pharmaceutical industry uk

8/7/2019 Pharmaceutical Industry UK

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The pharmaceutical

industrys contribution to

the UK economy and beyond

ABPI01_Brochure 05_V24.indd 1 16/11/10


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Executive SummaryBritains strong intellectual heritage in bioscience, the receptive commercialenvironment ostered by the PPRS, and a highly skilled workorce have, ormany years, allowed the UK generally and the NHS in particular to benetrom modern pharmaceutical discovery and development. Indeed, since 1948 when the Government established the NHS pharmaceutical companieshave worked in a highly successul partnership with politicians rom all sides,

policy makers and healthcare proessionals to ensure that the most eectiveinnovative medicines reach patients as quickly as possible.

For more than 60 years, this partnership has encouraged pharmaceuticalR&D, manuacturing and marketing in the UK. In turn, the pharmaceuticalsectors increasing importance bolstered the economy, generated high-qualityjobs, and supported local communities across the UK. The partnership hasled to a remarkably successul R&D programme that has produced numerousmedicines responsible or reducing mortality and morbidity, while enhancingquality o lie, or countless patients and has contributed heavily to Britainscollective scientic knowledge. The opportunity to participate in clinicalstudies keeps our UK-based healthcare proessionals at the cutting edgeo medical science and practice, as well as augmenting their knowledge,or the benet o all patients.



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An increasing contribution to the UK economyEconomists use Gross Value Added (GVA) to represent thecontribution made by businesses, industries or sectors to theUKs national income eectively an industrys contribution toGDP. To estimate GVA, economists measure output generatedby the business, industry or sector and deduct goods and

The pharmaceutical industry remains a jewel in the UKs scienticand industrial crown. This report helps to illustrate this point bysummarising the pharmaceutical sectors enormous contribution to theUK economy. Britains uture economic prosperity depends on osteringstrong, vigorous and well-supported knowledge-intensive industries.By most measures, the pharmaceutical sector is Britains most successulresearch-based industry. Indeed, pharmaceutical companies addmore economic value than any other sector.

services that producers use to create their output. GVAincludes labour costs and an operating surplus (or loss), whichmeets the cost o capital investment, inancial charges andshareholder dividends. Figure 1 shows that the GVA producedby the pharmaceutical sector has continued to rise overrecent years.

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

18,000

16,000

14,000

12,500

10,000

8,000

6,000

4,000

2,000

0

GVA

mperannum

Source: ONS Annual Business Inquiry1

Figure 1Economic value(Gross value added)

Pharmaceuticals

Motor Vehicles

Basic Chemicals

Medical andSurgical Equipment

The economic value of the pharmaceutical industry continues to rise



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Leading the fieldPharmaceutical companies are making an increasingcontribution to the UK economy. Indeed, the pharmaceuticalsector now makes a greater contribution than other high-techindustries.2 The pharmaceutical sectors relative importancebecomes even more obvious when the analysis considers

productivity that is: the Gross Value Added (GVA) generatedby each employee (igure 2). Pharmaceutical companiesmake important economic contributions throughout the UK.

Over 500 pharmaceutical organisations operate in Scotland(10% o which have academic links), employing approximately

30,500 people within the lie-science sector3. In theHighlands and Islands alone, medicine development andmedical technology employs 1,800 people and is worth130 million.4

The pharmaceutical industry makes the UK moreprosperous than would be possible if other industrialsectors used the same resources. In other words, thepeople and capital employed in the pharmaceuticalindustry earn more income for the UK than if they werein any other sector of the economy.



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Office equipmentand computers

Communicationequipment

Motorvehicles

Pharmaceuticals

200

160

120

80

40

52.0 52.758.6

192.1

0

GVAperhead/(1000)s

Figure 2GVA generated by each employee in various high-techsectors in the UK during 2008

Source: ONS Annual Business Inquiry, 20081

The pharmaceutical industry generatesa significant GVA per head

Case studyPharmaceutical companies contributionto regional economies

In addition to the direct eect o providing healthbenets to the population, the indirect eects o thepharmaceutical contribution are vast. During 2008,pharmaceutical-related businesses added nearly380 million to the gross value o the Scottisheconomy and contributed 1.34 billion to grossoutput. This regional investment was extendedthrough the employment o more than 11,000people in Scotland with salaries totaling in excesso 200 million. Many o these are high-value jobs:4people working in pharmaceutical companies andrelated businesses earn around 20% above theaverage level o gross wages and salaries in thewider Scottish economy.

