Skip to main content
Premium Trial:

Request an Annual Quote

Global Shift in R&D

A new analysis of global biomedical research and development investments shows that the US is losing some of its dominance, as industry science funding in the US, in particular, has lagged just as countries in Asia and Oceania have been spending more on R&D.

The analysis of global R&D trends between 2007 and 2012, published in the New England Journal of Medicine, found that the US share of global biomedical research spending declined over the last five years from 51 percent to below 45 percent.

During that period, overall R&D expenditures in the US, Canada, Europe, and Asia-Oceania rose by around $41.8 billion, increasing by 18.4 percent from $226.6 billion to $268.4 billion.

The overall US share of expenditures on biomedical R&D during this period declined by nine percent, when the numbers are adjusted for inflation, while the Asia-Pacific region saw an increase of 51 percent.

The authors say the decline is "remarkable" because the US has provided the majority of funding for biomedical R&D globally over the past two decades, a share which at times was suggested to be as high as 70 percent to 80 percent.

Interestingly, the decline in the US was driven not by cuts in federal spending, but by reduced investments by industry, the authors say.

However, the sequestration of NIH funding in 2013 is likely to exacerbate the overall decline in US biomedical R&D funding.

The reduction in US industry global R&D expenditures fell from 50.4 percent in 2007 to 42.3 percent in 2012.

Meanwhile, spending in the Asia-Pacific regions has been on the rise. In absolute dollars, the biggest jump in biomedical R&D investments over the period happened in Japan, which saw an increase of $9 billion.

China, however, had an increase of 313 percent, from around $2 billion in 2007 to just over $8.4 billion in 2012, which amounts to a compound annual growth rate of 32.8 percent.

"One explanation for the shift in global R&D expenditures may be the attractive cost of conducting R&D in Asia–Oceania, where labor is cheaper and greater government subsidies are available, especially as the development costs per FDA drug approval have increased considerably," the authors say.

Increasing NIH funding may not help the US maintain its long-term R&D leadership, they say, suggesting that the government may want to "develop strategies to provide incentives to industry for investing in biomedical R&D."