Life sciences accounted for 51% of federal research expenditure in 2011.[1]
Research budget by US agency, 1994–2014. Source: Figure 5.4 from UNESCO Science Report: towards 2030, based on data from the American Association for the Advancement of Science
The National Institutes of Health (NIH) are considered the government's flagship biomedical research funding organization. Between 2004 and 2014, NIH funding remained relatively flat and was not increased to keep pace with inflation. The NIH budget peaked at circa $35 billion per year from 2003 to 2005 and was around $30 billion in 2015.[1]
Government efforts to increase allocations to research between 2013 and 2016 were often thwarted by the congressional austerity drive, with Congress withholding approval of the federal government's budget several times. Over this period, the executive's priorities were taken forward largely thanks to collaboration between the government, industry and the non-profit sector. This was particularly true for the health sector which, like climate change, was a priority for the Obama administration.[1]
Towards more targeted therapies
A key policy objective of the Obama administration was to develop more targeted therapies while reducing the time and cost of drug development. Developing a new drug takes well over a decade and has a failure rate of more than 95%. The most expensive failures happen in late phase clinical trials. It is thus vital to pinpoint the right biological targets (genes, proteins and other molecules) early in the process, so as to design more rational drugs and better tailored therapies.[1]
The 21st Century Cures Act was signed into law on 13 December 2016, a year after the release of the UNESCO Science Report. The report had predicted that, ‘were the bill to pass into law, it would alter the way in which clinical trials are conducted by allowing new and adaptive trial designs that factor in personalized parameters, such as biomarkers and genetics. This provision has proven controversial, with doctors cautioning that overreliance on biomarkers as a measure of efficacy can be misleading, as they may not always reflect improved patient outcomes'.[1]
Another government scheme hopes to increase the number of new diagnostics and therapies for patients, while reducing the time and cost of developing these. At the launch of the Accelerating Medicines Partnership in February 2014, NIH director Francis S. Collins stated that 'Currently, we are investing too much money and time in avenues that don't pan out, while patients and their families wait'. Over the five years to 2019, this public−private partnership is developing up to five pilot projects for three common but difficult-to-treat diseases: Alzheimer's disease, type 2 (adult onset) diabetes and the autoimmune disorders of rheumatoid arthritis and lupus.[1]
Proportional allocation of federal research funding in the US by discipline, 1994-2011 (%). Source: Figure 5.5 from UNESCO Science Report: towards 2030, based on data from American Association for Advancement of Science
Laboratories share samples, such as blood or brain tissue from deceased patients, to identify biomarkers. They also participate in NIH clinical trials. One critical component is that industry partners have agreed to make the data and analyses arising from the partnership accessible to the broad biomedical community. They will not use any discoveries to develop their own drug until these findings have been made public.[1]
In April 2013, the government announced another public−private partnership, this time to implement its Brain Research through Advancing Innovative Neurotechnologies (BRAIN) Initiative. The goal of this project is to leverage genetic, optical and imaging technologies to map individual neurons and complex circuits in the brain, eventually leading to a more complete understanding of this organ's structure and function. By 2015, the BRAIN Initiative had ‘obtained commitments of over US$ 300 million in resources from federal agencies (National Institutes of Health, Food and Drug Administration, National Science Foundation, etc.), industry (National Photonics Initiative, General Electric, Google, GlaxoSmithKline, etc.) and philanthropy (foundations and universities)’.[1]
The Precision Medicine Initiative has been another government priority. Defined as delivering the right treatment to the right patient at the right time, precision medicine tailors treatments to patients based on their unique physiology, biochemistry and genetics. In his 2016 budget request, the president asked for US$215 million to be shared by the NIH, National Cancer Institute and FDA to fund the Precision Medicine Initiative.[1]
