U.S. Loses Ground On Biomedical R&D | January 13, 2014 Issue - Vol. 92 Issue 2 | Chemical & Engineering News
Volume 92 Issue 2 | p. 6 | News of The Week
Issue Date: January 13, 2014

U.S. Loses Ground On Biomedical R&D

Research: Global shift in investment is small but telling
Department: Business
News Channels: Biological SCENE
Keywords: R&D, research, India, China
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FALLING
The U.S. commands a large but shrinking share of biomedical R&D spending.NOTE: Figures represent spending by public and private sectors. a Compound annual spending change in U.S. dollars. SOURCE: N. Engl. J. Med. 2014, DOI: 10.1056/nejmp1311068
This pie chart shows how worldwide biomedical spending is divided, and how it has changed since 2007.
 
FALLING
The U.S. commands a large but shrinking share of biomedical R&D spending.NOTE: Figures represent spending by public and private sectors. a Compound annual spending change in U.S. dollars. SOURCE: N. Engl. J. Med. 2014, DOI: 10.1056/nejmp1311068

The U.S. continues to dominate the world in biomedical research spending, but its share of the total spending pie slipped from 50% in 2007 to 45% in 2012, according to a new report. Europe’s share also slipped over the same period. Meanwhile, China more than quadrupled its share, although it still accounted for only 3% of the global R&D spend.

The study, published in the New England Journal of Medicine, attributes the U.S. decline to a decrease in industry investment from $83.3 billion in 2007 to $70.4 billion in 2012. Public funding actually ticked up by about $1 billion, to $48.9 billion, over that time. In 2013, however, funding from the National Institutes of Health was cut by $1.7 billion as a result of the Budget Control Act of 2011, also known as sequestration.

The outsourcing of R&D by U.S. firms to Asia may have contributed to the comparative rise in biomedical research spending in China, India, and elsewhere, according to the study, which was conducted by a team led by venture capitalist Justin Chakma of the investment firm Thomas, McNerney & Partners.

Japan’s $9 billion increase in biomedical R&D spending to $37.2 billion over the five-year period represented the greatest change in dollar amount. China showed the largest percentage increase with a 313% growth in investment to $8.4 billion in 2012, according to the report.

Although it may not be surprising to see the U.S. slip and China gain in investment in any industry over the years studied in the report, G. Steven Burrill, head of the health care investment firm Burrill & Co., says the drop reflects changes beyond spending that will put the U.S. at a competitive disadvantage in the years ahead.

“There is pressure for more short-term results and industry consolidation,” Burrill tells C&EN, adding that venture capital is harder to come by and life sciences firms face an increased challenge to communicate the value of their research to investors. “This has added up to reduced spending in this country when the rest of the world has said ‘This is the future.’ ”

Burrill cautions that the shift in research investment could cause long-term damage to U.S. standing in health care. “Once we get behind the R&D curve,” he says, “it is going to be hard to recover.”

 
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