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Stephen Heffler
T he job market has shrunk in many manufacturing industries over the past 50 years, but the drugs-manufacturing industry has shown healthy employment gains year after year. Not only are jobs being created in this relatively small industry, but many are high paying, high skilled, and research oriented. The industry surged through the past four recessions with remarkable profit margins and substantial job growth. It also added jobs during the structural change in the economy that has occurred over the past few decades.
The market pressures facing the drugs-manufacturing industry are different from those facing most manufacturing industries. The supply of drug products is not necessarily based on the concept of normal market competition, under which demand is sensitive to changes in price. Instead, consumer demand depends mostly on relief from ill health, which shows little response to price changes. Despite the differences in market pressures, the industry faces new challenges in the 1990's from increased competition and proposed health-care reform. As a result, there is a serious question whether the industry can continue its robust employment growth of the past four decades or whether it will react to the challenges by slowing employment growth or decreasing payrolls.
This article presents a brief history of the drugs-manufacturing industry from 1964, when its rapid growth began, to 1994, and offers details behind the industry's growth since 1980. It surveys the changing conditions within the industry and explores possible future impacts on employment.
This excerpt is from an article published in the March 1995 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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