"A key strength of Italian pharma is its reception in foreign markets, with the majority of our products being used by international companies across the world."
Please explain the mission of Aschimfarma and the role it plays within the pharma community?
Aschimfarma represents the producers of pharma ingredients in Italy and we have taken upon ourselves the mission to represent and advise each of them on the changes and challenges of the market, especially pertaining to new regulations implemented in Europe and the US. Ultimately, Aschimfarma’s goal is to help our members to meet international standards. Currently, out of the 88 Italian producers, 50 are members of our association, the remaining choosing an alternative representative or not being part of any association.
Italian APIs make up around 10% of global API production. Could you briefly introduce some of the key characteristics of the sector?
The API manufacturers in Italy fall into three sections: CDMOs, CMOs, and the generic market. It is not a given that a company is involved in only one of these sections, but pharma players tend to be specialized as such. Valued at over US$3.7 billion dollars turnover, the API segment is made of over 80 companies who rely on more than 100 manufacturing sites; there are 10,500 people working in this field. In terms of regional production capability, the Italian pharma hubs are mostly concentrated in the northern part of the country, the Lombardia region holding over 65% of APIs facilities. The area surrounding Roma is a very crowded pharma hub too, but this is mostly relevant when discussing FDFs (Finished Dosage Forms). The vast majority of Italian-produced drugs are exported, foreign markets constituting 90% of our output.
Italy is currently one of the biggest pharma hubs in the world, but the emerging pharma sectors of Brazil, China or India are moving up ranks fast. How do you expect Italy will fare in coming years?
Simply put, Italian APIs are of better quality than Asian competitors, and thus our manufacturers do not feel threatened by the competition from China. India showed itself as a viable force about 20 years ago, but today we see that the pharma markets around the world are looking once again to Italian producers, rather than orienting to Asia as they were presumed to do two decades ago. Higher quality, the promise of reliability and efficiency are the vectors upon which Italy is measured satisfactorily compared to its foreign competitors, albeit our prices may sometimes be higher to reflect the quality. The Chinese and Indian pharma industries have faced repeated concerns and notifications regarding inadequate or impure products, while Italy has rightfully built its reputation upon a good track record of quality.
What measures are Italian manufacturers asked to take to minimise the impact on the environment?
Looking after the environment has become one of the central issues in our industry, a focus not seen, nor foreseen, in the past. Personally, I have been working in the industry for almost 50 years now, and I can affirm that the progress made by Italian manufacturers is outstanding. The advantage Italy possesses is that we have been on top of the environmental issue as far as 30 years ago, at a time when it was not in the mainstream spotlight. As a result of the self-imposed standards as well as the tight scrutiny by different agencies, Italy has not had big issues reported. Meanwhile, China did not pose the issue of environment until five years ago. This was very late. Today, many Chinese companies are forced to either close down or invest heavily to pick up on the current international standards. The reduced production in China also affects Italian APIs and FDFs producers, since we source the starting materials for our ingredients from China. Europe does not have a fine chemicals business anymore and is therefore subjected to import the starting materials from abroad. You can see then how the issue of the environment is of critical importance and how it spills over to different markets; the lesson to take on is that the sooner the environment is addressed, the better results in the long term.
Italian API manufacturers export the majority of their drugs (over 85%), with a visible impact on the economy. What are the main export countries that these products reach to? Do you foresee these likely to change in the future?
A key strength of Italian pharma is its reception in foreign markets, with the majority of our products being used by international companies across the world. Currently, 40% of the APIs go to the US, 35% to Europe, and 15% to Japan. However, exports may expand further, growing from these regulated markets into the large, emerging markets of Russia and Africa that show increasing demand. Latin America is already a market that we are exporting to in large volumes, as has been India for the past 10 years. Moreover, the CMO business specifically is poised to grow, as the global tendency is to outsource services to optimise production.
Public healthcare spending has been decreasing over the years in a measure to contain costs. With the geriatric segment continuing to grow, how is the cost burden going to affect decisions around pricing and SSN (Servizio Sanitario Nazionale)’s ability to bear these costs?
The SSN is hampered by its own issues, but also by the broader tendency to reduce healthcare costs across the world. The generic business is seen as the getaway for lower costs, and it has grown exponentially everywhere- even though, in Italy we started later than the UK, US, Germany or the Netherlands. The problem with seeking to reduce costs through generic drugs is that the price pressure of the new drugs is becoming greater. New chemical entities discovered by big pharma are ever more complex, more difficult to make, and the costs of these is naturally ever higher. Let us take the example of Gilead’s hepatitis treatment, which had revolutionary effects on patients, and was only brought to market three year ago. Surely, the SSN, as other state healthcare providers, is obliged by law to make such medicines available to the public, but it was a challenge for them to find a cheaper way to introduce the tremendously successful drug to Italy. This is only one example of the contradiction between targeting generics to reduce spending and the higher costs of originals. It will be tough in the future to keep healthcare spending under control given these considerations.
Could you share your final message to our readership?
Aschimfarma is proud of Italy’s achievements over the past 15 years, especially in hindsight of its higher visibility on the world stage. API manufacturers are conditioned by the fact that there is no direct interaction with our consumers, which are the patients themselves, having to go through the pharma companies. Due to this mediation, it is more challenging to voice oneself within the industry. Our primary focus has been to harmonize Italian regulations with international ones; the harmonization of the patent law was not realized until 2005, which set Italy well behind other pharma economies. Prior to this change, we had no chance to compete with other countries that were recognised on the same regulatory footing. I am happy with these milestones, and I can only hope we will continue on this successful path.