Biotech and pharmaceutical companies boosted their research and development (R&D) spending in 2013.

The lowdown: Ernst & Young reported that biotech spending hit US$29.1 billion in 2013, up 14% from $25.4 billion in 2012 (Fig. 1). “R&D spending rebounded forcefully to return to historic levels for the first time since the start of the global financial crisis,” the analysts wrote in their annual report, which looked at 616 biotech companies. A 20% increase in R&D spending in the United States drove the spike. In Europe, biotech spending fell by 4%.

Figure 1: R&D spending from 2006 to 2013.
figure 1

Biotech R&D spending data is from Ernst & Young Beyond Borders Global Biotechnology Report 2008, 2009, 2010, 2011, 2012, 2013 and 2014. Where annual reports provided inconsistent R&D spending data, data from latest report were used. Pharmaceutical R&D spending data are from PhRMA 2014 Profile. Some companies are included in both cohorts.

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“The amount of capital made available by investors, particularly to earlier-stage companies, helped fuel the rebound in R&D spending,” the authors wrote. They note that 41 initial public offerings in the United States raised $3.3 billion that contributed to the boom.

Pharmaceutical companies increased their R&D budget in 2013 as well. In April, the pharmaceutical industry association PhRMA reported that its members spent $51.1 billion in 2013, up 3% from $49.6 billion in 2012. This change was driven by a 6.9% spending increase in the United States, versus a 9.1% decrease elsewhere.

PhRMA notes that in 2012 nearly 24% of its members' research spend was allocated to preclinical research. 8% went on Phase I trials, 11% went on Phase II trials, 32% went on Phase III trials, 8% went on approval, and the remaining 17% went on post-approval or uncategorized spending.

These numbers make for rosier reading for US-based researchers than did a recent analysis that looked at R&D spending only up until 2012. Justin Chakma, a venture capital investor at Thomas, McNerney & Partners in La Jolla, California, and his colleagues reported in January that inflation-adjusted biomedical spending in the United States fell between 2007 and 2012 while biomedical spending in Asia rose (N. Engl. J. Med. 370, 3–6; 2014).