Italy presents a strong and growing market for multinational companies seeking to pursue biotechnology and pharmaceutical research. The country boast a vibrant medical and hospital system and the capacity to produce leading-edge medical and academic research. Structural changes have been made within government and the medical establishment, promising an ever more inviting environment for investors, clinicians and corporate managers. Meanwhile, those seeking a location for pharmaceutical production will find Italy cost-effective and stable.

Giampaolo Russo, the chief executive of Invest in Italy, the Italian organisation for investment promotion, told investors attending a series of roadshows in Switzerland, the UK and the US: “Our pharmaceutical industry has a long tradition and displays scientific excellence in basic fields like oncology, neuroscience and vaccines. The market has been growing at a rate of 105% since 1999, with outstanding prospects for products in the approval pipeline. In addition, research costs less here than in Switzerland, France and Germany.”


Mr Russo launched the roadshow, supported by Sviluppo Italia and the Italian Trade Commission (ICE), in Zurich and was gratified by the interest shown by international venture capitalists and local Swiss investors alike.

Leading-edge research is perhaps the greatest resource to be appreciated by international and national companies. While other European countries may have been more successful at attracting investment in pharma production, Italy has spent heavily – and has seen a good return – on establishing centres of academic excellence at its universities. These, in time, will provide a wealth of projects for international pharmaceutical companies. One observer comments: “The relationship between universities and economic innovation is the unique point about the Italian market.”

Strong on research

According to Dr Guido Grandi, vice-president of Chiron Vaccines, a Siena-based company which is a world leader in vaccines: “We have several good research centres, both academic and industrial. They are located mostly in the Milan area. We have a very strong research community in Siena because of the university, the small enterprises and the Scientific Park Initiative. There is no shortage of ambition in this country.

“Italy used to have a strong pharmaceutical sector, but a number of companies were acquired and they became little more than marketing arms for larger companies. Now research is giving Italy the basis for building a new pharmaceutical sector once again,” he says.

The government plans to enhance Milan’s status as Italy’s core biotechnology sector, although places as diverse as Siena, Pisa and Florence are all home to biotech players. An indication of Milan's pre-eminence is the decision to site there the International Institute of Molecular Genetics – supported by the Ministry of Health – specialising in proteomics, the study of proteins.

Trials reputation

International companies have particular respect for the Italian sector’s competence in clinical trials. Companies say that they like to place their key clinical trials projects with Italian medical service companies because the market is among the most efficient in Europe, most cost effective and most sophisticated. In this respect, where Italy is head to head with the market leader – the UK, top companies say they would be prepared to select Italy.

“Italy is one of the best markets in Europe for clinical trials. There is an ageing population, there are many good quality hospitals, and the clinical trials costs are much lower,” says Mr Russo.

Other managers in the sector also put Italy’s prominence in this area down to the trust that the average Italian places in their physician, which is said to be greater than elsewhere in Europe. So if the general practitioner suggests the patient might want to participate in a drugs trial, the patient is likely to agree.

Dr Mauro Germinario – clinical operations manager at Chiltern International, a clinical trials management firm – says the Italian sector has been boosted by changes in EU legislation that have speeded up the process of bringing drugs tests through the four stages required before a drug can be widely sold. Formerly, companies were required to gain approval at central government level before they could embark on each stage and, because of rigorous checking, each approval process could last as long as a year. Now, the approval process for the second, third and fourth stages has been delegated to an ethics committee at the local medical authority, where approvals can take as little as two to three months. Approval for the vital first stage of drug testing, when patients are exposed for the first time to a compound, remains with the central medical authority – a reasonable procedure, says the industry, given the sensitivity of this stage.

The changes in approval practice have led to changes at management level in local hospitals, which have started to appoint expert drug trial managers to enhance the efficiency of the process and control the new regime.

According to Giacomo di Nepi, managing director for Novartis in Italy (as of April 1, Mr di Nepi moved to the firm’s Basel HQ, where he was appointed global head of the Business Unit Transplatation and Immunlogy and a member of the International Pharma Executive Committee): “You can make top-notch clinical research in Italy. Some historic bottlenecks in terms of getting authorisation for clinical trials have been rolled back over the last five or six years. So Italy has become very competitive in terms of clinical trials. We have a group of people in the medical function who are very skilled, so this quality of performance is possible. For four years in a row, Italy has been the best country among the large countries with in the Novartis Group. Thanks to this performance we are continuously attracting investment in Italy.”

Novartis says it has placed many of its top clinical trials projects in Italy with outstanding results and, therefore, Italy has become – within the whole Novartis Group worldwide – the second country in terms of patients recruited for clinical trials, after the US. The number of clinical research projects already initiated or under way has reached 115, with more than 13,000 patients and more than 1400 centres involved. Novartis has invested a record €28.5m, a marked increase on the amount spent in 2003.

Italy also scores strongly in the production of pharmaceutical products, both in terms of cost effectiveness and competence. The case study of life science firm Serono’s experience (see following article) shows how a well-managed multinational selected Italy over other competing pharma centres on the grounds of cost effectiveness, as well as the quality of the human resources.

Attitude change

The burgeoning of these key areas of Italy’s pharmaceutical industry is, in part, a result of changing attitudes at the top of the Italian government. This was recently demonstrated by the country’s decision to give tax breaks to start-up and early-stage biotech companies. That in turn provides an incentive for enhancing investment in this area.

This legal and fiscal measure is expected to deal with a cultural and industrial problem at the heart of the medical sector. While Italy has a wealth of academic projects and a group of well-educated and highly skilled researchers, it has shown less competence in commercialising ideas. So the country has no more than 100 companies at the leading edge of biotechnology, and jointly these have sales of no more than €300m. To this extent, Italy lags its competitors in the sector, namely the UK, France and Germany. But it is on a roll, as the number of companies has grown by 60% since 1998. The sector now employs 1200 people and Italian biotech companies have developed 16 new drugs that are now in final approval stage.

