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Italy
Pharma report
August 2009
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L’uomo Vitruviano by Leonardo Da Vinci
ITALY:
Towards Pharmaceutical Renaissance
PART TWO
C
learly, innovation in Italy did not die with Da Vinci. Today,
the Italian pharmaceutical industry may lack the large multinationals of the past—Carlo Erba and Lepetit—but it can still
play a significant role in the more innovation-driven markets.
Numbers speak for themselves: 260 biotech companies generating a turnover of € 5.4 million in 2008, accounting for more
than 0.6 percent of the Italian turnover, and a 24 percent yearon year growth rate with respect to 2007. A pipeline of 258
products in development, of which 136 have already reached
the clinical phase. Italy’s first competitive advantage, extensive
tradition of research excellence, is solid enough to navigate the
sea change generated by the current economic turmoil.
This sponsored supplement
was produced by Focus Reports.
Project Publisher: Béatrice Collet
Project Editor: Sophie Thiard
Graphic Assistant: Omar Rahli
For exclusive interviews and more
info, please log onto
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write to [email protected]
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Going back in time, the National Research Centre so only for personal reasons. Combined with declining invest(CNR) has been the main breeding ground of Italian sci- ment in research, such deficiency could compromise the future
entifi c discoveries since its creation in 1982–an “origina- of Italian innovation. “However,” Maiani notes, “efforts are
tor of innovations,” in the words of current president Prof. being made from the government’s side: the budget dedicated
Luciano Maiani. The last restructuring carried out in 2003 to research increased to 2.5 percent in 2008, following years
gave birth to “a network of 108 connected institutes spread of steady decline. Therefore, CNR is able to start new recruitover the territory, and organized in 11 departments.” CNR ment processes and wishes to offer interesting perspectives to
currently has 38 spin-offs, three of which in the pharma- young Italians willing to invest in Italy.”
Looking at governmental efforts to conciliate cost-conceutical sector. Its role “is to act as a facilitator, connecting
public and private and creating bridges between the main tainment and innovation, Director of Farmindustria Enrica
stakeholders,” he says, offering a gateway to Italian brains Giorgetti identifi es three main measures. “First of all, the
implementation of a tax credit for research that can go up
for local and international laboratories.
Multinational corporations (MNCs) themselves are well to 40 percent for partnerships, with a sealed amount of
aware of the opportunities arising from the country’s re- euros 50 million.” In addition, the “Accordi di programsearch. French laboratory Servier did not casually choose ma” Plan “with 61 innovative projects in the pipeline for
Rome as home to one of the group’s 19 International Cen- a total amount of over €1 billion.” And the last measure,
ters for Therapeutic Research (ICTR), instrumental in per- raising expectations of the whole industry is the Industria
forming clinical research. General Manager Frederic Fasano 2015 initiative, which plans the allocation of €150 million.
backs up this choice: not only does the country offer con- Claudio Cavazza, founder and president of Italian laborasiderable market opportunities, but in addition “the weight tory Sigma Tau, has been appointed general manager of
of the Italian scientifi c community is growing, in terms of Industria 2015’s dedicated life-sciences program “New
research activities, as well as in scientifi c and political influ- Technologies for Life” (“Nuove Tecnologie per la Vita”),
ence,” he explains. “In some specifi c fi elds, the network’s and recently declared that the only option to cope with the
organization and the high frequency of territorial struc- current healthcare crisis would be to bet on genomics and
tures enable to perform highly specialized and sometimes personalized medicines. However, due to the costs involved
lives-saving procedures.” Such a concentration of centers of by such products “developing innovative medicines now reexcellence is a main asset for this medium-size player that quires pan-European research collaboration of public-priproved its ability to compete with giants thanks to a steady vate interaction.”
Not only is Italy in constant need for young talent and
and consistent focus on a few therapeutic areas- mostly
cardiology, diabetes, hypertension and osteoporosis—and government incentives, it is also craving to attract more
business angels and venture capital, especially to support
strong partnerships with the scientifi c community.
On the other hand, Fasano deplores the insignificance of translational research in the biotech fi eld. Leonardo Vingovernment incentives to companies
promoting and fi nancing research.
“As public projects are strongly
based on cost-containment approaches and poorly considering
innovation, the industry really has
to perform research on its own.”
For this reason, even though “the
attractiveness of Italy is made of
its well-trained researchers,” most
of them tend to expatriate to more
rewarding countries.
Theoretical physicist Prof. Luciano Maiani agrees, and points out
a challenging recruitment situation.
Most Italians are lured by more attractive conditions offered in other
countries—including less mature
markets such as Eastern Europe—
and those who come back often do LEFT: Luciano Maiani, President of CNR; RIGHT: Leonardo Vingiani, Assobiotec
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NUMBER OF BIOTECH COMPANIES IN ITALY:
DEVELOPMENT OVER TIME
211
140
101
71
49
36
BEFORE
1980
19811985
19861990
19911996
19962000
20012004
giani, director of the biotech companies’ association Assobiotec estimates that “Italy’s fi nancial schemes include
some really good investors for traditional technologies, but
regarding innovative technologies there has not been an effi cient strategy to foster innovation and get fi nancial capi-
tal.” Thus, many are the opportunities for specialized investors in well-established markets—namely
US, Canada, UK, Germany, and France—currently
260
lacking good projects to fi nance. “The Italian environment offers a very good cost-effectiveness ratio,” reminds Vingiani. “Italian researchers earn
less than in Northern Europe and US,” which
makes Italy a safe, profi table bet.
