The United States pharmaceutical research and development (R&D) expenditure has grown from two million USD in 1980 to 71.4 million USD in the year 2017, according to a survey of PhRMA members.
PhRMA—short for the Pharmaceutical Researchers and Manufacturers of America—represents the leading biopharmaceutical research companies in the United States.
Pharmaceutical R&D expenditure showed sharp growth between 1980 and 2006, skyrocketing from two billion USD to 47.9 billion USD. Pharmaceutical R&D expenditure plateaued between 2007 and 2014, remaining between 47.9 and 53.3 billion U.S. dollars. Since 2015, expenditure has continued to grow, with a high of 7.14 U.S. dollars reported in 2017.
Worldwide, pharmaceutical R&D spend has grown from 108.1 billion USD in 2006 to 156.7 billion USD in 2016, according to data released from EvaluatePharma and the Association of the British Pharmaceutical Industry (ABPI).
The United States leads the world in pharmaceutical R&D expenditures, followed by Europe and then Asia, the European Federation of Pharmaceutical Industries and Associations (EFPIA), which represents the pharmaceutical industry in Europe, says.
Pharmaceutical R&D expenditures—also known as spend—include expenditures within a company’s US or foreign research laboratory, plus R&D funds contracted or granted to commercial laboratories, private practitioners, consultants, educational and nonprofit research institutions, manufacturing and other companies or other research-performing organizations located inside/outside of the United States.
Expenditures apply to money spent on basic and applied research, as well as developmental activities carried on or supported in the pharmaceutical, biological, chemical, medical and related sciences (e.g., psychology and psychiatry), if the purpose of such activities is ultimately concerned with the utilization of scientific principles in understanding diseases or in improving health.
Salaries, materials, supplies used, part of overhead costs and the cost of developing quality control are all considered to be a part of expenditure. However, it does not include the cost of routine quality control activities, capital expenditures or costs incurred for medical R&D funded by a grant or contract for another company or organization.
Expenditures included both domestic R&D and research and development conducted abroad. R&D spend abroad includes expenditures outside the United States by U.S.-owned PhRMA member companies, and R&D conducted abroad by the U.S. divisions of foreign-owned PhRMA member companies. R&D performed abroad by the foreign divisions of foreign-owned PhRMA member companies are excluded.