The impact of the innovative pharmaceutical industry in Europe: 46.2 billion euros of R&D investment and the creation of more than 2.3 million jobs
A report by PwC for the European Federation of the Pharmaceutical Industry shows that the pharmaceutical industry contributes an economic value to the EU of 311,000 million euros and is three times more productive than the European economy as a whole.
Of this contribution, more than 24,000 million corresponds to the pharmaceutical industry in Spain, which in turn provides more than 265,000 jobs, making it the fourth most productive country in the EU-27 in this area.
However, the report warns that, although pharmaceutical R&D in Europe has grown by an average of 4.4% per year since 2010, the US and China’s commitment in this field has been much greater, with growth of 5.5% and 20.7% in the same period.
The innovative pharmaceutical industry has become a strategic sector for the future of Europe, both for its impact on the health of the population and for the social and economic value that innovative medicines bring. It is precisely this last aspect that has been the focus of a report by the consultancy firm PwC for the European Federation of the Pharmaceutical Industry (Efpia) – to which Farmaindustria belongs – and which was published on Wednesday. The analysis, entitled The economic footprint of the pharmaceutical industry in Europe ( ), provides an in-depth analysis of the impact of the pharmaceutical industry on the European economy in each of the Member States and compares this impact on our continent with other regions of the world.
Specifically, the report shows a ‘strong and growing’ pharmaceutical industry that contributed a total of €311 billion gross value added (GVA) to the EU-27 economy in 2022, made R&D investments worth €46.2 billion and generated a total of 2.3 million jobs on the continent. ‘The pharmaceutical industry in Europe is highly productive, driven by consistently high levels of research and innovation investment, making the sector three times more productive than the European economy as a whole and more productive than other similar industries,’ says the PWC report.
Of the industry’s €311 billion contribution to the EU economy in terms of gross value added (GVA), the analysis shows that €163 billion is direct gross value added, €68 billion is indirect GVA through the European supply chain and €80 billion is induced GVA through employee spending. Between 2016 and 2022, this GVA contribution of the pharmaceutical industry increased by 6.9% per year.
Farmaindustria.es
The report also highlights how this sector generates 2.3 million jobs in the EU-27 economy, of which 633,200 are directly employed, 737,500 jobs indirectly through the supply chain and 924,200 jobs induced through direct and indirect employee spending in the economy. This contribution to employment in the EU has had an average annual growth of 2.2% between 2016 and 2022, according to the report.
In the case of Spain, the report notes that the pharmaceutical industry contributes a total of €24,002 million in gross value added (GVA) – being the seventh country in Europe with the highest contribution – and 265,325 jobs generated, which places Spain as the fourth European country in this section, only behind Germany, France and Italy.
The challenge of the USA and China in R&D
However, the industry is not without its challenges. The biggest caveat, according to the research, is the divergence in R&D investment between the EU and other parts of the world, with Europe failing in recent years to keep pace with the growth seen in the sector in Asia and the US.
According to the PWC report, Europe and the US had similar levels of R&D investment until 2014. Since then, the US has consistently invested the highest level of R&D in medicines, so the gap is widening. Specifically, in Europe, R&D investment in pharmaceuticals has grown by an average of 4.4% each year between 2010 and 2022, from €27.8 billion to €46.2 billion. Meanwhile, in the US, R&D investment in new medicines has grown by an average of 5.5% each year over the same period, from €30.7 billion to €71.5 billion. As for China, the report shows that while in absolute terms R&D investment has grown at a similar rate to Europe since 2010, the trend in China starts from a low base, so that relative growth is much higher than in Europe and the US in percentage terms. Thus, in China, investment in pharmaceutical R&D has increased by an average of 20.7% each year over the same period, from €1.7 billion in 2010 to €14.8 billion in 2022.
This growing gap in R&D investment between Europe, the US and China has already correlated – the research shows – with a relative decline in the number of new drug discoveries in Europe. The report highlights that in 2023, for the first time in history, China overtook the EU in the number of discoveries of new molecular entities (NMEs), new medicines with an active ingredient that are marketed for the first time and whose discovery is a key output of R&D activity.