Research spending by biopharmaceutical companies
In 2013, US pharmaceutical companies spent $40 billion on R&D inside the US and nearly another $11 billion on R&D abroad.[1]
Between 2005 and 2010, pharmaceutical and biopharmaceutical companies increased their investment in precision medicine by roughly 75% and a further increase of 53% is projected by 2015. Between 12% and 50% of the products in their drug development pipelines are related to personalized medicine.[1]
The federal government and most of the 50 states that make up the United States offer R&D tax credits to particular industries and companies. Congress usually renews a tax credit every few years. According to a survey by the Wall Street Journal in 2012, companies do not factor in these credits when making décisions about investing in R&D, since they cannot rely on these credits being renewed.[2]
In 2014, six US biopharmaceutical companies figured in the global Top 50 for the volume of expenditure on R&D. The following have figured in the Top 20 for at least ten years: Intel, Microsoft, Johnson & Johnson, Pfizer and IBM. Google was included for the first time in 2013 and Amazon in 2014, which is why the online store does not figure in the Top 50 for 2014.[1]
Global top 50 companies by R&D volume and intensity, 2014
Rank in 2014
Company
Country
Field
R&D
(€ millions)
Change in rank for R&D, 2004–2014
R&D intensity*
1
Volkswagen
Germany
Automobiles & parts
11 743
+7
6.0
2
Samsung Electronics
Rep. Korea
Electronics
10 155
+31
6.5
3
Microsoft
US
Computer hardware and software
8 253
+10
13.1
4
Intel
US
Semiconductors
7 694
+10
20.1
5
Novartis
Switzerland
Pharmaceuticals
7 174
+15
17.1
6
Roche
Switzerland
Pharmaceuticals
7 076
+12
18.6
7
Toyota Motors
Japan
Automobiles & parts
6 270
-2
3.5
8
Johnson & Johnson
US
Medical equipment, pharmaceuticals, consumer goods
5 934
+ 4
11.5
9
Google
US
Internet-related products and services
5 736
+ 173
13.2
10
Daimler
Germany
Automobiles & parts
5 379
-7
4.6
11
General Motors
US
Automobiles & parts
5 221
-5
4.6
12
Merck USA
US
Pharmaceuticals
5 165
+17
16.2
13
BMW
Germany
Automobiles & parts
4 792
+15
6.3
14
Sanofi-Aventis
France
Pharmaceuticals
4 757
+8
14.4
15
Pfizer
US
Pharmaceuticals
4 750
-13
12.7
16
Robert Bosch
Germany
Engineering and electronics
4 653
+10
10.1
17
Ford Motors
US
Automobiles & parts
4 641
-16
4.4
18
Cisco Systems
US
Networking equipment
4 564
+13
13.4
19
Siemens
Germany
Electronics & electrical equipment
4 556
-15
6.0
20
Honda Motors
Japan
Automobiles & parts
4 367
- 4
5.4
21
Glaxosmithkline
UK
Pharmaceuticals & biotechnology
4 154
-10
13.1
22
IBM
US
Computer hardware, middleware & software
4 089
-13
5.7
23
Eli Lilly
US
Pharmaceuticals
4 011
+18
23.9
24
Oracle
US
Computer hardware & software
3 735
+47
13.5
25
Qualcomm
US
Semiconductors, telecommunications equipment
3 602
+112
20.0
26
Huawei
China
Telecommunications equipment and services
3 589
up > 200
25.6
27
Airbus
Netherlands**
Aeronautics
3 581
+8
6.0
28
Ericsson
Sweden
Telecommunications equipment
3 485
-11
13.6
29
Nokia
Finland
Technology hardware & equipment
3 456
- 9
14.7
30
Nissan Motors
Japan
Automobiles & parts
3 447
+4
4.8
31
General Electric
US
Engineering, electronics & electrical equipment
3 444
+6
3.3
32
Fiat
Italy
Automobiles & parts
3 362
+12
3.9
33
Panasonic
Japan
Electronics & electrical equipment
3 297
-26
6.2
34
Bayer
Germany
Pharmaceuticals & biotechnology
3 259
-2
8.1
35
Apple
US
Computer hardware & software
3 245
+120
2.6
36
Sony
Japan
Electronics & electrical equipment
3 209
-21
21.3
37
Astrazeneca
UK
Pharmaceuticals & biotechnology
3 203
-12
17.2
38
Amgen
US
Pharmaceuticals & biotechnology
2 961
+18
21.9
39
Boehringer Ingelheim
Germany
Pharmaceuticals & biotechnology
2 743
+23
19.5
40
Bristol–Myers Squibb
US
Pharmaceuticals & biotechnology
2 705
+2
22.8
41
Denso
Japan
Automobile parts
2 539
+12
9.0
42
Hitachi
Japan
Technology hardware & equipment
2 420
-18
3.7
43
Alcatel–Lucent
France
Technology hardware & equipment
2 374
+4
16.4
44
EMC
US
Computer software
2 355
+48
14.0
45
Takeda Pharmaceuticals
Japan
Pharmaceuticals & biotechnology
2 352
+28
20.2
46
SAP
Germany
Software & computer services
2 282
+23
13.6
47
Hewlett–Packard
US
Technology hardware & equipment
2 273
-24
2.8
48
Toshiba
Japan
Computer hardware
2 269
-18
5.1
49
LG Electronics
Korea, Rep.