The trading and manuacturing sector within the

pharmaceutical industry is estimated to contribute121,000 per employee to the gross output o theScottish ecomony.4

The pharmaceutical contribution is also extensive inWales: the 322 bioscience companies based thereemploy 15,000 people and contribute 1.3 billionto the regions economy. Likewise, in NorthernIreland, biopharmaceutical companies employapproximately 4,000 people.5



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Generating a positive trade balanceThe trade balance reers to the dierence between the valueo UK exports to other countries compared with imports romthem. A trade deicit means that the value o exports isinsuicient to pay or the country or sectors imports. In March

2010, the UKs trade deicit or all goods and services was3.7 billion in just one month.6In stark contrast, thepharmaceutical sector has, over the past decade,generated an ever-widening trade surplus (figure 3),reaching almost 7 billion in 2009.7 In act, in 2009, thepharmaceutical sectors contribution to the balance o tradewas the greatest o 9 major industrial sectors, up rom 5th in1975 and 3rd in 1990 (igure 4).8

In 2008, the pharmaceutical sectorscontribution to the balance o trade was

the greatest o 9 major industrial sectors,up rom 5th in 1975 and 3rd in 1990.8

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

18,000

16,000

20,000

22,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

UKpharmaceuticaltradebalancem

Source: OHE figure based on HM Customs and Excise data. The pharmaceutical sectors trade balance compared with other industrial sectors 8

Figure 3The pharmaceuticalsectors tradebalance

Exports

Imports

Trade balance

The trade balance is widening



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Figure 4The pharmaceutical sectors trade balance compared with other industrial sectors

*Sectors displayed are top and bottom 10 in terms of trade balance.

Source: HM Revenue and Customs, UK Trade Info7

Medicinaland

pharmaceuticalp

roducts

Powergeneratingm

achinery

Specialisedm

achinery

Chemicalmaterials

Iro

n&steel

Organicc

hemicals

Dyeing&

tanning

B

everages

Textiles

Metalworking

Furniture

Paper

Meat

Electrical

Misce

llaneous

Vegatables&fruit

Officem

achines

Telecommu

nications

Road

vehicles

Clothing

8

6

4

2

0

-2

-4

-6

-8

-10

-12

Tradebalance(bn)

The pharmaceutical industry generates a positive trade balance*



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Case studyAn open-innovationbiotechnology park

The pharmaceutical industry brings one o thehighest levels o innovation and development tothe UK. Working together with the UK Government,GlaxoSmithKline are helping to create a sciencepark or early-stage biotechnology research.In a 38 million partnership that includes theWellcome Trust, the Technology Strategy Board andthe East o England Development Agency (EEDA),the site aims to pioneer a new model o open-innovation that will allow companies to shareaccess to specialist skills, equipment and expertisewith the end goal o stimulating innovation inpharmaceutical development. In the longer term thenew centre could be home to up to 1,500 scientists.GlaxoSmithKline provided land, acilities and

investment worth almost 11 million and theWellcome Trust will provide a ur ther 6 million.Working together, the pharmaceutical industry isaiming to oster innovation and continue tocontribute to the health o the UK in terms o bothpatients and economics.9

The pharmaceutical industry employs 72,000people, 27,000 of them in R&D. The total numberof employees is fluctuating but R&D numbers arerelatively stable.10

Pharmaceutical R&D and manuacturing create manyhighly skilled jobs, both nationally and locally as well as

supporting local communities in many other ways. In 2008,pharmaceutical companies directly employed more than72,000 people,10 with over 200,000 more employedindirectly. However, while the numbers o people employed inpharmaceutical R&D in the UK is relatively stable, the totalnumber o employees is luctuating (igure 5).10 This all innumbers o non-R&D personnel relects a decrease in salesand marketing roles and a decline in pharmaceuticalmanuacturing in the UK.

