Health and medical to Italy

(Last updated: 19 Jul 2007)

Trends and opportunities

The market

The Italian public health system is planned and controlled by the Italian Ministry of Health. Healthcare is provided to the public through 196 local public health units, called Azienda Sanitaria Locale (ASL), which are managed and coordinated by the 20 individual Italian regions, and 98 major hospitals.

A major reform is being undertaken to totally deregulate Italy's public health services and place them under regional government control. Such reform is considered essential as the amount allocated to health care in the national budget has skyrocketed in recent years.

Healthcare services in Italy are offered at three levels:

• Basic healthcare provided by general practitioners and paediatricians
• Specialist care, provided by specialists through local public health units and hospitals
• Hospital care

ASL units are administrative boards that provide all the services and facilities required to safeguard public health including:

• Prevention
• Diagnostics
• Therapy
• In-patient rehabilitation
• Coordination of authorised private clinics, prevention centres, emergency care centres
• Other management-related services

All Italian citizens are registered with the ASL system and can choose their own doctors. A system of partial payment for medication and treatment has been introduced over the years to reduce the enormous public health expenditure.

Since 1995, the Italian public health system has been facing a major reorganisation aimed at improving the quality of services and reducing costs. Hospitals and local health units have been encouraged to adopt yearly budgets and operate in a business-like manner, but according to the Italian Senate Health Commission, 28 per cent of them still do not.

The public healthcare system has begun adopting the 'day hospital' concept to reduce operating costs. Hospitals currently receive funds according to the number of patients they treat, regardless of the length of time the patient spends in the facility.

The importance of the private sector role is growing because of the inefficiency of the public system. Sixty eight per cent of Italian households now spend A$226 per month on products and service provided by private health operators. New forms of cooperation between ASLs and the private sector are emerging in some areas (such as Emilia-Romagna and Lombardy), where public hospitals sometimes finance private clinics that treat patients that the ASLs cannot treat quickly enough.

Due to its ageing population, Italy's health expenditure is expected to grow considerably in the future. There are severe shortcomings in paediatric and geriatric facilities and hospital care. Several non-profit organisations, and private and religious institutions are attempting to offset the inadequacies of the public system.

In recent years the market for hospital and medical equipment in Italy has narrowed due to the government's tightening of healthcare spending. Italy used to be a strong producer in a handful of sectors, notably radiology, cardiology and ultrasound equipment. However, high taxes and bureaucratic constraints have discouraged growth.

Multinationals are increasingly entering the market through the acquisition of small and medium sized Italian manufactureres. Consequently, over 50 local biomedical companies have disappeared in the last six years. Now, only 25 per cent of diagnostic and biomedical products sold in Italy are manufactured locally.

Opportunities

The best opportunities for Australian companies are in the areas of:

• Sophisticated medical, hospital, dental and laboratory equipment
• Diagnostic and biomedical products and components
• Electro-medical components

Australia already supplies the Italian market with top-quality medical instruments such as:

• Hearing aids
• Diagnostic and ultrasound equipment
• Respiratory equipment
• Lasers
• Urology equipment

Competitive environment

Australian exporters often find it difficult to compete with both local manufacturers and countries with low labour costs. However, although Germany and the USA enjoy a duopoly in exporting hi-tech medical devices and machinery, Italians are not adverse to buying from other countries such as Australia, which are generally considered to be reliable and technologically advanced. 

Tariffs, regulations and customs

Italy is a member of European Union (EU) and grants free access to other EU members. Preference is given to associate members of the community, developing countries, and European Free Trade Agreement (EFTA) members. In general, the following applies: 

• Common External Tariff is applicable to non-EU countries.
• Valued Added Tax (IVA) is levied on the duty paid value and applies to most items imported and domestic items.
• The most common IVA rate is 20 per cent, with a reduced rate of four per cent for necessities (eg. orthopaedic devices).
• A Frontier Surtax is equivalent to the internal manufacturing tax, may be applied in some cases.

