I. Executive Summary .......................................................................................... 1
II. Introduction .................................................................................................... 13
III. Industry Geographic Location and Performance ......................................... 17
IV. Multiplier and Tax Impacts Analysis ............................................................. 43
V. Biopharmaceutical Innovation Pipeline ..................................................... 107
VI. 10-year Industry Projection ........................................................................ 157
VII. A Brief History of the Biopharmaceutical Industry
and Its Leading Companies .......................................................................... 183
About the Authors ................................................................................................ 211

Executive Summary
The pharmaceutical industry is one of the most enduring, largest and most critical knowledge-intensive
sectors in the U.S. economy. For about one century following its emergence as a sizable economic force
in the mid-19th century, pharmaceutical manufacturers in America essentially operated as a subsector
of the chemicals industry. Along with chemical development and manufacturing, the pharmaceutical
industry was distinctly shaped by advances in chemical engineering and basic chemistry and their
innovative application.
In the 1970s, developments under way since World War II ushered in the biotechnology revolution.
Biotechnology is an outgrowth of interdisciplinary research in molecular biology, immunology and
biochemistry, aided by new techniques such as X-ray structural analysis and computer-assisted drug
synthesis.
Partly due to the promise of therapeutic breakthroughs, many traditional pharmaceutical firms in the
1990s looking to augment their product pipelines matched up with biotech companies seeking external
resources, additional expertise and the ability to quickly scale-up production and global marketing
capabilities. Other pharmaceutical firms increased biotechnology research in their own laboratories. A
pattern of increasing interdependence evolved.

Key Findings
· Biopharmaceuticals is one of the most research-intensive sectors in the U.S.
· The U.S. biopharmaceutical sector has captured a larger share of global R&D
in recent years.
· Biopharmaceuticals employed 406,700 people in 2003, and when the full multiplicative
impact is captured, is responsible for 2,724,800 jobs and 2.1 percent of total
employment in the nation. Each job in the industry creates another 5.7 jobs elsewhere
in the economy, substantially above the average for all industries.
· The biopharmaceutical industry paid an average annual wage of $72,600 in 2003 and is
among the most productive sectors in the U.S. economy with real output per worker of
$157,300.
· Biopharmaceuticals was directly responsible for $63.9 billion in real output (based on
inflation-adjusted 1996 dollars) in 2003 and a total of $172.7 billion when the economic
ripple effects across other sectors are incorporated.
· Many state economies, and the District of Columbia, are highly dependent on the
biopharmaceutical industry, including New Jersey, Massachusetts, Indiana, North
Carolina, Connecticut, Pennsylvania, California, Utah, Maryland, New York, Rhode
Island, Illinois and Washington.
· Given the proper innovation environment, states such as Nevada, Vermont, Alabama,
New Hampshire, Florida and West Virginia could see biopharmaceuticals account for a
growing share of their economies.