Pharmaceutical companies are making a great contribution to the UK economy, higher than most other high-tech industries. The pharmaceutical sector’s relative importance becomes even more obvious when considering productivity, measured as Gross Value Added (GVA).
Economists use Gross Value Added (GVA) to represent the contribution made by business and industry to the UK’s national income. To measure GVA the value of output generated by the business or industry is calculated and from this the cost goods and services involved in production are deducted.
The graph below shows how the pharmaceutical industry’s contribution to the UK’s national income has evolved over recent years. This has been compared to other medium and high-tech industries as defined by the Department for Business, Innovation and Skills. For information on annual average GVA produced per employee for a cross-section of industry sectors, please visit our Employment in the pharmaceutical industry in the UK section.
Click here for a larger versionNote: Using the new definition of high and medium high tech sector (SIC2007).Source: ONS Annual Business Survey 2013 (Provisional), Section C Manufacturing, Release date 13 November 2014
The first graph below shows the total sales of prescription medicines to the NHS over the last nine years. The share of medicines sold via primary care is marked in dark purple and the share sold in hospitals (secondary care) is marked in light purple. The second graph below shows the growth profile for the same time period.
Click here for a larger versionNote: Pharmacy care information from 2011 to 2014 consists of XBPI and INTPHASource: IMS Health British Pharmaceutical Index, IMS Hospital Pharmacy AuditSource: IMS Analysis Manager
This table shows a comparison of prices of branded medicines in the UK with prices in a range of European countries and the USA. It compares the prices of all preparations for the top 150 branded medicines in the UK with other countries, depending on the availability of matching preparations elsewhere.
The graph below shows the development of Retail Price Index (RPI) and Producer Price Index (PPI) for pharmaceutical manufacturing between 1996 and 2014. PPIs are a series of economic indicators that measure the price movement of goods bought and sold by UK manufacturers. It is a base-weighted index using the 'basket of goods' concept. The PPI line graph shown below is for pharmaceutical products only and refers to the prices of these products when leaving the manufacturing plant, also often referred to as 'ex-factory prices'.
The comparison between pharmaceutical PPI and the RPI demonstrates that prices for medicines in the UK have lagged behind prices generally.
Click here for larger versionNote: RPI = Retail Prices IndexSource: ONS MM22 Producer price indicesSource: ONS RPI figure