Measurementof theeconomic impactrelating tothe pharmaceutical industry’s Mani JunejaLukas MaiDr.Nora Albu ImprintVersionNovember 2024 ClientInternational Federation of Pharmaceutical Manufacturers & Associations (IFPMA) AuthorsMani Juneja | WifOR Institute Lukas Mai| WifOR InstituteDr. Nora Albu| WifOR Institute ContactManiJunejamani.juneja@wifor.com WifOR InstituteRheinstrasse 2264283 Darmstadt, Germany Scientific Director of the InstituteProf. Dr. Dennis A. Ostwald Head of ImpactAnalysisDr. Richard Scholz Appreciation This project was commissioned by IFPMA. WifOR does not conduct research for advertising, promotion, or to support our clients' interests, in-cluding raising investment capital, recommending investment decisions, or for any use in litigation.This report was prepared by WifOR fortheInternational Federation of Pharmaceutical Manufacturers& Associations (IFPMA). WifOR always strives to produce work of the highest quality in accordance TABLE OF CONTENTS 1Introduction......................................................................1 2Economic impact of the pharmaceutical industry...........5 2.1Economic Impact..................................................................52.2Impact of R&D activities......................................................12 3Conclusion.....................................................................16 FIGURE INDEX Figure 2: Trend of direct GDP contribution (represented by bluebars) and annualgrowth rate of the global pharmaceutical industry (represented by red Figure 3: Direct and spillover GDP contribution effects of the global pharmaceuticalindustry in 2022.......................................................................................8 Figure 4: Direct and spillover employment effects of the global pharmaceuticalindustry in 2022.......................................................................................9 Figure 5: Treatment of R&D before and after the revision of the System of NationalAccounts................................................................................................12 Figure 6: Direct GDP contribution effects of the R&D activities of the globalpharmaceutical industry in 2022............................................................14 Figure 7: Direct employment effects of the R&D activities of the global pharmaceuticalindustry in 2022.....................................................................................15 Figure 8: Technical approach and coverage for updating the direct impact of the global Figure 9: Technical approach for the direct GDP contribution.....................................20 Figure 10: Technical approach for the direct employment...........................................20 Figure 11: Economic impact model: direct, indirect and induced effects.....................21 Figure 12: Components of upstream calculation..........................................................23 Figure 13: Income approach to estimate GDP contribution.........................................24 Figure 14: Technical approach for estimating data for R&D Labor cost of employees in2022.......................................................................................................25 Figure 15: Technical approach for estimating data for R&D employees in 2022.........26 TABLE INDEX Table 1: Top ten industrial suppliers of inputs to the pharmaceutical industry and topten industrial buyers of intermediate goods from the pharmaceutical Table 2: Growth of labor costs and employee compensation in the global Table 3: Data sources by region for direct GDP contribution.......................................27 Table 4: Data sources by region for direct employment...............................................30 EXECUTIVESUMMARY Objectiveand main results This report was commissioned by theInternational Federation of Pharmaceuti-cal Manufacturers & Associations (IFPMA).IFPMA represents the innovativepharmaceutical industry at the international level and in official relations with the The projectaimsto measure the economic impact relating to the pharmaceuti-cal industry’s global economic and R&Dactivities andfollowson thestudydonein 2020 by the WifOR Institute.Thestudyfrom 2020estimatedtheeconomic The main aim of this studyisto estimate theeconomicimpact of theglobalpharmaceutical industry.Respectively, thestudyquantifiestheeconomic valuein terms ofthe gross value added (GVA), i.e., contribution to Gross Domestic This study is based on public national statistics from statistical officesandotherpublic sourcesto calculate the direct effectsforGDP contribution and employ-ment.In addition to the updated data to estimate the direct effects, theinterme-diate consumptionof the global pharmaceutical industrywas alsoestimated for2022 using national statistics and other public sources.Thisdatawasthenused MAINRESULTS THE PHARMACEUTICAL INDUSTRY CONTRIBUTED A TOTAL GDP OF THE PHARMACEUTIC