Italian PM's resignation will hit API sector if anti-EU party takes power says expert

By Gareth Macdonald contact

- Last updated on GMT

Italian PM Matteo Renzi (Source Wikipedia)
Italian PM Matteo Renzi (Source Wikipedia)

Related tags: European union

Italian PM Matteo Renzi has quit after voters rejected his controversial plan for parliamentary reforms, setting the stage for political and economic turmoil.

The plan​ would have reduced the powers of the upper house, the Senate, and strengthened the Chamber, the lower house.

The vote was not about Italy’s membership of the European Union (EU) or its use of the euro. However, the concern is that Renzi’s resignation will see the Five Star Movement party – which has promised a referendum on EU membership - form the next Government.

This interpretation is further supported​ by the opportunistic, enthusiastic responses the “no” vote has received from right-wing, anti EU parties across Europe. (please feel free to Google, I'm not linking to them.) 

API impact

Whether Italians would vote to leave the EU or abandon the euro remains to be seen, but such decisions would impact any industry for which the free movement of goods in Europe is important.

There are 73 companies operating active pharmaceutical ingredient (API) plants in Italy, including Sterling, ACS Dobfar, Dipharma, Olon, Solmag, and Zambon. Italian manufacturers tend to supply hard to make ingredients like sterile antibiotics, hormones and steroids.

Leaving the EU would impact Italian API firms according to Mike Chace-Ortiz, senior director of product strategy at Clarivate Analytics, formerly the IP and science business of Thomson Reuters, who told us: “With a country so involved in API manufacturing there is significant potential for disruption with an exit from the union​.” 

Profitability and regulations

Profitability would be hit Chace-Ortiz said, explaining that: “API manufacturers generally operate on thin margins especially where generics are concerned, so the impacts of moving away from the single currency could adversely affect pricing and therefore profits and competitiveness compared to other API producer countries​.”

Italian API producers would also face higher regulatory costs if the country leaves the Union according to Chace-Ortiz.

He said “efficiencies may be lost and costs increased if producers are required to handle each country or groups of countries differently as individual trade pacts replace the common market and EMA as a single point of regulatory control, mutual recognition of filing standards​.”

Patents and exclusivity

No longer being part of the European Patent Convention would also impact how API firms do business.

Chace-Ortiz said: “No longer being part a common system of patents, data and market exclusivities can impact generic entry dates and when producers are able to start generic API production, which may hand competitive advantages to manufacturers outside of Italy​.”

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