Pharma’s economic footprint ‘equivalent to Argentina’
The pharma industry is often perceived as a cost on society but this view ignores the huge boost the sector delivers to the world economy, says a new report.
The study, which was commissioned by the International Federation of Pharmaceutical Industries and Associations (IFPMA), reveals that the industry increased its contribution to global GDP by 6 per cent annually between 2006 and 2012, reaching a total of $437 billion.
The global economic power of the sector ‘roughly corresponds to the economic performance of Argentina, and there are almost as many people employed in the sector as the total employed in all sectors in Belgium’, notes the report.
The aim of the study is to try to change the long-held perception of pharma as a cost driver and emphasise its ‘major role in boosting the global economy across regions’, according to the IFPMA, which commissioned German consultancy WifOR to conduct the research.
In 2012 the pharmaceutical industry accounted for 3.8 per cent of the gross value added – defined as the value of the output produced by a company less the value of its purchased materials and services – in manufacturing worldwide.
Drilling down into the data reveals some interesting findings. For example, Asia has the highest share of global direct gross value amounting to around $163 billion in 2012, ahead of both Europe ($134 billion) and North America ($105 billion). Six years earlier, Asia trailed Europe and North America by some margin.
Meanwhile, the North American industry – which employs 270,000 people – is well out in front in terms of labour productivity with an average of $387,800 per person employed in 2012, compared to $179,900 in Europe and an average across all territories of $98,300. Asia, which had the biggest share of gross value added and employment, had the second lowest apparent labour productivity at $54,400 per employee.
In fact, Asia was by far the biggest employer with more than 3 million workers, and there are signs that overall employment growth is accelerating, with the increase in 2012 (4.9 per cent) well above the average of around 3 per cent over the six-year period. Salaries seemed to be increasing much faster than the number of employees, according to WifOR.
The report “highlights a shifting perspective of pharma from a cost factor to a driver of growth, employment, health and last but not least wealth,” said WifOR chief executive Dennis Ostwald.
“These calculations of the pharmaceutical industry as part of the industrialised health economy represent the beginning of profound insights into the world economy,” he added.
The next version of the report will try to gauge the impact of pharma into other areas of society via indirect effects such as supplier contracting, and induced effects which result from the spending of incomes generated by the sector.
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