Investment in Pharmaceutical R&D
The Pharmaceutical Research and Manufacturers of America (PhRMA) recently mentioned that R&D investment in the pharmaceutical industry is making a significant contribution to the United States’ economic growth and global competitiveness.
According to its recent report, its 56 members’ R&D investment totaled US$58.8 billion last year, up 10.3% from a year ago. The amount was equivalent to 18.3% of their total annual sales whereas the ratio stood at 3.0% in the overall manufacturing sector during the same period. The report added that the R&D investment in the pharmaceutical industry rose by 25% between 2000 and 2012, when the ratio of R&D investment to sales increased 14.6% in the semiconductor industry, 11.9% in computer and electronics, 7.3% in medical equipment, 6.5% in chemical and 6.2% in aerospace.
Such an aggressive R&D investment in the pharmaceutical industry led to direct employment of 850,000 persons and indirect employment of 3.6 million persons. In addition, the average annual salary of those directly employed by American pharmaceutical companies amounted to US$123,000, more than double the average of manufacturing sector employees as a whole. According to the report, the economic effect in the United States derived from the pharmaceutical industry is US$1.2 trillion a year and its pharmaceutical product exports totaled US$47 billion last year with an annual growth rate of 9.9%.
R&D investment by pharmaceutical companies is on a rapid increase in South Korea, too. Last year, 96 listed companies recorded a total R&D investment of 1.2 trillion won, up 12.4% from a year earlier. According to the Korea Health Industry Development Institute, South Korea’s pharmaceutical exports increased 22% year on year to US$2.95 billion in 2015, when its pharmaceutical imports fell 5.1% to US$4.94974 billion. This implies South Korean pharmaceutical companies’ efforts to replace imported drugs with those developed by themselves are bearing fruit.
According to the Financial Supervisory Service, the pharmaceutical and bio industry of South Korea recorded an employment growth of 3.7% in 2015 whereas 44% of listed South Korean companies reduced their employment and the machinery and component manufacturing sector reduced its size of employment by 3.9% during the period. 34,899 persons worked for 55 listed pharmaceutical companies in South Korea last year while the number had been 33,555 in the previous year. The Korea Health Industry Development Institute recently estimated that the domestic pharmaceutical industry’s annual employment demand would increase from 125,000 to 160,000 between 2014 and 2024.