Key Factors in Attracting Internationally Mobile Investments by the Research-Based Pharmaceutical Industry
21 September 2007
By Dr. Richard Rozek et al.
In this report, prepared for UK Trade & Investment (UKTI) and the Association of the British Pharmaceutical Industry (ABPI), a NERA team including Special Consultant Dr. Richard Rozek identifies the key factors influencing how research-based pharmaceutical companies choose where to locate their functions and how to allocate their investments. The report, conducted in cooperation with a steering group comprising officials from the Department of Trade & Industry (now the Department for Business, Enterprise and Regulatory Reform), UKTI, the Department of Health, and members of the pharmaceutical industry in the UK, was commissioned in part to identify methods of reversing the current decline in the relative attractiveness of Europe as a location for investment by global pharmaceutical companies.
The report reviews the economic literature on industrial location decisions in the pharmaceutical sector, provides a basic analysis of data covering variables relevant to location decisions, and analyzes the findings from interviews with senior decision makers from research-based pharmaceutical and biotech companies. The NERA team focuses on decisions related to functions of research, development, clinical trial research, and manufacturing, as well as factors that influence the location of regional headquarters.
The report finds that no single factor determines the attractiveness of a region as a location for all elements of the pharmaceutical value chain, but that countries and governments that work to create an attractive climate for investment are more successful in driving industry growth and competitiveness.
The report also finds that investment history, the need for rationalization, stability, and industry market conditions can play a role in the pharmaceutical industry's willingness to invest in a particular country.
