The Economic Contribution of the Pharmaceuticals Sector in Scotland

Fraser of Allander Institute; McGeoch, Adam and Spowage, Mairi and Black, James. (2021) The Economic Contribution of the Pharmaceuticals Sector in Scotland. University of Strathclyde, Glasgow.

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The pharmaceutical sector plays an important role in the Scottish economy. Our findings in the accompanying report show that the industry has grown since our previous economic analysis in 2018 and 2017. The number of direct jobs in the sector has increased, as has Gross Value Added (GVA), Gross Value Added per head (GVA per head) and the total value of exports. In National Accounts, the statistical classification of the pharmaceutical industry narrowly defines the sector as the manufacturing of pharmaceuticals. However, whilst manufacturing is an important part of the pharmaceutical sector, it is not the only component. A more comprehensive definition, which we refer to as the 'Wider Pharmaceutical sector', includes: * The manufacturing of pharmaceuticals; * Pharmaceutical research and development; and, * Other activities including medical sales, medical science liaison, management, etc. The wider pharmaceutical sector itself employs 5,600 full-time equivalent (FTE) jobs and, once spill over effects are accounted for, generates £1.8bn of Gross Value Added in Scotland. On its own, the manufacturing of pharmaceuticals employs around 4,000 people, with significant employment in rural areas. Additionally, it employs a large number of people in places such as North Ayrshire where income and employment deprivation are higher than in most parts of the country. All of which makes the pharmaceutical sector an important contributor to inclusive growth in Scotland. The sector has complex supply chains and every pound of value created by the pharmaceutical sector, in turn, generates further value and jobs. For every 10 jobs in the wider pharmaceutical industry a further 17 are supported in the wider economy. Moreover, the pharmaceutical industry, which makes up a significant part of the Life Sciences sector, has been identified by the Scottish Government as a key ‘Growth Sector’ in which they believe Scotland has a distinctive comparative advantage. In this report, we assess both the economic impact of the wider pharmaceutical sector and the impact of manufacturing pharmaceutical products. This analysis allows us to estimate both the direct contribution of these sectors to the Scottish economy and the wider spill-over effects across the whole economy. We estimate that, once wider spill-over factors are accounted for, the wider pharmaceuticals industry: * Directly employs 5,600 FTE jobs in Scotland; * Supports a total of 15,250 FTE jobs in Scotland; * Supports a total of £2.5bn in Scottish output; and, * Supports Scottish GVA worth £1.8bn.