In Vitro Diagnostics (IVD) Products in Italy: A Strategic Reference, 2006
ICON Group International, July 2007, Pages: 256
How to Strategically Evaluate Italy
Perhaps the most efficient way of evaluating Italy is to consider key dimensions which themselves are composites of multiple factors. Composite portfolio approaches have long been used by strategic planners. The biggest challenge in this approach is to choose the appropriate factors that are the most relevant to international planning. The two measures of greatest relevance to in vitro diagnostics (ivd) products are “latent demand” and “market accessibility”. The figure below summarizes the key dimensions and recommendations of such an approach. Using these two composites, one can prioritize all countries of the world. Countries of high latent demand and high relative accessibility (e.g. easier entry for one firm compared to other firms) are given highest priority. The figure below shows two different scenarios. Accessibility is defined as a firm’s ease of entering or supplying from or to a market (the “supply side”), and latent demand is an indicator of the potential in serving from or to the market (the “demand side”).
Framework for Prioritizing Countries
Demand/Market Potential Driven Firm
Relative Accessibility
Accessibility/Supply Averse Firm
In the top figure, the firm is driven by market potential, whereas the bottom figure represents a firm that is driven by costs or by an aversion to difficult markets. This report treats the reader as coming from a “generic firm” approaching the global market - neither a market-driven nor a cost-driven company. Planners must therefore augment this report with their own company-specific factors that might change the priorities (e.g. a Canadian firm may have higher accessibility in Canada than a German firm).
Latent Demand and Accessibility in Italy
This report provides a detailed overview of factors driving latent demand and accessibility for in vitro diagnostics (ivd) products in Italy. Latent demand is largely driven by economic fundamentals specific to in vitro diagnostics (ivd) products. This topic is discussed in Chapter 2 using work carried out in Italy on behalf of American firms and authored by the United States government (typically commercial attachés or similar persons in local offices of the U.S. Department of State). I have included a number of edits to clarify the information provided. Latent demand only represents half of the picture. Chapter 2 also deals with micro-accessibility for in vitro diagnostics (ivd) products in Italy. I use the term “micro” since the discussion is focused specifically on in vitro diagnostics (ivd) products.
Chapter 3 is also a stand-alone report that I have authored. It covers proxy pro-forma financial indicators of firms operating in Italy. I use the word “proxy” because the provided figures only cover a “what if” scenario, based on actual operating results for firms in Italy. The numbers are only indicative of an average firm whose primary activity is in Italy. It covers a vertical analysis of the maximum likelihood balance sheet, income statement, and financial ratios of firms operating in Italy. It does so for a particular Standard Industrial Classification (SIC) code. That code covers “in vitro and diagnostic substances manufacturing”, as defined in Chapter 3. Again, while “in vitro and diagnostic substances manufacturing” does not exactly equate to “in vitro diagnostics (ivd) products”, it nevertheless gives an indicator of how Italy compares to other countries for a proxy adjacent category along various dimensions.
Chapter 4 deals with macro-accessibility and covers factors that go beyond in vitro diagnostics (ivd) products. A country may at first sight appear to be attractive due to a high latent demand, but it is often less attractive when one considers at the macro level how easy it might be to serve that entire potential and/or general business risks. While accessibility will always vary from one company to another for a given country, the following domains are typically considered when evaluating macro-accessibility in Italy:
Openness to Trade in Italy
Openness to Direct Investment in Italy
Local Marketing and Entry Strategy Alternatives
Local Human Resources
Local Risks
Across these domains, a number of not-so-obvious factors can affect accessibility and risk. These are covered in the Chapter 4, which is a general overview of investment and business conditions in Italy. Chapter 4 is also presented from the perspective of an American firm, though is equally applicable to most firms entering Italy. This chapter is also authored by local offices of the U.S. government, as is Chapter 2. Likewise, I have included a number of edits to clarify the provided information as it relates to the general strategic framework mentioned earlier.
1 INTRODUCTION & METHODOLOGY 1
1.1 What Does This Report Cover? 1
1.2 How to Strategically Evaluate Italy 1
1.3 Latent Demand and Accessibility in Italy 3
2 IN VITRO DIAGNOSTICS (IVD) PRODUCTS IN ITALY 5
2.1 Latent Demand and Accessibility: Background 5
2.2 Latent Demand: Market Composition 5
2.3 Latent Demand: Market Data 5
2.4 Accessibility: Market Entry 5
2.5 Key Contacts 7
