Italy's healthcare system was rated as the second best in the world by the World Health Organization. Italy has a government-funded healthcare system, making the government the primary purchaer of medical equipment. Public hospitals account for over 75 percent of sales of medical devices, while the remaining 25 percent of sales are made to the private sector.
Italy's sophisticaled health system translates into demand for a broad range of cutting edge medical equipment. Italians are educated consumers and expect state-of-the-art medical treatment, which ensures continuous demand for innovative medical equipment and products. U.S. medical equipment is traditional well-received in Italy due to its perceived high quality. Prices are considered to be of primary importance in all purchasing decisions, both by the public and private sectors.
The Italian market for medical equipment is highly dependent on imports that reach a value of approximately U.S. $6.7 billion. Major suppliers are the United States, Germany, France and Japan. Domestic production is strong in areas such as radiology, cardiology equipment, implantable pacemakers, anesthesia equipment, respiratory apparatus, dialysis equipment and dental products ranging from instruments to dental chairs.
The Italian domestic medical device market (excluding dental and optical medical devices) is estimated at approximately U.S. $7.7billion (of which public hospitals account for 75 percent of sales) broken down as follows:
•U.S. $4 billion related to biomedicines (including telemedicine and health telematics);
•U.S. $2.2 billion related to invitro diagnostics (including laboratory technologies and monitoring devices);
•U.S. $1.5 billion related to electro-medical (including equipment and diagnostic systems for images and ultrasound, electro-medicine, Healthcare-IT solutions and technologies), as well as related services.
The National Healthcare System (SSN) was established in 1978 to provide essentially free medical care to the entire population. Therefore, the SSN is by far the major healthcare provider in Italy. The Ministry of Health, through triennial national health plans, establishes the fundamental objectives of healthcare, including preventive care, therapy and rehabilitation. It defines the level of healthcare guaranteed to all citizens and issues guidelines for the organization, delivery and funding of healthcare services paid by the SSN. The 20 Italian regions, which have the primary role in setting and implementing healthcare policies, are responsible for developing regional health plans, for organizing and delivering healthcare services, establishing operational guidelines and deciding on the level of funds to be transferred to the “Local Health Unit”. Regions control healthcare provision both through Local Health Units and Independent Public Hospitals. Regions also have the responsibility to determine the number of Local Health Units. The currently existing 195 Local Health Units are public structures with territorial responsibilities and with the role of delivering healthcare services either through public or accredited private structures, while guaranteeing quality and efficiency in patient service. The SSN receives its funding through the National Health Fund, appropriated every year through the Government of Italy budgetary legislation.
Public healthcare accounts for 80 percent of total expenditures for medical equipment and products, with the remainder being spent by private healthcare facilities. In addition, the SSN purchases a significant portion of healthcare services from private providers. The SSN has jurisdiction over 657 hospitals managed by 195 Local Health Units.
In addition, public healthcare manages 414,000 outpatient facilities, 4,793 residential facilities for the elderly and 5,128 other healthcare facilities. Private healthcare service providers account for 629 private and independently operated clinics of which 560 are credited and operate within the SSN. A geographic map of public and private health care institutions indicates that while public hospitals are very numerous in the northern regions and evenly distributed in central Italy, private clinics dominate in the South.
The private sector is generally fragmented, with many small, independent operators. Private clinics operate with more flexibility and have independent financial means, and can thereby circumvent the cumbersome purchasing procedures and the financial limitations faced by public hospitals. Some private clinics opt not to seek accreditation, as they usually work through conventions with private health insurers, company or industry health funds, and mutual assistance organizations. Their clientele is a relatively small but growing segment of people looking for immediate access to medical and surgical care with a high level of comfort. They probably represent the most interesting private market segment purchasing innovative equipment and services. Within the private sector, other players include diagnostic and specialized medical care providers, nursing homes, health insurers and group health organizations.
Public hospitals, which make up 60 percent of total healthcare institutions, account for 75 percent of total equipment purchases. A significant number of U.S. manufacturers of medical equipment are present in the Italian healthcare market. Some American suppliers maintain wholly owned subsidiaries in Italy and sell equipment imported from the United States or from plants in other foreign countries. There are also numerous American companies represented by local importers and distributors. Since U.S. technology and standards are generally highly regarded and recognized, American companies will maintain their excellent market position in the future. U.S. subsidiaries operating in the Italian market include: Boston Scientific, Baxter, Johnson & Johnson and St. Jude Medical.
The Italian government has implemented various EU directives related to medical devices, and U.S. companies must be prepared to comply with the rules. The following EU Directives are in force in Italy:
Active Implantable Medical Device Directive (90/385/EEC): Active implantable medical devices (AIMD), such as heart pacemakers or defibrillators are defined as “any active medical device which is intended to be totally or partially introduced, surgically or medically, into the human body and which is intended to remain after the procedure”.
Medical Device Directive (93/42/EEC): Medical devices are broadly defined as “any instrument, apparatus, appliance, material or other article, whether used alone or in combination, including the software necessary for its proper application intended by the manufacturer to be used for human beings”. Medical devices include syringes, bandages, wheelchairs, endoscopes, prescription glasses and contact lens solution among others.
In Vitro Diagnostic Device Directive (98/79EEC): An in vitro diagnostic device (IVDD) is a reagent, reagent product, calibrator, control material, kit, instrument, apparatus, equipment or system used in vitro for the examination of specimens, including blood and tissue donations, derived from the human body. This category covers such items as pregnancy test kits and blood analysis machines.
