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Over the last few decades, increasing attention to climate change has led companies to invest in green innovation, developing new technologies that enable a transition to cleaner modes of production and consumption. Green innovation offers new growth opportunities and competitive advantages, which firms protect through patents. However, these new opportunities are accompanied by new challenges: there is considerable uncertainty about the speed of transition to greener modes of operation. One key source of uncertainty relates to future regulation. In the face of such uncertainty, we examine how firms complement their innovation with efforts to influence the regulatory agenda through lobbying.

Lobbying decisions can be related to firms’ innovation activities in different ways. On the one hand, firms’ efforts to shape the competitive landscape and hedge uncertainty may take the form of lobbying for the new technologies they are developing. That is, firms engaging in green innovation may lobby to increase demand for their products and services. Such dynamics suggest that lobbying would expedite progress toward a greener future. However, lobbying may also have distortionary effects. Suppose green technologies are protected by patents held by firms that derive most of their current cash flows from brown activities. Such firms might employ lobbying to maintain the status quo, i.e., to protect their brown cash flows into the future. As stated by Zingales (2017): “Most firms are actively engaged in protecting their source of competitive advantage through a mixture of innovation, lobbying, or both. As long as most of the effort is along the first dimension, there is little to worry about. (…) What is more problematic is when a lot of effort is put into lobbying.”

According to § 156(a) of the Patent Act, "the term of a patent which claims a product, a method of using a product, or a method of manufacturing a product shall be extended" if the other requirements of the section are met. The term 'product' is defined in that section to comprise "drug product(s)" and "any medical device, food additive, or color additive subject to regulation under the Federal Food, Drug, and Cosmetic Act (FFDCA)." Drug products include new drugs, antibiotic drugs, and human biological products, as those terms are used in the FFDCA and the Public Health Service Act, and new animal drugs and veterinary biological products, as those terms are used in the FFDCA and the Virus-Serum-Toxin Act.49

Consequently, the statutory framework limits the availability of a patent term extension to a narrow field of products. By its narrow definition of the term 'product', the statute forecloses other products subject to pre-market approval from being eligible for extension of the patent term under § 156 of the Patent Act. A patent term extension for inventions in the pesticide industry can therefore not be issued under that section.

The White House just supercharged America's solar future with a game-changing $71 million investment.

This cash infusion will create jobs, slash energy costs, and help build a cleaner future for all, according to .

Setting aside the overall levels of empirical support, there is at least one other way to reconcile diversionary war with patterns of diversionary peace. It is possible that if diversionary war does occur it is less likely to occur between rivals. While rivalries have emotional salience because of the enduring conflict, they also involve states that have been unable to resolve the rivalry through military force, as evidenced by the rivalry’s continued existence. A war that a leader expects to lose is unlikely to be an attractive diversion from domestic woes.52 As Amy Oakes notes, many weak states are seeking at most a “diversionary spectacle,” by provoking controversy with a target “unlikely to fight back.”53 The median dyad in the international system is 71 percent more unequal in its distribution of capabilities than the median rival pair.54 Rivals, on average, are less attractive targets for opportunism than other states.

One familiar argument is the so-called diversionary (or “scapegoat”) theory of war. It suggests that leaders who are worried about their popularity at home will try to divert attention from their failures by provoking a crisis with a foreign power and maybe even using force against it. Drawing on this logic, some Americans now worry that President Donald Trump will decide to attack a country like Iran or Venezuela in the run-up to the presidential election and especially if he thinks he’s likely to lose.

This outcome strikes me as unlikely, even if one ignores the logical and empirical flaws in the theory itself. War is always a gamble, and should things go badly—even a little bit—it would hammer the last nail in the coffin of Trump’s declining fortunes. Moreover, none of the countries Trump might consider going after pose an imminent threat to U.S. security, and even his staunchest supporters may wonder why he is wasting time and money going after Iran or Venezuela at a moment when thousands of Americans are dying preventable deaths at home. Even a successful military action won’t put Americans back to work, create the sort of testing-and-tracing regime that competent governments around the world have been able to implement already, or hasten the development of a vaccine. The same logic is likely to guide the decisions of other world leaders too.

On balance, however, I do not think that even the extraordinary economic conditions we are witnessing today are going to have much impact on the likelihood of war. Why? First of all, if depressions were a powerful cause of war, there would be a lot more of the latter. To take one example, the United States has suffered 40 or more recessions since the country was founded, yet it has fought perhaps 20 interstate wars, most of them unrelated to the state of the economy. To paraphrase the economist Paul Samuelson’s famous quip about the stock market, if recessions were a powerful cause of war, they would have predicted “nine out of the last five (or fewer).” Second, states do not start wars unless they believe they will win a quick and relatively cheap victory. As John Mearsheimer showed in his classic book Conventional Deterrence, national leaders avoid war when they are convinced it will be long, bloody, costly, and uncertain. To choose war, political leaders have to convince themselves they can either win a quick, cheap, and decisive victory or achieve some limited objective at low cost. Europe went to war in 1914 with each side believing it would win a rapid and easy victory, and Nazi Germany developed the strategy of blitzkrieg in order to subdue its foes as quickly and cheaply as possible. Iraq attacked Iran in 1980 because Saddam believed the Islamic Republic was in disarray and would be easy to defeat, and George W. Bush invaded Iraq in 2003 convinced the war would be short, successful, and pay for itself. The fact that each of these leaders miscalculated badly does not alter the main point: No matter what a country’s economic condition might be, its leaders will not go to war unless they think they can do so quickly, cheaply, and with a reasonable probability of success. Third, and most important, the primary motivation for most wars is the desire for security, not economic gain. For this reason, the odds of war increase when states believe the long-term balance of power may be shifting against them, when they are convinced that adversaries are unalterably hostile and cannot be accommodated, and when they are confident they can reverse the unfavorable trends and establish a secure position if they act now. The historian A.J.P. Taylor once observed that “every war between Great Powers [between 1848 and 1918] … started as a preventive war, not as a war of conquest,” and that remains true of most wars fought since then. The bottom line: Economic conditions (i.e., a depression) may affect the broader political environment in which decisions for war or peace are made, but they are only one factor among many and rarely the most significant. Even if the COVID-19 pandemic has large, lasting, and negative effects on the world economy—as seems quite likely—it is not likely to affect the probability of war very much, especially in the short term.