Overall, be it because the Italian bio-tech segment is still young, with more than 50 percent of
companies created in the last 10 years, or because
of brain drain and weak state support, Italian entrepreneurs still fi nd it hard to translate knowledge
into business, and convert excellent research into
sustainable companies. But even though public2005private partnerships (PPPs) are not yet widely rec2008
ognized as a best practice by Italian healthcare operators in order to open a way forward for Italian
research, Giorgetti sees encouraging signs. She has already
noticed that “more and more agreements are passed between small companies (mainly specialized in biotech) and
public institutions like universities, public research centers,
the Superior Institute for Health (ISS), and the CNR.”
CNR is indeed supporting the creation of business projects at regional level. Recently, it signed an agreement with
the Lombardia Region, providing €40 million over three
years for a myriad of projects, some of them based on nanotechnologies. If it proves successful, similar initiatives will
follow in Italy’s south, as the country gradually devolves
power to regional and local administrations.
FROM RESURGENCE TO DIVERGENCE:
ONE COUNTRY, 20 HEALTHCARE CITY-STATES
T
he Italian Peninsula was unifi ed amidst much struggle in the 19th and 20th centuries—in theory putting
an end to the territory’s historical fragmentation and the
leadership of local kings on a changing number of independent and powerful city-states. Nevertheless, it is still
suffering from a historical tendency towards competition
between small towns and a lack of inter-regional solidarity. Italy is now almost a textbook case of the regionalization process at work all over Europe: the constitutional
reform of 2001 and the political trend of administrative
federalism gave the peninsula’s 20 regions a signifi cant
level of autonomy. As a result, very few investment initiatives are launched at national level, a main point of
differentiation of the Italian system.
Local clusters become global players
Most federal states claim that a decentralized structure is
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Toscana Life Sciences park in Siena
the best way to create a healthy competition between regions
and local incentives for R&D. The structure of Italian science
parks proves this point. Whereas it is not the case in most other
countries where the national government is strongly involved
in such initiatives, all the Italian research clusters are hosted by
regional and local structures—the main ones being AREA Science Park in Trieste (Friuli-Venezia-Giulia), Science Park Raf in
Milan (Lombardy, Bioindustry Park Canavese in Torino (Piedmont) , Parco Tecnologico Padano in Lodi (Lombardy) Toscana
Life sciences in Siena (Tuscany), and Sardegna Ricerche in Pula
(Sardinia).
For the general manager of Toscana Life Sciences (TLS) Germano
Carganico “such an unusual structure
is a direct consequence of the lack of
national policies in Italy, rather than
an opportunity.” A bad starting point,
however, turned into TLS’ advantage.
Since the creation of TLS in 2004, the
organization progressively seduced
both public and private investors, and
for the fi rst time in history managed to
put together five academic bodies with
local institutions; Siena Province and
Siena Municipality, the Tuscany Region and private group Monte Paschi.
Building on Tuscany’s long tradition of
excellence in the biotech and biomedical sector, TLS Park eventually aggregated a number of successful initiatives and now counts 20 companies;
12 of which are located in the bio-incubator launched in 2006. TLS is now
widely renowned and recognized, both
nationally and internationally, and often seen as a reference in the Italian
biotech world.
“By combining its technology transfer role at the regional level and its fo-
cus on the specific field of orphan diseases,
TLS will have the chance to really all the
potential of the Tuscany region,” proudly
boasts Carganico. Because of its integrated
offer to biotech laboratories and its ability to attract investment in Tuscany, the
Park has been appointed by the Ministry of
Health as responsible for the management
of technology transfer projects fi nanced or
co-fi nanced by the Tuscany region. Therefore, “the foundation will soon start taking part in the regional fi nancing processes,
directly working with the Tuscany authorities—bringing its knowledge to the bureaucrats, and on the
other hand taking advantage of this assignment to put in
place biomedical projects at the regional level.”
Clearly, constructive dialogue is now the name of the game;
a game which MNCs are also playing. Global giant Pfi zer converted its former country management structure into a Business Unit model in 2009, but it is still aiming to act local while
keeping an eye on the company’s global strategy—and does
so in Italy through a series of innovative PPPs with several
Italian regions.
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TREND OF R&D INVESTMENTS IN THE PHARMACEUTICAL SECTOR
INDEX 2002 = 100, constant growth rate
135
130
125
120
115
110
105
100
2002
PHARMA R&D
2003
2004
2005
2006
TURNOVER (RETAIL&HOSPITAL)
SOURCE: FARMINDUSTRIA—ISPAT DATA
So far, explains Managing Director Cees Heiman, “Pfi zer
Italy has established four regional PPPs all aiming at improving the healthcare system’s quality and efficiency by combining patients’ needs with the necessity to seek greater economic
sustainability.”
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2007
TOTAL R&D
Cees Heiman, Country Manager of Pfizer
The “Leonardo Project” is a partnership with the Puglia
Region. Since 2004, it has launched several initiatives like a
new telecardiology service, a disease and care management
program and a Clinical Governance group for depression.
