Center for Research on Science, Technology and Society

Priscila Koeller
Planning and budget analyst at CTS-Ipea.
This email address is being protected from spambots. You need JavaScript enabled to view it.

Francisco Levy
Research fellow under the National Development Research Subprogram at CTS-Ipea.
This email address is being protected from spambots. You need JavaScript enabled to view it.

The production of innovative medicines and the incorporation of new technologies in healthcare have been the focus of attention in several countries, but this movement has intensified in recent years, mainly as a result of the COVID-19 pandemic (Aitken et al., 2015; Congressional Budget Office, 2021; Queiroz, 2024; Vargas, 2024). The health crisis triggered by the new coronavirus (Sars-CoV-2) and the need for new drugs and vaccines to combat it have highlighted the societal importance of innovation in the pharmaceutical industry.

However, countries’ participation in the production—and especially in the innovation—of medicines is not homogeneous. This raises two key questions: which countries stand out in drug production, and what patterns and outcomes in innovation are observed in the pharmaceutical industry? As there is no single metric capable of identifying which countries stand out in production and innovation in this sector, this study focuses on selected international trade data and indicators of innovative effort and innovation outcomes within the pharmaceutical industry.

To map the importance of countries in the production of pharmaceutical products, we considered their level of international integration, using the volume of pharmaceutical exports as the main indicator. This metric reflects, to some extent, the development of the productive capacity of this activity in each of them. Table 1 presents Brazil and the 14 countries with the highest volume of pharmaceutical exports in descending order, considering the most recent available data (2023).

Table 1 — Volume of pharmaceutical exports by country, from 2015 to 2023 (in millions of current dollars)

Source: WTO. Available at: https://stats.wto.org/. Retrieved on: May 14, 2025.

Data from the World Trade Organization (WTO) on pharmaceutical exports shows that the main exporting countries are largely concentrated in Europe, with the exception of the United States, India, and China. The ranking remained relatively stable between 2015 and 2023, apart from Slovenia, which rose from 22nd place in 2015 to 13th in 2023. The data also shows that the top five countries in the ranking accounted for more than half (53.2%) of global pharmaceutical exports in 2023, while the top ten accounted for 75.6%—apart from the United States, all of which are European countries. Brazil ranked 35th in terms of pharmaceutical export volume in 2023.

However, export data alone is not sufficient, as some countries function primarily as ports of entry for pharmaceutical products — a situation that may apply to certain members of the European Union. To complement these figures, we also considered statistics on value added incorporated into final foreign demand (OECD, 2023, p. 32) in the manufacture of chemical and pharmaceutical products.

Table 2 — Value added incorporated into final foreign demand in the manufacture of chemical and pharmaceutical products, from 2015 to 2020 (in millions of current dollars)

Source: OECD (2023) — Trade in Value Added (TiVA) 2023 edition: Principal Indicators. 

Available at: https://data-explorer.oecd.org/?pg=0&bp=true&snb=15&tm=TIVA. Retrieved on: June 9, 2025.

As shown in Table 2, China ranked first in value added incorporated into final foreign demand during the 2015-2020 period, for which data are available, followed by the United States. European countries (8) were prominent among the top 15, followed by Asian countries (6). In 2020, Brazil ranked 24th.

There are 11 countries that appear in both groups—the top 15 exporters of pharmaceutical products and the top 15 in value added incorporated into final foreign demand: Germany, Belgium, China, the United States, France, the Netherlands, India, Ireland, Italy, the United Kingdom, and Switzerland. For these countries, innovative efforts and innovation outcomes were analyzed and compared with Brazil's performance.

Innovative effort and results

The analysis of innovative effort and innovative outcomes for these 11 countries and Brazil is constrained by the limited availability of comparable indicators for the same years. For this reason, two proxies were selected, based on the availability of data for as many of these 11 countries and Brazil as possible. 

The first measures innovation effort through research and development (R&D) intensity, defined as R&D expenditure[1] relative to the total value added in the pharmaceutical sector.[2] For the second proxy—aimed at assessing innovation outcomes—the number of patents application filed by these countries with the European Patent Office (EPO) was used. The choice of EPO data reflects both the availability of patent information by technological field and the fact that EPO is one of the world’s leading patent offices. However, some degree of overrepresentation of European Union countries is expected.

Graph 1 shows that, among the selected countries, the most R&D-intensive pharmaceutical industry is in the United States, where approximately 48% of the value added was allocated to these activities in 2021. In the same year, Belgian pharmaceutical companies stood out within the European group, spending 32% of the value added in the pharmaceutical industry. This level is higher than that observed in Germany (19%), France (17%), and Switzerland (15%). 