Electronics
2 209
+61
5.5
50
Volvo
Sweden
Automobiles & parts
2 131
+27
6.9
* R&D intensity is defined as R&D expenditure divided by net sales.
** Although incorporated in the Netherlands, Airbus's principal manufacturing facilities are located in France, Germany, Spain and the UK.
Source: UNESCO Science Report: towards 2030 (2015), Table 9.3, based on Hernández et al. (2014) EU R&D Scoreboard: the 2014 EU Industrial R&D Investment Scoreboard. European Commission: Brussels, Table 2.2.
Trends in venture capital investment
The National Venture Capital Association has reported that, in 2014, venture capital investment in the life sciences was at its highest level since 2008: in biotechnology, $6.0 billion was invested in 470 deals and, in life sciences overall, $8.6 billion in 789 deals (including biotechnology and medical devices). Two-thirds (68%) of the investment in biotechnology went to first-time/early-stage development deals and the remainder to the expansion stage of development (14%), seed-stage companies (11%) and late-stage companies (7%).[1]
However, it was the software industry which invested in the greatest number of deals overall: 1 799, for an investment of $19.8 billion. Second came internet-specific companies, garnering US$11.9 billion in investment through 1 005 deals. Many of these companies are based in the State of California, which alone concentrates 28% of US research.[1]
Total investment in venture capital amounted to US$48.3 billion in 2014, for 4 356 deals. This represented ‘an increase of 61% in dollars and a 4% increase in deals over the prior year,’ reported the National Venture Capital Association.[1]
The Organisation for Economic Cooperation and Development estimates that venture capital investment in the United States had fully recovered by 2014.[3]
In recent years, a number of pharmaceutical companies have made strategic mergers to relocate their headquarters overseas to gain a tax advantage, including Medtronic and Endo International. Pfizer's own attempt to take over the British pharmaceutical company AstraZeneca aborted in 2014 after Pfizer admitted plans to cut research spending in the combined company.[1]
Trends in prescription drug prices
One policy concern for the Obama administration has been the steep rise in the price of prescription drugs, in a country where these prices are largely unregulated. From January 2008 to December 2014, the price of commonly used branded drugs increased by a little over 127%, even as the price of commonly prescribed generic drugs decreased by almost 63%.[1]
In 2014, spending on prescription drugs hit $374 billion. This increase in spending was fuelled by the costly new drugs on the market for treating hepatitis C ($11 billion), rather than by the millions of newly insured Americans under the Patient Protection and Affordable Care Act of 2010 ($1 billion). About 31% of this spending went on specialty drug therapies to treat inflammatory conditions, multiple sclerosis, oncology, hepatitis C and HIV, etc., and 6.4% on traditional therapies to treat diabetes, high cholesterol, pain, high blood pressure and heart disease, asthma, depression and so on’.[1]
Fuelling the 'astronomic' rise in consumer prices for prescription drugs has been a new trend in the US, the acquisition of pharmaceuticals through licensing, purchase, a merger or acquisition. In the first half of 2014, the value of mergers and acquisitions by pharmaceutical companies totalled US$317.4 billion and, in the first quarter of 2015, the drug industry accounted for a little more than 45% of all US mergers and acquisitions. Several pharmaceutical companies have made strategic mergers in recent years to relocate their headquarters overseas to order to gain a tax advantage. Pfizer's own attempt to take over the British pharmaceutical company Astrazeneca aborted in 2014, after Pfizer admitted plans to cut research spending in the combined company.[1]
Bringing down the cost to consumers
The Biologics Price Competition and Innovation Act was signed into law in March 2010 to encourage the development of generic drug competition as a cost containment measure for high-priced pharmaceuticals. Part of the government's signatory Patient Protection and Affordable Care Act, it has created a pathway for fast-track licensure for biological products that are shown to be ‘biosimilar’ to, or ‘interchangeable’ with, an approved biological product. One inspiration for the act was that the patents for many biologic drugs will expire in the next decade.[1]
