"With the competition from more affordable Asian APIs, European API manufacturers are losing market share. This catches Italy in a cycle: to be able to continue to compete against the Asian formulations, Italian drug producers need to source the constituting materials of their drugs from Asia. Given this situation, European authorities are discussing how to sustain the longevity of their API manufacturers, but no viable solution is in sight. I believe that European producers have no option but to work on improving their manufacturing technologies to raise their competitiveness."
Assogenerici was established in 1993 to represent the generics industry. Much has changed since. Could you briefly take us through how has the association evolved and what are its key responsibilities today?
Assogenerici is the official delegate body of the generic and biosimilars industry in Italy. The evolution of the generic industry in Italy has been quite slow, encumbered by regulatory and marketing obstacles. In the 2000’s, major generic pharmaceutical companies, mainly coming from Germany, started to enter the Italian market; this marked beginnings of the generic industry in Italy. Since then, the market has been continuously growing.
After 2010, Assogenerici became a reliable and well-recognized player in the pharmaceutical industry. Today we play an important role in the Italian health sector, representing more than 60 pharmaceutical organizations and their backups, for which we play a vital consultative part, especially when it comes to arranging social insurances. Assogenerici is thus at the forefront of providing high quality medicines at affordable prices for millions of citizens, helping to boost competition and innovation in the pharmaceutical sector. We work with the Italian legislative agencies and the EU institutions to create sustainable solutions for pharmaceutical care and to increase the strength of Italy in the worldwide pharmaceutical market.
Could you briefly introduce our audience to the Italian generics sector, highlighting what sets it apart from other countries?
Worldwide, we have seen an overarching market conflict between generic medicine manufacturers and the innovator pharmaceutical industry. Between 2000 and 2010, in particular, big pharma ran an aggressive campaign against the generic industry. We are fortunate that in Italy the market has evolved in such a way that generic medicines are seen as competitors in the market rather than an enemy and a detriment to innovators. Even so, the Italian generics market share is still below the average European level, but it is continuously gaining new ground. In other parts of the world, the tension between the two camps persists.
Biosimilars are quickly gaining traction, representing about 20% of total prescriptions worldwide and gaining greater acceptance particularly in Europe. How do you think this segment may develop in the future, taking the case of Italy specifically?
In the biosimilars sector, the innovator-copy-drug conflict has been less acerb. Biosimilars have been more immediately accepted than generic medicines, for various reasons. One comes down to the consumer culture which has learned to embrace more comfortably the alternatives. While the end users for both chemical and biological drugs are the patients themselves, in the bio-space it is the practitioner who decides on the administration of which drug; on the other hand, the consumption of generic drugs is mainly decided by ordinary buyers. For biosimilars, this has meant that the convincing act was more targeted and market acceptance occurred faster.
Compared to other European countries, Italy has a higher acceptance rate for biosimilars. Around the world, the biosimilar industry is developing significantly fast and the same can be said about Italy. There are biosimilars products that have already gained approximately 90% market share in Italy. Establishing bioequivalence or interchangeability is a key factor in the future of biosimilars.
Looking first into the generics space, one of the key challenges facing the industry is the fierce competition with lower-priced medicines from Asian manufacturers. How are Italian producers coping with this?
Approximately half of all generic products sold in Italy are manufactured in Italy. The generics space is dictated by the price battle and, with this constant vector in mind, Italian manufacturers increasingly have to look for less expensive APIs. Asia brings the solution for affordable APIs. Of course there are hurdles when importing a foreign-sourced API to Italy, including various controls, but this is a legitimate challenge, worthwhile when put in balance with the cost advantages.
With the competition from more affordable Asian APIs, European API manufacturers are losing market share. This catches Italy in a cycle: to be able to continue to compete against the Asian formulations, Italian drug producers need to source the constituting materials of their drugs from Asia. Given this situation, European authorities are discussing how to sustain the longevity of their API manufacturers, but no viable solution is in sight. I believe that European producers have no option but to work on improving their manufacturing technologies to raise their competitiveness. At this point, the incentive to continue API production in Europe is weak, and the EU must step in to incentivise the industry.
What do you identify as the main priorities for Italian pharma and biopharma players in coming years?
The Italian pharmaceutical industry, from a manufacturing perspective, ranks first in Europe, but the biggest affliction the industry suffers from remains the bureaucracy the system is caught under. The reimbursement system is a key governance issue. This system is common in many European countries and it is used to counter overspending. What we see today in Italy is a paradoxal situation in which two levels of expenditure are booked in: one is for expenses of the pharmaceutical products reimbursed by the national health service, but supplied by pharmacies (indirect route), and the second is the expenses for products acquired directly by hospitals and clinics (direct route).
In 2018, Indirect expenditures were far below budget with € 0.7 million, while direct expenditures are far above budget with € 1.1 billion. We have to rebalance the expenditures and transfer out to direct expenditures everything that can be saved through indirect expenditures. The two need to be strengthened into one balance sheet. Another aspect is the reimbursement drug list, which should be revised; this is a necessary measure to make sure the prices of medicines are well accounted for. In Italy, the level of the average reimbursement price is €6 and below, which is one of the lowest in Europe.