Creating a significant spill-over effectThe UKs pharmaceutical sector invests approximately11.8 million every day in R&D (figure 6).11In act, thepharmaceutical industry invests more in R&D in the UK than anyother industrial sector. This investment does not only beneit

pharmaceutical companies the R&D investment made by onepharmaceutical company oten stimulates innovation elsewherein the sector or the economy more widely. Knowledge generatedby R&D can low rom one organisation to other companies inthe same sector: at the simplest level, scientists employed by thepharmaceutical sector share knowledge at congresses and in

1995 1996 1997 19991998 2000 2001 2002 2003 2004 2005 2006 2007 2008

90

80

70

60

50

40

30

20

10

0

Numbero

femployees(1000s)

Source: ONS Annual Business Inquiry and R&D Survey6

Figure 5The number of peopleemployed by the UKpharmaceutical sectorbetween 1995 and 2008

Total employees

R&D employees

62

59

55

6870

66

71

84

73 73

6871

67

72

1719 20

21 21

2527

2927 27 26

28

32

27

Employment in R&D is relatively stable



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publications. In many cases, the cutting-edge knowledge lowsto other sectors as well as public and charitable organisations.This spill-over eect generated by pharmaceutical R&D isestimated at between 120 million and 360 million a year.12

It is clear that the UK would be, literally, much poorer without

the pharmaceutical industrys economic contribution. Thepharmaceutical industry is part o our nations history andidentity one o the remaining jewels in the British scientiicand industrial crown.

Beyond medicinesBut the value extolled by the UKs pharmaceutical industryextends arther aield beyond developing mortality-reducing,lie-transorming, innovative medicines. The sector has amuch broader impact in the UK and beyond, rom extensivesupport o ongoing medical proessional education, to jointworking projects that help the NHS achieve better patientoutcomes, to supporting local communities or to partneringwith UNICEF to supply vaccines to the developing world.13

Medicines and the developing worldCompanies in the UK are among those leading the way inboth the eort and resources needed to tackle developing-world diseases. Many have established private-public healthpartnerships and work closely with governments across thedeveloping world to secure universal access to healthcare or

2000 2001 2002 2003 2004 2005 2006 2007 2008

5,000

4,500

4,000

3,500

3,000

2,500

1,500

1,000

2,000

0

m

R&D expenditure continues to rise

Other current

Source: OHE calculations based on R&D in UK businesses (ONS)14

Figure 6Composition of UK pharmaceutical R&D expenditure

Salaries and wages Capital

all. The emphasis o those public-private partnerships is onbuilding local capacity to reinorce local health services.Moving beyond the supply o medicines, companies areproviding training or health workers, education programmes,logistical inrastructure and research into neglected diseasesas part o a wider strategy supporting poorer countries.

In the UK, ABPI members work closely with InternationalHealth Partners (IHPUK), a dedicated charity providingmedicines to developing countries and countries aected bynatural disaster. This partnership, or instance, succeeded insecuring vital supplies o medicines within days ollowing theHaiti earthquake, and IHPUK have so ar secured over 7million worth o medicines to reach the victims o loodsin Pakistan.

In partnership with the NHSIncreasingly, pharmaceutical companies work with theNHS to ensure local health priorities are met, patientoutcomes are improved and local NHS organisations canmeet their objectives. Guided by appropriate governance,

including the ABPI Code o Practice, these joint-workingprojects ensure a win: win: win or patients, the NHS andthe industry.



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The Pharmaceutical Oncology InitiativeThe Pharmaceutical Oncology Initiative (POI) oers a strikingexample o a partnership that supports the NHSs strategicobjectives and ensures that as many cancer patients as possiblereceive timely treatment. The POI aims to ensure that everycancer patient in the UK can access the most appropriate

medicines at the most appropriate time or each malignancy.The POI believes that everyone in the UK should have the bestpossible chance to ight cancer regardless o where patientslive. Indeed, the POI believes that survival among the UKscancer patients should be comparable to the best in Europe.15

Working with patientsThe pharmaceutical industry is strongly committed to helpingpatients to participate ully in decisions about their care and, asar as practicable, sel-manage chronic conditions. Providedcompanies ollow strict guidelines, they can support disease-awareness programmes, work with patient groups and undspeciic patient-support programmes. Through theseprogrammes, pharmaceutical companies have gainedconsiderable understanding o, and knowledge about, the

everyday health issues that patients ace: valuable insights thatin turn help these companies to develop medicines that evermore closely meet patients needs.

