0© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
Studies conducted by:Intesa SanpaoloIMT Institute for Advanced Studies - Lucca
for Aspen Institute Italia
ITALIAN HI-TECH INDUSTRY:THE CASE OF LIFE SCIENCES
National interestMay 2013
1© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
Section guide
Italy’s competitive ranking (study conducted by Intesa Sanpaolo)
Research capability (study conducted by IMT)
2© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
Life sciences: a global industry with a key role for the public sector
A wide-ranging sector encompassing pharmaceuticals and the full gamut of medical devices, life sciences is a global industry: the major players are multinational corporations (the incumbents are
few, and mergers and acquisitions are rampant); the target market is global; competition is played out at a supranational level.
At the local level, individual countries differ in the extent of the role played by the public sector, which impacts on supply (regulatory framework governing distribution channels, advertising, testing controls, and patent registration and protection), demand (cost-sharing), and consequently the profitability of firms.
Changes are taking place in the scientific basis and methodology of research (from chemistry to biology, the focus on ethical considerations has increased).
Intellectual property protection laws are becoming increasingly complex (e.g. international scope of patents & exemptions to cover exceptional cases).
3© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
An important engine for Italian economic growth
The progressive aging of the population and a growing focus on quality of life are making pharmaceutical and medical technologies and products more and more crucial to facilitating new treatment approaches and increasing the wellbeing of the populace.
Against a backdrop of sweeping public spending cuts, such outcomes can make a vital contribution to improving the efficiency of health systems.
The health industry has a high growth potential in the medium to long term, given rising global demand for healthcare.
The sector can also help keep Italy highly competitive, by contributing to raising the technological content of exports.
There is no shortage of excellence in Italy to draw on: large (Italian- and foreign-owned) multinationals, a dense network of dynamic SMEs capable of maintaining operational flexibility and a high capacity for innovation, and an increasing number of innovative start-ups that are transforming the wealth of knowledge of Italian university and hospital research centers into concrete applications.
4© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
Life sciences: making a significant contribution to the Italian economy...
SOURCES: ISTAT, Farmindustria and Assobiomedica
Employees: 175,000Turnover: €43 billionExports: €23 billion
Life sciences share of Italian manufacturing (%)
4.2%5.1%
6.2%
5© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
... particularly in terms of innovation
14.2%
SOURCES: ISTAT, Assobiomedica, and OECD
21.5%
Life sciences share of Italian totals (%)
6© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
The sector has a high incidence of foreign multinationals...
SOURCES: ISTAT and ASSOBIOMEDICA
Differenza
Foreign-controlled firms (as % of firms resident in Italy)
7© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
… and a high level of internationalization through foreign direct investment
* net of purchases of goods and services. SOURCE: ISTATDifferenza
Italian-controlled foreign firms (as % of firms resident in Italy)
18% of firms in the medical devices
industry
8© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
The role of “new economies”...
2011
New markets: all the world’s economies excluding the oldest industrialized ones (EU-15, USA, Switzerland, Norway, Canada, Australia and Japan). SOURCE: based on UNCTAD data
Export Import
Differenza
World trade share of new markets (%)
9© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
… is expected to grow, both as export markets and competitors The growth in disposable income and the development of public health
systems is driving demand for healthcare in emerging countries, with corollary effects on the global reallocation of production capacity.
