A really difficult year Positive signs are not lacking, however, at the 'closure' of the financial statements.
D'a entrepreneur, 2007 confirmed the desire to grow, to do and to innovate of the drug companies operating in Italy. The future is innovation and expansion into foreign markets. A process that in the last year has seen many protagonists: Rottapharm with the acquisition of the German Madaus, Zambon with the fine chemicals area of Ppg and Recordati with a French company specialized in orphan drugs. Three examples of an internationalization trend that has involved all the large national capital groups with acquisitions of over 20 companies in recent years. Abroad, we have almost 200 establishments and the employees of companies with Italian capital are 40% of those in Italy, double the industry average. This trend has also continued with the commitment of the large multinationals who decide to invest in our country. This is the case, for example, of Merck Sharp&Dohme whose laboratories in Pomezia are working on the new products against AIDS and cancer by GlaxoSmithKline, which inaugurated the first vaccine production line in September at the San Polo di Tonile plant in Parma; by Novartis with the vaccine center in Siena and by Eli Lilly, which is completing the largest biotech plant in Italy in Sesto Fiorentino. The industrial fabric is also made up of SMEs, which every year compete more and more in foreign markets and intensify their commitment to production and research and development especially in advanced sectors. Finally, there are cases of biotech companies that amaze even overseas such as Gentium which is listed on the Nasdaq and Philogen or MolMed which will soon be listed on the Italian Stock Exchange. Important and significant results of the desire to do business and which demonstrate the vitality of the pharmaceutical industry in Italy. Industry that needs to grow and represent one of the most important resources of our country for its ability to combine economic development and social cohesion. There are examples of excellence and they are all companies that want to invest in innovation to become the real stars of the knowledge economy. Balance sheet in chiaroscuro As President of Farmindustria, I cannot fail to underline that the pharmaceutical sector is poised between confirmation of its internal and international growth potential and the presence of strong signs of risk for activities and employment levels. The data speak for themselves: • approved pharmaceutical spending now at 2001 levels, given that the weak growth of the five-year period 2001-2006 (+5.7%) was canceled out by this year's decline (-8.8% January-September); • employment crisis with nearly 3,000 workers leaving the sector in 2007; • increasingly lower prices of prescription drugs, as confirmed by a recent study by Cergas Bocconi (in Italy, compared to the main European countries, the prices of drugs are lower than the 20% on average with even higher peaks). Furthermore, the pharmaceutical industry bears an average tax burden of 65%, which depends for about a third on specific measures on the pharmaceutical. Companies directly pay 1.6 billion euros in taxes and other charges, an amount to which social security contributions of 1.3 billion euros are added, compared to a net profit of around 1 billion. All of this perfectly describes the dire situation the industry is in at the moment. In the pharmaceutical sector, Italy is the 3rd European country and the 5th in the world in terms of market size and number of employees. However, the progressive deterioration of the price/cost ratio has made the competitive conditions worse for companies operating in