2.6 Accessibility: Trade Event 7
3 FINANCIAL INDICATORS: IN VITRO AND DIAGNOSTIC SUBSTANCES MANUFACTURING 8
3.1 Overview 8
3.1.1 Financial Returns and Gaps in Italy 9
3.1.2 Labor Productivity Gaps in Italy 12
3.1.3 Limitations and Extensions 12
3.2 Financial Returns in Italy: Asset Structure Ratios 13
3.2.1 Overview 13
3.2.2 Assets - Definitions of Terms 13
3.2.3 Asset Structure: Outlook 16
3.2.4 Large Variances: Assets 17
3.2.5 Key Percentiles and Rankings 20
3.3 Financial Returns in Italy: Liability Structure Ratios 35
3.3.1 Overview 35
3.3.2 Liabilities and Equity - Definitions of Terms 35
3.3.3 Liability Structure: Outlook 37
3.3.4 Large Variances: Liabilities 38
3.3.5 Key Percentiles and Rankings 41
3.4 Financial Returns in Italy: Income Structure Ratios 54
3.4.1 Overview 54
3.4.2 Income Statements - Definitions of Terms 54
3.4.3 Income Structure: Outlook 57
3.4.4 Large Variances: Income 58
3.4.5 Key Percentiles and Rankings 61
3.5 Financial Returns in Italy: Profitability Ratios 76
3.5.1 Overview 76
3.5.2 Ratios - Definitions of Terms 76
3.5.3 Ratio Structure: Outlook 78
3.5.4 Large Variances: Ratios 79
3.5.5 Key Percentiles and Rankings 82
3.6 Productivity in Italy: Asset-Labor Ratios 97
3.6.1 Overview 97
3.6.2 Asset to Labor: Outlook 98
3.6.3 Asset to Labor: International Gaps 99
3.6.4 Key Percentiles and Rankings 102
3.7 Productivity in Italy: Liability-Labor Ratios 117
3.7.1 Overview 117
3.7.2 Liability to Labor: Outlook 118
3.7.3 Liability and Equity to Labor: International Gaps 119
3.7.4 Key Percentiles and Rankings 122
3.8 Productivity in Italy: Income-Labor Ratios 135
3.8.1 Overview 135
3.8.2 Income to Labor: Outlook 136
3.8.3 Income to Labor: Gaps 137
3.8.4 Key Percentiles and Rankings 140
4 MACRO-ACCESSIBILITY IN ITALY 155
4.1 Executive Summary 155
4.2 Fundamental Dynamics 156
4.3 Dynamics in Agriculture 156
4.4 Dynamic Markets 156
4.5 Government Intervention Risks 157
4.6 Infrastructure Development 157
4.7 Economic Relationship with the United States 158
4.8 The Political System 158
4.8.1 Political Risks for Agriculture 159
4.9 Marketing Strategies 160
4.9.1 Distribution Channel Options 160
4.9.2 Agents and Distributors 161
4.9.3 Franchising 162
4.9.4 Direct Marketing Options 164
4.9.5 E-Commerce 164
4.9.6 Leasing 166
4.9.7 Joint Ventures and Licensing Options 167
4.9.8 Creating a Sales Office 167
4.9.9 Advertising and Trade Promotion 167
4.9.10 Pricing Issues 175
4.9.11 Quotes and Payment Terms 176
4.9.12 Selling Strategies 176
4.9.13 Public Sector Marketing 177
4.9.14 Hiring Local Counsel 177
4.9.15 Performing Due Diligence 177
4.9.16 Marketing Agricultural Products 178
4.10 Trade Barrier Risks 179
4.10.1 Broadcast Directive and Motion Picture Quotas 179
4.10.2 Civil Aviation 180
4.10.3 Government Procurement 180
4.10.4 Customs Regulations, Tariff Rates, and Import License Requirements 180
4.10.5 Value-Added Taxes 181
4.10.6 Temporary Goods Entry Requirements 181
4.10.7 Special Import/Export Requirements and Certifications 182
4.10.8 Labeling Issues 182
4.10.9 Restrictions on Imports 183
4.10.10 Controls on Exports 183
4.10.11 Local Standards 183
4.10.12 Free Trade Zones and Warehouses 190
4.10.13 Adherence to Free Trade Agreements 190
4.10.14 Customs Contact Information 191
4.10.15 Warranty and Non-Warranty Repairs 191
4.10.16 Trade Regulations and Standards for Agriculture 191
4.11 Investment Climate 192
4.11.1 Openness to Foreign Investment 192
4.11.2 Right to Private Ownership and Establishment 193
4.11.3 Intellectual Property Risks 193
4.11.4 Laws Governing Intellectual Property Rights 194
4.11.5 Foreign Trade Zones and Free Ports 196
4.11.6 Taxation Issues 196
4.11.7 Performance Requirements and Incentives 197
4.12 Transparency of the Regulatory System 197
4.12.1 Corruption 197
4.12.2 Labor 198
4.12.3 Capital Market Risks 199
4.12.4 Conversion and Transfer Policies 200
4.12.5 Expropriation and Compensation 200
4.12.6 Dispute Settlement 200
4.12.7 Political Violence 201
4.12.8 Bilateral Investment Agreements 201
4.12.9 OPIC and Other Investment Insurance 203
4.12.10 Capital Outflow Policy 203
4.12.11 Major Foreign Investments 203
4.13 TRADE AND PROJECT FINANCING 204
4.13.1 The Banking System 204
4.13.2 Foreign Exchange Control Risks 205
4.13.3 General Financing Availability 205
4.13.4 Financing Export Strategies 205
4.13.5 Financing Options 206
4.13.6 Availability of Project Financing 206
4.13.7 Banks with Correspondent U.S. Banking Arrangements 207
4.14 Travel Issues 210
4.14.1 Local Business Practices 210
4.14.2 Travel Advisory and Visas 210
4.14.3 Work Week 211
4.14.4 Infrastructure for Conducting Business 211
4.14.5 Temporary Entry of Goods 213
4.15 Key Contacts 214
4.15.1 U.S. Embassy Trade Contacts 214
4.15.2 American Chamber of Commerce 216
4.15.3 Italian Government Agencies 216
4.15.4 Italian Trade Associations 219
4.15.5 Market Research Firms 226
4.15.6 Italian Commercial Banks 227
4.15.7 Contacts in Washington D.C. 229
4.15.8 U.S.-Based Multipliers Relevant for Italy 229
4.15.9 Agricultural Contacts By Industry 230
5 DISCLAIMERS, WARRANTEES, AND USER AGREEMENT PROVISIONS 247
5.1 Disclaimers & Safe Harbor 247
5.2 Icon Group International, Inc. User Agreement Provisions 248
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