Although the act was passed in 2010, the first biosimilar was only approved in the US by the FDA in 2015: Zarxio, made by Sandoz. Zarxio is a biosimilar of the cancer drug Neupogen, which boosts the patient's white blood cells to ward off infection. In September 2015, a US court ruled that the Neupogen brand manufacturer Amgen could not block Zarxio from being sold in the US. Neupogen costs about US$3 000 per chemotherapy cycle; Zarxio hit the US market on 3 September 2015 at a 15% discount.[1]
In Europe, the same drug had been approved as early as 2008 and has been safely marketed there ever since. The lag in development of an approval pathway in the US has been criticized for impeding access to biological therapies.[1]
The true cost savings from the use of biosimilars is difficult to assess. A 2014 study by the Rand Institute estimates a range of US$13–66 billion in savings over 2014–2024, depending upon the level of competition and FDA regulatory approval patterns.[1]
Unlike generics, biosimilars cannot be approved on the basis of minimal and inexpensive tests to prove bioequivalence. Since biological drugs are complex, heterogeneous products derived from living cells, they can only be shown to be highly similar to the appropriate reference product and therefore require demonstration that there are no clinically meaningful differences in safety and efficacy. The extent to which clinical trials are required will largely determine the cost of development.[1]
Orphan drugs
Orphan diseases affect fewer than 200 000 Americans each year. Since the Orphan Drug Act of 1983, over 400 drugs and biologic products for rare diseases have been designated by the Food and Drug Administration (as of 2015), 260 alone in 2013. In 2014, sales of the top 10 orphan drugs in the US amounted to US$18.32 billion; by 2020, orphan drugs sales worldwide are projected to account for 19% (US$28.16 billion) of the total US$176 billion in prescription drug spending.[1]
However, orphan drugs cost about 19.1 times more than non-orphan drugs (on an annual basis) in 2014, at an average annual cost per patient of US$137 782. Some are concerned that the incentives given to pharmaceutical companies to develop orphan drugs by the FDA's orphan drug products programme is taking the companies’ attention away from developing drugs that will benefit more of the population.[1]
Medical devices
There are more than 6500 medical device companies in the US, more than 80% of which have fewer than 50 employees. According to the US Department of Commerce, the market size of the medical device industry in the US is expected to reach US$133 billion by 2016.[1]
Observers foresee the further development and emergence of wearable health monitoring devices, telediagnosis and telemonitoring, robotics, biosensors, three-dimensional (3D) printing, new in vitro diagnostic tests and mobile apps that enable users to monitor their health and related behaviour better.[1]
Trends in pharmaceutical exports and patents
High-tech exports from the United States of America as a world share, 2008–2013, data from Comtrade database, taken from UNESCO Science Report: towards 2030 (2015), Figure 5.10
Until 2010, the United States of America was a net exporter of pharmaceuticals. Since 2011, it has become a net importer of these goods. The United States has lost its world leadership for high-tech goods. Even computing and communications equipment is now assembled in China and other emerging economies, with high-tech value-added components being produced elsewhere.[1]
The United States is a post-industrial country. Imports of high-tech products far exceed exports. However, the United States' technologically skilled workforce produces a large volume of patents and can still profit from the license or sale of these patents. Within the United States' scientific industries active in research, 9.1% of products and services are concerned with the licensing of intellectual property rights.[1]
When it comes to trade in intellectual property, the United States remains unrivalled. Income from royalties and licensing amounted to $129.2 billion in 2013, the highest in the world. Japan comes a distant second, with receipts of $31.6 billion in 2013. The United States' payments for use of intellectual property amounted to $39.0 billion in 2013, exceeded only by Ireland ($46.4 billion).[1]
A generic drug is a pharmaceutical drug that contains the same chemical substance as a drug that was originally protected by chemical patents. Generic drugs are allowed for sale after the patents on the original drugs expire. Because the active chemical substance is the same, the medical profile of generics is equivalent in performance compared to their performance at the time when they were patented drugs. A generic drug has the same active pharmaceutical ingredient (API) as the original, but it may differ in some characteristics such as the manufacturing process, formulation, excipients, color, taste, and packaging.
