R&D Investment by U.S. Biopharmaceutical Companies Remains Strong Despite Ongoing Economic Challenges

Despite a fragile economy, America's pharmaceutical research and biotechnology companies invested a record $65.3 billion last year in the research and development of new life-changing medicines and vaccines – an increase of more than $1.5 billion from 2008, according to analyses by the Pharmaceutical Research and Manufacturers of America (PhRMA) and Burrill & Company.

This investment reflects the continued commitment of America's biopharmaceutical research companies to lead the world in the pursuit of new, life-saving and life-enhancing medicines. PhRMA-member companies alone spent an estimated $45.8 billion on pharmaceutical R&D last year, according to the PhRMA survey. The Burrill & Company analysis shows that non-PhRMA pharmaceutical research companies in the United States spent an estimated $19.5 billion on R&D in 2009.

Investment in R&D by America's pharmaceutical research and biotechnology companies remained strong last year, in the face of a weak economic environment and historically low growth in drug spending. While companies have been forced to make difficult business decisions, research spending as a percentage of sales remained high in 2009. Over the past nine years, America's pharmaceutical research companies have consistently invested around 18 percent of domestic sales on R&D activities.

"America's biopharmaceutical research sector takes great pride in its global leadership in the development of new life-saving treatments and cures," said PhRMA President and CEO Billy Tauzin. "Over the past year the economic challenges have been enormous, but our industry's continued commitment to R&D is bringing hope to millions of patients around the world who are battling potentially devastating diseases such as cancer, heart disease and diabetes."

U.S. biopharmaceutical companies' focus on research has been observed by many independent experts. For instance, the nonpartisan Congressional Budget Office (CBO) has said: "The pharmaceutical industry is one of the most research-intensive industries in the United States. Pharmaceutical firms invest as much as five times more in research and development, relative to their sales, than the average U.S. manufacturing firm."

Last year, University of Connecticut researchers similarly found that over the past 25 years, investment in R&D by the pharmaceutical and biotechnology sectors greatly exceeded that of all other industries in the U.S.

Importantly, this investment has produced results. According to a 2006 CBO analysis, "Many examples exist of major therapeutic gains achieved by the industry in recent years.... [A]necdotal and statistical evidence suggests that the rapid increases that have been observed in drug-related R&D spending have been accompanied by major therapeutic gains in available drug treatments."

For instance, independent research shows that cancer patients are living, on average, three years longer – and 83 percent of those survival rate gains are due to new treatments, including medicines. Heart failure and heart attack deaths fell by nearly half from 1999 to 2005. And since the advent of highly active anti-retroviral therapy in 1995, the annual number of U.S. deaths due to AIDS has plummeted by more than 70 percent.

As in past years, an increasing number of potential new drugs are entering clinical testing. Today, there are more than 2,900 medicines in clinical trials or awaiting review by the Food and Drug Administration in the U.S., compared with 2,400 in 2005. The current pipeline includes more than 800 medicines to treat cancer, over 300 specific to rare diseases and more than 300 medicines for heart disease and stroke.

"This exciting research not only carries the potential to dramatically change and improve the lives of countless patients, it supports valuable and rewarding jobs for millions of American workers," said Tauzin. "With unemployment rates remaining high, our nation must embrace strong sectors such as ours. If we want to maintain our leadership in biopharmaceutical R&D – and the subsequent value it brings to our state and national economies – it's critical that the U.S. preserve policies that make such research possible."

The Pharmaceutical Research and Manufacturers of America (PhRMA) represents the country's leading pharmaceutical research and biotechnology companies, which are devoted to inventing medicines that allow patients to live longer, healthier, and more productive lives. PhRMA companies are leading the way in the search for new cures. PhRMA members alone invested an estimated $45.8 billion in 2009 in discovering and developing new medicines. Industry-wide research and investment reached a record $65.3 billion in 2009.

PhRMA Internet Address: http://www.phrma.org

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