Report: Biopharma Manufacturing is a Robust and Vital Part of the U.S. Economy
Manufacturing is the non-glamorous side of the biopharmaceutical industry, but is at least as important as the cutting-edge research behind new drugs. A recent report by TEConomy Partners and the Pharmaceutical Research and Manufacturers of America (PhRMA) outlines the significance of manufacturing on the overall biopharma innovation ecosystem and its leadership in the global economy.
The study found at least seven significant economic contributions of biopharmaceutical manufacturing. This included: 1) strong gains in economic output while overall manufacturing lags, 2) it operates at a high level of productivity, 3) has high wages while 4) supporting a broad range of occupations, 5) provides outsized and increasing levels of investments by new facility construction and retrofitting existing facilities, 6) creates a high level of exports, and 7) provides economic spillovers in construction and other related manufacturing industries.
Biopharma manufacturing outpaced all other types of manufacturing, but also all private sector industries from 2000 to 2016. For example, the total private sector in those years went from about 8% to slightly over 50% and total manufacturing rose from about 8% to approximately 23%. Biopharmaceutical manufacturing went from the same baseline of about 8% to almost 70%.
The report also notes that “the biopharmaceutical manufacturing industry stands nearly three times higher in the value of its labor productivity than all manufacturing in 2016, demonstrating its capacity as an economic growth driver. Higher productivity is associated with the ability to pay higher wages and to produce more manufacturing output per labor input.”
On the topic of wages, the biopharma manufacturing industry on average blows all manufacturing and total private sector jobs out of the water. In 2017, the average annual wages for the total private sector were $55,338, for all manufacturing it was $66,840 and for biopharmaceutical manufacturing it was $115,010.
As noted earlier, biopharma manufacturing supports a wider range of production-related jobs at a higher level of specialization than all other manufacturing industries. That includes packaging and filling machine operators and tenders; mixing and blending machine setters, operators, and tenders; inspectors, testers, sorters, samplers and weighers; chemical equipment operators and tenders; and separating, filtering, clarifying, precipitating and still machine setters, operators, and tenders.
Biopharma invested 50% more in capital expenditures for facilities in 2016 than all manufacturing—$22,300 per worker for biopharma manufacturing compared to $15,150 per worker for all manufacturing.
As mentioned, the economic spillover is significant. From 2012 to 2017, there were $22.4 billion in biopharmaceutical plant construction projects in 11 states that generated 45.4 million construction hours—the equivalent of 23,000 full-time jobs. The highest demand was for electricians, instrumentation techs, plumbers, carpenters and millwrights.
The spillover applies not just to construction jobs, but to the overall supply chain, including packaging and labeling, chemical inputs, production apparatus, electronics, computers and communication equipment.
In addition, U.S. biopharma in 2017 was the largest exporter of goods, representing $51.4 billion compared to navigational/measuring/medical/control instruments ($37.7 billion), semiconductors and other electronic components ($37.8 billion) and communications equipment ($17.3 billion).
Last year, TEConomy and BIO published a report, “Investment, Innovation and Job Creation in a Growing U.S. Bioscience Industry 2018,” noting that contract research organizations (CROs) handled much of the industry’s manufacturing. In 2018, the top 10 CROs were LabCorp, IQVIA, Syneos Health, PAREXEL, PRA Health Sciences, Pharmaceutical Product Development (PPD), Charles River Laboratories International (CRL), ICON, WuXI AppTec and Medpace Holdings. Combined, they represented annual revenues of $34.5 billion.
It was noted then and continues to be true that biologics, cell and gene therapies and immuno-oncology are becoming more and more mainstream, driving specialized manufacturing. In mid-May, for example, Bayer announced plans to build a Cell Culture Technology Center in Berkeley, Calif., investing $150 million in the project. The center will focus on developing biologics.
In late-March, Thermo Fisher Scientific acquired gene and cell therapy manufacturer Brammer Bio for $1.7 billion in cash. Brammer Bio is a contract development and manufacturing organization (CDMO) focused on manufacturing viral vectors for gene and cell therapies.
Earlier in March, bluebird bio announced it was opening a new gene therapy manufacturing facility in Durham, NC. The factory will produce lentiviral vectors for its gene and cell therapies, including bb2121 and bb21217 for multiple myeloma and possibly LentiGlobin for transfusion-dependent beta-thalassemia (TDT) and sickle cell disease.
Biopharma manufacturing, according to the new report, also has an impressive level and concentration of STEM workers, more than double that in all U.S. manufacturing and almost five times that of all private sector industries. Biopharma’s share of STEM-related occupations is 25.5%, compared to 5.6% for the private sector and 9.9% for all manufacturing. The breakdown in biopharma is 16% scientists, 5.9% engineering and 3.6% computers and math.
Biopharma manufacturing’s influence is broad. For example, for every single worker employed in biopharma manufacturing, it creates another 4.9 jobs across other industries. CROs, startups and early-stage biopharma companies feel the effects, as do other industries related to drug distribution.
In the U.S., biopharma manufacturing has an impact on nearly every state and territory. There are presently 1,193 FDA-approved manufacturing facilities in the U.S. spread across 44 states, the District of Columbia and Puerto Rico. Of them, 37 states and Puerto Rico have more than five facilities manufacturing approved drugs.
Although other countries are making forays, it is being challenged by other countries, with China almost catching up. The U.S. makes about 70% of global biopharma venture capital investments, but China is making some growth, though it’s still far behind. From 2010 to 2017, the U.S. VC investment grew 166%, the UK’s 116%, and the world overall growing 168%. China’s growth in VC biopharma, however, rose a whopping 1,084%, although it still only represents 16% of the U.S.’s VC investment.
In 2012, the Brookings Institution wrote, “Manufacturing serves critical public purposes that make it indispensable to the U.S. economy. It remains a source of high-wage jobs for virtually all types of workers…. Manufacturing is the major source of commercial innovation in the United States…. It accounts for the majority of U.S. foreign trade.”
And as this new report indicates, this is still true.