The Impact of the Pharmaceutical Industry on the Innovation Performance of European Countries

Abstract: There are significant differences in innovation performance between countries. Additionally, the pharmaceutical sector is stronger in some countries than in others. This suggests that the development of the pharmaceutical industry can influence a country's innovation performance. Using the Global Innovation Index and selected performance measures of the pharmaceutical sector, this study examines how the pharmaceutical sector influences the innovation performance of countries from the European context. The dataset of 27 European countries was analysed using simple, and multiple linear regressions and Pearson correlation. Our findings show that only three indicators of the pharmaceutical industry, more precisely pharmaceutical Research and Development, pharmaceutical exports, and pharmaceutical employment explain the innovation performance of a country largely. Pharmaceutical Research and Development and exports have a significant positive impact on a country's innovation performance, whereas employment in the pharmaceutical industry has a slightly negative impact. Additionally, global innovation performance has been found to positively influence life expectancy. We further outline the implications and possible policy directions based on these findings.