New ApproacheThe pharmaceutical industry’s R&D expenditure at the global level in 2007–2018 is analyzed. Two-thirds of the global pharmaceutical companies’ spending on R&D are accounted for s to the Assessment of Foreign Trade in High-Tech Pharmaceuticals

Abstract

The pharmaceutical industry’s R&D expenditure at the global level in 2007–2018 is analyzed. Two-thirds of the global pharmaceutical companies’ spending on R&D are accounted for by 20 multinationals companies located mostly in the U.S. and EU. With low level of R&D funding, Ukraine cannot produce cutting-edge pharmaceutical technologies. Imports of intermediate goods for pharmaceutical industry are the most widely used and most influential channel for attracting advanced technologies. The aggregation of high-tech goods by functional purpose (high-tech capital goods, high-tech intermediate and high-tech consumer goods) is analyzed. This aggregation is made by combining the Classification by Broad Economic Categories by SITC Rev. 4 (UN Statistics Division) and the High-Tech Aggregation SITC Rev. 4 (Eurostat). Based on this approach, the article identifies a range of high-tech pharmaceutical goods that are essential for pharmaceutical production, and introduces the concept of “high-tech pharmaceutical intermediate goods”. The author compiled a nomenclature of high-tech pharmaceutical intermediate goods by SITC Rev.4 (17 nomenclature positions with 6 digits). For the first time, this statistical tool made it possible to estimate the scale of national economy spending on advanced foreign technology embodied in commodities that are inputs in the pharmaceutical industry. New indicators are proposed: “ratio of import dependence of pharmaceutical production”, “‘purified’ exports of pharmaceutical goods” and “coverage ratio of imports of high-tech intermediate pharmaceutical goods”; their algorithms are given and used in the author’s calculations for Germany (strong innovator), Poland (moderate innovator), and Ukraine as a country with low level of technological innovation in the analyzed field. The author recommends using the proposed new indicators for statistical monitoring and analysis of the effectiveness of science & technology and innovation policy measures aimed at building competitive pharmaceutical industry in Ukraine, reducing its dependence on imports and enhancing its export potential.