Italian Pharma SMEs: Family Knows Best!
Italy’s traditional family-owned pharmaceutical companies are one of its greatest strengths; but these companies must be amenable to outside influence in order to grow sustainably.
“It is important to recognize that the backbone of the Italian pharma industry is composed of private, family owned companies,” says PwC partner Rodrigue Schübelin. “This is actually a significant competitive advantage in many regards, as these companies do not have to answer to shareholders every quarter and can act much more flexibly and decisively than their public counterparts.” However, he highlights that “the risk is that without that pressure, some companies may not challenge themselves to grow enough, or have a clear idea of where they should invest.”
SIFI’s executive chairman Fabrizio Chines argues that “first of all, when family companies are growing in size, bringing in outside management capabilities is a must.” Italy is already in a good position in this regard, as “it has become increasingly common for family owned companies to be run by non-family CEOs”. Instead, he argues that “the more relevant issue at present is not that of management, but of investment capacity; some family companies like Menarini and Angelini may have the critical mass necessary to compete effectively, but for others it is critical to consider equity financing to support innovative product development or M&A strategies.” SIFI is one such company that has “taken this step by securing equity funding from a leading Italian PE firm, 21 Investimenti,” and Chines argues that there are other “Italian companies [that] should look at opportunities to raise capital from PE or VC firms.”