Healthcare has a cost problem. No one disputes that. But what many would dispute is the assertion that rapidly rising drug prices are the root cause of the problem. They are, as the latest data from the CMS and major hospital systems clearly show. The pharmaceutical industry's campaign to deflect attention from high drug prices was on display during the confirmation hearing for Alex Azar, the former Eli Lilly executive slated to become the next HHS secretary. When pushed on what he would do to rein in drug prices—his highest priority, according to his prepared testimony—Azar rejected Medicare negotiations, including for most Part B (physician-administered) drugs. Specialty drugs and cancer therapies, usually administered in physician offices or hospital outpatient settings, are among the most expensive in medicine. Azar said his second-highest priority is to make healthcare more affordable. That will be a neat trick without tackling the No. 1 cause of rising costs, which is out-of-control drug spending. I've always counted myself among those who see the problem of rising healthcare costs as a "Pogo" issue. "We have met the enemy and he is us," as the newspaper cartoon character used to say. High hospital prices, overpaid doctors, overutilization, disparate regional care patterns all have come in for a share of the blame in recent years. There is a modicum of truth in each of those claims. But, after closely examining the latest CMS expenditures report, the indisputable fact is that rising drug and medical-device prices remain the most serious contemporary cost problem the healthcare industry has. Indeed, it threatens to overwhelm all other efforts at cost control, many of which are showing signs of progress. Let's do a quick tour through the math. When the Affordable Care Act passed in 2010, healthcare's share of the national economy stood at 17.4%. It fell to 17.2% by 2013, but by 2016 was back up to 17.9%. The small but noticeable increases in recent years are raising fears we're re-entering a period of uncontrolled spending. However, not all sectors are increasing at the same rate. Total personal healthcare consumption, not adjusted for inflation, rose 16.7% between 2013 and 2016. But its hospital spending component rose at a slower pace-15.5%. Professional services, which is mostly physician office-based care, also rose more slowly-16%. On the other hand, drug spending, whether purchased through pharmacies, mail order or online, rose by 23.9% over the past three years. That led to the drug industry gaining nearly a full-percentage-point share of the overall healthcare economy since 2013. In an economic sector where change is glacial, an increase of 1 percentage point is huge. And the share grab is actually much worse. Retail drug sales don't include the most expensive drugs-those delivered in hospital outpatient and physician offices. The CMS doesn't track that data separately, but one can get a glimpse of what's happening by examining the latest financial reports from major hospital systems. Ascension, for instance, saw its margins collapse in its most recent quarter. Total operating expenses at the nation's largest not-for-profit hospital system rose 12.9% over its last three full fiscal years, an average of 4.3% a year. Salaries, its single largest expense, rose about at the same rate. But supply costs rose 15.8%, or 5.3% a year-a full percentage point higher. Are the rising cost of bed pans, hospital gowns and syringes to blame? It seems unlikely when hospital admissions and lengths of stay are shrinking every year. Where is that care going? It's moving to outpatient settings, where they deliver cancer chemotherapy and other high-priced specialty drugs. Former drug executive Azar says his two biggest priorities will be dealing with high drug prices and rising healthcare costs. Thing Two, meet Thing One.

Finally, the broken patent system also provides a toxic incentive for pharmaceutical companies. The ability to extract year after year of hyper-profits from a handful of blockbuster drugs pushes companies to spend heavily on drug modification and lawyers who’ll protect their patent monopoly instead of investing in genuinely new drug research. In 2021, Keytruda alone made up 48 percent of Merck’s profits; Eylea 48 percent of Regeneron/Bayer’s; and Humira 40 percent of AbbVie’s. Feldman’s research found that once a drug company starts down the patent abuse road, it tends to rely on it more and more as time passes.