Industry standards

Medical devices come under a series of three EU directives. The most comprehensive is the EU Medical Devices Directive (MDD). According to this directive, after new equipment has passed through the testing procedures in one country and has obtained CE marking, it can then be freely marketed through all European Economic Area (EEA) member countries without obtaining specific approval for each country. For Australian exporters, ISO 9001 certification is also recommended, as this will help you get the CE marking because the two have similar requirements.

Medical technology and device conformity is based on compliance with Quality Management Systems and harmonised standards, according to the European Association of Medical Device Manufacturers (Eucomed). Controls and requirements increase in proportion to the product risk, established through classification.

At the low risk end of the product spectrum (eg. simple metal instruments, crutches, tongue depressors) self-declaration of product conformity is the norm.

At a higher level, as specified in Article 16 of the MDD, devices must be tested and approved by Notified Bodies. These are private companies appointed by government authorities to certify conformity assessment procedures.

EU member countries and Australia have signed a bilateral agreement on medical device mutual recognition, aimed at promoting overseas trade. This means that Australian manufacturers can get CE marking in Australia prior to export, with testing and inspection proceedures carried out by the Therapeutic Goods Administration (TGA). Hospital and medical equipment that has been approved for sale in Italy is listed in the 'Elenco dei Presidi Medico Chirurgici', a list published every six months by the Health Ministry in the 'Gazzetta Ufficiale'.

Marketing your products and services

Market entry

It is imperative for Australian exporters to select a local partner (either an agent or a distributor) who understands the complexities of the Italian health system and can comply with existing purchasing practices.

In order to promote your products successfully you should:

• Emphasise your reliability
• Focus on the innovative technologies of your operation
• Local after-sales assistance and additional services will also be appreciated

Please note that advertising and promotional activities for pharmaceuticals and medical devices are forbidden by Italian law.

The major trade fairs in Italian healthcare are: Dia Biotech, Exposalute and MilanSana.

Distribution channels

The difference between private and public hospitals in procurement procedures is highly relevant. Private hospitals do not have the same legal restrictions as public ones. They simply operate as private companies. When purchasing products from well known international suppliers, most large private clinics and hospitals generally buy direct from the Italian branches, or through agents and local distributors. Providing technical assistance locally is vital and private hospitals are willing to pay a surplus for this service.

Azienda Sanitaria Locales (ASLs) have a more restrictive procurement procedure as they are part of the public administration. Once the yearly budget has determined the amount of money that can be spent on medical equipment the ASLs have two options:

• For sales contracts under €200 000 private negotations are allowed.
• For higher priced products or services the purchase is made through public tender.

A European Directive that the Italian Government has assimilated into its legislation regulates the tender procedures. There may also be further differences at a local level, since the regions enjoy a certain degree of freedom for public health management. Moreover, 98 large hospitals are autonomous in their management and purchasing system.

A common business practice is ‘commodatum’, or loan for use without pay, where medical equipment is leased to the ASLs or hospitals with a deadline to return to the supplier. Financial leasing came into use to overcome the slow replacement of obsolete medical equipment. It is unfortunately quite common for publicly owned hospitals to use outdated medical equipment, with appalling consequences in terms of medical risks and higher maintenance costs. ANIE estimates that 36.5 per cent of diagnostic imaging devices are over 10 years old.

Links and industry contacts

Hospital and medical–related resources

Medical Devices Directive - www.europa.eu.int

Government, business and trade resources for Italy

European Union - www.europa.eu.int
Italian Ministry of Health - www.ministerosalute.it
Italian Ministry of Health - www.sanita.it

Media

Medical journals are generally mailed directly to surgeries and hospitals. Their content varies according to readership and specialisations. Italy's most widely read newspaper, 'Corriere della Sera' has a healthcare supplement on Sundays. More information on the healthcare industry can sometimes be found in Italy's major financial and business newspaper, Il Sole 24 Ore.