It is estimated that major multinationals and large companies use their own direct distribution networks and sales organizations for approximately 67 percent of their business turnover in Italy. The remaining 33 percent is sold through local agents who are becoming increasingly important, particularly in southern Italy. U.S. firms that decide not to have a direct presence in Italy usually operate through locally selected distributors that are well established throughout the country. The local distributors offer good technical and after-sales service, experience in the different market sectors, and can maintain person-to-person contact with customers. American companies interested in entering the Italian market should carefully select their potential distributors or agents and should also consider cooperative arrangements or joint venture/licensing agreements with Italian partners.
It is up to the Regional Governments to issue specific regulations governing procurement of medical equipment. Most purchases are made by public tenders open to both domestic and foreign companies.
All medical devices marketed in the EU must bear the CE mark to certify conformity with EU legislation. Member States have appointed certification authorities or “notified” bodies to grant these compliance certificates. Award criteria are normally based either on the lowest price or on the most economically advantageous quotations.
Proven knowledge of innovative technologies, availability of high quality solutions, and prompt maintenance and repair services are important criteria in purchasing decisions. Effective pricing strategies and high technological content are also key factors for success in Italy. The flexibility to meet clients' needs adequately is also extremely important.
Financing practices in this sector adhere to normal business standards and are usually handled by the banking sector. It should be noted that turnaround times for paying invoices are very long and range from 100 days in some northern regions to 500 days in the south. This situation often causes serious liquidity problems for the Italian importers/distributors, as their terms of payment with the U.S. are usually 30-60 days. The mark-up imposed by local distributors/importers varies from 60 percent to over 100 percent of the original selling price, depending on the value of the products.
The best sales potential for U.S. manufactured medical technology is in the following areas: high frequency medical lasers (for multiple applications), endoscopes and diagnostic imaging equipment, non-invasive and micro-surgery devices and equipment, anesthesiology equipment, monitoring equipment, telemedicine equipment and services. Good opportunities also exist in vascular X-ray equipment for cardiology and in the area of digital radiology. The market for ultrasonic medical devices has been growing at a steady pace.
IT healthcare products are also in demand. Products that improve the delivery of services by reducing medical errors and adverse medical events, or that increase patient safety and satisfaction, such as health information management systems, patient administration and clinical information systems, are all experiencing growth.
The majority of the third country import market in diagnostic imaging equipment is held by Siemens (Germany), which combines a leading edge in technology with a broad range of products and a very extensive sales and servicing network. Philips (Netherlands) is particularly strong in the sector of digital radiography and angiographies, CT, MR, ecography and radiotherapy. Toshiba (Japan) has been present for a number of years and has acquired a substantial market share with its complete line of diagnostic imaging equipment. Other key players are smaller companies with niche market products with very high technological content and are generally represented by local distributors and importers.
Market Issues and Obstacles
Companies interested in participating in public tenders must first qualify by submitting adequate evidence of their business experience and professional expertise. Bidding specifications normally include a detailed technical description of the product, as well as other requirements, such as the CE mark, safety standards, testing procedures, operation manuals and quality assurance. Award criteria are normally based either on the lowest price or on the most economically advantageous quotations.
The Government of Italy has implemented mandatory procedures for the registration of medical devices in Italy. All new–to-market medical devices to be placed in the Italian market must go through an on-line device registration process with the Italian Ministry of Health.
The system, according to the Ministry of Health, is intended to improve the previous registration procedures and also enhance device traceability. A registration number will be assigned to each medical device and the data bank will be used to generate a list of medical devices referred to as a "Repertorio" that are sold to the Italian National Health System (Servizio Sanitario Nazionale). Companies interested in selling to the Italian National Health System should be included in the "Repertorio".
As of February 2010 a new decree dated December 21, 2009, introduced changes in the registration procedures of medical devices in Italy as follows:
It is no longer mandatory for companies with a European Representatives outside of Italy to register Class 1 medical devices and assembled kits with the Italian Ministry of Health (MOH). The registration of medical devices classified as Class 1 and assembled kits are mandatory if the company's European Representative is located in Italy.
It is no longer mandatory to provide all the information requested in the Italian Register for medical devices (Repertorio) classified as Class I, Class IIa, IIb, III and Active Implantable Medical Devices. As specified previously, it will no longer be mandatory to register Class 1 medical devices and assembled kits in the Ministry of Health's website for companies with a European Representative located outside of Italy. As the registration can only be done with granted access to the Italian Database, and with the required “smart card” for the actual registration, it is strongly suggested that U.S. companies designate a third party (legal representative or compliance regulatory company) to register their product. A fee of euro 100 is required for the registration of each medical device with the same technical file (family of devices).
There are no other significant trade barriers or limitations on imports of U.S. goods. Technical specifications are essentially those established by the EU, which have been incorporated into Italian law. Official technical norms are issued by UNI, the Italian Standards Institute, and electrical norms are from CEI, the Italian Electro technical Standards Institute. Information on EU standards is available from the Commercial Service Office at the U.S. Mission to the European Union at the following address: 40 Boulevard du Regent, 1000 Brussels, Belgium, tel.: 32 2 5082746; fax: 32 2 5131228. The Italian institutions responsible for product standards and certification in Italy are listed in the contacts section below.