It has been two years since forecasters felt this good about the economic outlook. In the latest quarterly survey by The Wall Street Journal, business and academic economists lowered the chances of a recession within the next year to 29% from 39% in the January survey. That was the lowest probability since April 2022, when the chances of a recession were set at 28%. Economists, in fact, don’t think the economy will get even close to a recession. In January, they on average forecast sub-1% growth in each of the first three quarters of this year. Now, they expect growth to bottom out this year at an inflation-adjusted 1.4% in the third quarter. Just 10% of survey respondents think the economy will experience at least one quarter of negative growth over the next 12 months, down from 33% in January. The Wall Street Journal survey was conducted from April 5 to 9, just before the release of March consumer-price index data showing inflation running hotter than economists had anticipated. The U.S. economy has far outperformed expectations over the past year and a half. Instead of stumbling under the weight of the Federal Reserve’s most aggressive interest-rate-raising campaign in four decades, it has continued expanding at a robust clip. Few think that the economy can do quite as well as last year’s 3.1% growth, as measured by the seasonally adjusted fourth-quarter change from a year earlier. That figure might have been boosted by one-time factors such as federal infrastructure and semiconductor legislation and an uptick in immigration, which also might not last. Still, economists have had to rethink forecasts for a major slowdown as more time has passed and one still doesn’t seem imminent. Economists on average think the economy grew at a 2.2% rate in the first three months of the year, up from a 0.9% forecast in January. “The U.S. economy is performing very well,” EconForecaster economist James Smith said in the survey. “We’re truly the envy of the world.” Much has changed since economists were last this optimistic. Two years ago, the Fed’s benchmark federal-funds rate was set between 0.25% and 0.5%. Inflation was high but economists still generally thought that it could come down without too much help from the Fed. They forecast steady growth and the midpoint of the range for the fed-funds rate topping out at just above 2.5%. Now, the fed-funds rate is sitting between 5.25% and 5.5%, and economists don’t see a bunch of cuts coming soon. Many analysts trimmed their rate-cut forecasts after last week’s hot inflation report. But even before the report, survey respondents predicted that rates would end the year at 4.67%, implying three cuts. In January, their responses suggested that they thought four or five cuts were likely. Economists now think the economy can withstand higher rates than they did not long ago. They expect the 10-year Treasury yield—a key borrowing benchmark that was around 4.4% at the time of the survey—to end 2024 at 3.97%. Looking further into the future, they expect the yield to end 2026 at 3.78%. That is slightly above even their forecast last October, when the yield was higher than it is now. Many economists have long thought that the economy can handle higher interest rates when it is capable of growing faster, and particularly when worker productivity has increased. To that end, economists expect the Labor Department’s measure of productivity to rise at an annual rate of 1.9% over the next decade. That matches the annual increase in productivity over the last 40 years. But it is above the 1.2% pace of the 2010s, when the 10-year Treasury yield was typically stuck between 1.5% and 2.5%. Some economists are now enthusiastic about the economy’s longer-term potential. The U.S. economy—by many measures—is doing great. But many voters think otherwise. Here’s what the data say about why voters feel so bad about the economy and what it could mean for Biden in the 2024 election. “We think that the American economy has entered a virtuous cycle where strong productivity results in growth above the long-term trend, inflation between 2% and 2.5% and an unemployment rate between 3.5% and 4%,” RSM US chief economist Joe Brusuelas said in the survey. Many aren’t quite as optimistic. One downside of a better growth outlook is that a stronger economy could make it harder for inflation to fall all the way back to the Fed’s 2% target. An inflation gauge that is closely watched by the Fed, the core personal-consumption expenditures price index, was 2.8% in February, its most recent reading. Economists now expect it to end the year at 2.5%, after having forecast 2.3% in January. Economists, on average, believe that core PCE inflation will fall to 2.1% by the end of next year without a recession. However, their projections might already have ticked higher after last week’s price data, and some continue to worry that the Fed’s efforts to control inflation still present a major threat to the economy.

The global economy is in better shape than it was at the start of the year, thanks largely to the performance of the United States, the World Bank said in its latest forecast Tuesday. But the sunnier outlook could cloud over if major central banks — including the — keep interest rates at elevated levels. Global growth is expected to reach an annual rate of 2.6 percent this year, up from a of 2.4 percent, the bank said. The global economy is drawing closer to a “soft landing” after recent price spikes, with average inflation dropping to a three-year low amid continuing growth, bank economists said. While Americans’ unhappiness with high prices remains a key vulnerability for President Biden’s reelection bid, the World Bank now expects the U.S. economy to grow at an annual rate of 2.5 percent, nearly a full percentage point higher than it predicted in January. The United States is the only advanced economy growing significantly faster than the bank anticipated at the start of the year. “Globally, overall things are better today than they were just four or five months ago,” said Indermit Gill, the World Bank’s chief economist. “A big part of this has to do with the resilience of the U.S. economy.” The bank’s assessment will come as news to many Americans who remain preoccupied by the cost of living. Even as the U.S. economy outpaces Europe and Japan, and hiring stays steady, voters are irked by inflation. The price of such as rent, car insurance and beef in recent months has risen sharply. Policymakers can point to progress. Following the Federal Reserve’s fastest interest rate increases in decades, the annual rate at which overall prices are rising in April to 3.4 percent, from a mid-2022 peak of 9.1 percent. But even as the pace of price hikes has slowed, the worst inflation since the early 1980s left prices at uncomfortably high levels. Overall, consumer prices are up almost 19 percent since Biden was inaugurated. These pocketbook pressures have translated into a brittle public mood. Though public attitudes have improved over the past year as inflation declined, consumer sentiment in May slid to its lowest level in five months, according to the monthly index. Respondents said they were worried about the impact of high interest rates, saying they expected hiring to slow and income gains to ebb, according to Joanne Hsu, director of the survey. Recognizing the political danger, the White House calls lowering costs the president’s “top priority.” Biden has criticized corporations for price gouging and for cloaking price increases by reducing package sizes, a phenomenon known as “shrinkflation.” Last month, the took credit for decisions by Target and Walmart to , saying the moves came in response to calls for action by the president. In a May Gallup poll, only 38 percent of U.S. adults reported having confidence in Biden to do the right thing for the U.S. economy. That was among the lowest presidential scores the pollster reported since 2001. The World Bank, meanwhile, credited “U.S. dynamism” with helping stabilize the global economy, despite the highest interest rates in years and wars in Ukraine and the Middle East. Employers added in May, topping analysts’ estimates, the Labor Department reported last week. Expected global growth this year and next, however, will remain below the pre-pandemic average of 3.1 percent. Three out of four developing countries are now expected to grow more slowly than the bank forecast in January, leaving them little hope of narrowing the income gap with richer nations. Despite their mostly upbeat tone, bank officials warned that central banks including the Fed are likely to move slowly to begin reversing the past two years of interest rate increases. That means global interest rates will remain high, averaging around 4 percent over the next two years, roughly twice the average recorded during the two decades before the pandemic. Global inflation should ease to 3.5 percent this year, before dropping to 2.9 percent next year. But the decline is proving more gradual than the bank anticipated. And any deterioration that causes monetary authorities to delay cuts in borrowing costs could strip 0.3 percentage points from the forecast growth rates. “This is a major risk confronting the global economy — interest rates remaining higher for longer and an already weak growth outlook becoming weaker,” Gill said. Bank officials also flagged global trade — which is on course this year to complete its weakest half-decade since the 1990s — as a concern. Trading nations in 2024 have implemented more than 700 on merchandise trade and nearly 160 barriers to services trade. “Trade restrictive measures have skyrocketed. They have more than doubled since the pre-pandemic period,” Gill said. Rising protectionism risks becoming a drag on the global economy’s already modest pace of growth. Popular support in many countries for and industrial subsidies that favor domestic production could further constrict trade flows that are already under pressure from the U.S.-China rivalry and other geopolitical risks. “The world might become stuck in the slow lane,” said Ayhan Kose, the bank’s deputy chief economist. Among those likely to suffer if key interest rates stay higher for longer are the 40 percent of developing countries at risk of a debt crisis. Many borrowed heavily to fund pandemic-related health care and subsequently to cover food and fertilizer bills that soared following the war in Ukraine. They have little immediate prospect of securing debt relief and now risk losing out on trade gains as larger economies turn inward, Gill said.

