Italy – Generic Players: Bend it Like Teva


“The ball is in the hands of the government,” according to Giorgio Foresti, general manager of Ratiopharm. “Once aware of the opportunities created by generics, politicians will have to make hard decisions.”

Until now, generics prescriptions were limited by strong links between innovators and doctors, and price alignment trends reducing the difference between brand and equivalents down to 40 cents. Generic companies were therefore fi ghting to survive by transferring most of their margins to customers through excessive discount policies which ended up reaching an unsustainable level. For this reason, the Government recently intervened by introducing new guidelines: starting from 2009, discounts to pharmacists and wholesalers are forbidden, margins fixed, and the delivery of generics by pharmacies will be encouraged by a discount of 8% not applicable to brands or copies. “But such measures are still very superficial” insists Foresti.

“The only real solution would be to implement a mandatory price difference between generics and originators of at least two Euros for a limited period of time, so that patients will become more likely to choose generics.” Such a legal change, if and when it happens, should create a better future for generics in Italy. Beyond regulatory evolutions, the success of the generics segment in the country also depends on the industry’s ability to play with the new rules. “When I took my position at ratiopharm two and a half years ago, the company was working exactly as the others, focusing on discount policies” he explains. But such a marketing approach as not satisfying for Foresti who is convinced that “generic companies should not claim to be different than the rest of the pharmaceutical industry, abandoning their work with the physicians directing all their efforts to pharmacies. All of them should diversify their marketing activities, developing their presence in the market by targeting doctors and pharmacies as well as the society itself- patients, politics and the industry.”

Foresti has clearly studied TEVA’s score in Italy. The Italian affiliate of this Israeli based group was founded in 1996 to become the leading generic player in Italy. Walter Medda, its Managing Director, introduced a strategic project for “Resources Optimization” as he was appointed in 2007. Teva’s business model has been completely re-invented, taking into account that whereas “until 2005, the most strategic customers for the development of generics were GPs; pharmacists became progressively more important in terms of competition. And the future will see the role of patients and specialists growing”, he explains. Consequently, Teva added pharmacists and specialists to its main target audience historically composed of GPs. For this purpose, a small pharmacy sales force was launched, as well as one dedicated to specialists, and investment on the hospital business was reinforced. “It is not easy to prepare for the future for such a young company”, Medda insists, “in challenging market conditions that don’t allow generics to be adequately perceived by customers”.

In spite of all difficulties, Teva Italia is now the 11th pharmaceutical company in terms of units sold monthly, and is planning to continue climbing up the ladder. Banking on generics becoming the gold standard therapy in prescriptions he forecasts that “in five years from now, the whole Italian primary care system shall be based on off-patent drugs”. So, the company is seeking “profi table market share as a driving factor for development, excellent customer service, portfolio management and value proposition.” A specific strategy has been defi ned to reach each of these important milestones, which will enable Teva to “consolidate its position…and develop and leverage market growth in the coming years.”

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