The Economic Contributions of the Biotechnology Industry
The biotechnology industry has grown rapidly in recent years, doubling in size between 1993 and 1999. Much attention is given to the potential of the biotechnology industry, from drugs, agricultural and environmental products currently in the pipeline. These products have the potential to generate tremendous opportunities for society, by improving the quality of health care, increasing agricultural production and producing a cleaner environment. No less significant, however, is the fact that the industry clearly makes substantial current economic and fiscal contributions to the U.S. economy.
This report presents the estimates of the significant financial contributions of the biotechnology industry to the U.S. economy and to revenues collected by the federal, state and local governments. In 1999, the biotechnology industry generated:
- 437,400 U.S. jobs. Of these, 150,800 jobs were generated directly by biotechnology companies, while the remaining 286,600 jobs were generated by companies supplying inputs to the industry, or by companies providing goods and services to biotechnology employees.
- $47 billion in additional revenues. Even though the industry as a whole remains unprofitable, biotechnology companies produced revenues of $20 billion. Companies supplying inputs or selling goods and services to biotech employees generated revenues of $27 billion.
- $11 billion in research & development spending. This includes research and development conducted by biotechnology firms, but does not include research and development conducted by firms supplying the biotechnology industry with inputs or workers with goods and services.
- $10 billion in tax revenues, including federal, state and local taxes. The largest components of the tax revenues were individual income taxes, social security and property taxes, with a little over two-thirds of total taxes going to the federal government.
The analysis also estimated the contributions generated by publicly traded and private companies and by the agricultural biotechnology sector:
- Publicly traded companies generated 305,100 jobs and $32 billion in revenues, while privately traded companies generated 132,300 jobs and $14 billion in revenues, including the contributions of companies supplying inputs to the industry or goods and services to employees.
- Agricultural biotechnology generated 21,900 jobs and about $2.3 billion in revenues, including the contributions of companies supplying inputs to the industry or goods and services to employees.
THE ECONOMIC CONTRIBUTIONS OF THE BIOTECHNOLOGY INDUSTRY TO THE U.S. ECONOMY
This report estimates the contributions of the biotechnology industry to the U.S. economy and provides detail on the nature and magnitude of the various economic and tax revenue contributions. The analysis here is limited to the financial contributions (revenues, jobs, compensation and taxes generated). It does not include the significant nonfinancial contributions of the industry, from factors such as increased longevity and productivity from health improvements, increased quality of life and increased agricultural productivity. Data sources and methodological details about the analysis can be found in Appendix 1.
The biotechnology industry has grown rapidly, doubling in size from 1993 ($8 billion in revenues) to 1999 ($20 billion). As shown in Chart 1, the direct employment of 150,800 American workers in the industry is considerably more than that of the toys and sporting goods industry, and slightly less than the cable television industry. The industry has approximately 100 biotech products on the market with many more in late stage clinical trials.