BMI View: Drugmakers will continue to face revenue earning challenges in Italy. In 2014, spending by Italy's national healthcare service, Servizio Sanitario Nazionale (SSN), fell for the seventh consecutive year in which SSN spending on drugs declined. S S N pharmaceutical expenditure will decline in 2015 - creating further revenue pressures for drugmakers as well as pharmacies in Italy and increasing out-of-pocket costs for the population. In February 2015, it was announced that the public healthcare costs will be slashed by EUR2.6bn (USD2.9bn) in 2015. We note that this accounts for a large proportion of the EUR5.2bn (USD5.8bn) spending cuts announced by the government.
Headline Expenditure Projections
Pharmaceuticals: EUR21.00bn (USD28.14bn) in 2014 to EUR20.51bn (USD25.56bn) in 2015; -2.3% in local currency terms and -19.8% in US dollar terms.
Healthcare: EUR140.55bn (USD188.33bn) in 2014 to EUR140.28bn (USD154.30bn) in 2015; -0.2% growth in local currency terms and -18.1% in US dollar terms.
In our Pharmaceuticals and Healthcare Risk/Reward Index for Q315, Italy is 13th out of the 15 markets surveyed in Western Europe. Despite being a large market, Italy is characterised by low levels of annual growth, largely due to of widespread price cuts. Additionally, the Italian economy is one of the most vulnerable economies in an already shaky eurozone. High levels of public debt, poor infrastructure and a lack of competitiveness indicate that the country will remain one of the region's laggards over the forecast period.
Key Trends And Developments
In 2014, spending by Italy's national healthcare service, Servizio Sanitario Nazionale, fell to EUR8.77bn (USD9.64bn) from EUR9.06bn (USD9.96bn) in 2013 - the seventh consecutive year in which SSN spending on drugs declined. The drop was a 3.1% decline in spending compared with 2013, despite a 0.2% increase in the number of prescriptions.
In May 2015, GlaxoSmithKline and Italian partners Fondazione Telethon and Ospedale San Raffaele submitted an application in Europe to market an investigational gene therapy for the treatment of an ultra-rare white blood cell deficiency condition often referred to as 'bubble boy disease'.
In May 2015, a Ministry of Health report stated that the cost of opioid analgesics in Italy increased 26% between 2012 and 2014, while the consumption of the drug rose 30% during the same period. The growth was significant in some regions, such as Valle d'Aosta, Lombardy, PA Trento, Lazio, Marche, Molise, Puglia and Sardinia.
BMI Economic View
The adoption of a more flexible stance from the European Commission with regards to austerity, as well as the launch of sovereign quantitative easing by the European Central Bank, will significantly ease fiscal constraints in Italy and support long-term debt reduction. Nevertheless, a low growth trajectory will prevent a rapid reduction in public debt, which we forecast to remain above 110% of GDP over our ten-year forecast period.
BMI Political ViewIn sharp contrast to previous years, Italy now stands out in the eurozone for its political stability and structural reform momentum, especially when considering the precarious backdrop in Spain and Greece at present. Many core and periphery eurozone countries have seen non-mainstream parties rise in prominence over the past year. This has followed the general pattern of leftist, anti-austerity parties gaining in the periphery and populist, anti-immigration parties gaining in the core, most sharing a healthy dose of euro scepticism. While this is true in Italy as well, the governing centre-left Democratic Party (PD) - which remains staunchly pro euro - has seen its popularity rise steadily in the past year in spite of economic stagnation and the passage of divisive reforms, and remains by far the most popular party in the country.