New Report Outlines Steps to Keep U.S. Life Sciences Competitive Globally

Innovative Life Sciences Companies

The Information Technology & Innovation Foundation recently published a report diving into the U.S.’s trade deficits in the life sciences industry worldwide and steps that can be made to keep the biopharma and medical device industries competitive globally.

The author of the report, Joe Kennedy, a senior fellow at the foundation, points out in a STAT article, that the life-science sector employs more than 1.2 million people in the U.S., with average wages in the pharmaceuticals industry at $124,400 and $86,200 for the medical device industry. He also notes that life science jobs have been growing steadily, compared to U.S. manufacturing jobs. In addition, U.S. biopharma companies invest 43.8 percent in research and development as a share of value added than any other industry. “This is one reason the American life-sciences sector is highly competitive, and helps explain why the U.S. is home to the most company headquarters and its researchers develop the most new drugs and devices.”

However, Kennedy argues that the U.S. is losing ground to China, Ireland, Singapore, India and the UK because of their governments’ policies targeting the industry, including increasing investment in research and better intellectual property protection. He also states that these countries are implementing new policies that “harm both the global quest for innovation in drugs and devices and the U.S. economy.”

The report cites that India and several other countries place high tariffs on some medical devices. Exports to China often have regulatory delays, more problems with patent violations, and counterfeiting. “Perhaps more surprising, the International Trade Administration,” Kennedy writes in STAT, “recently concluded that pharmaceutical innovations have effectively become un-patentable in Canada.”

Kennedy’s report is a bit gloom-and-doom with a focus on perceived trade imbalances. Another study, by Deloitte, points out that global health care spending is increasingly dramatically, going from $7 trillion in 2015 and projected to hit $8.7 trillion by 2020. But, health care spending is not uniform from country to country. In the U.S. health care spending per person in the U.S. is expected to be $11,356 compared to only $53 per person in Pakistan by 2021.

The industry is international in nature, as well. Japan-based Takeda Pharmaceuticals is in the process of negotiating an acquisition of Dublin, Ireland-based Shire. Takeda employs 30,000 people worldwide and operates in more than 70 countries. Shire employs 24,000 people, most of which are in the U.S.

Regardless, Kennedy cites three steps that he believes the U.S. government should take to bolster the U.S. biopharma and medical devices industries in order to maintain global dominance. First, “Penalize nations that engage in life-sciences mercantilism by removing them from the Generalized System of Preferences, which eliminates duties on thousands of products entering the United States from 120 countries and territories.”

Secondly, make sure that patent protections for life-science products remain strong in new and renegotiated trade agreements. And third, pressure other “foreign nations to stop free riding on the United States when it comes to life sciences and innovation by increasing payments for drugs.”

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