Prescription drug list prices in the United States continually are among the highest in the world. The high cost of prescription drugs became a major topic of discussion in the 21st century, leading up to the American health care reform debate of 2009, and received renewed attention in 2015. One major reason for high prescription drug prices in the United States relative to other countries is the inability of government-granted monopolies in the American health care sector to use their bargaining power to negotiate lower prices, and the American payer ends up subsidizing the world's R&D spending on drugs.
Biogen Inc. is an American multinational biotechnology company based in Cambridge, Massachusetts, United States specializing in the discovery, development, and delivery of therapies for the treatment of neurological diseases to patients worldwide. Biogen operates in Argentina, Brazil, Canada, China, France, Germany, Hungary, India, Italy, Japan, Mexico, Netherlands, Poland, Sweden, and Switzerland.
An orphan drug is a pharmaceutical agent that is developed to treat certain rare medical conditions. An orphan drug would not be profitable to produce without government assistance, due to the small population of patients affected by the conditions. The conditions that orphan drugs are used to treat are referred to as orphan diseases. The assignment of orphan status to a disease and to drugs developed to treat it is a matter of public policy that depends on the legislation of the country.
The pharmaceutical industry is an industry in medicine that discovers, develops, produces, and markets pharmaceutical drugs for use as medications to be administered to patients, with the aim to cure and prevent diseases, or alleviate symptoms. Pharmaceutical companies may deal in generic or brand medications and medical devices. They are subject to a variety of laws and regulations that govern the patenting, testing, safety, efficacy using drug testing and marketing of drugs. The global pharmaceuticals market produced treatments worth $1,228.45 billion in 2020 and showed a compound annual growth rate (CAGR) of 1.8%.
Amgen Inc. is an American multinational biopharmaceutical company headquartered in Thousand Oaks, California. One of the world's largest independent biotechnology companies, Amgen's Thousand Oaks staff in 2022 numbered approximately 5,000 and included hundreds of scientists, making Amgen the largest employer in Ventura County. As of 2022, Amgen has approximately 24,000 staff in total.
Adalimumab, sold under the brand name Humira and others, is a disease-modifying antirheumatic drug and monoclonal antibody used to treat rheumatoid arthritis, juvenile idiopathic arthritis, psoriatic arthritis, ankylosing spondylitis, Crohn's disease, ulcerative colitis, plaque psoriasis, hidradenitis suppurativa, and uveitis. It is administered by subcutaneous injection. It works by inactivating tumor necrosis factor-alpha (TNFα).
Biocon Limited is an Indian biopharmaceutical company based in Bangalore. It was founded by Kiran Mazumdar-Shaw in 1978. The company manufactures generic active pharmaceutical ingredients (APIs) that are sold in approximately 120 countries, including the United States and Europe. It also manufactures novel biologics as well as biosimilar insulins and antibodies, which are sold in India as branded formulations. Biocon's biosimilar products are also sold in both bulk and formulation forms in several emerging markets.