The pharmaceutical industry is responsible for the research, development, production, and distribution of medications. The market has experienced significant growth during the past two decades, and totaled 1.48 trillion U.S. dollars in 2022. Top pharmaceutical company The pharma industry is composed of some major multinational companies. Based on prescription drug sales, U.S. company Pfizer has been among the for many years. The company, which has its global headquarters in New York City, generated of more than 100 billion U.S. dollars in 2022. However, back in 2020, the company saw a heavy drop in revenues after the spin-off of its Upjohn generics business. Other top global players from the United States include Johnson & Johnson, Merck & Co., and . Pharma industry by country Many of the leading pharma companies come from the United States, and, therefore, it is no surprise that the country has the . China has become one of the main players in the industry, although currently fighting with receding growth rates as in many other sectors. Among emerging markets, was very strong in Brazil during 2022. However, show that the established markets of North America and Europe will still be leading the way in the foreseeable future. Some of the biggest European companies are Novartis, Roche, AstraZeneca, and . How much do companies spend on R&D? More than any other industry, the pharmaceutical sector is highly dependent on , with companies investing around 20 percent or more of their sales revenues in R&D projects. This at companies that specialize in research and generate low sales. The discovery of new drugs is vital for the continued growth of pharma companies, and sales of new branded drugs can provide . However, the loss of patent protection can have serious consequences, and competition from generic drugs is a major challenge for companies. The expiration of a product patent can result in a significant reduction in revenues, as experienced by .

Fitch Ratings-London-20 December 2022: The global pharmaceutical and biotech sector is returning to innovation-driven growth as demand normalises following Covid-related dislocations, Fitch Ratings says. However, new treatments will increasingly be subject to regulatory attention, particularly regarding access and drug pricing. Meanwhile, favourable secular trends will also support industry growth. We expect business models in the industry to continue to specialise around three core pillars: innovative pharma, generics and consumer health. This follows the simplification of business models established by Pfizer and GSK that focused on core innovation. We expect a similar strategic refocus could be implemented at Novartis, which has already expressed its desire to separate its generic and innovative pharma businesses, and streamline its research efforts. We also expect Sanofi to continue its repositioning towards specialty pharma over the medium term. The specialisation of business models reflects increasingly diverging underlying strategic drivers. Generics and consumer health are benefitting from increasing scale and access to distribution, whereas the specialisation of innovative pharma reflects the strong innovation pipeline increasing capital requirements to support state-of-the-art research. We also expect active portfolio management within companies’ divisions, including targeted M&A and partnering opportunities, but also divestments of tail-end drugs and brands to free up resources for innovation. In our view this will continue to offer significant investment opportunities in the mid-cap pharma market, attracting significant private equity capital, particularly in consolidating European markets. Research and development productivity is becoming increasingly important as complexities and investment requirements of new drug developments are growing. Given a rising risk/return ratio, we expect market participants to take a more targeted and selective approach to bolstering research, favouring partnerships and cooperation over outright M&A, and business models that have been successfully implemented during the pandemic. However, we also expect regulators to increasingly focus on access to treatment and pricing, particularly due to public finances being under pressure after the pandemic. Most Fitch-rated global pharma companies enter 2023 with comfortable rating headroom. This not only reflects benefits for issuers involved in the pandemic response (including treatments and vaccines), but also the business model specialisation, which has led to a simplification of businesses, often raising disposal proceeds and increasing financial flexibility. However, the current rating headroom could be reinvested in the business, particularly to strengthen innovation or scale selectively, like the recently announced acquisition of Horizon by Amgen. We expect total debt/EBITDA across the sector to gradually trend back towards 2x by 2024, which we view as the historical average. We also expect cash flow generation in the sector to remain stable. As we project a steady and favourable operating environment for global pharma issuers over our rating horizon, rating changes are likely to be driven by capital allocation decisions. In addition, the current capital market environment might make access to capital for early-stage biotech ventures more difficult, offering consolidation opportunities. In the absence of investments into the businesses, we would also consider there to be some event risk around an increase of shareholder distributions.

