How much is the pharmaceutical industry actually investing into R&D?
It turns out that media, academic and policy discourses have often been led by inconsistent and incomplete reports of industry R&D. Novel research co-authored by Johnson & Johnson finds that the true R&D investment in biopharma is much broader than widely-cited measures suggest. The study offers the first comprehensive and reproducible measure of all ecosystem R&D investment at $276B globally in 2021. The pioneering approach to account for all R&D across the private-sector ecosystem demonstrates that conventional estimates often overlook contributions from smaller public, development-stage and privately-held companies. These entities are playing a vital role in drug discovery and development, yet their impact is frequently underrepresented in policy analyses.
The study revealed that the private sector invested over $1.5B every 48 hours, more than $5B per week on medicine R&D in 2021. Contrary to some reports in the media, industry sales and marketing (S&M) expenses were vastly smaller than R&D investment: For every dollar spent on S&M, public U.S. companies with commercial products invested $5.7 in R&D. Notably, consumer advertising represents only a tiny fraction of these costs, at $10B annually. The study also underscores America’s role as the global leader in R&D: Approximately 48% of companies engaged in biopharma R&D headquartered in the U.S., accounting for 55% of worldwide R&D investments and 65% of all development-stage funding. Notably, U.S. companies also had a much higher R&D intensity, re-investing their revenues back into research at a rate that is 50% above those based in Europe & Asia.
This research was funded by Johnson & Johnson Innovative Medicine and conducted in collaboration with Prof. Amitabh Chandra of Harvard University and researchers at the Analysis Group led by Dr. Noam Kirson. For full details on the study design, methods and limitations, see: Chandra A, et al. Comprehensive measurement of biopharmaceutical R&D investment. Nat Rev Drug Discovery. 2024; 23(9): 652-653. doi: 10.1038/d41573-024-00131-2