Medical research, also known as health research, refers to the process of using scientific methods with the aim to produce knowledge about human diseases, the prevention and treatment of illness, and the promotion of health.
A biopharmaceutical, also known as a biological medical product, or biologic, is any pharmaceutical drug product manufactured in, extracted from, or semisynthesized from biological sources. Different from totally synthesized pharmaceuticals, they include vaccines, whole blood, blood components, allergenics, somatic cells, gene therapies, tissues, recombinant therapeutic protein, and living medicines used in cell therapy. Biologics can be composed of sugars, proteins, nucleic acids, or complex combinations of these substances, or may be living cells or tissues. They are isolated from living sources—human, animal, plant, fungal, or microbial. They can be used in both human and animal medicine.
Gemtuzumab ozogamicin, sold under the brand name Mylotarg, is an antibody-drug conjugate that is used to treat acute myeloid leukemia.
The pharmaceutical industry in India was valued at an estimated US$42 billion in 2021 and is estimated to reach $130 billion by 2030. India is the world's largest provider of generic medicines by volume, with a 20% share of total global pharmaceutical exports. It is also the largest vaccine supplier in the world by volume, accounting for more than 60% of all vaccines manufactured in the world. Indian pharmaceutical products are exported to various regulated markets including the US, UK, European Union and Canada.
Glenmark Pharmaceuticals Limited is an Indian multinational pharmaceutical company headquartered in Mumbai, India.
Actelion is a pharmaceuticals and biotechnology company established in December 1997, headquartered in Allschwil near Basel, Switzerland.
Sarfaraz Khan Niazi he migrated to Karachi, Pakistan in 1962, and to the United States in 1970. He is an expert in biopharmaceutical manufacturing and has worked in academia, industry, and as an entrepreneur. He has written books in pharmaceutical sciences, biotechnology, consumer healthcare, and poetry. He has translated ghazals of the Urdu poet Ghalib.
The Food and Drug Administration Safety and Innovation Act of 2012 (FDASIA) is a piece of American regulatory legislation signed into law on July 9, 2012. It gives the United States Food and Drug Administration (FDA) the authority to collect user fees from the medical industry to fund reviews of innovator drugs, medical devices, generic drugs and biosimilar biologics. It also creates the breakthrough therapy designation program and extends the priority review voucher program to make eligible rare pediatric diseases. The measure was passed by 96 senators voting for and one voting against.
Amneal Pharmaceuticals, Inc. is an American publicly traded generics and specialty pharmaceutical company. The company is headquartered in Bridgewater, New Jersey.
Specialty drugs or specialty pharmaceuticals are a recent designation of pharmaceuticals classified as high-cost, high complexity and/or high touch. Specialty drugs are often biologics—"drugs derived from living cells" that are injectable or infused. They are used to treat complex or rare chronic conditions such as cancer, rheumatoid arthritis, hemophilia, H.I.V. psoriasis, inflammatory bowel disease and hepatitis C. In 1990 there were 10 specialty drugs on the market, around five years later nearly 30, by 2008 200, and by 2015 300.
The Association for Accessible Medicines (AAM), Washington, D.C., is a trade association representing the manufacturers and distributors of generic prescription drugs, manufacturers and distributors of bulk pharmaceutical chemicals, and suppliers of other goods and services to the U.S. generic drug industry. As the primary lobby for makers of generic drugs, AAM's stated mission is to advocate for public policies that facilitate timely access to lower-cost, FDA-approved generic and biosimilar medicines by consumers and patients. Over the 10-year period 2008 through 2018, the use of generic drugs generated $2 trillion in U.S. healthcare savings.
Viatris Inc. is an American global pharmaceutical and healthcare corporation headquartered in Canonsburg, Pennsylvania. The corporation was formed through the merger of Mylan and Upjohn, a legacy division of Pfizer, on November 16, 2020.
↑ Science, Technology and Innovation Outlook. Paris: Organisation for Economic Cooperation and Development. 2014.
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