Indeed, many initiatives supported by the pharmaceuticalsector directly or indirectly support expert patient programmes.These programmes increase patients conidence that they canmanage their disease, as well as helping improve quality o lieand clinical outcomes. Furthermore, GP consultations,attendances at Accident & Emergency departments, andoutpatient appointments can decline among patients thatparticipate in expert patient programmes.16

Case studyC-PORT supports Cancer Networks15

The Pharmaceutical Oncology Initiative (POI), agroup o pharmaceutical companies with an interest incancer, worked with the National Cancer Action Team

and NHS Improvement to develop the ChemotherapyPlanning Online Resource Tool (C-PORT). Launchedduring 2007, C-PORT is a web-based simulator thatenables cancer units to eectively plan capacity andimprove access to medicines. Most Cancer Networksand more than 100 hospitals have now implementedC-PORT, supported by NHS and industry acilitators.By March 2009, the NHS had run more than 2,800simulations through C-PORT.

Users input key variables such as treatment regimens,patient fows, resource levels and working methods and the system models the number o patients whocan receive chemotherapy, estimates waiting times

and identies how to optimise the use o availableresources. C-PORT, which has won numerous awardsor innovation and joint working, enableschemotherapy units to review resources, model theimpact o changes in resource utilisation andunderstand the consequences o investment decisionsand choices.

For example, the West London Cancer Network usedC-PORT to help save 1,299 hours o nursing time and2,184 hours o chemotherapy time over six-months byinvesting in new sta and introducing more-ecientpractices, including transerring some services to thecommunity. The Norolk and Norwich University

Hospitals NHS Foundation Trust used C-PORT to helpachieve an 11% productivity increase withoutadditional resources. Beore using C-PORT, thenetworks workload was high but inconsistent, whichmade planning dicult. The trust used C-PORT tomodel various scenarios, such as pharmacy preparingregimens a day ahead, which allowed treatmentearlier the ollowing day, rearrangingnurse shits, and smoothing patients appointments toavoid an infux at one time. Ater instigating thechanges, patient capacity increased rom 880 to over1,000 per month. Despite being near maximumcapacity, the unit managed the greater caseloadwithout increasing resources. Furthermore, delays

declined and the unit elt less congested.The POI is just one o numerous joint-working projectsbetween pharmaceutical companies and the NHS.



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Furthering educationThe pharmaceutical industry also believes in the importanceo enhancing education, stimulating academic research andimproving the skills o patients and healthcare proessionals.

Some o the basic science that orms the oundation o

modern medicines lows rom academic research. GSK hascompounds that do not it into the companys traditional R&Dstructure. By giving university researchers a project leadershiprole, GSK hopes to improve on the traditional way in whichindustry accesses academic expertise. Academic researchersinvestigate a pharmaceuticals undamental properties, whichmay reveal potential uses that pharmaceutical companiesmight have overlooked.17 Many pharmaceutical companiesalso work with schools and universities to oer trainingopportunities through graduate and intern programmes, aswell as PhD and post-doctoral opportunities within a ullyresourced commercial environment.

Many pharmaceutical companies help enhance speciicclinical skills. In one case, the East Anglia Ambulance NHS

Trust worked with Boehringer Ingelheim in a programmewhere experienced thrombolytic nurses trained ambulanceparamedics to use this lie-saving intervention in heartattack patients.18

More widely, pharmaceutical companies also und leadership,coaching and team-building projects and help developcommunication and presentation skills or NHS cliniciansand managers.18

Case studiesStrength in working together

To deliver the best possible treatment or patients,the pharmaceutical industry and the NHS havecome together to develop programmes that benet

all parties. The ABPI Outreach Programme, whichwas set up in 2006, aimed to establish at least ninejoint-working projects between NHS organisationsand pharmaceutical companies in areas that theNHS regarded as high priority:

