Pharmaceutical Manufacturing; Dr Stan Higgins Examines the Real Value

The Journal (Newcastle, England), June 27, 2013 | Go to article overview

Pharmaceutical Manufacturing; Dr Stan Higgins Examines the Real Value


Byline: Stan Higgins

THE importance of pharmaceutical manufacturing to the North East and ultimately the UK economy cannot be underestimated but at the same time poor R&D performance of the sector could be a disaster for the industry states Dr Stan Higgins of NEPIC who represents the pharmaceutical manufacturing companies in the region.

The Association for the British Pharmaceutical Industry (ABPI) reports that there are some 67,000 jobs in the pharmaceutical industry in the UK and that those employed in the sector generate one of the highest value contributions to our economy of PS206,000 per employee.

This data alone means that the 11,000 pharmaceutical related workers in the North East are contributing some PS2.2 billion of Gross Value Added (GVA) to our economy, but due to the way the mainly multinational companies record and report their results we do not see this level of contribution landing in our region.

In fact, the economic contribution of this sector is way ahead of the contributions made from the employees of other high value adding sectors such as the engineering, automobile and aerospace sectors - the automobile sector for example contributes around PS80,000 GVA per employee; almost two thirds less.

If you analyse the pharmaceutical data a little more closely you can see that the contribution being made by the manufacturing employees of the Pharmaceutical sector must in fact be far higher than is recorded.

This because of the 67,000 pharmaceutical employees we have in the UK, 25,000 of them are researchers. I am afraid in the value chain terms these individuals in R&D spend money rather that make it, particularly in the short and medium term. For too we have much on service finance sectors In fact recently, as the pharmaceutical new product pipeline shows, the R&D performance of most pharmaceutical companies has been abysmal, with fewer new drugs coming to market today than ten years ago. So in fact it is the 42,000 manufacturing related UK employees that make the money for the sector.

Logic tells us that the actual GVA that these employees generate is closer to PS382,000 of GVA per employee.

This makes the value created by each of the 11,000 pharmaceutical workers in the North East region closer to PS4 billion per annum and much closer to the bottom up figures we collect in the Cluster.

So let's cross check this PS4 Billion of GVA number - those working in the industry know that one third of the UK's pharmaceutical manufacturing industry is based here in the North East. …

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