Research and Development (R&D) Investment By the Biopharmaceutical Industry: A Global Ecosystem Update

OBJECTIVES: A comprehensive account of private-sector biopharma R&D is important to researchers and policy makers. Conventional understanding of the magnitude, intensity, and productivity of industry R&D funding is predominantly based on surveys of large public companies. We propose a transparent measure of annual R&D investment and revenue for the full range of firms in the global biopharma ecosystem.

METHODS: Reported 2021 data for public commercial-stage companies was sourced from S&P Capital IQ and adjusted via detailed keyword algorithms for necessary exclusions (e.g. R&D vendors). We sourced data on private development-stage companies from Pitchbook, using a three-year average of total capital raised (from venture funds, private equity growth, and debt funding) to account for timing differences between capital raise and deployment. For public development-stage companies, we used reported net loss. Detailed adjustments were made to avoid over counting.

RESULTS: 2021 R&D investment was $276 billion across 4,191 companies, with total net revenue of $1,022 billion across 583 companies. This yields a global R&D intensity of 27% (R&D share of revenue). 583 commercial-stage and 3,608 development-stage companies accounted for $204 billion (74%) and $73 billion (26%) of R&D investments, respectively. 2,755 private companies contributed $32 billion (12%). Companies headquartered in the U.S., Europe, and Asia/Pacific regions contributed 55%, 29%, and 15%, respectively. Of the three regions, the U.S. had the highest R&D intensity (34%), followed by Europe (22%) and Asia/Pacific (20%).

CONCLUSIONS: Conventional measures provide an incomplete picture of the R&D funding landscape if they ignore investments by the ecosystem of private companies, smaller public commercial- and development-stage companies. Our methodology, which integrates these entities and refines R&D measurement of public firms, reveals R&D investments substantially exceeding prior estimates. Our replicable approach illuminates the scale of biopharma R&D investment within the multifaceted, interlinked private sector ecosystem.