Project “Raffaelo” for Marche and Abruzzo regions has so
far established a disease and care management program, a
Hearth failure management program, and individual health
economics university courses. The “Michelangelo Project”
oversees an investment of €1 million in Lazio in order to
sustain cardiovascular prevention initiatives; for instance,
the reorganization of the region’s cardiology emergency processes and its new cardiovascular prevention model. Finally,
project “Virgilio” has been developed jointly with the Lombardia region to promote and develop public health research
through innovative initiatives targeting cardio-cerebrovascular pathologies with an aim to improve patient management, and the CAMUNI database for epidemiological-cardiovascular integration.
“Through these initiatives,” Heiman ensures, “Pfi zer demonstrates its fi rm intention to act as a healthcare
company; partnering with regional Governments in a
responsible way, managing the system and its challenges
hand in hand with them. Overall, we aim to improve local
healthcare–beyond the mere production and distribution
of drugs.” Such commitment is essential if Pfi zer wants to
become the largest company in the country by the end of
2009, once the planned Pfi zer-Wyeth merger is fi nalized.
“Our business would become extremely diversifi ed—including pharma- and biopharmaceuticals, vaccines and
nutritional products—and many synergies would be created between Pfi zer and its new partner.” Building on the
group’s strengths applied to the Italian context should enable the subsidiary to “remain a most important contributor to Pfi zer’s global success,” Heiman concludes.
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Devolution vs Evolution
Unfortunately, the path towards successful regionalization is
also full of hurdles—sometimes easy to leap over, and sometimes not. Amongst those is the extensive interpretation of the
regions autonomy; especially regarding purchase and provision
of health care services.
Indeed, each of the 20 regions can decide the quantity and mix of each service to be provided, yet securing
the minimum Level of Coverage (LEA) to its population,
according to budget constraints. Regional authorities have
to contain the pharmaceutical expenditure at a maximum
of 13 percent of the total healthcare expenditure, and are
free to decide cost containment measures–as co-payments,
limitation to hospital setting for some drugs, limitation for
sub groups of patients. Pricing and reimbursement is still
in theory managed at national level by AIFA, the dedicated
regulatory body, guarantor of the Italian healthcare system’s unity.
But, as general manager of AIFA Guido Rasi deplores,
each region autonomously decides the “real” reimbursement status of many drugs. Rasi considers “the limitation
of access to medicines included in the LEA that has been
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DISTRIBUTORS SWITCHING
INTO HIGH GEAR
R
egardless of ever increasing inequalities between regions,
the role of intermediate distributors is to ensure the right conservation, distribution, and delivery of drugs in a capillary way
throughout the territory– and in Italy, this function is executed with
cumulative costs amongst the lowest in Europe. Despite the Financial Law of 1997 which set that 26.7 percent of the margins of a
drug sale shall be kept by the pharmacist, leaving 6.65 percent to
the wholesaler, and the rest to the industry, director of ADF (the
Association of Pharmaceutical Distributors) Sergio Sparacio likes to
highlight how Italian distribution “really manages to fulfill its social
function, by ensuring the efficiency of distribution channels not only
in a quick and secure way, but also following cost-rationalization
patterns.”
One example: With two warehouses in Naples and Milan, logistics provider Petrone group made the choice to make products
available wherever the customer needs them and is “not willing to
focus on specific regions” remarks its CEO Raffaele Petrone. It is
also worth considering that the Southern part of Italy offers a less
competitive environment and higher levels of understanding and
availability. “Whereas pharmacies in Milan are every laboratory’s
targets, a pharmacist in Reggio Calabria has more time to listen
and to build long-term business relationships with sales representatives,” Petrone points out.
And even through the distributors’ margins have inevitably
been eroded over the years, while considerable resources have
been devoted to significant technological upgrades, cold chain
managements, and rising insurance and transport costs, Italy
still counts several wholesalers and pre-wholesalers. However,
the president of pre-wholesaling company Ferlito Farmaceutici is
convinced that “competition and market conditions will most likely
trigger a concentration in the years to come. Such an occurrence
will eventually enable the remaining players to reach a more critical mass and achieve additional economies of scale.” Founded
by Sicilian entrepreneur Salvino Ferlito in 1948, the company is
currently led by his daughter Carmen Ferlito and her two sons,
Salvino and Antonio Benanti, and surely on track to achieve such
goals. Having brought the nationwide infrastructure to a very high
quality level, with three warehouses in the Milan and Rome areas
at the cutting edge of technology and safety, Carmen Ferlito’s next
goal is “to develop an international network, by cooperating with
like-minded peers.” Salvino Benanti reveals the grounds of Ferlito
Farmaceutici’s twofold strategy: “At a ‘horizontal’ level we will establish operating ties with international peers in the pre-wholesaling arena, whereas at the ‘vertical’ level we will maintain an open
dialogue with couriers and wholesalers in order to identify the
most suitable way of integrating the services each of us offers.”
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implemented by some
autonomous regions as
a grave mistake, creating inequalities related
to places of residence,
and affecting the right
of citizens to have an
equal access to healthcare.” Rasi believes
that regions shall understand that each of
AIFA’s
negotiations
is the conclusion of a
long, careful and rigorous assessment process
conducted in accorEmilano Gummati of Cegedim Dendrite
dance with European
guidelines and following the best professional standards. “It is therefore irrelevant for regions to try and replicate some of AIFA’s tools
and assessment bodies; as these processes are very unlikely
to have better outcomes once they are multiplied by 20.”
Such trend also affects the industry’s behavior, as one could
be tempted to focus on drugs’ distribution in the regions with
better terms of price and reimbursement, and a higher purchasing power.