Graph 1 — R&D expenditures as a proportion of value added in the pharmaceutical industry 2017, 2020-2022

Source: OECD - Analytical Business Enterprise R&D (ANBERD); STAN Database for Structural Analysis; Pintec 2017; PIA 2017; Annual Survey of Industries (ASI); S&T Indicators Tables. Retrieved on: July 31, 2025. Note: For Brazil, the latest information available broken down by economic activity, comparable with the statistics presented, is from the 2017 Innovation Survey (Pintec 2017).

As for Brazil, the 2017 data point to a low R&D intensity in the domestic pharmaceutical industry, with expenditures corresponding to just 2.75% of the value added. It is noteworthy that all the selected countries invested more than 5% of value added in R&D in the same year. By contrast, firms in the same sector in India—another middle-income country, according to the World Bank's 2023 income classification—showed higher R&D intensity, with the indicator reaching 10% in both 2017 and 2020.

As a measure of the outcomes of R&D spending, we adopted the share of each country's pharmaceutical patents in the total number of pharmaceutical patent applications filed with the EPO. To do this, we identified patent applications in the pharmaceutical technological field (Schmoch, 2008). This indicator is widely used in the literature on innovation, although it has limitations: not all R&D activities lead to patents, and not all patents translate into innovation (Koeller and Miranda, 2021, p. 589). As highlighted in the OECD Patent Manual, patents are closely, albeit imperfectly, linked to innovation (OECD, 2009, p. 27) and are particularly relevant in the pharmaceutical industry due to their association with both R&D expenditure and innovative activity (Grabowski, 2002; Lehman, 2003; Cockburn, Long, 2015).

Table 3 — Share (%) of Patents in Pharmaceutical Products by Country in the Total Number of Pharmaceutical Patents Applied for at the EPO, from 2017 to 2024

Source: EPO. Available at: https://www.epo.org/en/about-us/statistics/statistics-centre#/customchart. Retrieved on: August 1, 2025. Note: The available information does not allow for the selection of only depositing companies and therefore refers to the set of depositors.

The patent indicator (Table 3) shows a strong concentration of applications from the United States (37.0%), followed by Germany (7.3%) and France (5.9%), considering the group of 11  selected countries in 2024. It is worth noting that these countries account for roughly 75% of all patent applications in the pharmaceutical technology field. China stands out for its shift in position: rising from 8th place in 2015 to 4th in 2024, more than doubling its share over the decade. India, a lower-middle-income country, lost ground in the ranking, moving from 10th place in 2015 to 11th in 2024. Even so, it maintained its share between 1.0% and 1.5% throughout the period, a result that is notable given the overrepresentation of European Union countries.

Brazil, by contrast, has maintained a relatively stable share over the period, ranging from 0.2% in 2015 to 0.1% in 2024, far below the 5% or more recorded by the top five countries in the ranking. Its performance is also weak when compared with India, whose share in 2024 was one percentage point higher than Brazil.

Challenges and prospects for Brazil

The analysis of the innovative effort and associated outcomes of the pharmaceutical industry in countries that concentrated exports and the added value incorporated into final foreign demand in the manufacture of chemical and pharmaceutical products can be seen as a benchmark for the development of this sector in Brazil.

R&D expenditure indicators show that Brazil's efforts remain modest compared to the 11 countries that stand as leading players in the pharmaceutical industry in recent years. Patent indicators follow the same pattern, suggesting that the results, measured by this metric, likely correspond to the country’s relatively low level of investment in innovation.

Finally, beyond the European countries and the United States, China stands out, not only for the indicator of value added incorporated into final foreign demand in the manufacture of chemical and pharmaceutical products, but also for the rapid growth of its share in global patent statistics, despite being, like Brazil, an upper-middle-income country. India also stands out because, although it ranks 11th in patent participation among the selected countries, it appears in this ranking and, throughout the period considered, shows percentages above those presented by Brazil, despite being a lower-middle-income country.

[1] For research on R&D expenditures, the period from 2015 to 2022 was considered. Data were not available for China and Ireland.

[2] For data extracted from the OECD, the economic activity considered is NACE 21 — Manufacture of basic pharmaceutical products and pharmaceutical preparations; for Brazil, the economic activity is CNAE 21 — manufacture of pharmaceutical chemicals and pharmaceutical products; for India, the classification is NIC, code 21 — Manufacture of pharmaceuticals, medicinal chemical and botanical products — all compatible with each other.

This work was funded by the Ministry of Health (MS), through the Decentralized Execution Term (TED) No. 6, of 2022.

The opinions expressed in this publication are the sole and entire responsibility of the authors and do not necessarily reflect the views of the Institute of Applied Economic Research or the Ministry of Planning and Budget.