A new report from the University of Strathclyde’s Fraser of Allander Institute (FAI) reveals the increasingly ‘significant’ contribution of the pharmaceutical sector to Scotland’s economy, while highlighting concerns about a reduction in clinical trials.

With the publication of its new report detailing the pharmaceutical industry’s impact, the FAI says the sector is a ‘key player’ in both Scotland’s economy and its life sciences sector.

The findings reveal an overall increase in manufacturing turnover from £690m in 2019 to £1.65bn in 2022, having peaked at £2bn at the height of the pandemic in 2020.

This comes as the Scottish parliament’s Life Sciences Cross Party Group heard from pharmaceutical company Moderna’s Chief Medical Officer on the potential of mRNA vaccines in disease prevention and treatment.

Commissioned by the Association of the British Pharmaceutical Industry (ABPI), the FAI report was undertaken independently by the research institute and reveals that the pharmaceutical sector is a major ‘driver of innovation and productivity’ in Scotland. 

The analysis by FAI considers all aspects of Scotland’s pharmaceutical sector from research and development to sales, management and beyond to capture the fullest picture, while also modelling the impact of the life sciences sector.

It found that the life sciences sector as a whole – which includes medical and health technologies; and the 3As of animal health, agritech and aquaculture – supports almost £3.4bn in gross value added, accounting for over 38,000 full-time equivalent jobs in Scotland.

Professor Mairi Spowage, Director of the FAI, said:

“Scotland’s pharmaceutical industry is a key driver of growth in the Scottish economy, supporting productive jobs not just in Scotland’s big cities but across the country.

“Our latest modelling estimates highlight the sector’s considerable economic impact in terms of economic growth and employment, but it also demonstrates the wider impact of the sector in supporting the Scottish government’s economic strategy.”

The sector’s employment contribution to the Scottish economy in 2020 equates to more than 3 times the Scottish average, and extends to rural and deprived areas, including North Ayrshire.

Additionally, the impact extends to employment opportunities outside of the industry, as for every one job created in the wider pharmaceutical sector, 1.5 jobs are created elsewhere in Scotland’s economy.

Taking just the pharmaceutical manufacturing industry – which directly employs over 4,000 people in Scotland – every one job supports 1.7 jobs elsewhere in the economy.

However, with almost a third of Scotland’s inactivity rate driven by long term sickness, the report also points to the opportunities to use innovative medicines to improve patient outcomes and get people back to work.

Professor Spowage, said long-term health issues and sickness leading to economic inactivity has been a growing concern since the pandemic, adding:

“This growing problem has serious implications for public finances, productivity, and longer-term economic growth. However, as demonstrated in our latest findings, pharmaceuticals have and will continue to play a fundamental role in improving the health of the people in our economy.”

FAI’s report states that pharmaceuticals can help reduce patient wait times, introduce innovative medicines and in doing so enable crucial developments in good long-term health outcomes across Scotland.

While sector wages are above the real living wage for the UK, gender equality remains an issue across the pharmaceutical sector. In Scotland, women working in pharmaceuticals earned 22% less than men in the sector, over three times the 6% gap observed across the UK.

Innovation and Clinical Trials

The findings detail further challenges to growth with the need for more support in clinical trials and research from higher education institutions. Scotland has the highest number of higher education students enrolled in STEM-related subjects compared to other UK nations.

Despite Scotland performing well in its Higher Education Institutes’ contributions to the life sciences sector, the FAI found barriers remain in terms of scale-up with Scotland losing talent and research spin-out companies to England.

FAI’s research economists point to the close links and partnerships between NHS Scotland, university research and the private sector as central to the strength and growth of the sector.

Yet, even with progressing innovation, clinical trials have been struggling across the UK and Scotland for several years.

Now, the ABPI is warning against complacency and calling on the Scottish government to ‘take action to maximise the sector’s potential’ and ensure sustained long-term economic benefits.

Across the UK, patient access to industry research has fallen by 44% since 2017/18 and median wait times for clinical trial approval from regulatory bodies increased by 25 days between 2018-2020.

ABPI reported a decrease of 41% in the number of clinical trials across the UK has also been reported between 2017 and 2021, with the UK falling from 4^th in the world for phase III industry trails to 10^th in that same period.

Alison Culpan, Director of ABPI Scotland said:

“Scotland’s life science offering continues to provide high quality jobs, education and research and development. This report illustrates how vital our industry is to the economy and the positive impact it has on the lives of people across all of Scotland.”

“While the sector continues to do well in Scotland, there are also warning signs that tougher times lie ahead. Scotland has proved that it has the skills and infrastructure required for a thriving pharmaceutical sector, but the Scottish government must now capitalise on this to avoid the return to pre-pandemic levels of output.”

Ms Culpan added that the challenges around delivery of clinical trials could “spell trouble” unless decisive, course-correcting action is taken this year.

The report states that:

‘While world-leading expertise in drug discovery, precision medicine, medical technologies, and pharmaceutical services, Scotland’s life sciences sector plays a vital role in the economy, most recently in tackling COVID-19.’

In its conclusion, the report says that while the level of turnover in the sector remains above pre-pandemic levels, it must be ‘properly supported’ to ensure increased jobs and growth are not lost.

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