Last year, the three largest US-listed pharmaceutical companies by revenues, Pfizer, Johnson & Johnson, and Merck, spent a combined $39.6 billion on R&D. That is, admittedly, a lot of money. But less than Medicare is currently paying on just ten drugs — a vast pool of potential savings that could simply be handed over to the National Institutes of Health (NIH) to finance R&D directly. Moreover, those same companies funneled almost as much money to Wall Street, through dividends and share buybacks, to the tune of $35.7 billion. And they also found $40.1 billion to spend — just in cash — on acquisitions of other, already-existing drug companies. That’s not even getting into the bloated marketing budgets spent on convincing both doctors and patients to buy their products. If the companies’ books are any indication, spending money on R&D for new drugs is not exactly the top priority for Big Pharma.

The truth is, the biggest pharmaceutical companies aren’t really drug development companies at all: they’re marketing, lobbying, and litigation firms with patent portfolios. While Big Pharma holds vast portfolios of existing patents for prescription drugs, the innovation pipeline for new drugs actually has very little to do with Big Pharma. In reality, public sources — especially the NIH — fund the basic research that makes scientific breakthroughs. Then small, boutique biotech and pharmaceutical firms take that publicly generated knowledge and do the final stages of research, like running clinical trials, that get the drugs to market. The share of small companies in the supply of new drugs is huge, and it’s still growing. Fully two-thirds of new drugs now come from these small companies, up from one-third twenty years ago. It is not the research labs of Pfizer that are developing new drugs.

In the past, the industrial sector, particularly manufacturing, has been a major source of productivity gains. Efficiency improvements in most manufacturing industries has drastically slowed, but for a while computers and electronics picked up the mantle and kept manufacturing productivity growing. As “Moore’s law”—the seemingly inexorable climb in electronics performance—has proven harder to sustain, even productivity gains in this industry have slowed. Wholesale and retail trade has also contributed to productivity growth. Stiff competition among large companies like Walmart, Kroger, and Costco forced the industry to consolidate and speed distribution and point-of-sale efficiency. These gains also have faded, unfortunately, despite the revolution in online retail.

Some worry that rapid technological progress, specifically in automation and robotics, may lead to workers being replaced by machines in many industries, and that this will generate societal disruptions not seen since the onset of the Industrial Revolution. The authors of Demographics and Automation (NBER Working Paper No. 24421) offer a different narrative. Daron Acemoglu and Pascual Restrepo show that changing demographics are one factor that relates to the adoption of new technologies. An aging workforce leads to automation, particularly through robotics, as employers react to a scarcity of middle-aged workers. New automation and robotic technologies are deployed more rapidly in countries where young and middle-aged workers are comparatively scarce. The researchers study the demographic differentials within industries and between countries in an effort to explain the large country-to-country differences in the adoption of new automation and robotic technologies. The number of industrial robots per thousand workers in the U.S. manufacturing sector, for instance, stood at 9.1 in 2014; the numbers were significantly higher in Japan (14.2) and Germany (17.0), both of which have older populations. Using data from a variety of sources, including the International Federation of Robotics, the researchers zero in on the age distribution of the working population as a potential driver of robotic innovation. They define middle-aged workers as those between the ages of 26 and 55, and older workers as those over the age of 55. They find that countries that are undergoing more rapid aging, meaning that they are experiencing a greater proportional decrease in the number of middle-aged workers relative to older workers, invest significantly more in robotics. They are more likely to develop new technologies and manufacture robots, and to deploy these robots in production. Population aging can explain almost 40 percent of the country-to-country variation in the adoption of industrial robots. The researchers estimate that a 10 percentage point increase in the ratio of the number of middle-aged to older workers is associated with 0.9 more robots per thousand workers. In their sample of developed countries over the last two decades, the average number of robots per thousand workers was three. The researchers estimate that demographic differences can explain 25 percent of the gap in the number of robots per worker between the United States and Germany. They also find that the shift to automation is more pronounced in industries that traditionally rely more heavily on middle-aged workers. While the implications of population aging for a nation's productivity are ambiguous, and depend on how technology responds to demographic change, the implications for the relative productivities of specific industries are clear: "[B]ecause of the induced increase in automation, industries with the greatest opportunities for automation should increase their value added per worker relative to other industries."

Faster productivity growth in the U.S. economy provides many benefits such as faster wage growth without adding to inflationary pressures. It also hinges on a few key factors such as public infrastructure investments and private business investments in updated facilities and new technologies. The U.S. economy has seen an acceleration in productivity growth – how output per hour has changed – over the past year. This is atypical for this stage in a business cycle. That is, productivity growth has unexpectedly accelerated. This acceleration could reflect recent trends in public and private investments as well as in employment. Given that these trends have continued, albeit in slightly different forms, there is a good chance that productivity growth will continue at a healthy pace.

