The Global Economic Impact of the Pharmaceutical Industry Prof. Dr. Dennis Ostwald Dr. Marcus Cramer Nora Albu Jasmin Tesch

ECONOMIC IMPACT 
IMPACT ANALYSIS:
DIRECT, INDIRECT AND INDUCED EFFECTS
 
In addition to 
direct effects,
which describe the immediate economic effects directly 
generated by the global pharmaceutical industry, the analysis encompasses indirect and 
induced economic effects.
Indirect effects
are effects arising due to the input the industry demands from other 
economic sectors. Order placements result in an increase of economic activity at 
commissioned agents and their suppliers. This stimulus increases gross value added 
(GVA)and other economic key figures along the supply chain.
Induced effects
originate from the expenditure of directly and indirectly generated 
incomes and the concomitant increase in demand. The combination of indirect and 
induced effects is called 
spillover effects
.
Total economic effects
refer to the sum of all three (direct, indirect and induced effects). 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Figure 1: Diagram of the economic impact analysis: direct, indirect and induced effects triggered 
through economic activities of the global pharmaceutical industry. 
 
 
 
 
 
 
 
 
Direct effect
Economic activities 
 
of the global 
pharmaceutical 
industry
Production
Wholesale

Materials and 
services 
purchased
trigger 
ripple effects along 
the 
supply chain
Indirect effect
+
Induced effect