IW survey on "Germany's future industries"

 

The three industries of "Corporate Services," "Pharmaceuticals" and "Medical, Measuring and Control Technology" have the best future prospects out of 34 analyzed German industries. They benefit most strongly from expected technological and societal changes and have the best growth and development prospects. This is the result of the study "Germany's Future Industries" by Institut der deutschen Wirtschaft Köln Consult GmbH (Cologne Institute of the German Economy) on behalf of the German Association of Research-based Pharmaceutical Companies (VFA).

In the future, the increasing demand for health care services will be one of the most important growth drivers. While the top-ranking industry of "Corporate Services" benefits from its function as nerve center for the economy, the sustainability of the two other top industries is largely due to their ability to participate in the "health care boom." "The health care sector is a future field for the German economy," said Dr. Michael Hüther, director of the Cologne-based institute. "A meaningful networking of economic, research and health policy is urgently necessary for tapping this future potential on behalf of Germany as an industrial location," Cornelia Yzer, Director General of the VFA, added.

Survey methodology

The study analyzed the relevant macroeconomic indicators and growth drivers of the German industries and derived a ranking of the industries of the future. This quantitative analysis is supplemented by an expert survey on the industries' future potential among 70 economists, future researchers, corporate consultants and financial analysts as well as data from the IW Future Panel, a regular poll of about 3,500 companies by Institut der deutschen Wirtschaft Köln.

Corporate services: Nerve center of the economy

The most sustainable German industry is corporate services. This includes information technology, corporate consulting and service, financial services and real estate. Due to involvements based on advance performance, this very heterogeneous industry is closely connected with various manufacturing industries and serves as an important "nerve center" for the overall economic value chain. "Corporate Services are a strong driver of the ongoing tertiarization of the economy," Hüther explained. "This industry emerged as one of the winners from the structural change and is well prepared for the future." The high R&D intensity of many industry sectors, which should further increase based on its continuing specialization, also contributes to this development. However, based on its structure, the industry exhibits low growth in productivity and exports. Nevertheless, with regard to the analyzed macroeconomic indicators, it took first place among the 34 analyzed industries, primarily due to its strong employment growth over the past years.

Pharmaceutical industry: Strategic innovators with regulatory obstacles

According to IW Consult, the second-ranked pharmaceutical industry will be able to use technological progress particularly strongly for its own growth, especially innovations in gene and biotechnology. The above-average R&D orientation of the pharmaceutical industry also had a positive effect. Compared to the overall economy, pharmaceutical companies set long-term R&D budgets almost three times as frequently (62 percent) for strategic reasons. The change in demand based on demographic changes will also lead to very good future prospects. Employment trends show that the pharmaceutical industry is already benefiting from this change: From 2000 to 2005, the number of jobs increased against the trend by 14.4 percent. Particularly negative is the regulatory framework, which poses a greater-than-average obstacle to the pharmaceutical industry. While the industry gets best ratings for its sustainability, it ranks only in the lower middle (13th) in the assessment of the general framework. Especially increasing regulation of prices and distribution channels due to reference prices as well as set mark-ups for the individual trade levels have a negative impact. "Its framework jeopardizes the pharmaceutical industry, which is otherwise extremely sustainable. This expert vote should be taken as a warning by the politicians," Hüther said in commenting the results.

Medical, measuring and control technology: Technological leader with excellent prospects

Ranked third is medical, measuring and control technology (in short: MMC). Although the MMC industry was the only one of the three industries to record slight job cuts over the past few years, the added value developed positively during this time. Together with the pharmaceutical industry, the industry is among the sectors with the most intensive research effort and the most human capital. It benefits just as strongly from the growing demand for health care services and technological innovations. With a disproportionate share of innovators, the industry itself is the pacemaker of this progress. It operates in a very favorable environment: In a comparison, of the 34 analyzed industries, the experts rated the MMC industry best with regard to framework conditions. "MMC is clearly a sustainable industry that will be among the definite winners of globalization due to its strong internationalization," Hüther summarized the results.

Summary

The broadly designed industry analysis shows which factors are relevant for the sustainability of an industry. "This is primarily the ability to productively use the large technological and societal future trends and to convert them into marketable innovations," Hüther said. Yzer pointed out that the framework plays an important role in this respect: "The political arena must create the prerequisites, so that such innovations will come from Germany and go out into the world."

Stand: 16.04.2007