PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Reminder During This COVID-19 Crisis: The Pharmaceutical Industry is Dominated by Small Businesses

By at 9 April, 2020, 2:16 pm

by Raymond J. Keating-

Kicking around so-called “Big Pharma” and calling for price controls had been all the rage in political and media circles for years. But the message largely has shifted in recent weeks, during the coronavirus outbreak, to rooting on and even praising the companies that make medicines and vaccines.

Thankfully, the U.S. has the leading pharmaceutical industry in the world, and that’s because we don’t impose price controls, we do protect intellectual property, and as a result, we have vibrant entrepreneurship and investment.

Indeed, the pharmaceutical and medicine manufacturing industry is overwhelmingly populated by small and mid-size businesses. Consider the breakdown among employer firms (latest Census Bureau data 2017):

Size of Firms by Number of Employees         Percent of Total Employer Firms in Pharmaceutical and Medicine Manufacturing Sector
Less than 10          46.1%
Less than 20          58.0%
Less than 100          78.7%
Less than 500          90.4%

 

Creating and bringing to market a new drug is a high-cost undertaking, jam-packed with risk and uncertainty. The U.S., again, leads the way significantly due to protecting property rights and avoiding price controls, which in turn encourages investment in the entrepreneurial firms that will help fight our current health care crisis, take on future problems, make sure that we avoid the spread of other illnesses now and in the future, improve the quality of life, and save lives. That’s impressive, and warrants praise, not just during crises, but all of the time.

Stay safe, healthy and innovative!

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

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