This particular environment provides plenty of business
opportunities for Customer Relationship Management providers (CRM). According to Emilano Gummati, Cegedim
Dendrite Italy’s general manager, the importance of key account management is drastically increasing in Italy. “The
recent constitutional reform enhanced the power of the regions related to market access, and the local authorities are
now fully responsible for their healthcare spending—either
through directive or liberal interpretations of AIFA’s central
directives,” he explains. In this context, traditional drug
promotion addressed to GPs is less effective. “It has been
statistically proved that out of 100 products prescribed by
a doctor, 46 are the direct consequence of specialist’s prescriptions, and 12 are dictated by the influence of the local health authority—this 12 percent rate being currently
growing at a 40 percent pace per year.” Therefore, GPs are
not fully following their own initiative, and are less influenced by promotions. “Laboratories have to take this trend
into account,” Gummati says, and “try to enhance their
drugs’ access to the local health authorities reimbursement
formulary.”
As Italian stakeholders evolve, Cegedim Dendrite is
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looking to fulfi ll its
ambition to further
bond with local players. Indeed “Cegedim
Dendrite has a strong
foot in the multinationals world, but
there is room for improvement in the domestic environment.”
The company would
like to expand with
new offers, more tailored to the needs
of local laboratories
Givanni Recordati, Chairman and CEO of
willing to expand
Recordati
and professionalize
their customer’s relations. In this process of fi nding new
clients, Gummati reminds that “the one key database’s
international structure is a main competitive advantage,
which allowed developing international CRM solutions
such as mobile intelligence, a multi-country tool covering
every language, and all types of business needs. This makes
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Cegedim Dendrite an ideal partner for companies willing
to expand abroad.”
And surely, Italy’s dozens of successful local pharma are in
need of such support.
GREEN FLAG FOR LOCAL ENTREPRENEURS
“I
t has always been my dream to become more than a sales
representative...and my story showed that sometimes,
dreams can become true. I just hope no one will wake me
up.” Sicilian entrepreneur Fabio Scaccia, founder and CEO of
Finderm, sums up in a few words the essence of the Italian entrepreneurial spirit. Having worked as a rep for little less than
10 years, he started his own pharmaceutical adventure when
only aged 28, by “launching alone, without a cent, a pharmaceutical company specialized in gynaecology.” Thirteen years
later, Scaccia is head of a consistent reality involving 52 collaborators with a yearly turnover surpassing €10 millions, that
“now claims to have one of the most diversified gynaecological portfolio—including cosmetics, medical devices, pharma
specialties, and integrators, constantly associated together as
to create innovative solutions.”
The organization seems to have not missed a good opportunity. After having developed strong
manufacturing agreements with third
parts, it is now willing to achieve international expansion through partnerships in order to “start bringing the Italian gynaecological knowledge to other
countries.”
Many other Italian pharma success
stories can be found, from Catania to
Milan. General Manager of Farmindustria Enrica Giorgetti is proud to say
that one-third of the pharmaceutical
industry’s Association’s members are
Italian companies. Some of them are
growing multinational, but “the Italian
market also expresses its vitality with
a lot of smaller companies, important
industrial players that work in network
with big players and public institutions.”
Most are family business, often not listed on the stock exchange, yet “flexible,
specialized, and innovative”—a model
of micro-companies that is highly representative of the Italian industry.
Italy, however, has also been the
breeding ground of a number of multinationals, like Menarini, Sigma Tau,
Chiesi, Recordati, Bracco, Italfarmaco,
Alfa Wassermann, Zambon, Dompé,
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Angelini, Rottapharm.
THE MAN WHO WORKED
ROUND-THE-CLOCK
“M
ost of my life, I worked three shifts: arrived at the office at
8:30am, went back home at 1pm, was back to work at
3pm until 7:30, and then would start again from 10 or 12pm until
3:30 the next morning.”
He certainly inspired following generations of Italian entrepreneurs. Cavaliere Alberto Aleotti, president of Menarini,
might have been awarded entrepreneur of the Year in 2007
by Ernst and Young; but he prefers to look back at his whole
career of 67 years dedicated to the pharmaceutical industry
(of which 45 at the head of Menarini), with a subtle mixture of
pride and humility.
“I consider this ability to work long hours as a critical success factor in the leadership of Menarini. Having looked at multinationals all my life, I always felt I had to do more than them
in order to reach their level. Coming from a very modest family, I have been the
only one from my
school to fight and
go to a university.”
Aleotti´s feat is
ever so heartening
as he had to work
during the day
at the Farmacie
Comunali Riunite
di Reggio Emilia,
¨thus only having
the night left to
study.” Getting an
¨A¨ grade on a
university exam for
which he did not
Cavaliere Alberto Aleotti, President of Menarini
attend class gave
him “enough courage to always give a try to what seems impossible and keep
following entrepreneurial ambitions.”
His personal ethic has permeated the company he still leads
with an iron hand at 86 years of age. “The constant appraisal of
merit, excellence and hard work is part of Menarini’s DNA,” he
concludes. “Even though I probably should not, because of my
age, I personally examine each new employee of the company.”
Indeed, each of them has to be able to support the winning
strategy of Menarini: “to focus on overtaking bigger players in
terms of quality but also quantity of working hours.”
From generation one to generation three
According to industry insiders, leadership of the third generation is a decisive turning point for a family company—that determines either its immediate failure or its long-term triumph.