Faster Productivity Growth At The Heart Of Rising Living Standards

If the United States’ economy were an athlete, right now it would be peak LeBron James. If it were a pop star, it would be peak Taylor Swift. Four years ago, the pandemic temporarily brought much of the world economy to a halt. Since then, America’s economic performance has left other countries in the dust and even broken some of its own records. The growth rate is high, the unemployment rate is at historic lows, household wealth is surging, and wages are rising faster than costs, especially for the working class. There are many ways to define a good economy. America is in tremendous shape according to just about any of them. The American public doesn’t feel that way—a dynamic that many people, including me, have recently to explain. But if, instead of asking how people feel about the economy, we ask how it’s objectively performing, we get a very different answer. Let’s start with economists’ favorite metric: growth. When an economy is growing, more money is being spent. More stuff is being produced, more services are being performed, more businesses are being started, more workers are being hired—and, because of this abundance, living standards are probably rising. (On the flip side, during a recession—literally, when the economy shrinks—life gets materially worse.) Right now America’s economic-growth rate is the envy of the world. From the end of 2019 to the end of 2023, U.S. GDP grew by 8.2 percent—nearly twice as fast as Canada’s, three times as fast as the European Union’s, and more than eight times as fast as the United Kingdom’s. “It’s hard to think of a time when the U.S. economy has diverged so fundamentally from its peers,” Mark Zandi, the chief economist at Moody’s Analytics, told me. Over the past year, some of the world’s biggest economies, including those of Japan and Germany, have fallen into recession, complete with mass layoffs and angry street protests. In the U.S., however, the post-pandemic recession never arrived. The economy just keeps growing. Still, growth is a crude measure that says very little about people’s day-to-day lives. Perhaps the right question to ask is: Are most Americans better off financially than they were before the pandemic? One school of thought maintains that the answer is no, because of the rising cost of living. Thanks to three years of higher-than-usual inflation, just about everything costs more than it did before the pandemic. Price increases on their own, however, can’t tell us if the cost of living has gone up. What really matters is the relationship between how expensive things are and how much money people have to spend on them. As Vox’s Eric Levitz recently , prices have by 1,400 percent since 1947; that doesn’t mean Americans have less buying power today than at a time when of the country didn’t have running water and lived in poverty. That’s largely because incomes have increased by 2,400 percent over the same stretch. If prices go up but people’s incomes go up faster, then the cost of living decreases. And that is exactly what has happened in the U.S. over the past five years. It took some time. When inflation was at its worst, in late 2021 and 2022, prices were rising too fast for workers’ pay to keep up. Over the course of 2023, however, the rate of inflation plummeted while wages kept rising. According to calculations by the economist Arindrajit Dube, prices rose about 20 percent from the beginning of the pandemic to the end of 2023—but the median worker’s hourly wages had increased by more than 26 percent. In other words, a dollar in 2024 might not go as far as a dollar in 2019, but today the average worker has so many more dollars that they can afford a higher quality of life. Some experts dispute this. Loretta Mester, the president of the Cleveland Federal Reserve, recently that wage growth hadn’t kept pace with inflation, citing an that tracks changes in compensation within particular industries. But one of the most common ways for workers to get a raise is to move between industries, from lower- to higher-paying occupations—the way someone working as a fry cook, say, might next take a job as a package-delivery driver. Basically every other measure of worker pay that wages adjusted for inflation are higher today than they were before the pandemic. Dube’s are particularly reliable because they are based on a that tracks wages for individual workers over time. Other nations probably wish they had the luxury of debating such technicalities. From the beginning of the pandemic through the fall of 2023, the last period for which we have good comparative data, real wages in both Europe and Japan fell. In Germany, workers lost 7 percent of their purchasing power; in Italy, 9 percent. By these metrics, the only workers in the entire developed world who are meaningfully better off than they were four years ago are American ones. Averages can conceal a lot, of course. The rise in inflation-adjusted wages, which economists call “real wages,” might not be such good news if it were flowing mostly to the already-wealthy, as it did during the recovery from the Great Recession. In fact, from 1964 through 2018, real wages for most workers ; almost all gains went to the richest Americans. In the early days of the pandemic, when millions of low-income workers found themselves suddenly out of a job, it would have been reasonable to expect the same trend to play itself out. Instead, the opposite happened. A from the Economic Policy Institute found that from the end of 2019 to the end of 2023, the lowest-paid decile of workers saw their wages rise four times faster than middle-class workers and more than 10 times faster than the richest decile. A by Dube and two co-authors reached similar conclusions. Wage gains at the bottom, they found, have been so steep that they have erased a full third of the rise in wage inequality between the poorest and richest workers over the previous 40 years. This finding holds even when you account for the fact that lower-income Americans tend to spend a higher proportion of their income on the items that have experienced the largest price increases in recent years, such as food and gas. “We haven’t seen a reduction in wage inequality like this since the 1940s,” Dube told me. Pay in America is becoming more equal along race, age, and education lines as well. The wage gap between Black and white Americans has to its lowest point since at least the 1980s. Pay for workers younger than 25 has increased as older workers’ pay. And the so-called —the pay gap between those with and without a college degree—has shrunk to its lowest measure in 15 years. (The gender pay gap has also slightly, but far less than the others.) What explains this sudden boost in lower- and middle-class wages? The answer lies in the post-pandemic American labor market, which has been unbelievably strong. The —defined as the percentage of workers who have recently looked for a job but don’t have one—has been at or below 4 percent for more than two years, the longest streak since the 1960s. Even that understates just how good the current labor market is. Unemployment at any point during the 1970s, ’80s, or ’90s. In 1984—the year Ronald Reagan declared “It’s morning again in America”—unemployment was above 7 percent; for most of the Clinton boom of the 1990s, it was above 5 percent. The obvious upside of low unemployment is that people who want jobs can get them. A more subtle consequence, and arguably a more important one, is a shift in power from employers to workers. When unemployment is relatively high, as it was in the years immediately following the 2008 financial crisis, more workers are competing for fewer jobs, making it easier for employers to demand higher qualifications and offer meager pay. That’s how you end up with about college graduates working as baristas for $7.25 an hour. But when unemployment is low and relatively few people are looking for jobs, the relationship inverts: Now employers have to compete against one another to attract workers, often by raising wages. And—this is the crucial part—these dynamics affect all workers, not just people who are out of a job. This helps explain what happened after the pandemic. When the economy first reopened, employers suddenly had to fill millions of positions. Meanwhile, workers—flush with stimulus checks and expanded unemployment insurance—could afford to say no to bad jobs. In response, even famously low-paying companies such as Amazon, Walmart, and McDonald’s started and offering new benefits to attract employees. What was the “Great Resignation” was really more of a great reshuffling, as record numbers of workers quit a job to take a better-paying one. Over the next couple of years, as American consumers kept spending money, demand for labor stayed high. “Low-wage workers are finally getting a small taste of the bargaining power that highly paid professionals experience most of the time,” Betsey Stevenson, a labor economist at the University of Michigan, told me. So far we’ve been talking about wages: the money people are paid by their employer. To better capture overall financial well-being, we might instead look at household wealth, which takes into account the full range of people’s debts and assets. Over the past few years, Americans have experienced the biggest surge in wealth in at least three decades. The gold standard for research into the state of Americans’ finances is the Federal Reserve’s Survey of Consumer Finances, released every three years. The found that, from 2019 to 2022, the net worth of the median household increased by 37 percent, from about $141,000 to $192,000, adjusted for inflation. That’s the largest three-year increase on record since the Fed started issuing the report in 1989, and more than double the next-largest one on record. (According to from the Fed, wealth continued to rise across the board in 2023.) Every single income bracket saw net worth increase considerably, but the biggest gains went to poor, middle-class, Black, Latino, and younger households, generating a slight reduction in overall wealth inequality (though not nearly as steep a reduction as the decline in wage inequality). By comparison, median household wealth actually by 19 percent from 2007 to 2019. An important caveat to the wealth statistics is that much of the recent increase came from the surge in home prices. A family that’s wealthier on paper might not feel rich if they would have to sell their home to realize any gains—especially if all the places they might want to move to have gotten similarly expensive. Indeed, the out-of-control cost of housing is perhaps the biggest black mark on an otherwise excellent economy. This problem started decades ago—since the 1980s, the median U.S. home price has by more than 400 percent, twice as fast as incomes—and got even worse during the pandemic, as the rise of remote work prompted millions of people to seek more space. Those rising prices have collided with higher interest rates to produce the in at least a generation. Would-be homeowners can’t afford to buy, and many existing homeowners feel stuck in place. Housing is one of several crucial categories, along with child care, health care, and higher education, that have ballooned in cost in recent decades, putting a middle-class lifestyle further and further out of reach—what my colleague Annie Lowrey has the “Great Affordability Crisis.” The past few years of high interest rates, which make borrowing money more expensive, have jacked up costs even more. And despite the recent good news, the U.S. still has lower life expectancy and much higher levels of inequality, poverty, and homelessness than other wealthy nations. For millions of people, getting by in America was a struggle before the pandemic and continues to be a struggle today. Still, that doesn’t change the fact that the U.S. economy has had a remarkable four-year run, judged against both its own history or the international competition. A few years of good news isn’t enough to make up for 40 years of rising inequality and stagnant wages. But it’s a whole lot better than the alternative.

