The biotech sector increased its research and development (R&D) spending to US$35.4 billion in 2014, up 14% from $29.4 million in 2013, shows the latest Ernst & Young Biotechnology Industry Report. This increase brings biotech R&D spending back above spending levels in 2008, before the recession (see Fig. 1). Biotech R&D spending was up by 22% in the United States, and by 14% in Europe.

Figure 1: R&D spending from 2006 to 2014.
figure 1

Biotech R&D spending data are from the Ernst & Young Biotechnology Reports 2008–2015. Where annual reports provided inconsistent R&D spending data, data from the latest report were used. Pharmaceutical R&D spending data are from the PhRMA 2015 Profile. Some companies are included in both cohorts.

PowerPoint slide

Full size image

“On almost every measure we track — revenues, profitability, capital raised and more — the industry reached new heights in 2014,” the authors of the report write. Across the United States, Europe, Australia and Canada, biotech companies cumulatively grew their revenue by 24% in 2014. Although 12% of this growth was solely attributable to Gilead's hepatitis C success, the remaining 12% growth still beats the 10% delivered in 2013.

“[2014] was a year for the record books,” they add. “Against a backdrop of booming stock markets and expansionary monetary policies, these product successes helped propel the biotech industry's market capitalization above the US$1 trillion threshold, a new high.”

A separate analysis by the lobby group PhRMA shows that pharmaceutical R&D spending was down slightly in 2014, to just over $51 billion.