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R&D Spending by U.S. Biopharmaceutical Companies Reaches Record Levels in 2008 Despite Economic Challenges

WASHINGTON, March 10 /PRNewswire-USNewswire/ -- Despite the nation's economic slowdown, America's pharmaceutical research and biotechnology companies invested a record $65.2 billion last year in the research and development of new life-changing medicines and vaccines - an increase of roughly $2 billion from 2007, according to analyses by the Pharmaceutical Research and Manufacturers of America (PhRMA) and Burrill & Company.

PhRMA-member companies alone invested an estimated $50.3 billion on pharmaceutical R&D last year - up from the previous record of $47.9 billion in 2007, according to the PhRMA survey. Additionally, the Burrill & Company analysis shows that non-PhRMA pharmaceutical research companies spent an estimated $14.9 billion on R&D last year.

This record R&D investment reflects the continued commitment of America's pharmaceutical research and biotechnology companies (also known collectively as the biopharmaceutical sector) to lead the world in the pursuit of new, life-saving and life-enhancing medicines. The foremost beneficiaries of this dedication are patients, who are living longer, healthier, more productive lives, thanks in part to the new medicines generated by these research efforts.

While the innovative process, which is costly, time-consuming and risky, has always presented challenges, the current economic climate compounds those challenges. However, the data show that the drive toward innovation remains strong.

The sector's R&D focus also provides considerable value to the U.S. economy. At a time when many industries are seeking help just to stay afloat, pharmaceutical research companies are devoting the vast majority of their R&D investment within America. In fact, PhRMA member companies dedicated roughly 70 percent of their R&D investment domestically.

The sector's contribution to the nation's economy is further illustrated in a new study conducted by Archstone Consulting and Dr. Lawton R. Burns, Director, The Wharton Center for Health Management and Economics at The Wharton School, University of Pennsylvania. Entitled The Biopharmaceutical Sector's Impact on the U.S. Economy: Analysis at the National, State, and Local Levels, the study found that domestic R&D spending by biopharmaceutical companies equaled roughly $65,000 per direct employee in 2006 - about eight times the published estimates of R&D spending per employee in all manufacturing industries between 2000 and 2004.

In fact, roughly one-quarter of the more than 686,000 direct employees of the sector were engaged in life, physical or social sciences research in 2006, the study shows. This research-intensive sector also supported 1 million indirect jobs and 1.5 million induced jobs that year.

Perhaps one of the strongest signs of potential for future growth - and recovery - is a sector's contribution to gross domestic product. According to the study, the sector's direct contribution to the U.S. GDP of $88.5 billion was triple the average contribution from sectors in the rest of the economy in 2006. The same ripple effect that supported indirect and induced jobs also had a ripple effect on GDP, with every dollar contributed to GDP by biopharmaceutical companies supporting another $2.33 in contribution from other sectors in 2006.

Michael Eckstut, Principal and Life Sciences and Strategy Practice Leader, Archstone Consulting, commented, "Our research indicates that the biopharmaceutical sector has made a substantial contribution to U.S. economic growth, and that on average, this sector contributed more to GDP on a per employee basis and grew faster than the rest of the economy from 1996 to 2006."

"America's pharmaceutical research and biotechnology companies are not immune to the challenges presented by our current economic crisis," said PhRMA President and CEO Billy Tauzin. "However, the important work that we do every day in the battle with disease cannot stop. The U.S. is the world's hotbed of medical innovation, and throughout the country, we remain committed today to finding tomorrow's cures, despite the incredible challenges that are posed by the current economy."

Record investment in R&D is leading America's biopharmaceutical companies toward record levels of clinical testing of new medicines. Today, there are more than 2,900 medicines in development in the U.S., including 750 compounds in development for cancer, 312 for heart disease and stroke, 150 for diabetes, 109 for HIV/AIDS and 91 for Alzheimer's disease and dementia.

"As we look toward the future of health care in America, we must remember that the incredible progress we make every day in research and development will be wasted if patients don't have access to our life-saving medicines," said Tauzin. "That's why we're committed to working toward comprehensive health care reform that offers health coverage to all Americans."

To view the report, please visit

The Pharmaceutical Research and Manufacturers of America (PhRMA) represents the country's leading pharmaceutical research and biotechnology companies, which are devoted to inventing medicines that allow patients to live longer, healthier, and more productive lives. PhRMA companies are leading the way in the search for new cures. PhRMA members alone invested an estimated $50.3 billion in 2008 in discovering and developing new medicines. Industry-wide research and investment reached a record $65.2 billion in 2008.

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SOURCE Pharmaceutical Research and Manufacturers of America
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