The life science industry consists of manufacturers of pharmaceuticals, biotech products, medical instruments and devices, animal and agricultural bioscience products
and commercial research and testing. Life science R&D investments are driven by the expansive biopharmaceutical sector
which accounts for about 80% of the industry’s total R&D
spending. The companies involved in this sector are well-known and well-established. Over the years, they’ve acquired
numerous smaller life science enterprises and smaller start-ups
them into the larger
The life science
R&D industry is
truly global, more
so than most other
industries. Of the
top 50 life science
organizations, 36% are headquartered in the U.S., 36% are
headquartered throughout Europe, 22% are headquartered in
Asia and the remaining 6% are headquartered in Africa, Canada and the Middle East. These top 50 bio-pharms invest, on
average, about 18% of their revenues in their R&D programs.
Their overall organizations are spread throughout the world
with about 20% of their R&D budgets being spent outside of
their home country, according to a recent study by PhRMA
(Pharmaceutical Research and Manufacturers of America).
Global R&D spending in the total life science industry is
forecast to increase 4.5% to $177.6 billion in 2017, according to
R&D Magazine. The U.S. portion of the life science industry
is forecast to increase 3.5% to $74.6 billion in 2017.
Challenges to overcome
The life science industry has a number
of challenges threatening their R&D
funding resources. One, of course, is
that there is significant backlash in government and public circles to biopharmaceutical pricing. President-elect Donald Trump has stated that he doesn’t
like what has happened to drug prices
and he is going to bring them down. No
specifics were included about how he
was going to lower drug prices. But the
reaction in the stock market was quick,
with stock prices for bio-pharms dropping. Two of the vehicles mentioned in
the Trump campaign for lowering drug
prices were to allow Medicare to negotiate drug prices or import drugs from
Truly Global Life Science R&D
outside the U.S. The transition team also mentioned that the
new administration would “reform the U.S. Food and Drug
Administration (FDA) to put a greater focus on the need of
patients for new and innovative medical products.”
Another aspect of the drug pricing concerns was voiced
by the FDA in that this agency would prioritize and expe-
dite their review of applications for first generics, making
sure that the first applicants for generic alternatives to high-
priced drugs are moved to the head of the queue and given
priority reviews. The same is holding
true for the development of biosimilars.
Public pressure on price hikes for
drugs is also taking its toll. Amgen’s
recent 20% price hikes for its cholesterol
drug Enbrel were found to be non-sus-tainable, according to analysts. Amgen
stock has recently fallen by more than
11% on their pricing news.
The more traditional challenge which has reared its head
in 2016 was the failure in clinical trials of a widely anticipated Alzheimer drug. Patients using Lilly’s solanezumab
did not experience a statistically slowing in cognitive decline
compared to patients treated with a placebo. Lilly’s clinical
failure was a bellwether for other drug developers who were
working on similar drugs.
Additionally, some drug developers, such as Allergan,
are scaling back on the number of drugs they are developing to focus on those drugs they have the most experience
in and fit better into their overall drug pipeline.
The life science R&D industry
is truly global, more so than
most other industries.
2016 Global 2016 U.S. 2017 Global 2017 U.S.
Life Science R&D Spending