Healthcare & Pharmaceuticals

Compounded by High R&D Spending

Despite the nation’s economic slowdown, the U.S.’s pharmaceutical research and biotechnology companies invested a record $65.2 billion in 2008 in the R&D of innovative medicines and vaccines – an increase of roughly $2 billion from 2007, according to analyses by the Pharmaceutical Research and Manufacturers of

America (PhRMA). The ground-breaking process, which is costly, time-consuming, and risky, has always presented these challenges, which have been compounded by the current economic climate. However, as displayed by the chart above, the drive toward R&D for innovation remains strong. Pharmaceutical companies ranked as the highest sector of R&D investment across the world's top 1,400 companies, spending more than $75 million.

In 2008, Roche spent nearly $8.1 billion on R&D globally, followed by Pfizer ($7.9 billion), Johnson & Johnson ($7.7 billion), Novartis AG ($7.2 billion), Sanofi-Aventis ($6.7 billion), and GlaxoSmithKline ($6.4 billion). Of the top 10 pharmaceutical companies, Amgen spent the largest proportion on R&D with expenditure equaling more than 20% of total sales in 2008. Although the rate of R&D growth was slower than in prior years, research spending as a percentage of sales remained high. Over the past seven years, U.S. pharmaceutical research companies have invested approximately 15% to 18% of sales on R&D. There are more than 2,700 drugs in development in the U.S. compared to 2,000 drugs five years ago.

There are more than 2,700 drugs in development in the U.S. compared to 2,000 drugs five years ago.

(Source: News articles www.phrma.org, March 24, 2008)