The pharmaceutical landscape is undergoing a transformative phase, driven by groundbreaking innovations, disruptive technologies, and a heightened focus on personalized medicine. Despite the challenges posed by the COVID-19 pandemic, the industry has demonstrated remarkable resilience, adapting to the new normal and embracing digital transformation. The global pharmaceutical manufacturing market is poised for significant growth, projected to exceed $570.01bn in 2024, driven by increasing demand for innovative therapies and rising healthcare expenditures. The key market segments, including oncology, immunology, diabetes, cardiovascular, respiratory, and central nervous system disorders, are expected to witness substantial growth in the coming years. The pharmaceutical manufacturing market witnessed robust growth of 12% in 2023, reaching $508.48bn in revenues. This surge can be attributed to factors such as the increasing number of prescription drugs, an aging global population, and the growing demand for innovative medicines. Technological Breakthroughs The convergence of science and technology is fueling innovation in the pharma industry. Artificial intelligence (AI) and big data analytics are revolutionizing drug discovery, clinical trials, and personalized medicine. The report highlights ten key technological trends that are transforming the pharmaceutical landscape, including: 1. Artificial Intelligence in Pharma: The application of artificial intelligence (AI) is accelerating drug research and development. AI algorithms analyze massive datasets of genetic and medical information, leading to the identification of new drug targets and the development of more effective therapies. Startups are leveraging AI to address various challenges, such as automating and optimizing production processes, as well as developing successful marketing and post-launch strategies. AI streamlines patient identification for clinical trials, making the process quicker and more cost-effective by scanning electronic health records and unstructured doctors' notes. 2. Big Data & Analytics: The pharmaceutical industry requires high-performance systems to process the vast amounts of data generated throughout the drug research and development process. Advanced analytical methodologies are transforming historical and real-time data held by pharmaceutical companies into valuable assets for predictive, diagnostic, prescriptive, and descriptive analytics. These pharmaceutical analytics approaches are applied to various types of medical data, including patient records, medical imaging, and hospital data, to gain insights and drive decision-making. 3. Flexible Production: As market dynamics change, the pharmaceutical sector is exploring novel production methods, such as small batches for precision medicine and single-use bioreactors. These bioreactors eliminate downtime and increase output by removing tasks like cleaning and validation from distinct production phases. New bioreactor systems and continuous production procedures are being developed to meet the growing demand for biopharmaceuticals, reducing energy consumption, increasing productivity, and minimizing waste. 4. Precision Medicine: Precision medicine is based on the notion of treating each patient as a unique individual. Advances in omics and data analysis are revealing new information on how the human body responds to drugs. This information, combined with innovative production techniques like additive manufacturing, is making personalized medicine a reality. Drug exposure models calculate the pharmacokinetic and pharmacodynamic properties of drugs to determine the appropriate dosage based on age, gender, comorbidities, and other clinical data. 5. Additive Manufacturing: The demand for precision medicine is forcing pharmaceutical corporations to rethink the production process. Significant research is being conducted to develop powerful 3D printers capable of creating tissues or cells. The pharmaceutical industry utilizes 3D printing for drug development, organ engineering, and regenerative medicine. Additive manufacturing enables the production of medicinal formulations tailored to age or physiology, as well as precise tablets. 6. Blockchain: Blockchain technology has immense implications for the pharmaceutical sector at all stages of drug development and delivery. Due to the sensitive nature of the data, players in the pharmaceutical sector are often quite discreet about it. Blockchain is being explored to combat the use of counterfeit pharmaceuticals and inferior treatments in the supply chain, which claim thousands of lives each year. Blockchain is a viable tool for tracking and securing the pharmaceutical transaction ecosystem as transactions become more digital. 7. Extended Reality (XR): Mixed reality (MR), virtual reality (VR), and augmented reality (AR) are enabling visualizations like never before. Pharma entrepreneurs are investigating the use of extended reality technology in pharmaceutical research and manufacturing. Extended reality solutions provide data-rich and relevant real-time location-based engagement among research teams. Human enhancement in pharmaceuticals is becoming a reality thanks to startups developing extended reality devices and technologies. 8. Digital Therapeutics: Digital therapy uses software to provide evidence-based therapeutic treatments for the prevention, management, and treatment of physical, mental, and behavioral issues. These non-pharmacological, technological solutions can be used alone or in combination with drugs, devices, or therapy. Digital medicines give each individual more control over their health and outcomes, enabling personalized treatment and improved patient convenience. 9. Curative Therapies: There is a paradigm shift in the treatment of diseases, from disease management to disease cure. Curative therapies, such as cell and gene therapies, are revolutionizing the way we treat chronic diseases and difficult-to-treat conditions by eliminating the need for long-term medications. Gene therapy involves introducing genetic material into cells to correct defective genes or produce a beneficial protein, often using genetically modified viruses as vectors. These cutting-edge technologies are enabling pharmaceutical companies to optimize processes, enhance efficiency, and develop targeted therapies tailored to individual patient needs. Emerging Therapies Latest advancements in emerging therapies, such as oncology, immunology, and rare diseases. The oncology market, in particular, is being revolutionized by innovative approaches like immunotherapy and targeted therapies, with spending in this segment expected to reach $375 billion by 2027. Moreover, the biotech sector is expected to experience substantial growth, with emerging biopharma companies accounting for a significant portion of the oncology pipeline, indicating the pivotal role of smaller, nimbler firms in driving cutting-edge cancer innovation. Strategic Imperatives To capitalize on the growth opportunities and navigate the evolving landscape, the report outlines several strategic imperatives for pharmaceutical and biotech companies: 1. Embracing digital transformation and harnessing new technologies like AI, big data, and automation to accelerate drug discovery and development. 2. Pursuing agile business development strategies, including strategic partnerships, mergers and acquisitions, and venture investments, to access emerging science, talent, and high-potential markets. 3. Developing advanced therapies in cutting-edge areas like oncology, rare diseases, gene therapy, and personalized medicine to address significant unmet needs. 4. Adapting product portfolios and pipelines to diversify from blockbuster drug dependence, optimize non-core assets, and prepare for patent expires. Conclusion: The pharmaceutical industry is at an inflection point, poised for transformative growth and innovation. Companies that embrace digital transformation, foster agile business strategies, and invest in cutting-edge therapies will be well-positioned to capture a larger share of the market and drive meaningful impact on patient lives. As the industry continues to evolve, it will be crucial for stakeholders to stay informed, adapt to changing market conditions, and seize opportunities for growth and innovation.