Although unclear as to why this happens, most agree that the
entrepreneurial legacy of the founding grandfathers is either
set or lost forever two generations up the family tree.
When reaching this crossroad, Giovanni Recordati chose
the way to success. His grandfather Giovanni transformed a
small apothecary into a modern drug-based scientifi c business from 1926 onwards; his father Arrigo took the company towards listing on Milan’s stock exchange in 1984 and
realized the fi rst international acquisition in Spain. Building on such heritage, Recordati is now “still betting on a
virtuous circle that starts with research activities, directly
leading to the development of very profitable proprietary
products such as Lercanidipine—successfully exported to
foreign markets and therefore generating profits to be reinvested in research.”
Aiming to become a “european specialty pharmaceutical company,” the organization progressively expanded
to France, Germany, UK, Greece, Portugal, more recently
Turkey, and Czech Republic, following a mixed strategy of
acquisitions and start-ups. But growth ambitions in some
countries sometimes failed “like in Poland, six years ago,”
Recordati recalls showing that entering a new country requires caution, cultural, and contextual awareness. “Being
competitive in Germany or in the UK implies searching for
specialty niches in a generics-dominated market,” whereas
“Southern European countries still offer opportunities for
co-marketing and primary care,” and “Eastern Europe is
still an adequate land to launch branded generics or other
products that would be outdated in the western part of the
continent,” he says.
Looking at the future, Recordati “does not exclude expansion outside Europe, for instance in the US.” But overall, the
CEO is convinced that even though it is always safer to depend
upon a bigger basket of markets, “success is not about size; it’s
about the quality of growth.”
Surely, Elena Zambon won’t contradict such statement. As
current President of Zambon group, founded in 1906 by her
grandfather Gaetano Zambon, her key to quality growth is the
ability to read the past and learn from previous experiences.
“Zambon’s third generation has been and will keep building
on historical values, adapted to the new business environment,” she says.
In the same way Lucia Aleotti is determined to keep
building her Florence-based family company on the same
three pillars on which Menarini fi rst successes relied: “research, internationalization, and partnerships.” No third
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Italy. Spain, Portugal, and Greece were the
generation is involved yet in the leading
fi rst to be conquered, and “more diffi cult
Italian group, ranked 19th in Europe and
countries,” such as France and Germany,
36th worldwide for retail sales in value,
came later, followed by the Eastern Euroas this pharmacy created in 1886 got
pean region (boosted by the acquisition
to his current position under the strong
of Berlin-Chemie in 1992), and Central
leadership of Alberto Aleotti, who took
America.
over the business in 1964.
The three strategic lines have therefore
Aleotti, 86, is still the current presibeen carried hand in hand “such process
dent and CEO, working together with
has been sustained by fully re-investhis two children and assistants Lucia and
ing Menarini’s revenues in the company,
Alberto Aleotti. As explained by Lucia,
a main tool of family companies, which
he has been a precursor in understanding
don’t have to deliver dividends to stock“from the start (the patent introduction
holders on a quarterly base.”
in 1978) that research was the key for a
Despite a €2.5 billion turnover in 2008,
sustainable future.” The R&D depart- Paolo Zambonardi, General Manager of
37 percent of which was generated by inment grew from 11 researchers in 1978
to more than 700 now. However, feeding the company’s ternational sales, Menarini is far from resting on its laurels.
own R&D required taking “a second step, by developing As important patents recently expired in Italy, the laborapartnerships with companies sharing similar R&D values, tory is betting on biotech processes to launch the future’s
offering a strong knowledge, and excellent compounds in key compounds. Amongst the most promising programs
order to learn from their teams much beyond merely mar- are co-development of Ranexa with CV Therapeutics, and
keting their products.” At the same time, funding costly re- the ongoing Mimosa project working towards the developsearch required reaching a strong critical mass, well beyond ment of bio-tech vaccines for ovarian cancer. The results of
the latter “might give birth to a product able to save lives, but above all a
revolutionary concept,” Lucia Aleotti
explains “as this compound would attack the tumor cells which cannot be
completely eliminated by chemotherapy and surgery.”
New runners in the starting blocks
Critics of the world like to claim that
Italy’s commercial and industrial entrepreneurial spirit now belongs to the
past- and that the home country of
industrial giants such as Fiat and Benetton is now left in the hands of petty
“political entrepreneurs.”
But young companies like Cosmo
Pharmaceuticals are here to prove that
entrepreneurship is still alive. Mauro
Ajani did not take the reins of an established laboratory, but built Cosmo
himself by purchasing Warner Lambert’s Lainate plant to link it to the
commercial activities of his own previous OTC Company, Pharmajani. “But
the story followed a different path,” he
reveals. “I sold Pharmajani fi ve years
later and fully focused on Cosmo.
From that moment, thanks to the large
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LEFT: Fabio Scaccia, CEO of Finderm; RIGHT: CEO of SIFI, Cavaliere Giuseppe
Benanti
FROM GODFATHERS
TO DRUGMAKERS
S
icily plays a major role in a plethora of gangster stories, whether real or fictional; the initiated also know that it is the land of
incredibly well preserved Greco-Roman sights and excellent food
and wine. Fewer, however, are aware that the Italian island more
recently gave birth to outstanding pharmaceutical entrepreneurs.
Indeed, not only are Sicilian executives at the head of many successful MNCs affiliates, headquartered in Milan or Roma, such as
Maurizio Castorina of Takeda and Silvio Gherardi of Baxterbut,
some also produced remarkable local success stories.
