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R&D Spending Among US Biopharmas Will Increase in 2004; Biopharma Execs Optimistic

NEW YORK, Jan. 22 (GenomeWeb News) - US biotech and pharmaceutical companies will spend considerably more on R&D than they did in 2003, according to an anticipated market-survey report.


The survey, which shows that overall R&D spending at US companies is expected to remain flat for the fourth consecutive year, also predicts that spending on life-sciences technologies by the USgovernment and academic centers will rise in 2004.


US-based biotechnology companies will increase spending on R&D programs by 16.4 percent, to $8.1 billion, according to research firm Battelle Memorial Institute and R&D Magazine. Meantime, pharmaceutical companies will increase R&D spending in 2004 by 8.3 percent, to $59.6 billion. The report, which can be read here, is based on data compiled by the US National Science Foundation.

By comparison, total R&D spending for all sectors of the economy will inch up this year to $181.1 billion from $179.6 billion in 2003, the annual report said. The USgovernment is expected to spend 4.8 percent more on R&D, or $89.4 billion, in order to help develop technologies against terrorism, the report said.


On life-sciences and healthcare technologies, the Department of Defense will spend 13 percent more in 2004, to $66.3 billion; the National Institutes of Health will spend 3.2 percent more in the year, to $27 billion; the Department of Energy will increase its spending in 2004 by 6.1 percent, to $8.7 billion; and the National Science Foundation will spend 4.7 percent, or $4.1 billion, more in 2004 than in 2003, the report showed.


The results appear to jibe with data from a business consultancy showing that most executives from life sciences and technology firms consider near-term business outlook to be "very optimistic."

Researchers from Princeton, NJ-based Waterford Advisors yesterday said that senior executives in life science and technology companies consider "near-term business outlook for pharmaceuticals, biotechnology, medical devices, bio-IT and related companies is very optimistic."

"When asked to rate their firms' current abilities in operations, financing and investments, life science and technology executives said they're somewhere between above-average and excellent," Peter Leitner, managing partner of Waterford, said in a statement. "We expected good news, but this was a pleasant surprise.
"Life science firms, particularly in biopharma, tell us they're well positioned to deliver strong results this year, at least in the first half," Leitner added. He said this is "consistent with the anecdotal evidence we are seeing among emerging and middle-market firms."

However, respondents also agreed that the toughest part of doing business this year will be raising cash. "Equity capital ... was ranked the lowest by executives, while raising debt was in line with capital expenditures and the general outlook ... ," the report said.

"Equity may be the weakest link, but we think that's the nature of equity; it's supposed to be precious," Leitner said. "But it also reflects several years of difficulty in the stock market and investor rotation out of healthcare as the general economy improves."