Alex Philippidis Senior News Editor Genetic Engineering & Biotechnology News
Sector has work cut out for it as ARRA has dried up and gov’t as well as industry cut budgets.
For reasons ranging from the shrinking of big pharma to the $814 billion American Recovery and Reinvestment Act (ARRA), research spending by academic institutions has risen over the past few years. Industrial R&D reached an all-time high of $67.4 billion in 2010, but the prospects for this year may not be as strong, since several pharma companies have announced plans to cut back on R&D.
So the question becomes, will the increased R&D spending by academia make up for industry’s shifting focus? Probably not entirely, though universities are likely to continue investing more in research if for no other reason than to justify what they have laid out in recent years for top-tier investigators and new facilities.
In some cases, universities are expected to ramp up their R&D spending as a result of partnerships being formed with industry. Industry partners include some of the same companies that are shrinking, or plan on reducing, their own in-house R&D operations as they scramble to cut costs due to mergers, acquisitions, and the end of patent protection that’s coming soon for some blockbuster drugs.
“The mathematics of pharmaceutical mergers seems to be that 2 + 2 equals 3 and a half,” said Ashley J. Stevens, D.Phil., special assistant to the vp for research technology development and senior research associate at Boston University’s Institute of Technology Entrepreneurship and Commercialization.
Dr. Stevens, a lecturer at the BU School of Medicine, said the shrinking of big pharma will also benefit academic R&D as universities snap up facilities no longer needed by pharmaceutical companies. For example, Yale University has expanded into Bayer HealthCare’s West Haven, CT, campus, seven miles west of the school’s main campus in New Haven. Additionally, the University of Michigan picked up Pfizer’s old Ann Arbor, MI, campus.
A Look at the Numbers
All that extra space does not guarantee that a lot more research will take place there. That will happen only if the grants are there, Dr. Stevens noted. NIH spending rose about 3% between FY ’08 and FY ’09, from $29.3 billion to $30.2 billion, then further to $30.93 billion in FY 2010. That excludes the $10 billion appropriated to NIH in FY ’09 under ARRA, which was available through FY ’10.
NIH funding dipped in the recently approved budget deal for FY 2011 to $30.7 billion. President Obama would like, however, to raise the agency’s budget to $32.9 billion for FY ’12.
Two sets of numbers offer additional insight on academic R&D. Last December, the Association of University Technology Managers issued data showing a 4.7% increase in the amount spent by universities on research to $53.9 billion in the year ending June 30, 2009, from $51.47 billion a year earlier. This figure includes all types of scientific research, not just life sciences.
A few months earlier the NSF released data showing that the life sciences accounted for about 60%, or $32.8 billion, of the overall $54.9 billion spent by the nation’s colleges and universities on R&D during the 2009 academic fiscal year. That figure rose 5%, or more than $1.5 billion, from the $31.2 billion recorded for FY 2008, according to NSF’s annual Survey of Research and Development Expenditures at Universities and Colleges.
Within NSF’s life science category, medical sciences accounted for most of the research spending in FY ’09, which grew 5.7% to $18.2 billion from $17.3 billion the previous year. The next-largest category was biological sciences, which grew 3.9% to $10.15 billion from $9.8 billion in FY ’08. Rounding out the list was agricultural sciences, up 2.1% year-over-year to almost $3.1 billion, and life sciences falling in the “not elsewhere classified” category up 13.6% to $1.3 billion.
NSF’s ability to grow all these numbers will be hampered at least for this fiscal year, since the agency’s budget was cut as part of the recent budget agreement approved by both houses of Congress and signed by President Obama. At about $6.9 billion, NSF will see $53 million less than FY ’10, of which $43 million was cut from the agency’s budget for research and related activities, shrinking it to $5.56 million.
And while the size of NSF’s FY 2012 budget is anyone’s guess, it’s fair to say it won’t be as high as the $7.77 billion proposed in January by President Obama, about 13% above FY 2010 spending. Not when Congressional Republicans and the president are positioning themselves as spending cutters. Both are championing competing cost-reduction plans as annual deficits exceed $1 trillion.
Industry’s Role in Academia’s Budget
According to NSF, the bulk of academic R&D is basic research, amounting to more than half of the nation’s total basic research. The top sources of support for academic R&D have been stable for nearly two decades: About 60% comes from the federal government, followed by 20% from institutions’ own funds.
During that time, the share of academic R&D funding coming from industry has dipped from 7% to 6%. For one of the nation’s largest public recipients of NIH funding, the University of California, San Francisco (UCSF), industry research accounted for 6.5% of its total $514.2 million in research funding during the fiscal year ending June 30, 2001. During FY ’10, even as total funding just about doubled to $1.028 billion, the industry proportion only inched up to 7%. That number could climb in future years if some recently announced activity pans out as planned, which will be detailed in an upcoming report.
Even if industry funding for R&D at UCSF grows as the university hopes, the amount would likely still be a bargain for companies over the cost of staffing and operating their own R&D departments. This is no small consideration as companies struggle to contain drug development costs.
Yet that bargain could be a windfall for academic institutions that, like UCSF, have their own issues with containing costs—especially public universities facing government cuts—and can use whatever help they can find in building up their research programs. In the follow-up to this article, we’ll look at some academic-industry collaborations, both at UCSF and elsewhere, and the variety of forms they take.
Alex Philippidis is senior news editor at Mary Ann Liebert, Inc., and Genetic Engineering & Biotechnology News.