A Letter From Phil Kirk

Pharmaceuticals: The Cure for N.C.'s Blues

The pharmaceutical industry is of great importance to the economy in North Carolina especially as we continue to create new jobs for our workers.

Already responsible for in excess of 25,400 jobs with an average salary of more than $72,000 per year, this industry is a major factor in enhancing our state’s reputation of being business-friendly.

North Carolina is viewed as a world leader in this important industry. Our state has a well-deserved superb reputation as a leader in the overall biotechnology field and pharmaceuticals in particular.  In fact, we are now the third leading biotech state in terms of employment.

However, we cannot afford to rest on past or current successes because other states are improving their recruitment efforts and some short-sighted politicians may make an effort to hurt pharmaceutical companies by changing laws affecting the purchase of prescription drugs from other countries.

Our state government bureaucracy last year took some initial steps which would substitute cheaper but possibly less effective drugs for our citizen’s health just to save money; however, a strong lobbying effort kept this from happening, but it may reoccur.

 Then there is the ever-present demagoguery from some of the media and politicians about the “profits” the drug industry is making.  Few realize the time AND money which go into the research which makes life-saving and life-enhancing drugs possible.  Overall, biopharmaceutical firms invest between 10 and 20 percent of sales in research and development.

The direct economic impact on our state’s economy was nearly $4.5 billion last year.

While the direct impact of this industry on our state’s economy is very important, the indirect or multiplier effect is often overlooked.  For example, for each job created by the industry, another 5.7 jobs are created elsewhere in the economy.  In North Carolina, this translates to 102, 210 indirect and induced employees.

The industry impacts many supplier industries such as legal, financial, and advertising services, as well as sophisticated manufacturing machinery.  Because of the biopharmaceutical facilities located in North Carolina, we have seen an increase in related jobs.  Regretfully this fact is overlooked by those who criticize the state’s efforts to locate high-paying jobs by “big business” in our state.  Every additional new job has a positive impact on many small businesses!

To better understand other contributions which the industry makes to society, we must look at the taxes it pays.  Personal income taxes of $24.5 billion at the federal, state and local levels are attributable directly to the biopharmaceutical industry. Sales tax revenues account for $985.6 million and corporate income taxes of $6.4 billion.  N.C. companies paid more than $1 billion in federal taxes last year.  The industry paid $302,368,158 in local and state taxes in North Carolina last year.

North Carolina’s growth in this industry is projected to match the national growth rate during the next 10 years with the creation of 7,200 new jobs.  However, states expected to grow much faster are Connecticut, California, Washington, and Pennsylvania.  We need to see what factors are contributing to these four states performing “better” than we are and then have the political courage to take the necessary steps to improve our job growth even more.

But it is also crucial to remember that North Carolina is not competing solely with 49 other states, but we are clearly in strong global competition for jobs in this industry.  That is why we must continue to invest in public education at every level so we will have a superior workforce.  That is why we must get our tax structure more competitive with our neighbors, along with improving our workers compensation system and reforming our legal system which promotes expensive lawsuits and stifles innovation.