Evidence since 2021 suggests that these troubling signs have reversed themselves and that we are in the midst of a startup boom. This boom in business formation could be meaningful for local economies: More new businesses can lead to more job creation, faster productivity growth, and stronger wage growth. New businesses can also increase competition and decrease corporate concentration, boosting wages and reducing prices.

Existing research first identified this surge in entrepreneurship and business formation, and new analysis from the Center for American Progress with a specific focus on state and county data finds that:

In this paper, we undertook a detailed review of 1,589 clinical trials, 410 FDA drug approvals, and 10 years of biopharmaceutical company financial data in order to examine trends in drug innovation. We found the following:

Low R&D costs, not high prices, are the primary driver of pharmaceutical innovation. The U.S Food and Drug Administration and its counterparts around the world require drugmakers to undertake large, costly clinical trials if they study common diseases with tens of millions of patients, like diabetes and heart disease. By contrast, companies that study ultra-rare “orphan” diseases affecting a few thousand patients endure far lower R&D costs and upfront financial risk. As a result, companies are increasingly focusing on orphan diseases and abandoning work on large public health problems. 48% of all drugs in phase III clinical trials in 2020 are for treatments of orphan diseases, despite the fact that orphan drugs represent 11% of U.S. drug spending and currently treat 0.5% of the U.S. population.