In BMI's Q410 Pharmaceuticals & Healthcare Business Environment Ratings (BERs), the Western Europe region scored a total of 64.5 out of 100. The attractiveness of the region to pharmaceutical firms stems from the fact that its countries are key revenue sources for 'big pharma', particularly for companies selling high-end products, as per-capita spending is substantially above that of emerging markets.

Dallas, Taxas -- (SBWire) -- 10/05/2010 -- In BMI's Q410 Pharmaceuticals & Healthcare Business Environment Ratings (BERs), the Western Europe region scored a total of 64.5 out of 100. The attractiveness of the region to pharmaceutical firms stems from the fact that its countries are key revenue sources for 'big pharma', particularly for companies selling high-end products, as per-capita spending is substantially above that of emerging markets. However, it is BMI's view that drug companies will face many challenges in Western Europe over the next decade, including pressures to reduce fiscal deficits, the patent cliff, added regulatory hurdles and increasingly scrupulous cost-effectiveness assessments of new drugs – all factors that will influence the risk and reward scores assigned to markets in the region.

In the Q410 BERs, Italy remains the least attractive Western European market of the ten surveyed. Despite being a large market, Italy is characterised by low levels of growth, largely a result of widespread price cuts and shaky levels of economic growth – which translate into insufficient funds for pharmaceutical expenditure, especially for innovative products. High levels of public debt, poor infrastructure and a lack of competitiveness indicate that the country will remain one of the region’s laggards over our forecast period. Additionally, pharmaceutical companies’ performance in the country – already hampered by counterfeiting and parallel imports – is also expected to be majorly impacted by the pending patent expiration ‘slope’.

In July 2010, Silvio Berlusconi's government won a confidence vote in the Senate over its EUR25bn (US$32bn) austerity package aimed at lowering the country's budget deficit from 5.3% of GDP in 2009 to 2.7% by 2012. The package incorporated a series of relatively minor changes introduced by parliament since the bill was originally presented at the end of May 2010.

Included in the package are a number of medicine cost-containment plans, as well as moves to speed the introduction of electronic prescribing, which in turn is expected to increase the prescription of generic medicines. Furthermore, a reduction in margins on sales of Class A reimbursed drugs will be split between pharmacists and manufacturers, with pharmacists losing 1.82% and drugmakers 1.83%. Furthermore, aiming to make annual savings of at least EUR600mn (US$768mn), the Italian agency for pharmaceuticals (AIFA) is to review the pharmaceutical expenditure of the various territorial regions in Italy in order to provide 'tools' that will direct the prescription of medicines towards lower-cost generic drugs.

Additionally, in a bid to contain rising healthcare costs and an increasing state drugs bill, the maximum reimbursement rate paid for generic medicines by the Italian national health service (SSN) will be based on the drugs' average prices in Europe as of 2011. The government claims pricing drugs in this manner will create cost savings of EUR600mn (US$768mn). Hitting generic drug producer revenues more immediately is a 12.5% reduction on retail prices of generics, an initiative implemented in June 2010 and set to run until December 31 2010.

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