Abstract

In contrast to analyses that regard health policy and industrial policy as anathema to each other, either because an emphasis on health implies neglect of industry or because gains in industrialization come at the expense of health, we show positive synergies between the two realms. Government intervention into the health sector can catalyze interventions to promote industrial development in the pharmaceutical sector, which in turn can make health policies more effective. We focus on two pathways by which health policies can trigger industrial policies. A demand-driven pathway entails government commitments in health revealing weaknesses and deficiencies in pharmaceutical production, and thus inspiring efforts to build capabilities to stabilize the flow of drugs to the public sector. A regulation-induced pathway consists of sanitary policies revealing mismatches between what is required for firms to continue to participate in the market and pharmaceutical producers’ prevailing levels of capabilities, and government measures then being developed and deployed to address the mismatch. We demonstrate both pathways with the case of Brazil.