The biopharmaceutical industry, one of the most sought-after business sectors by cities and states thanks to its promise of high-quality jobs and substantial economic returns, is expected to add more than 122,000 jobs and nearly $60 billion in real output to the U.S. economy in the next 10 years, according to a new study by the Milken Institute.
The report, Biopharmaceutical Industry Contributions to State and U.S. Economies, says that several states — New Jersey, Massachusetts, Pennsylvania, California and Maryland among them — are already in position to take advantage of this industry′s economic development, while others — like Nevada, Vermont, Florida and West Virginia — are on the cusp of developing an important biopharmaceutical economy.
"Many cities and states are working hard to gain a share of the biopharmaceutical industry," said Ross DeVol, Director of Regional Economics at the Milken Institute and the report′s principal author. "And our research shows why: It′s an important and growing part of the global knowledge-based economy that will have a very positive impact in those regions that are successful in growing these firms."
According to the study, the biopharmaceutical industry is expected to employ more than 413,000 workers nationwide by the end of this year. By 2014, that number is expected to increase to more than 536,000 — an increase of 30 percent. In addition, real output (adjusted for inflation) is expected to rise from $69.2 billion this year to $128.3 billion in 2014, while workers′ earnings are due to rise from $31.4 billion in 2004 to $56.6 billion in 10 years.
Among the study′s highlights:
- The industry was directly responsible for $63.9 billion in real output in 2003. When the additional dollars it generated in other industries through an economic "ripple" effect are accounted for, it was responsible for more than $174 billion.
- The industry directly employed 406,700 workers in 2003. When the additional jobs it creates in other sectors of the U.S. economy are added in, the biopharmaceutical industry was responsible for more than 2.72 million jobs nationwide.
- Industry employment is expected to grow by nearly 30 percent in the next 10 years, with Nevada, Vermont, Rhode Island and Alabama showing the biggest percentage gains.
- For each dollar of output produced by the biopharmaceutical industry in the U.S., an additional $1.70 of output is generated elsewhere in the country. For each job created directly by the industry, an additional 5.7 jobs are created in other sectors of the U.S. economy.
- In 2003, the industry generated $985.6 million in sales taxes and $6.4 billion in corporate income taxes for local, state and federal governments. In addition, when adding in the multiplier impact, the industry helped generate $24.5 billion in personal income taxes.
- Biopharmaceutical research and manufacturing is concentrated in the New Jersey-New York-Pennsylvania region, California, New York, Massachusetts, North Carolina, Washington and the Midwest states of Illinois, Indiana and Michigan.
The study provides a state-by-state examination of the industry′s economic impact in four main areas:
Industry Geographic Location and Performance: This section shows the economic importance of the biopharmaceutical industry state by state, measuring the concentration and growth of employment and output. The top states in this category are New Jersey, Indiana, Massachusetts, North Carolina and Pennsylvania.
Innovation Pipeline: This section measures a state′s assets necessary to produce a strong and viable biopharmaceutical industry, including such things as the skills of its workforce and the amount of research and development dollars it receives. The top states in this category are Massachusetts, Maryland, Connecticut, New Jersey and Pennsylvania.
Multiplier and Tax Impact: Institute researchers looked at how much additional economic activity is created by the biopharmaceutical industry, including and indirect and induced impacts — additional jobs and output that are created in other sectors — and tax revenues States showing the biggest results here are California, New Jersey, Pennsylvania, North Carolina and Illinois.
10-year Industry Projections: This section projects the likely growth of the biopharmaceutical industry in each state by employment and output, based on an Institute economic model. The states showing the biggest gains in absolute numbers in the next decade include California, Massachusetts, Pennsylvania, New York and Maryland.
The study was made possible, in part, by support from PhRMA, the industry trade group. The results can be used by government and economic development officials to evaluate their biopharmaceutical assets and determine what is needed to grow and nurture the industry in their states.
"The medical research leading to finding cures to our most deadly diseases — and the manufacture of those drugs — is expected take off in the next decade," DeVol said. "That will result in a powerful economic engine for the nation."
View statistics. (This interactive site allows you to review data by individual states or categories.)