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France’s pharmaceutical industry in global value chains

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  • R. Cezar

Abstract

Companies are increasingly engaged in global value chains (GVCs). All of their activities, from design to bringing products to market, are spread across a variety of domestic and foreign participants. Taking the example of the French pharmaceutical industry, we use trade in value added indicators to examine this phenomenon. Over the 2000-2014 period, the French pharmaceutical industry opened up to GVCs, as reflected in the 392% increase in the share of imported value added in its exports and the 185% increase in the share of exported domestic value added. After being especially pronounced between 2007 and 2010, however, this integration process has slowed since 2012: the share of foreign value added in exports was smaller in 2014 than in 2012. The degree to which companies participate in GVCs is heterogeneous: exporting firms make greater use of imported inputs and are thus more integrated than those that produce for the domestic market. Foreign multinational businesses operating in France participate to a larger extent in GVCs than French multinationals producing in France. The opening up of the pharmaceutical industry to GVCs has been accompanied by greater diversification in trade partners and increased production sharing with zones outside Europe’s borders. Today, international production sharing within the industry involves the major euro area countries but also the UK, Switzerland, the USA, Poland, as well as the large Asian economies such as China. Integration of the French pharmaceutical industry in GVCs has gone hand in hand with rising direct investment, both outward by French firms and inward by foreign firms in France, and an increase in income earned by the French economy within the framework of the international organisation of production.

Suggested Citation

  • R. Cezar, 2016. "France’s pharmaceutical industry in global value chains," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 44, pages 52-63, Winter.
  • Handle: RePEc:bfr:quarte:2016:44:05
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    File URL: https://publications.banque-france.fr/sites/default/files/medias/documents/qsa44_winter-2016.pdf#page=52
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    References listed on IDEAS

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    Cited by:

    1. R. Cezar & A. Duguet & G. Gaulier & V. Vicard, 2017. "Competition for Global Value Added: Export and Domestic Market Shares," Working papers 628, Banque de France.

    More about this item

    Keywords

    pharmaceutical industry; trade in value added; global value chains; FDI; heterogeneity of exporting firms; firm data;

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • F15 - International Economics - - Trade - - - Economic Integration
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics

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