Research Spending Falls in U.S., Rises in Asia

The U.S. share of global biomedical research spending was once as high as 80%. By 2012, it had fallen to 45%, down from 51% in 2007. Meanwhile, Asia's share of spending increased from 18% in 2007 to 24% in 2012, according to one analysis.

Authors of the analysis, published in January in The New England Journal of Medicine, blame the U.S. decline on reduced investment by industry, not on funding cuts to the NIH.

However, Matt Hourihan, MPP, director of the R&D Budget and Policy Program at the American Association for the Advancement of Science in Washington, DC, points out that the researchers examined a 6-year period when NIH funding was relatively flat—2007 to 2012.

“The authors absolve public-sector R&D [research and development]. But I'm not sure they could have done that had they gone back to 2003 or 2004, because the NIH budget doubled between 1998 and 2003,” says Hourihan. The NIH budget decreased by 22% between 2003 and 2013, after adjusting for inflation, according to a report from the Congressional Research Service, the nonpartisan research arm of the U.S. Congress.

The new analysis shows U.S. biomedical research spending dropped from $131 billion in 2007 to $119 billion in 2012, when adjusted for inflation. Public-sector spending, which includes funds from government agencies, educational and research institutions, and charitable organizations, increased by nearly $1 billion during that time; private industry spent $13 billion less.

By comparison, China's spending increased by $6.4 billion and Japan's by $9 billion from 2007 to 2012. No other region of the world comes close to having those levels of increased investment.

Because global R&D investments remained flat over those 6 years while investments in the United States declined, industry apparently reallocated its funding to Asia. This shift likely occurred because labor is cheaper in Asia and governments offer greater subsidies and a less bureaucratic research infrastructure than the United States, researchers said.

Direct investments by Asian governments are also playing a role, Hourihan says. He points to China's plan to invest $308.5 billion in science and technology from 2011 to 2015, and Singapore's investment in its biomedical research campus, Biopolis.

Meanwhile in the United States, the recently enacted federal spending bill restores to the NIH only $1 billion of the $1.55 billion cut by sequestration, putting the fiscal year 2014 budget at $29.9 billion.

If the deceleration in U.S. spending persists, it could mean a general slowdown in the rate of discovery and innovation. “Policymakers need to find ways to incentivize private-sector investment, whether it's through partnership agreements or tax incentives,” Hourihan says.

More importantly, he says, public-sector funding must increase. “Government R&D has an undeniable effect on R&D from other sources, helping to incentivize it and strengthen the system overall,” he notes. “Weakening public R&D weakens the system.”