Industrial health economy on a steady course


On october 23rd, Life Science Nord released the latest key figures on the economic strength of Northern Germany’s industrial health economy. Dr Sandra Hofmann from the economic research institute WifOR presented these numbers during an online event. Cluster manager Dr Hinrich Habeck then ranked these figures within the context of the current COVID-19 crisis based on a recent survey of industry players on the impacts of the pandemic.

The Minister of Economic Affairs Schleswig-Holstein Dr Bernd Buchholz and Hamburg’s Senator for Economics Michael Westhagemann commented on the management of the crisis, support measures and future prospects from the political point of view of the federal states.

Foto: Shutterstock/Arthimedes
Foto: Shutterstock/Arthimedes
Industrial health economy on a steady course

Michael Westhagemann, Hamburg’s Senator for Economics and Innovation, added: ‘Our top priority shall remain the liquidity of companies and the protection of jobs. Measures to further strengthen network structures within the clusters have proven to be helpful and have led to rapid success. One example where this worked well was swiftly assigning employees to work in different industries, which had been affected by reduced working hours or a shortage of skilled professionals. It actually makes perfect sense to pool expertise and to collaborate closely, thereby driving important innovations.’

Both politicians agreed that these measures must be further expanded in the future whilst also taking acute needs into consideration. Above all, the preservation and endorsement of innovation must be guaranteed so that the crisis challenges may be appropriately addressed and the economic power of the cluster may be further secured.

What is the financial state of the industrial health economy in Hamburg and Schleswig-Holstein? How are employment figures and exports developing? And how is this spilling over and affecting other areas of the economy? Answering this question, especially in times of the COVID-19 pandemic, is no easy task. The crisis is undermining all previously existing parameters and creating challenges that could have never been imagined.

At the request of the North German industry network Life Science Nord, the economic research institute WifOR has now determined the latest key figures on the development of the industry from 2016 to 2018. The ‘Economic Footprint of the Life Science North Cluster’ was unveiled during an online event on 23 October.

‘Even in our third round of collecting data, the indicators gross value added, employed persons and exports show that the Life Science North cluster experienced growth during the period under review (2016–2018) and is an important economic factor in Northern Germany’, as Dr Sandra Hofmann, Head of International Social Policy at WifOR GmbH, summarises the results of the study.

A cluster with strong growth and excellent appeal

In the period under review, the direct gross value added thus grew by 3% annually and rose to €5.0 billion. The number of employed persons also increased between 2016 and 2018 by 4.8% to 52,800 employees. The cluster is therefore very appealing and ensures added value and jobs in the region outside the actual industry itself: there was also a boost in the gross value added contribution per inhabitant from €979 in 2016 to €1,062 in 2018. The Life Science Nord cluster ranks third across Germany (behind Baden-Württemberg and Hesse).

Furthermore, the industry region can record an upswing in exports: they climbed to €6.6 billion, which represents an average annual growth of 5.6%. The economy’s share in total exports is 5.1% (2016: 4.7%).

The coronavirus pandemic and its clear impact on the industrial health economy

Since the key figures are calculated for the previous year based on the data available, the impacts of the COVID-19 pandemic were not included in the result. That’s why cluster manager Dr Hinrich Habeck used a survey recently conducted by cluster management among industry players to create a ranking and gather an impression of the current mood: ‘The share of companies affected by a decline in sales has significantly decreased by approx. 50% compared to our first survey in April 2020. About one-third of the companies are even witnessing a growth in sales compared to the previous year.’ Habeck concluded that there was a slight upward trend and moderately optimistic expectations for the future. It is true, however, that the unpredictable nature and extremely dynamic development of the pandemic situation means that this evaluation can only serve as a partial snapshot of the current climate and that public support measures are still required for many industry players.

The necessity for political support during crisis

‘During the acute crisis, our measures mainly revolved around providing emergency relief and interim aid as well as safeguarding jobs through reduced hours compensation and hardship funds’, said the Minister of Economic Affairs Schleswig-Holstein Dr Bernd Buchholz. ‘To respond to the shortages in the supply of personal protective equipment (PPE), we launched a new funding program to set up the production of PPE in Schleswig-Holstein. Despite all the adversities, I also see opportunities in the current situation: digital change and new working models are being greatly encouraged. Many companies are standing out thanks to their great level of resourcefulness.’

Methodology and terminology

The healthcare sector is one of Germany’s largest industries. The industrial health economy primarily represents the
manufacturing part and is a highly productive area within the entire industry. As the core of the Life Science North cluster, the industrial health economy extends to many important parts of the ‘health segment’s value chain’ such as human pharmaceuticals, medical technology, personal hygiene, dental and oral hygiene products, sports and fitness equipment, health-related information devices, research and development, and e-health. The definition assigned to the LSN cluster also includes wholesale, but not retail. In addition to identifying the key economic figures for the entire industry, the study individually defined the sector for the Life Science North cluster.

The term ‘economic footprint’ refers to the overall economic importance of industries or companies based on economic indicators such as gross added value, the number of employed persons and the volume of exports.

The economic research institute WifOR applied the established ‘economic footprint’ approach to Hamburg and Schleswig-Holstein across the states, and for the first time presented the close economic ties between the two federal states in 2014. The facts and figures in the recently published study are based on the current results provided by the Federal Ministry for Economic Affairs and Energy for Germany and the individual federal states for the overall accounts of the healthcare sector.

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