New data from the National Science Foundation (NSF) quantifies one industry trend of recent years—biopharma companies cut their spending on R&D performed in the United States in 2011 compared with 2010.
Spending on R&D within the “pharmaceuticals and medicines” industry category slipped 7%, to $45.949 billion in 2011 from $49.415 billion the previous year, according to figures from the Business and R&D and Innovation Survey (BRDIS), co-sponsored by NSF and the U.S. Census Bureau.
Biopharma bucked a trend across industries showing a 5% increase in overall R&D spending, to $294.093 billion in 2011. These and other numbers appear in a mini-report or InfoBrief, “Business R&D Performance in the United States,” published September 19 by NSF’s National Center for Science and Engineering Statistics.
An NSF spokeswoman, Deborah Wing, said the agency could not explain the decrease, except to say it could reflect the entry of new companies to the survey, or changes in industry classification, which for pharmaceuticals and medicines carries the NAICS code of 3254.
However, the biopharma R&D spending drop may also reflect the industry’s shift—especially by corporate giants—away from internal R&D and toward research funded externally by collaboration partners. Between 2010 and 2011, the BRDIS said, the value of pharmaceuticals/medicines R&D “paid for by the company” fell 9.4%, to $41.111 billion from $45.398 billion.
The value of pharmaceuticals/medicines research funded by “others” rose 20.4%, to $4.838 billion in 2011. Most of that research was funded by other companies—$3.474 billion (72%) from foreign-based businesses, including foreign-based parents of U.S. subsidiaries, with $1.285 billion (almost 27%) from domestic companies.
A year-over-year comparison of corporate biopharma R&D spending from 2010 cannot be made by InfoBrief readers, since other-company figures for that year were “suppressed to avoid disclosure of confidential information” and thus unavailable. Wing said the Census Bureau suppresses the figure “in cases when a large percentage of the statistic is accounted for by a small number of firms (the magnitudes of both of these parameters are carefully guarded by Census).”
Since 2009, the previous year such figures were available, the gap between domestic and foreign partner spending on biopharma R&D has widened. At that time, foreign companies accounted for nearly 57% ($1.813 billion) of the $3.185 billion spent by other companies, with the rest being spent by domestic companies.
Between 2010 and 2011, U.S. federal government spending toward domestic biopharma R&D fell by nearly half, from $99 million to $52 million. That’s more than twice the $27 million in “pharmaceuticals and medicines” R&D spending from “all other organizations”—defined by the BRDIS as U.S. state government agencies and laboratories, foreign government agencies and laboratories, and all other organizations located inside and outside the United States.
The 2010 “all other organizations” figure was also suppressed.
The BRDIS did reveal, however, that overall domestic employment in the biopharma industry rose in 2011 compared to its 2009 figure, up 2% from 538,000 to 549,000 jobs. However, the number of R&D jobs shrunk by almost 3% or 3,000 during that period, to 107,000 jobs in 2011.
Worse, domestic biopharma lost a substantial number of jobs since 2008—before the industry had been reshaped by the recession, the growth of biotech in China and the rest of Asia, and a wave of mergers and acquisitions. Back in 2008, the BRDIS recorded 654,000 jobs, of which 123,000 entailed R&D, which means the industry’s U.S. employment levels shrunk 16% in terms of overall jobs, and 13% in R&D jobs in the following three years.
Pharmaceuticals and medicines accounted for $388.664 billion in domestic net sales in 2011, a 4.3% slice of the total $9.107 trillion reported for all industries that performed or funded business R&D. Total industry domestic net sales have risen 14% since 2009’s $339.73 billion.