Tens of thousands of additional jobs in the pharmaceutical industry

 

The pharmaceutical industry in Germany has the potential of creating tens of thousands of additional jobs over the next 10 to 15 years, including many academic and highly qualified vocational positions. However, this job potential can only be tapped based on targeted measures to strengthen Germany as an industrial location. This is the result of two surveys on Germany as a site for the pharmaceutical industry, one of which was conducted by management consulting firm A.T. Kearney and the Fraunhofer Institute for Systems and Innovation Research, while the other was done by the Boston Consulting Group (BCG).

The first survey was commissioned by international research-based pharmaceutical companies with the support of the American Chamber of Commerce in Germany (AmCham Germany). The second study was commissioned by the German Association of Research-based Pharmaceutical Companies (VFA) and several renowned groups of companies. Both studies were presented today by the VFA and the AmCham Germany in Berlin.

"These results underscore how the German economy could benefit from the global growth market of health care, if it created a better framework for the research-based pharmaceutical industry," Cornelia Yzer, director general of the VFA, commented on the results. And Fred B. Irwin of the American Chamber of Commerce in Germany explained: "On a worldwide scale, the pharmaceutical sector represents an outstanding economic and growth factor with annual growth rates of eight to 11 percent. This is supported by the expanding health care market, which - in part due to demographic change - demands innovative solutions for increasingly pressing health problems such as diabetes and Alzheimer's disease."

The survey of the Boston Consulting Group (BCG) features important diagnoses and recommended measures regarding Germany as a location for the pharmaceutical industry: BCG has developed an innovation index (INIX) to compare the innovative power of the pharmaceutical, medical technology and health care IT industries in Germany with those in the United States, England, Sweden and the Netherlands. The product was analyzed and rated from three factors: spending for research and development (ideas), market environment and process quality - this includes the duration of authorization procedures but also the wage level. In comparison to the reference countries, Germany as a location for the pharmaceutical industry only occupies one of the lower ranks on the innovation index. In the United States, the pharmaceutical industry and the public sector invest more than EUR 135 per resident in research and development (R&D), compared to EUR 243 in Sweden and only EUR 95 in Germany. This deficit could be eliminated - with positive consequences for the job market: As a percentage, Sweden, which holds a leadership position on the innovation index with regard to pharmaceuticals, has twice as many employees in the pharmaceutical industry as Germany. If Germany succeeded in tapping the additional potential, more than 20,000 new jobs could be created in the pharmaceutical industry by the year 2015, according to the BCG survey.

Based on the analyses, BCG has developed recommendations for how the framework in Germany could be improved. These include:

• More public research funds for biomedicine: An additional EUR 900 million will be needed to make the field of research internationally competitive. A stronger focus should be placed on application-oriented research.
  
• Sponsoring of knowledge clusters across federal state lines: Support for the economy should focus on clearly defined segments and locations to promote the formation and usage of knowledge clusters.
  
• Improvement of the knowledge transfer between academic knowledge centers and industry based on the establishment of (possibly private) advice and coordination centers.
  
• Promotion of competition within and between universities as well as greater autonomy of knowledge centers by creating greater entrepreneurial freedom.
  
• Continued reform of the German Federal Institute for Drugs and Medical Devices (BfArM) with the objective of further accelerating authorization procedures and positioning the reformed institution as a leader.
  
• Greater leeway for the market pricing of new products: This will strengthen the companies' willingness to invest without using public subsidies.
  
• An improvement of the framework for venture capital, which would be beneficial especially for smaller companies.

The management consulting firm A.T. Kearney and the Fraunhofer Institute for Systems and Innovation Research have determined that the innovative pharmaceutical industry can considerably strengthen Germany as an industrial location. However, a substantial employment potential was not tapped in the past. If Germany had maintained its 1973 share in the global industrial R&D spending of 13 percent and not dropped to today's value of 7 percent, there would be about 35,000 additional jobs in Germany, 21,000 of them in research and development. These calculations are based on an input-output analysis with the Fraunhofer model ISIS.

A poll conducted as part of this survey shows that research-based pharmaceutical companies with headquarters outside of Germany can also disproportionately strengthen Germany as an industrial site:

• With a 30 percent share of academicians, these companies make a disproportionately high contribution to strengthening the German economy. The average of the overall economy is 15 percent. The share of women among the overall number of academicians is also disproportionately high at 50 percent.
  
• The polled companies employ 18,300 people and generate an additional 29,800 jobs externally, predominantly in sustainable service sectors for earlier production stages.
  
• With corporate training expenses worth EUR 1,300 per employee, the companies make a disproportionately high contribution to the information society. The average for the economy as a whole is about EUR 900.

A simulation by A.T. Kearney shows that an improved framework for research and development could generate about 27,000 new jobs in Germany over the next 15 years. A.T. Kearney recommends two approaches both of which propose to promote clinical research in Germany:

• Forming efficient infrastructures for clinical research. This requires organizationally independent professional study centers at universities, which should be set up similarly to the general clinic research centers (GCRC) in the United States. External funds provided by the industry for clinical trials should directly go to the research departments instead of disappearing in the general budget.
  
• Eliminating bureaucratic obstacles for clinical trials. In the future, authorization should lie in the responsibility of a single institution, which should possibly have to procure the expertise of other specialists. The duration of the authorization procedures should be limited by deadlines.

For the VFA and the AmCham Germany, these surveys show that it is not an impossible dream of bringing Germany back to the top among countries conducting pharmaceutical research. Instead, this objective, which is equally important for the high-tech job market and the technological significance of Germany, can be achieved through a relatively small number of measures. "To advance Germany, an ad-hoc program should be created that promotes clinical research according to both surveys and that professionalizes the knowledge transfer between academic and industrial research," Yzer said. "The way the VFA sees it, this program should also ensure that existing price intervention is replaced with free market pricing. Any additional improvement measures could build on this foundation."

A.T. Kearney/Fraunhofer Gesellschaft: "The Research-Based Pharmaceutical Industry as a Chance for the Business Location Germany" - A study on behalf of PhRMA (Pharmaceutical Research and Manufacturers of America), representative of leading pharmaceutical research and biotechnology companies in the United States, and the German LAWG (Local American Working Group), PDF, 1.62 MB

Stand: 08.03.2006