Does IP Stimulate Growth and Create Jobs? New European Data Says Yes

European Patent Office Headquarters in Munich, Germany

A new study shows the importance of intellectual property in stimulating jobs and productivity in the EU. Surprisingly, it illustrates pharma’s established position as an IP powerhouse, evidence that adds conviction to the views expressed by GSK CEO Andrew Witty and other industry leaders that growing cuts on drug pricing are limiting an industry that drives significant productivity and growth, in Europe-still the world’s largest exporter of medicines.

On September 30, the European Commission published a study on the impact that Intellectual Property Rights (IPR) have on the EU in terms of GDP, employment, wages, and trade. The study, done by the Commission’s Office for Harmonization in the Internal Market (OHIM), the EU Observatory, and the European Patent Office (EPO) reports that 40% of all economic activity in the EU is created by IPR-intensive industries, and roughly 35% of all work in the EU stems from industries that have a “higher than normal” use of IP rights. The study looked at trademarks, patents, design and copyright granted from 2004-2008, and compared this to corresponding economic data from 2008-2010 to measure IP’s impact.

The study demonstrates that the pharma industry in EU does fairly well in trademarks and patents compared to the US. Manufacture of basic pharmaceutical products was second in the list of top 20 trade mark-intensive industries, and third in top patent-intensive industries, producing 27.57 patents and 38.81 trademarks per 1000 employees. This contrasts to a similar study released in March 2012 by the US Patent and Trademark Office, which stated that pharmaceuticals accounted for 46.8 patents per 1000 employees, yet only 4.6 trademarks, ranking 8^th and 19^th among industries nationwide, respectively.

Of the top 10 IPR-intensive exporting industries, manufacture of pharmaceutical preparations for the EU comes in at number 2, exporting €83.4 billion worth of product, and accounting for 7% share in all IPR-intensive exports, comparing to the US at $49.4 billion in 2010. In terms of employment, wholesale of pharmaceutical products accounted for 584,633 jobs, making the list of top 20 employers in IPR-intensive industries at 17^th. Additionally, pharma is number 8 in production for the EU, generating €67.7 billion in GDP. When considering that IPR-intensive industries contribute to 39% of the total volume of production in Europe, this translates to pharma generating roughly 1.1% of Europe’s total GDP.