The Pharmaceutical Business   3 of 13  
     1. The market
The pharmaceutical industry sells a lot to other countries because it makes marketable products at a competitive price. This, in turn, reflects the success of the industry in developing new products and increasing productivity. The pharmaceutical industry only employs a small proportion of the total UK manufacturing workforce but it extracts a high level of productivity from its Human Resources.
Photo of vaccines
Figure 7. Vaccines produced in the UK are used all over the world.
Graph of exports
Figure 8. Exports per employee - pharmaceutical compared with the rest of UK manufacturing 1980 - 2001.
A competitive success story
The graph in figure 8 makes this very clear. It shows the exports per employee for both the pharmaceutical industry and the whole of UK manufacturing.

Notice how exports per employee in pharmaceuticals has grown. In 1981, a pharmaceutical employee produced £12,206 worth of exports compared to the manufacturing average of £6,345. By 2001 this rose to £132,526 worth of exports per employee in the pharmaceutical industry. This is a 20 fold increase in 20 years. The rest of manufacturing has achieved about a ten fold increase over the same period.

It is clear that the pharmaceutical industry has a high level of productivity and a successful trade performance. These have helped to maintain employment in this sector whilst manufacturing as a whole has seen a significant decline. This is illustrated by the data in Figure 9.
Year Manufacturing
workforce
(000s)		 Pharmaceutical
workforce
(000s)
1981 5500 69.8
1982 5264 68.6
1983 5025 67.9
1984 4958 67.6
1985 4988 66.9
1986 4868 63.9
1987 4799 66.6
1988 4839 67.7
1989 4828 71.2
1990 4709 71.1
1991 4299 72.8
Year Manufacturing
workforce
(000s)		 Pharmaceutical
workforce
(000s)
1992 4084 73.8
1993 3906 68.8
1994 3923 69.4
1995 4026 61.9
1996 4067 58.8
1997 4111 60.0
1998 4354 68.0
1999 4230 69.0
2000 4091 65.0
2001 3892 69.0
2002 3762 83.0
Figure 9. UK manufacturing and pharmaceutical workforce 1981 - 2002.
Chart of market share
Figure 10. UK pharmaceutical exports % share by region in 2002.

UK pharmaceutical companies sell their products all over the world. Figures 10 and 11 show the distribution of pharmaceutical exports by region and how exports are divided between the different countries of the European Union - our biggest market.
Graph of exports
Figure 11. UK pharmaceutical exports to the EU by country in 2002.
Assignment trigger 1b

Look at the data contained in figures 8 and 9. Draw a graph to illustrate what has been happening to employment in pharmaceutical manufacturing and manufacturing generally. What does this data tell us about the contribution of the pharmaceutical industry to the performance of the UK economy?

Check your answer

Look at figures 10 and 11. What might explain the pattern of trade shown in these graphs? Look at Resource 1. Turn the data into a graph. Which markets are expanding fastest?

Check your answer
Our experts' view Close

Figure 8 shows that pharmaceutical exports per employee are much higher than exports per employee in the rest of UK manufacturing.

Figure 9 shows that the size of the pharmaceutical workforce has remained fairly stable and that the size of the manufacturing workforce has declined quite significantly. The link between the graphs is that successful trade performance tends to result in employment in a sector being maintained. So by implication one could argue that the fall in UK manufacturing employment largely reflects the poor trade performance of the manufacturing sector.
Our experts' view Close

Figures 10 and 11 provide data on the pattern of UK pharmaceutical trade. Points to note are the fact that the main area we trade with is the European Union and that there is more trade with developed countries than with developing countries.