Difference between 2011 and 2016 ($bn)
+29.1
+5.3
-13.4
+171.2
+51.8
Emerging countries: BRICs, Mexico, Turkey, Poland, Venezuela, Argentina, Indonesia, South Africa, Thailand, Romania, Egypt, Ukraine, Pakistan, and Vietnam. SOURCES: IMS and GLOBAL INSIGHTS
The global pharma market outlook to 2016(billions of dollars)
Share of new investment in the global pharmaceutical industry (%)
10© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
By 2016, China will be the world’s 2nd-largest pharma market. Brazil, India and Russia will be in the top ten
2006
SOURCE: IMS
1 United States
2 Japan
3 France
4 Germany
5 China
6 Italy
7 Spain
8 United Kingdom
9 Canada
10 Brazil
1 United States
2 Japan
3 China
4 Germany
5 France
6 Brazil
7 Italy
8 Spain
9 Canada
10 United Kingdom
2011 2016
1 United States
2 China
3 Japan
4 Brazil
5 Germany
6 France
7 Italy
8 India
9 Russia
10 Canada
The top 10 global pharmaceutical markets
11© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
0,0 5,0 10,0 15,0
SveziaAustria
SingaporeIndia
SpagnaCina
Paesi BassiItalia
FranciaRegno Unito
IrlandaStati Uniti
BelgioSvizzera
Germania
8th
SOURCE: UNCTAD Comtrade
12°
% share of world exports (2011, current dollars)
0,0 5,0 10,0 15,0 20,0 25,0
SveziaSingapore
Rep. of KoreaItalia
MessicoIrlanda
Regno UnitoSvizzera
BelgioFrancia
CinaGiappone
OlandaGermania
Usa
Pharmaceuticals Medical devices
Italy’s world ranking in the sector: exports
Germany
SwitzerlandBelgium
United StatesIreland
United KingdomFrance
Italy
NetherlandsChinaSpainIndia
SingaporeAustria
Sweden
United States
GermanyNetherlands
JapanChina
FranceBelgium
Switzerland
United KingdomIrelandMexico
ItalyRep. of Korea
Singapore
Sweden
12© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
Italy’s world ranking in the sector: patents
SOURCE: OECD
12°
% share of patents (1999-2009, PCT patents)
Pharmaceuticals Medical devices
0,0 10,0 20,0 30,0 40,0
IsraeleFinlandiaAustralia
ItaliaCanada
CinaSvezia
SvizzeraCorea
OlandaRegno Unito
FranciaGermaniaGiapponeStati Uniti
0,0 10,0 20,0 30,0 40,0 50,0
DanimarcaItaliaCina
AustraliaIsraeleCorea
CanadaSvezia
SvizzeraOlandaFrancia
Regno UnitoGermaniaGiapponeStati Uniti
14th
United States
JapanGermany
United KingdomFrance
NetherlandsSwitzerland
Sweden
CanadaRep. of Korea
IsraelAustralia
ChinaItaly
Denmark
United States
JapanGermany
FranceUnited Kingdom
NetherlandsRep. of Korea
Switzerland
SwedenChina
CanadaItaly
AustraliaFinland
Israel
13© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
A healthy trend in terms of turnover growth…
2011
% change between 2008 and 2011. Based on figures in 969 corporate financial statements. Source: Intesa Sanpaolo from ISID data
-16,2
7,34,6
-6,7
0,6
5,43,4
6,7
-20
-15
-10
-5
0
5
10
2009 2010 2011 2008-2011*
Manifatturiero Scienze della vita
Turnover trends compared (% change, median values)
% change in turnover
2008-2011*: Pharmaceuticals:
+12.1%Medical devices:
+4.1%
Manufacturing Life sciences
14© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
... owing mainly to a surge in exports
SOURCE: based on ISTAT data
Trend in exports (% change between 2008 and 2012)
)
% change in exports in the 1st
quarter of 2013: Pharmaceuticals:
+16.5% Manufacturing: -
0.8%
15© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
Foreign trade deficit only partly reduced
SOURCE: based on ISTAT data
Balance of trade (millions of euro)
16© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
Profitability slightly down…
2011
7,9
9,710,8
9,6
7
9,0
10,6
8,6
0
2
4
6
8
10
12
Manifatturiero Scienze della vita Farmaceutica Dispositivi medici
2008 2011
EBITDA margin (median values)
-0.9Difference between
2008 and 2011 -0.7 -0.2 -1.0Based on 969 corporate financial statements. Source: Intesa Sanpaolo from ISID data
Life sciencesManufacturing Pharmaceuticals Medical devices
17© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
... due in part to healthcare cost-containment policies
SOURCES: FARMINDUSTRIA, ISTAT, IMS, and AIFA
Trend in health expenditure (%)
6
9
12
15
18
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Spesa sanitaria/PIL Spesa farmaceutica convenzionata netta/Spesa sanitaria
Between 2001 and 2012, the prices of refundable drugs dropped by 40%
Net expenditure on drugs dispensed by the national heath service/Health expenditure
Health expenditure/GDP
18© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
Delays in payments by public authorities hamper firms’ capacity to manage working capital
SOURCE: Intesa Sanpaolo-Prometeia
Differences between Italy and Germany
+49
+72
+58
+61
Customer payment days in pharmaceutical firms, 2011
Total
Large firms
Medium-sized firms
Small firms
19© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
Greater growth and profitability for more innovative firms
2011
4,6
10,9
2,3
10,6
13,2
7,2
0
2
4
6
8
10
12
14
Scienze dellavita
Farmaceutica Dispositivimedici
Imprese SENZA domande di brevetto
Imprese CON domande di brevetto
9,7
8,7
10,3 10,2
8
9
10
11
12
2008 2011
Imprese SENZA domande di brevettoImprese CON domande di brevetto
Trend in turnover between 2008 and 2011(% change, median values)
EBITDA margin in the life sciences industry (%, median values)
Based on figures in 969 corporate financial statements. SOURCE: Intesa Sanpaolo from ISID data
Firms WITHOUT patent applications
Firms WITH patent applications
Firms WITHOUT patent applications
Firms WITH patent applications
20© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
More can be done, including with more proactive support from the state: to quickly resolve the problem of delays in payments by public
authorities; to put in place a more stable and enabling regulatory framework for
investment in research and development, for the promotion of centers of excellence in pre-clinical and clinical testing of new drugs, and so on;
to learn from the example of other countries (such as Germany), which have developed healthcare reforms aimed at keeping spending under control and supporting the most innovative products.
Creating an improved enabling environment for investment in research is essential as the R&D costs for developing new products tend to increase over time: between the 1990s and the first decade of the 21st century, these costs have more than doubled in the US and nearly tripled in Europe.
More proactive state support is required, especially to create an improved enabling environment for research
21© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
Section guide
Italy’s competitive ranking (study conducted by Intesa Sanpaolo)
Research capability (study conducted by IMT)
22© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
The wider European context
Europe as IT WAS, or a hotchpotch of national innovation systems?Italy: a diffuse network, with Milan as its main hub.
Other main clusters:Verona-PaduaFlorence-Sienaand the hubs of Naples, Turin, Genoa and Bologna
RomeMilan
23© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
What policies should the EU adopt?
PATENTS
PUBLICATIONS
-50
5-.
50
.5-.
20
.2-.
10
.1.2
0.1
.2C
o-in
vent
orC
o-ap
plic
ant
Cit
atio
nsM
obil
ity
Coa
utho
r
1986 1990 1995 2000 2005 2009
Base year Stalled period
24© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
Italy’s position
Medical publications (Pubmed) > Biopharmaceutical publications (ISI)> Patents devised > Patents held.
Ranked 4th after the US, the UK and Germany for medical publications; 9th in the biopharmaceuticals field (it was 7th
in 1990). A low relative specialization index (RSI) in life sciences
patenting.
25© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
Regional clusters
The most innovative regions are central to all networks. Networks are becoming more global (with an increasing number of nodes) and hierarchical (with an increasing degree of asymmetry).
The top 10 NUTS2 regions hold more than 38% of EPO patents in life sciences.
7 of the top 10 innovative regions are American (California, New Jersey, Massachusetts, Pennsylvania, New York, Maryland, and Connecticut); 3 are European: Ile-de-France (FR), Darmstadt (DE) and Hovedstaden (DK).
Lombardy is ranked 18th, with Milan dropping out of the top 10 in the 1990s.
The USA’s lead is even stronger according to USPTO data (with only Paris featuring in the top 10 clusters).
26© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
What it all means for the Italian research sphere
Rome and Milan are almost on par with each other, but way behind the core group of leading US regional clusters.
The leading regions specialize in biotechnology and post-genomics (sequencing, recombinant proteins, algorithms and simulations, and so on).
Rome and Milan are specialized in medicine, with RSI values lower than 1 in biotech.
27© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
The scientific collaboration network
28© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
The co-inventor network
29© Aspen Institute Italia | National interest | Italian hi-tech industry: the case of life sciences
Topics for discussion
Regional growth: openness, specialization, infrastructure and services.
Enabling technologies: diagnostics, molecular modeling, high-resolution imaging, and nanostructures.
Vaccines and orphan diseases. Organization of clinical research. Industrial involvement: what complementarities should be
sought? Regulating the supply side and demand side.