody entry, 2010 126
Figure 39: Key biosimilars in development internationally by product class, 2010 127
Figure 40: Pharma's strategic responses to slowing sales and operating profit growth 130
Figure 41: Italy - Pfizer's manufacturing presence (post-merger with Wyeth) , 2010 134
Figure 42: Italy - Pfizer's pharmaceutical operations (post-merger with Wyeth), 2010 135
Figure 43: Italy - Sanofi-Aventis's R&D presence, 2010 139
Figure 44: Italy - Sanofi-Aventis's pharmaceutical operations, 2010 140
Figure 45: Italy - Roche's manufacturing presence, 2010 143
Figure 46: Italy - Roche's pharmaceutical operations, 2010 144
Figure 47: Italy - GlaxoSmithKline's R&D and manufacturing presence, 2010 147
Figure 48: Italy - GlaxoSmithKline's pharmaceutical operations, 2010 148
Figure 49: Italy - Menarini's R&D and manufacturing presence, 2010 151
Figure 50: Italy - Menarini's pharmaceutical operations, 2010 152
Figure 51: Italy - Merck & Co.'s R&D and manufacturing presence, 2010 155
Figure 52: Italy - Merck & Co.'s and Schering-Plough's pharmaceutical operations, 2010 156
Figure 53: Italy - Novartis's R&D presence, 2010 159
Figure 54: Italy - Novartis's pharmaceutical operations, 2010 160
Figure 55: Italy - AstraZeneca's R&D and manufacturing presence, 2010 164
Figure 56: Italy - AstraZeneca's pharmaceutical operations, 2010 165
Figure 57: Italy - Bayer Schering's manufacturing presence, 2010 169
Figure 58: Italy - Bayer Schering's pharmaceutical operations, 2010 170
Figure 59: Italy - Johnson & Johnson's pharmaceutical operations, 2010 173
Figure 60: Italy - sales erosion of branded small molecules during the first 2 years of generic competition 187
Figure 61: Italy - volume erosion of branded small molecules during the first 2 years of generic competition 188
Figure 62: Drugs experiencing generic erosion between Q1 2006 and Q2 2007 189
Figure 63: Erosion curves for each drug experiencing generic entry 190
Figure 64: Mean erosion curve for drugs A, B, and C experiencing generic entry 191

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