The Italian biotechnology sector has made huge strides in the last few years, growing at rapid pace and currently generating an overall €16.3 ($23.9) billion in yearly revenues, of which €6.3 ($9.2) come from strict biotech sales. It comprises 260 companies- of which more than 190 are focused on the health care segment- whose R&D spending reached €1.5 ($2.2) billion in 2008. The largest number of firms (at least 40) are focused on Oncology, a field in which is ranked second only to the United States. Other fields such as Vaccines, Gene Therapy, Neurosciences and Cardiovascular Diseases have also been a longtime focus of leading-edge applied medical research. In terms of size, 75% of Italian companies are considered small enterprises, possessing fewer than 50 employees and having less than €10 million in annual sales. Italian biotech companies are also proving to be exceptionally strong in product development, with 136 compounds in clinical trials and 73 at the preclinical phase by the end of 2008. Of these products in trials 38% belong to the area of antineoplastics and immune modulators, 12% to CNS, and 7% to cardiovascular diseases and dermatology, while 40 of them have received “orphan drug designation” (7 from EMEA, 2 from FDA and 31 from both EMEA and FDA). In addition, approximately 49 compounds are in the discovery phase.

The following report hopes to acquaint potential investors with a spectrum of Italian locations where early stage companies are currently active or are forming. To that end, it will provide a brief analysis of the main science parks, research centers, universities and incubators in Italy which host researchers, ideas, business plans and which could therefore be the target of a careful investigation by potential investors. In fact, an important source of start-ups and new business in the Life Sciences is the extensive network of Science Parks and Business Incubators, which, thanks to the dynamic interaction among companies, research, finance and the local governments, has contributed to the creation of a growth oriented business environment. In addition, several public and private Research Institutes are present throughout the country, highly specialized in molecular technologies, biomedical technologies, neurosciences, cell biology, molecular immunology, molecular genetics, oncology, gene therapy. At least 95 companies out of 260 are located in these types of infrastructures. Also, several of the universities and institutes listed in this document have incubators or tech transfer capabilities and in 2008 they generated 44 spin-offs. Investors can find several start-ups and early stage companies inside these environments, and explore co-investment opportunities with existing financial backers.

The high quality of the research occurring in these infrastructures and the strength of Italy’s scientific community is well known. The Aspen Institute Italia, which recently carried out an analysis measuring the strength of Italian biomedical research vis-à-vis the one conducted in France, the UK and Germany (measured by Italian publications’ share of total output, growth rate and relative degree of specialization), found that Italy is a leader in most areas (particularly Oncology, Endocrinology, Gastroenterology, Urology, Pharmaceuticals) and is behind in Genomics and post-Genomics.

To provide a glimpse of Italy’s vibrant biotech entrepreneurial community, the report includes: brief profiles for a dozen early stage biotech companies, whose delegates presented at the most recent edition of the conference BioInItaly; a selection of the most recent and relevant examples (“success stories”) of alliances; collaboration agreements and investments between Italian life sciences companies or Universities and American counterparts will be provided.

The report will also furnish a selected list of venture capitalists in Italy. The country is still experiencing a significant lack of VC activity and the industry is rather immature compared to several European neighbors. However, there are several active VC funds, both private and public or a combination thereof, with which prospective foreign players could co-invest in early stage companies. Included in the list will also be the Italian Business Angels Association and The Italian Venture Capital and Private Equity Association (AIFI), whose members follow and fund entrepreneurs and could therefore serve as insightful local partners for foreign investors.

Examples of some additional sources of funding will also be furnished. For example, banking foundations, a traditional source of funding for education and science in Italy, have started to actively back the biotech industry through several initiatives. Furthermore, some regions most notably Lombardy, Emilia Romagna, Sardinia and, have started local private equity funds dedicated to the support of young and innovative companies.

Some information on the current programs administered by the Italian government to support the Life Sciences will also be included, such as its current flagship program Industria 2015 aimed at increasing the competitiveness of Italy’s industrial system in several strategic areas, one of which is the Biotech Sector. Within Industria 2015, for the period of 2007-2009 the government has allocated €150 million ($220) to the Life Sciences alone, while the strategic plan for this sector, aimed at defining themes and priorities to be addressed, is currently being finalized.

The report will outline the current government regime concerning Intellectual Property rights in the Life Sciences, which is covered by Law N. 78 of February 2006. As a founder member of the European Union, is at the forefront of European IP Rights developments and has some of the most modern and up-to-date IP practices in the world.

Finally, the report will conclude with a list of upcoming events featuring Italian Life Science companies, which present a great opportunity to meet Italian biotech researchers and entrepreneurs, as well as current investors.