Inforce(IndustryandNottinghamNHSFocusonReducing COPD Exacerbations) aimed at reducingthe number o avoidable admissions to hospital orCOPD exacerbations and related illnesses. Anaudit identied cases where sub-optimal care mighthave contributed to the exacerbation. Based on thendings, the joint-working project redesigned carepathways and guidelines, developed a detailed

primary care education programme or healthcareproessionals and introduced personalisedsel-management plans or patients.19

EastLincolnshirePrimaryCareTrustcollaboratedwith GlaxoSmithKline, Boehringer Ingelheim andPzer to target COPD. The programme involvedpatient screening, training o clinicians and set-upo COPD clinics. The Primary Care Trust and thethree pharmaceutical companies jointly unded theproject and successully managed to reduce thenumber o admissions or COPD by 23%.20

Joint projects are becoming increasingly popular astheir success is observed. GlaxoSmithKline also

worked together with Salord Primary Care Trust todevelop and implement a best-practice COPDmanagement guideline, a bespoke healthproessional educational programme and anautomated patient audit tool.To date, improved care avoided an estimated 792hospital admissions, saving 167,000 and ultimatelydelivering better patient care.



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Case studiesImproving medicines use amongstthe elderly

Many elderly people suer multiple health issues.As a result, elderly patients o ten take severalmedications (polypharmacy), which increases therisk o adverse events and raises the prospect opotentially hazardous interactions betweenpharmaceuticals. In order to address this issue,a consortium o 11 pharmaceutical companiesworked with the Head o Medicines Managementin Somerset PCT to develop and deliver a medicinesreview service called MedCheck or elderlypatients who are taking numerous medicines ormultiple conditions when discharged romcommunity hospitals. MedCheck aims to reducemedicines waste and readmissions caused bymedicine-related complications.

Partnerships between the pharmaceutical industryand the NHS, like MedCheck, have been shownto be successul in bringing benets to patients andthe NHS. A urther example o such a successulprogramme can be seen in a pilot study, whichevaluated the value o employing an intermediatecare pharmacist and involved 30 patients admittedto two community hospitals in Somerset.Pharmaceutical companies helped und thepharmacist and provided project managementexpertise, while the PCT provided pharmacy skills.

Experiences gained during MedCheck and the pilotpharmacist study resulted in recommendations to

the PCT regarding ways to improve commissioning;ideas on how to improve communication systems,policies and procedures; and the importance oencouraging the wider use o medication remindercharts. The PCT became a pilot or the Care QualityCommission inspection that evaluated post-discharge procedures.

Supporting local communitiesNumerous companies support initiatives that aim to help their

local community. For example:As part o the Novartis Community Partnership Day

each year, employees participate in a variety o initiatives,ranging rom painting a local youth club, gardening at aschool, painting and decorating at a local hospice toundraising activities to raise money or local charities21

Pfizers Reaching Out and Health Relief programmesencourage colleagues to take up to ive days paid leave ayear to volunteer. These programmes not only supportcharities and other stakeholders through practicalvolunteering skills, but also in more innovative ways,allowing colleagues to ocus on transerring business skills22

The Pfizer UK Foundation supports groups working at acommunity level to tackle local inequalities and to date has

provided over 6m to 219 groups ranging rom communitygroups and local and national charities to the NHS andlocal authorities. It also ocuses on helping these groups ona practical level, by providing opportunities and platormsor groups to showcase their work, share learnings andnetwork with a view to building capacity, replicating successand maximising impact22

Abbotts Caring for our Community programme hasproved to be mutually beneicial: providing local not-or-proit groups with much needed help and resources, whilstallowing employees to apply their skills and knowledge toimprove local communities through teambuilding projects23

Pulse the GlaxoSmithKline Volunteer Partnership allows highly qualiied sta to work with a chosennon-governmental organisation or up to six months.