Amongst those is ophthalmology-focused SIFI, created by Antonino Benanti in 1936 and now led by his son Cavaliere Giuseppe
Benanti whose own offspring – Salvino and Antonino – are sharing
their time between SIFI and Ferlito, the two family businesses. In the
words of Cavaliere Benanti, “Sicily offers many opportunities to investors willing to take advantage of its privileged geographic position
and unique climate proper for agriculture and tourism.” However, “it
is not the same situation for pharmaceutical companies since it lacks
proper infrastructure and is far away from the main markets.”
Compatriot Fabio Scaccia of Finderm agrees. “Sicily seems to
offer a challenging business environment, especially for small and medium-sized companies.” But on a more positive notes he remarks that
“this context also offers considerable opportunities for bigger players,
and especially multinationals with the adequate strength and power
to bet on the region and revitalize the Catania area. Indeed, Catania
is home to highly skilled professionals and has all the potential to
become the ‘pharmaceutical engine’ of Southern Italy.”
expertise of the former Warner Lambert employees, Cosmo
started in-house drug development and obtained its fi rst
patent on the MMX technology.” Leveraging on this proprietary technology that enables to “produce formulations
delivering the active ingredient in the entire colon,” Cosmo
entered the Infl ammatory Bowel Diseases (IBD) area with
three main products. Lialda, “the fi rst one-a-day therapy in
the IBD fi eld” already on the market and licensed to Shire
and Giuliani; Budesonide MMX currently in Phase III and
licensed to Ferring and Santarus; and Ryfamycin MMX, in
Phase II, licensed to Dr Falke Pharma and Santarus.
Having seen many other mid-size players emerge then
fail, Ajani evaluates the keys of Cosmo’s growth. Not only
has the laboratory completed a successful IPO in the Swiss
Stock Exchange (SWX) in March 2007. Its main assets are a
consistent B-to-B strategy and a relentless focus on a niche
therapeutic area “that has tremendously progressed in the
last 10 years.” Last but not least “whereas other Italian
laboratories in the IBD niche cover the entire value chain
and are mainly present in the domestic market, Cosmo focuses on research and development in a global market.”
Similar open-mindedness allowed domestic biotech players to attract global partners. Many MNCs now understand
the need to go scouting for biotech in Italy, and companies
like Molmed, Axxam, Genextra and Gentium, led by ambitious entrepreneurs, are clearly building a bright future for
Italy’s international presence on the global bio-pharmaceutical scene.
Less obvious are the benefi ts that the Italian talent for
innovation and risk-responsibility brings to the MNCs.
However, the case of Ferring perfectly embodies such a paradigm. Indeed, as Country Manager Italy of this Swiss laboratory, Paolo Zambonardi enthusiastically explains how,
after having spent his “learning years” in MNCs, joining
family-owned Rottapharm leaded by Prof. Luigi Rovati—
“one of the most brilliants Italian researchers”—strongly
impacted his future career.“ Indeed, both types of companies follow very different mindsets; whereas multinationals
seem to grow by themselves, family-owned laboratories are
more demanding towards their collaborators, asking them
to work in a much more concrete and detailed way.” Enriched by this experience, he was then able to become “fully
responsible for a company,” and “eventually found in Ferring the perfect compromise between entrepreneurial spirit
and multinational scope.”
Zambonardi is now proud to be living—together with
his collaborators—the dream of any pharmaceutical executive and representative: “To be part of a research company
able to discover new drugs, and offer doctors a lifesaving
product.” Indeed, Ferring will soon be ready to launch Firmagon, an innovative prostate cancer drug “really able to
increase the patients’ chances of survival—which is not that
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CHARACTERISTICS OF THE INDUSTRY BY COMPANY’S SIZE
Distribution of employment by number of employees (percent of total)
Pharmaceutical Sector
Manufacturing Sector
6.2
15.7
6.3
23.8
58.5
21.0
57.0
11.5
1-49
50-249
250-499
500 or greater
Baxter CEO, Silvio Gherardi
SOURCE: FARMINDUSTRIA
frequent in today’s pharmaceutical market.”
THE RISING GLORY OF “MADE IN ITALY”
T
he Italian fashion industry recently asked for governmental assistance to protect the “Made in Italy” standards dur-
ing recession. Surely, Milan’s golden triangle concentrating the
most exclusive fashion windows has been severely hit by the
economic crisis, but it is far from being the case when it comes
to pharmaceutical production.
According to President of Aschimfarma, the Italian Association of Active Pharmaceutical Ingredients (API) producers, Italy’s industrial manufacturing base is more dynamic
than ever. Big pharma are coming back to the country with
specific targets such as custom synthesis and toll manufacturing. “Most of them have invested a lot of time and money in Asia where prices are surely extremely competitive,
but the low level of services stopped them from reaching
fully satisfying results,” Gian Mario Baccalini explains. As
a long experienced chemist, he doesn’t deny that manufacturing costs in India and China are lower, but believes that
“the differentiation point of Italy is technology.” Indeed,
even in the mist of delocalization trends, “companies who
have different facilities around the world don’t have a clear
will to shut down Italian plants, which are generally offering a high level of skills, expertise and competitive new
techniques” that they might not fi nd in the far East.
