Biotech R&D spending hit US$45.7 billion in 2016, up 12% from 2015, found an annual analysis of the sector by consulting firm EY (see Fig. 1). This was the seventh consecutive year that these firms increased their cumulative R&D spending, and the second consecutive year in which R&D spending growth outpaced revenue growth (7%).

Figure 1: Biotech R&D spending data from the EY Biotechnology Reports 2008–2017.
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When annual reports provided inconsistent R&D spending data, data from the latest report were used. The most recent analysis studied 708 biotech firms, and excluded large pharmaceutical companies.

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US firms poured the most new money into R&D, increasing their investment in science by 14%. European firms spent only an extra 3% on R&D in 2016.

“The biotech industry's financial commitment to R&D, while impressive, needs to be coupled with efficiency improvements to achieve better returns and ultimately to drive greater affordability of its products,” said Pamela Spence, EY Global Life Sciences Leader. “With pricing pressures expected to escalate, firms will need to incorporate new digital and artificial intelligence technologies into their traditional drug target selection and overall R&D processes to achieve those returns or risk being outdone by firms that do.”