Furthermore, through the companys Orange Day initiative,all sta can take one day paid leave a year to oer theirtime, knowledge and skills to local community projects24

Napps Ambassador Scheme helps local schools with theteaching o science and engineering, creating un andinspiring science experiences or young people as part othe national Science, Technology, Engineering and MathsNetwork (STEMNET). Napp employees, acting asAmbassadors, are allowed up to ive days paid leave eachyear to support local schools.25



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Delivering more than medicinesThere is no question that the pharmaceutical sectordelivers more than just medicines. Medical innovation andcommercialisation are, o course, at the core o thepharmaceutical sectors business. Nevertheless, thepharmaceutical industrys responsibilities extend ar beyond

discovering and developing new medicines. Pharmaceuticalcompanies help enhance clinical and other management skills

in the NHS, improve eiciency and perhaps most importantlyhelp to empower patients. As a leading UK industry,pharmaceutical companies also support national and localeconomies. Most pharmaceutical companies play an activeand positive role within their local community. Engaging withlocal people, the NHS and other stakeholders helps the

pharmaceutical sector ensure that companies continue toaddress societys evolving needs.

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References1.ONS Annual Business Inquiry.2. http://www.abpi.org.uk/statistics/section.asp?sect=23. Department or Business, Innovation and Skills (BIS). BIS Economics Paper

No.2. Lie Sciences in the UK Economic analysis and evidence or Lie Sciences 2010: Delivering the Blueprint. January 2010.4. Contribution o Pharma-RelatedBusinesses to the Scottish Economy 2008 Update or ABPI Scotland.5. Invest Northern Ireland L ie Sciences January 2007.6. http://www.statistics.gov.uk/cci/nugget.asp?id=1997. HM Revenue and Customs, UK Trade In o.8. OHE igures based on HM Customs and Excise data.9.http://us.gsk.com/html/media-news/pressreleases/2009/2009_pressrelease_10108.htm10.ONS Annual Business Inquiry and R & D Survey.11.www.abpi.org.uk/statistics/section.asp?sect=312.Garau Mand Sussex J Estimating Pharmaceutical Companies Value to the National Economy Case Study o the British Pharma Group OHE 2007.13.Stphenne J The new globaleconomics o vaccines: will the scientiic potential be realised? OHE 13th Annual Lecture November 2006.14.OHE calculations based on R&D in UK businesses (ONS)15.http://www.swmit.nhs.uk/SWMSP_Project.htm16.http://www.dh.gov.uk/dr_consum_dh/groups/dh_digitalassets/@dh/@en/documents/digitalasset/dh_4107100.pd17. http://www.gsk.com/responsibility/global-health/contributing-scientiic-understanding.htm18.www.abpi.org.uk/publications/pds/jointworking_05.pd19. http://www.abpi.org.uk/press/press_releases_08/030608.asp20. MISG Long-term Leadership Strategy, February 2007.21. http://www.novartis.co.uk/corporate_citizenship/uk_community_programmes.shtml22. http://www.pizer.co.uk/sites/PizerCoUK/OurResponsibility/Pages/Communityengagement.aspx23. http://www.abbott.co.uk/community/caring_or_our_community.asp24. http://www.gsk.com/community/employee_involvement.htm25. http://www.napp.co.uk/AboutUs/Pages/Givingback.aspx26. OHE calculations based on IMS World Review data27. PPRS reports to Parliament 6th and 10th editions.

In summary

Thepharmaceuticalindustrydelivers signicant direct andindirect economic benets,providing more economic valuethan any other industry sector

Thepharmaceuticalindustryscontribution extends ar beyonddiscovering and developing

new medicinesClosepartnershipsbetweenthe

industry and the NHS will improvehealth outcomes.



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The value of the pharmaceutical industry

in the UK

The pharmaceutical industry delivers a signi cant contribution tothe UK economy and the population as a whole. As an industry,UK R&D is responsible or producing around 16% o the worldstop-selling medicines,26 and provides medicines to UK patients atsome o the lowest prices in Europe.27 It brings to the UK greater

economic bene t than any other technology-based industry.2 Itsgreatest impact, however, is clear to see in the overall improvementin the health o the UK population.

ThepharmaceuticalindustryintheUKhasconsistentlycontributed to the health and economy o the nation

ThepharmaceuticalindustryintheUKmustremainaworld leader

Thepharmaceuticalindustryisworthinvestinginforthefuture

The Association of the

British Pharmaceutical Industry

12 Whitehall

London SW1A 2DY

Telephone: +44 (0)870 890 4333

Email: [email protected]

Website: www.abpi.org.uk

pharmaceutical industry uk

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