A great part of Aschimfarma’s work is to internally
promote investments in innovative manufacturing processes, while “not many efforts are made in this direction from the Government’s side.” But as Baccalini points
out, “Italy showed its ability to sustain innovation even
in most diffi cult times.” Looking forward, “a push from
the industry compensating the lack of governmental initiatives” makes him confi dent that “Italy will soon reach
extremely good results.”
Manufacturing moving back West
A few scandals made the industry realize that too high a focus on prices can seriously affect the quality and reliability
of drugs. As a logic consequence of the counterfeit Heparin
affair of 2004, Baxter is now more than ever committed to
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AUGUST 2009
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Gian Mario Baccalini, President of Aschimfarma; Grunenthal plant.
“deliver the best quality, but not necessarily at a higher price
than its counterparts”—in the words of Italian affiliate’s CEO
Silvio Gherardi.
He likes to use a striking comparison when describing his
headquarters’ investment policy: “When buying a house in the
US, it is often said that the choice should be based on three
main criteria: location, location, and location. And in the same
way, manufacturing investment strategies should be driven by
‘quality, quality, and quality.’” In this context, no surprise
that Italy became strategically important for Baxter’s activi-
S17 FOCUS REPORTS
AUGUST 2009
ties. “The Rieti facilities, fully dedicated to plasma
fractionations, are currently receiving major investments in terms of fi nancial means, but also human
capital and technology,” Gherardi explains. The goal
is to double the plant’s capacity from 600,000 to 1.2
million liters of plasma, and expand the headcount
from 130 to 250 employees. Such investments will
surely enable Baxter to keep building on its leadership among the top three plasma companies in Italy.
But its CEO is even prouder to point out that
the levels of quality delivered by the Italian facilities are at least equal to the US and Canadian
standards. In addition, “investing in an existing
plant is less costly than building a new one, even in
countries that are considered more cost-effective.” Overall,
while a wave of enthusiasm is currently addressed to emerging markets, there is no doubt that “in 10 years time, these
less developed countries will offer the same price levels and
the same amount of obstacles than the mature ones.” For
these reasons, Rieti is due to become “the unique production center for all Baxter’s gamma-globulins, exporting
worldwide including to the US and Canada, as FDA authorization has just been received.”
In the same way, pain management and gynaecologyfocused Grunenthal recently chose its Italian plant as one
of the group’s manufacturing centres of excellence. Back
in 2005, Managing Director Alberto Grua recalls, “the
opportunity was offered to a few affi liates to become in
charge of Tapentadol’s production,” which account for
more than half a million units a year. “Winning this internal competition allowed the Italian site to attract additional investments—as more than €20 million has been
invested in Origgio since then.” As a result, not only has
the capacity doubled in terms of production and volumes,
but also a very strict cost-control policy enabled to reduce
the cost per unit produced by 40 percent.
The Italian manufacture is therefore “the most competitive among Grunenthal Group itself, but also to the eyes of
the industry, with some players now willing to outsource part
of their production to Origgio.” As soon as the modernization of infrastructures is fully achieved by mid-2009, the site
shall start betting on third-part manufacturing, which makes
Grua confident that “in little more than 18 month, the Italian subsidiary should become a center of profits rather than
a center of costs.”
Even the bigger multinational giants take the small peninsula’s potential into careful consideration. German group
Boehringer Ingelheim might rely on five pharma chemical
production sites in the world; it is investing €60 million per
year in Bidachem, the division of the Italian subsidiary dedicated to chemical production for both the group and third
parties.
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This site is one of the main producers of generic Ketoprofen worldwide and its capacity is being doubled in order to produce API for global distribution of Dabigatran.
“Construction started two years ago,” explains Country
Manager Sergio Daniotti, “and the new production site will
be inaugurated and operative by mid-2009. It is a classical
chemical plant, but much more automated and multi-purposed than it used to be. Seventy additional employees will
join the current teams, allowing the workforce on site to
grow from 110 to 180.”
As third-part business represents about 10 percent of
Boehringer Ingelheim’s sales in Italy, such upgrading process
will allow the company to keep a strong toll manufacturing segment. Of course, producing for third parts involves
adapting one’s mindset. In other words, “when a client asks
for an offer Boehringer Ingelheim cannot take two weeks
to make a cost calculation—it has to provide an answer in
24 hours, otherwise there is the risk to lose the customer to
the benefi t of a competitor.” But it is on the other hand a
crucial asset for Daniotti, who is convinced that “this business can be seen as opportunistic as it is aimed at covering
fi xed costs fi lling the plant’s extra capacity, but it is above
all a profi table business that allows the company to survive
and make the difference in a competitive environment.”
Indeed, this trained doctor is keen on reminding the scientific community that whereas “the industry is aimed at curing people, saving lives, and improving the quality of life, the
companies’ fi rst social responsibility is to make profits.” Following its manager’s strong convictions, Boehringer Ingelheim
Italy experienced a 9 percent growth in 2008 and expects to
continue doing so this year.
APIs or the Admirable Performance of Italians
Boehringer Ingelheim’s experience shows that it still makes
sense to produce APIs in Italy, “because of the country’s competitiveness price-wise in relation with the quality requested,”
according to Daniotti. “Getting API’s from Asia is always
cheaper, but with time it can create problems in terms of purity,
and having to re-work a powder involves high costs and strong
economic damage.”