According to Dr Roberto Gradnik, regional vice-president for Serono in Rome, and president of Assobiotec, the Italian association of biotech companies: “We have a huge number of articles in leading publications and we have very good quality of research. Italy ranks fourth in Europe for its publications record. But it is not harnessed to producing commercial products so we have relatively few biotech patents. Our research has not yet provided the basis for a substantial industry although 15 groups of university researchers have set themselves up as spin-off companies.”

Researchers who succeed in Italy must be very good, says Mr Gradnik, because Italy has not, historically, proven an easy environment in which to thrive. “When researchers go abroad, they go into top jobs because of their quality,” he says. One instance of this effect was at Chiron, where the former head of research at Siena was promoted to head the company’s entire vaccine research at its HQ in California. The Italian research facility now controls the company’s entire vaccine research with a 150-strong team.

Orphan products

Mr Gradnik pays particular regard to the country’s research record in using biotech solutions for developing “orphan” products. These are drugs dedicated to treating rare diseases for which potential customers are fewer, so the economic benefits for large companies are reduced. However, small but clever Italian companies have taken advantage of quicker approval processes permitted for the development of these drugs to become leaders in the field.

Italy’s relatively nascent biotechnology industry is expected to grow as more finance is made available to its leading institutes. Industry observers say that the relatively small Italian stock exchanges, and restricted venture capital and private equity sectors mean that entrepreneurs have had to look abroad for their financial support. Some Italian entrepreneurs have completed IPOs on the US Nasdaq exchange for small technology companies. The Italian pharma and biotech industry’s growing solvency and success will serve as its own magnet for finance and observers say a virtuous circle will be created in which investors will follow the inventors.

The capacity of Italy’s biotech sector both to attract investment and to produce a satisfactory outcome for its owners is demonstrated by the experience of Etna Biotech, a spin-off from Berna Biotech, a leading Swiss biotech firm. Etna specialises in immunotherapy and is based in Catania, in Sicily. It has 20 employees and after four years of operation and there are plans to increase that number to 110 once a €50m development has been completed.

Reinhard Gluck, Berna Biotech’s manager, responsible for virology at the Bern Serotherapeutic and Vaccine Extraction Institute, attributes Etna’s success to “the relationship with universities, the know-how inherited from the parent company, international agreements with other companies and a product pipeline in the advanced approval stage”. Berna works closely with the Science Park of Sicily, Bio-Incubator of Catania, the Biotech Incubator SIF12 and the Catania Research Consortium.

Government support

taly has a history of largely benign neglect of a sector that relies on support from the government. Pharmaceutical companies clearly seek top prices for their drugs from state-owned healthcare providers on the one hand, and quick and smooth procedures for drug trials and drug registration on the other. Industry figures say that Italy’s governments have not always been as supportive in these critical aspects as they would like. Greater understanding of the industry might have led to stronger levels of FDI into the Italian sector.

However, there is growing evidence that the Italian government is seeking to stimulate its science and technology sectors in a bid to boost industrial competitiveness. It has recently allocated €1.8bn towards its National Programme for Research (NRP). This is aimed at advancing the role of science and technology in industry and at building stronger ties and co-operation between companies, universities and research centres.

The NRP provides finance for several key areas of Italian technology:

  • the costs of researchers involved in company research programmes;


  • 10 strategic research programmes (tumour treatment through innovative techniques pertaining to the knowledge to the human genome, biomedicine, and pharmaceuticals applied to fine chemicals);


  • intervention in technological start-ups in support of the creation of innovative and competitive companies.

The 2005 Financial Bill proposes an incentive scheme that allows for the deduction of labour costs for people involved in research and development from the Regional Tax on Business Activities (IRAP) taxable base. The deduction applies to people involved both in basic and applied research.



Contact (Ref. Biotech) for more information on InvestInItaly’s Biotech initiatives and investor support



Clinical operations manager at Chiltern International

Chiltern is a leading UK-based manager of clinical trials worldwide. Its workload in Italy grew to the point where it needed a local office. This was set up in 2004 and has resulted in a growing number of relationships with local companies.

Q Why did you decide to choose Italy for the company’s investment?


This is an important time for clinical drug development in Italy following the implementation of the EU Clinical Trials Directive and revision of the Italian regulatory procedure for clinical trials. Procedures have become much more streamlined as a result. This is encouraging more pharmaceutical companies to run clinical studies in Italy and obviously dramatically improves the drug’s time to market.

Q What ideas did you have about Italy when setting up the company?


We have found a performance gap between Italy and EU top countries in clinical research. The resources allocated in clinical studies by both hospitals and universities are not totally sufficient. However, the results we are obtaining are outstanding.

Q Could you describe the developments since you have come to Italy?


Fierce competition is one of the main characteristics of the Italian market. We are developing our strategy internally and organising in order to reach potential local prospects.

Q How good is you relationship with Italian institutions?


We are constantly in touch with the Ministry of Health, to which we acknowledge a huge commitment in trying to make Italy a leading country in European clinical drug development. In fact, the ministry played a key role in designing and developing the EUDRACT system. This links and integrates all the clinical data coming from all European countries. We view the ministry as a vital source of professional education

and information. It is just about to release a decree that is the first in Europe to regulate not-for-profit trials.

Q What do you think about the Italian business model?


Creativity and innovation are part of our heritage. Quality and flexibility are some of the basic elements of our business model. The environment seems to be highly bureaucratic but we have noticed a new political impetus to attract foreign investments and provide assistance to foreign investors through law and regulations.