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By Robert G. Bell

Robert BellA recent survey and report by PhRMA and Battelle indicates that pharmaceutical executives believe there will be strong growth in R&D and manufacturing but that fewer workers would be needed as “efficiencies” in R&D and manufacturing take hold in the next 10 years.

Pharmaceutical executives were surveyed for their best-case, most likely case, and worst-case views and projections for the future growth probabilities of U.S. and global pharmaceutical industry across R&D and manufacturing activities for the next 10 years. These different potential futures for domestic growth in pharmaceutical R&D and manufacturing activities are dependent on policy choices made in the United States regarding coverage/payment to encourage innovation, regularity systems, and intellectual property. The report’s authors developed a statistically adjusted or normalized distribution of future growth probabilities based on the distribution of these future growth rates and how much, on average, the individual scores varied from the current trajectory. The distributions were used to give an estimate of the probability of observing different growth rate scenarios in the pharmaceutical industry over the next 10 years.

According to the survey, current U.S. R&D expenditures and manufacturing output are expected to grow modestly over the next 10 years: 19% in domestic pharmaceutical R&D activities and 21% in domestic biopharmaceutical manufacturing activities over the next decade.  However, while pharmaceutical production is projected to grow, fewer workers will be needed as efficiencies in productivity are achieved across all manufacturing industries. This will result, under the “status quo” scenario, in a potential decrease of 4.5 percent in industry employment, which equates to over 140,000 total jobs lost across the U.S. economy over the next decade. This current trajectory is the growth rate with the highest statistical likelihood of occurring based on the executives’ responses, and it can be interpreted as their expectation of future growth levels given the present market information. Per the report, this is lower than the industry’s job growth rate of about 4.3 percent over the past 10 years and would lag behind the 4.8 percent projected growth of pharmaceutical manufacturing jobs forecast by the U.S. Bureau of Labor Statistics over the 2012–2022 period, suggesting a somewhat pessimistic view from industry executives as to the current trajectory of the business operating environment in the United States.

Regardless of this view, the United States is still the leader in innovation and intellectual property. The responses provided by the pharmaceutical industry executives underscore the changing global environment and the extent to which U.S. competitors such as China, India, and Brazil are actively seeking to improve their comparative advantage. The survey findings should serve as a “wake-up call” to the United States. In order for America to maintain its competitiveness in pharmaceutical development, it needs to pay attention to improving capabilities in both R&D and manufacturing, while creating a business environment that allows companies in this and other R&D-intensive sectors to become more efficient and effective.

This reports begs some questions: Are we training our future pharmaceutical scientists appropriately to fit in to the ever-evolving industrial pharmaceutical paradigm? How are efficiencies being taught in graduate school? What can we do to ensure the pharmaceutical graduates are prepared for these future requirements and challenges?

Robert G. Bell, Ph.D., is president and owner of Drug and Biotechnology Development LLC, a consultancy to the pharmaceutical industry and academia for biological, drug, and device development.