Because MNCs are aware of this, there are opportunities
to seize for local API producers. More and more of them
“are starting to promote different and more advanced technologies such as micro-reactors, unlike in India or China
where only traditional processes can be found,” remarks
Baccalini of Aschimfarma. This is why Italy is still consid-
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ered as the fi rst API producer in the world—despite fi erce
competition from India—mainly exporting to regulated
markets such as the US, Europe and Japan. “New markets
are now only accounting for 3 percent,” Baccalini evaluates, “but this number is aimed at increasing. Indeed, Italy
is betting on its technological competitiveness to export to
countries like India some very specifi c products requiring
top-level sophisticated processes, for instance in the fi eld
of injectables.”
Asian markets have already long been considered a main
focus for Euticals. Since he took the reins in 2002, President
and CEO Maurizio Silvestri developed dozens of contacts
with Indian partners and customers. But more recently, this
group of four entities (Euticals, Ambrosia, Prochisa, and Pro.
Bio.Sint) took a determining step by selling the majority of
its stock to the Italo-Chinese private equity fund Mandarin
Capital Partners.
Both Euticals and Mandarin share “a proactive analysis
of the opportunities for synergies worldwide with a special
attention to China in term of end market, source of technologies and low cost manufacturing capabilities,” Silvestri
says. Indeed, Euticals has been present with its products in
China for many years. “Building on this solid base, further
S19 FOCUS REPORTS
AUGUST 2009
strategic decisions will be oriented towards re-enforcement
in the Chinese market,” Silvestri forecasts. “In addition, appropriate combinations will certainly contribute to develop
Euticals as a more important global player in the chemical
pharmaceutical context. Euticals is constantly looking at
new international opportunities, such as in Eastern Europe
and Russia where several products have been registered
thanks to short approval processes.”
These countries have an interest in relying on Italian producers such as Euticals because “Italy knows the business,”
states Silvestri. “The country’s long tradition of knowledge
in the API fi eld enables producers to know exactly how
and when things should be done, and to anticipate market
trends in order to offer the customers the possibility to be
the fi rst entrants in the market.”
INFA Group is the living proof that Italian API’s dynamism has been maintained throughout the years. From the
foundation of Labochim in 1966 by Ruggero Cardoso, the
organization was converted 42 years later into a European
group consisting of four manufacturing sites (Labochim
and Sivafi tor in Italy; Derivados Quimicos and Kylolab in
Spain), supported by Italian private equity fund Investitori
Associati and led by the founder’s son Daniel Cardoso.
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INFA strives to
continuously
improve the documentation’s quality, the
level of expertise
and the sophistication of technological processes, Cardoso points, but
aside from these
aspects, he reveals
that the old recipe
to succeed did not
change over the
Marco Falciani, President of ACS Dobfar
past 40 years. “The
industry has to be
dynamic, not afraid to invest, and have an aggressive approach towards R&D.” He is personally convinced that
“the tougher times are, the more the industry has to invest.
Companies have to be brave enough to invest in the storm,
without waiting until it becomes too late.” These strong
convictions enabled Infa group to develop its commercial
presence. Cardoso boasts that he could not think of a market where INFA is not present, and ensures that the group
will keep its eyes wide open to new opportunities.
Looking at the potential threat from more cost-effective
producers, he cheerfully compares it to the dichotomy between low cost and regular airlines: “Overall, everything
depends on the strategic choice made by customers. It is
not a matter of country-some extremely good Indian and
Chinese producers can be found, as well as some very poor
European ones, but some companies are competing at the
expense of quality and the amount of risk seems to be higher in some geographical areas.”
However, there are also some “real” challenges. Even
though API manufacturing has been one of the very fi rst
global industries, all fi rms are still not playing by the same
rules.
Indeed, Baccalini explains that “Italy’s fi rst export market being the US, the country’s API industry had to develop
from the very beginning a high level of excellence in quality
control.” For this reason, “inspections are more developed
in Italy than in the rest of Europe, being similar and sometimes even stricter than the FDA inspections.”
The scarce uniformity at European level is restricting Italy’s
worldwide competitiveness, and “the lack of a European equivalent of the American FDA stops the system from being clear
and transparent enough from a regulatory point of view.” For
this reason, Aschimfarma is currently working at the EU level
to promote the idea that more traceability standards should be
applied to drugs. As Baccalini reveals, 79 percent of API that
can be found in Europe are coming from Asia, which is far too
much, as they are not submitted to inspections of any kind. And
as Italy submits all its API production to both FDA and local
inspections in order to ensure the compliance with Good Manufacturing Practice (GMP), Aschimfarma has been suggesting
for years the implementation of similar controls at European
level. The association is still struggling at the moment to change
the mentality. A first written declaration was approved by the
European Parliament in 2006, and a second proposal is currently being discussed by the European Commission. Both Aschimfarma and the industry believe that only then, barriers will
be at the same level for everyone and competition will be fair.
Even if regulatory issues come as compromising drawbacks, Italian optimism seems invulnerable. Insiders do not
doubt that Italian creativity and natural resourcefulness
will enable the country’s industry to make it happen.
The Italian for “we have to make it” is “dobbiamo farcela.”
A simple yet striking motto,which inspired Marco Falciani. Cofounder and current CEO of ACS Dobfar, Italy’s first API producer ranking amongst the world’s top five, believes that “without inspiration, even the synthetic chemical Industry would fail.
The only survivors will be those who are able to combine detailed
financial and business strategies with both artistic brilliance and
an insatiable enthusiasm for creativity and aesthetics.”
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email: [email protected]