Big Pharma's decision to shift more of its R&D resources to Asia over the past few years has helped spur a subtle but significant erosion of the U.S.'s traditional dominance in the field. New research from the University of Michigan Health System shows that the U.S. share of the global biomedical R&D business declined to 45%--from 51%--between 2007 and 2012. And while Europe stayed steady at 29%, Asia swelled from 18% to 24%.
The R&D budget in the U.S. dropped from $131 billion in 2007 to $119 billion--adjusted for inflation--in 2012.
Japan accounted for much of the increase in Asia, with a $9 billion increase in R&D spending. And the growing China market added $6.4 billion in spending as companies ranging from Merck ($MRK) to GlaxoSmithKline ($GSK) stepped up their work in the booming country.
Michigan researchers were careful to note that despite the decline in purchasing power at the NIH in that period, the shift in the U.S. was directly attributable to a reduced investment by the industry. And they concluded that the trend has ominous implications for job growth in the U.S. biomedical field.
"The United States has long been a world leader in driving research and development in the biomedical science. It's important to maintain that leadership role because biomedical research has a number of long term downstream economic benefits, especially around job creation," says study author Dr. Reshma Jagsi, associate professor of radiation oncology at the University of Michigan Health System, in a statement.
Why Asia? Perhaps, says the new study, it can be attributed to fewer regulations (though that would be less likely in Japan than China), cheaper labor (ditto) and more government subsidies. The summary from the university, though, declines to mention China's growing allure to the industry as a key emerging market, as its huge population increasingly can afford to pay for the therapies Big Pharma has to offer. By mounting R&D activities in China, Big Pharma has been opening up new inroads into the market, despite the recent setback regarding under-the-table payments to physicians.
No amount of fretting, though, is likely to restore the U.S. R&D share to its old glory. The U.S. remains dominant in the world, but increasingly biomedical research is an integrated global effort that requires companies to share the wealth. The study's authors are also hoping to provide some ammunition to the forces backing increased funding for the NIH, but there are few signs that Congress--which is grappling with big deficits--will respond to this latest poke from Michigan.
- here's the release