Investing in a skilled, healthy workforce, infrastructure and technology are crucial for economic growth, job creation and security. By prioritizing health, countries help build the foundation for the human capital that drives job creation, shared prosperity and improved societal well-being. Yet for decades, policymakers lacked a consistent and comprehensive view of research and development (R&D) investment in the biopharmaceutical industry. Figures were often derived solely from surveys of large publicly listed companies. The problem: The gap in data undervalued the vast commitment of the private sector and it failed to represent what it truly takes to deliver an average of 50 novel medicines each year.
A peer-reviewed study published in Nature Reviews Drug Discovery – co-authored by researchers from Johnson & Johnson, Harvard University and the Analysis Group – brings long-needed transparency. It offers the first replicable and comprehensive measurement of total private-sector R&D investment.
The study found that in 2021, worldwide private-sector investment in innovative medicines reached $276 billion, spanning 4,191 companies. By offering a methodology to include smaller, private, development-stage firms alongside large public ones, the analysis provides a complete picture of the enormous investment that powers medical progress for patients.
As documented in our Transparency Reports, J&J alone invested approximately $90 billion in pharmaceutical R&D between 2016 and 2024. Looking ahead, J&J has committed more than $55 billion to U.S.-based manufacturing, research and technology over the next four years.
The scale and impact of biopharmaceutical investment
The magnitude of these investments is striking – and so is their impact. Breaking it down, the study reveals that the private pharmaceutical sector dedicates over $1.5 billion to medicine development every 48 hours, amounting to more than $5 billion every week. This unprecedented investment is driving breakthroughs in therapies and cures for unmet medical needs.
Evidence attributes at least 35% of the increase in U.S. life expectancy between 1990 and 2015 to medicines, transforming outcomes in cancer, cardiovascular disease, HIV/AIDS and beyond. Biopharmaceutical R&D produces tremendous societal returns – delivering healthier lives, stronger communities and more resilient economies.
The U.S.: Birthplace and launch pad of new medicines
The study confirms that the R&D ecosystem is overwhelmingly American. In 2021, U.S.-based pharmaceutical companies invested $152 billion in R&D – 34% of their sales. The U.S. leads the world not only in absolute R&D volume but also in intensity – R&D spending as a share of net revenues – reinvesting revenues into research at a rate 50% higher than firms headquartered in Europe or Asia. At the same time, the U.S. also enjoys the greatest and broadest availability of new medicines after regulatory approval. Since 2020, 110 new medicines have been launched in the U.S. that were not available in the key European markets.
The study further clarified a common misconception. Contrary to certain media narratives, U.S. biopharmaceutical companies spend far more on research than on marketing. For every dollar spent on selling and marketing, public U.S. companies with commercial products invested at least $5.70 in R&D, the data shows.
Protecting a carefully balanced innovation economy
The U.S. market has cultivated a unique, dynamic ecosystem – offering substantial opportunities for small biotech firms and fostering innovation through clusters and partnerships. Policy and research must reflect this interconnected system rather than treating sectors in isolation. The study shows that 65% of global development-stage research funding comes from more than 1,800 companies that have no products on the market yet but have chosen to be based in the U.S. Further research should illustrate how the connection between ownership structures influences R&D incentives. Still, one thing is clear: progress in one area accelerates advances in another, and policy decisions ripple across the entire system.
Maintaining U.S. leadership in medical innovation will require policies that appreciate – not diminish – R&D investments as the product of the unique U.S. ecosystem. Supporting each sector’s contributions will ensure continued innovation – and, most importantly, better health outcomes for American patients.
This research was funded by Johnson & Johnson 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. Nature Reviews Drug Discovery. Published August 6, 2024; 23(9): 652-653 (2024). https://doi.org/10.1038/d41573-024-00131-2.
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