Magazine Article | February 2, 2014

Reports Of U.S. Biomedical R&D Demise – A Great Exaggeration

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By Rob Wright
Follow Me On Twitter @RfwrightLSL

Prior to heading out to the 32nd Annual J.P. Morgan Healthcare Conference in San Francisco last month, I stumbled across several article headlines indicating the United States’ domination of global biomedical R&D was fading. What metric was used to determine this? R&D spend. According to “new” research from the University of Michigan Health System, the U.S. share of the global biomedical R&D business declined from 51 percent to a mere 45 percent from 2007 to 2012. And while Europe remained unchanged at 29 percent, Asia rose from 18 to 24 percent. According to Dr. Reshma Jagsi, associate professor of radiation oncology at the University of Michigan Health System and author of the study, “The United States has long been a world leader in driving research and development in biomedical science.” I would argue it still is, and this six-percentage-points slip isn’t the doomsday scenario some would have you believe.

For starters, the majority of the Asian increase came from Japan ($9 billion), while China added $6.4 billion. You should also take into account that the time period referenced just so happens to also encompass “The Great Recession” (December 2007 to June 2009), as well as the $250 billion pharmaceutical industry patent cliff (2011 to 2015). Numerically, the biomedical R&D geographical spend translates as follows: U.S. $119 billion, EU $76 billion, and Asia $63 billion. The United States still holds a commanding lead, which is even more apparent when you factor in some other metrics. For example, the population of Asia is estimated to be 4.3 billion. At 733 million, Europe makes up about 11 percent of the world’s population. The United States’ population of 317 million is less than half that of Europe, and a mere 7.3 percent of Asia. This translates to a U.S. R&D biomedical spend of $375 per resident — more than three times Europe’s $103 per person and 25 times that of Asia’s $15 per person. The 2013 Legatum Prosperity Index, which takes into account both income and well-being in its prosperity ranking of 142 countries, provides additional insight.

Of the top 10 most prosperous countries, 7 are in Europe: Norway (1), Switzerland (2), Sweden (4), Denmark (6), Finland (8), Netherlands (9), and Luxembourg (10). The three outliers are Canada (3), New Zealand (5), and Australia (7). The United States (11) ranks second on the health metric behind Luxembourg — a country with a population less than Albuquerque, NM. Where do the two countries highlighted as leading the Asian biomedical R&D surge fall? Japan sits at 21 and China at 51, with respective health rankings of 6 and 68. The only BRIC (Brazil, Russia, India, China) country in the top 50 is Brazil (46). At an overall prosperity ranking of 106, India has demonstrated a blatant disregard for foreign IP protection under the guise of providing its impoverished with access to medicines. Though Cipla’s billionaire chairman, Y.K. Hamied, has called for “automatic license” of foreign patents to local Indian champions, he should be advocating greater national investment in biomedical R&D in order to truly reap the rewards of job creation and other long-term, downstream national economic benefits. Currently, India devotes a measly 1.25 percent of GDP to healthcare — a level below that of Haiti. For years, the United States has been bearing a disproportionate share of the world’s biomedical innovation, and this little correction, in my opinion, is long overdue. So too is a correction in India’s approach to solving its healthcare infrastructure problems.

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