The fourth instalment of the sectoral analyses, conducted by EY and the Luiss Business School as part of the “Italian economy from crisis to reconstruction” project, looks beyond the current phase and suggests some ideas to put the country on a more sustainable growth curve.
Italy’s pharmaceutical industry is a highly technologically advanced sector and a leader at European level. In 2018, production value exceeded 32 billion euros, compared to Germany’s approximately 30 billion euros.
In comparison with other sectors, the pharmaceutical industry has a higher added value per employee, higher investments per employee and a marked propensity to export. Finally, the sector has a higher number of medium-large companies in relation to industry as a whole, but also in comparison with more capital-intensive sectors.
The Life Sciences sector is by nature resilient to economic cycles, being principally subject to long-term demographic and epidemiological dynamics, which have not seen substantial changes as a result of the COVID-19 emergency.
Indeed, the spread of COVID-19 has underlined the importance of health as a crucial value, highlighted the sector’s resilience and demonstrated the importance of responding quickly to emergency demand in the short term and developing and producing effective vaccines in the medium term. It is estimated that pharmaceutical companies will see an increase in turnover of 1.3%-2.3%. Similarly, it is estimated that this year alone, employment in the sector will increase by around 3.6% in the August to October quarter.
However, the sector’s structure has not been immune to the profound changes that the numerous lockdowns have produced globally. The various types of closures imposed at different times across the most strategic geographical areas have highlighted the interdependencies and fragilities of a sector which has extensive and complex value chains. The sector is founded on research and development and, consequently, on highly trained human capital capable of predicting how its main international competitors will behave. From this perspective, to fully take advantage of the accelerating push that the health crisis has provided, the Italian sector needs an integrated public-private plan that allows for improvements in the ability to produce innovative products, ensuring the supply chain is at the forefront of excellence.