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PhRMA-sponsored study outlines the economic effects of US-based operations
It’s routine these days to lambast the US pharma industry for expensive drugs—less frequently, observers stop to ask what is that revenue doing in terms of jobs and economic impact? PhRMA, with the just-issued report, gives some answers. The industry (defined as biopharma R&D, manufacturing, distribution and corporate offices) directly employed 853,818 in 2014, and had a direct effect of $558 billion on the US economy. (“Direct” impact includes revenue but also factors like value added to intermediate inputs, wage income and tax on personal income.)
The indirect effects include how much the biopharma industry supports in terms of inputs (of raw materials and services); a third element includes induced effects—the goods and services generated by the direct and indirect effects (for example, expenditures by wage earners in those categories). Cumulatively, the total impact is measured as 4.4 million jobs and $1.2 trillion, representing 3.8% of US GDP in 2014.
Research activity—the theme that PhRMA always emphasizes in its public statements—is highly concentrated in the industry, with 208,000 R&D employees (which doesn’t count outsourced research; including that brings the total to 342,808), internal investment in domestic R&D of $47 billion in 2013—two-thirds higher than the semiconductor industry, its closest competitor. “At a time when the economic competitiveness of our nation is recognized to be strongly rooted in our capacity to advance innovation-based industries, the US biopharmaceutical industry stands out as a leading advanced manufacturing industry,” pronounced PhRMA.
This study was performed by TEConomy Partners (Columbus, OH), which was formed recently by the principals of what had been the Battelle Technology Practice. While at Battelle, the researchers have performed a similar, biennial analysis of overall bioscience-related impact; the 2016 edition of that study will be published around when this year’s BIO meeting is scheduled (June 6-9, San Francisco).
One of the insightful elements of the PhRMA study is its inclusion of employment and economic impacts of activities downstream of the biopharma industry—specifically, distribution. According to the report, biopharma-related distribution represents 89.2% of the “druggists sundries merchant wholesalers” category of Census Dept. data (specifically, NAICS 4242)—that category adds 181,623 jobs, or 21.3%, to the biopharma total employment of 853,818.
The PhRMA report is available here.