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Topics under Research and Development

Global Research & Development Industry

The global research and development (R&D) industry is included in business services and encompasses three main fields of activity, which are basic research, applied research and development. Two central branches of the industry involve R&D in engineering, physical and life sciences on one hand, and the humanities and social sciences on the other.

R&D involves carrying out creative work to expand the knowledge base, and then use that base to improve existing products and processes and to create new products and processes. Company survival relies on innovation, which is encouraged by R&D. Industrial companies in the US invest an average of almost 4% of revenue in R&D, while in the high technology sector this rises closer to 7%. In the pharmaceutical sector the percentage of revenue dedicated to R&D can be higher, such as Novartis at 15%, Merck & Co at 14% and Ericsson at almost 25%.

Key Market Segments

Technology - Sensors manufacturing is becoming easier in terms of quantity and adaptability as technological advances make it easier to produce more sensors and sensors that can be incorporated into smaller devices. Sensors are vital to the functioning of most electronics-based devices, instruments and equipment used in domains that necessitate measuring. Fuji Keizai USA notes the huge potential for sensor research and development (R&D), encompassing various types of sensors, including extreme temperature sensors, multi-axis sensors, accelerometers, wireless sensors, in vivo sensors, millimeter-wave radar sensors and pressure sensors.

Health - Datamonitor estimates there are more than 135 products being developed in the sector of women’s health, which is a sector that has witnessed a falling off in investment over recent years as other therapy areas promising greater return on investment were favored by the pharmaceutical industry. New therapeutics in women’s health cover a wide range of preclinical and clinical level conditions. The leading segments concern menopausal symptoms and contraceptives. Though endometriosis and uterine fibroids represent appealing markets in the women’s health sector, both innovation and investment remain low. Oral gonadotropin releasing hormone antagonists are likely short-term candidates, and diagnostic and biomarker research is likely to be strong long term. Investment in drug discovery is weak due to a perception of lower return on investment. Patient access is likely to fuel long-term market expansion rather than drug advances. Treatment demand will be fuelled by a widening treatable population, with contraceptives and infertility treatments representing the leading segment.

Pharmaceuticals - The global pharmaceutical industry avails of R&D to assess health technology for new products and to gather the economic analyses necessary for effective decision making. Business Insights points to the importance for pharmaceutical companies of taking HTA requirements for new drugs into account. Prior to the launch of a new product on the market, it is vital for companies to explore factors such as treatment heterogeneity, costs associated with a condition, patient perspectives, unmet needs and existing practices. Throughout phase III trials, data can be gathered to support positive reimbursement decisions. Treatment costs are coming to light more and more often following US healthcare reform. The FDA and Centers for Medicare and Medicaid Services are examining the review process. Kalorama Information estimates the average drug takes up to 15 years at a cost of $1.3 billion to bring to market. There is, therefore, an increasing degree of outsourcing of various development phases, with contract research organizations recording growing demand.

Regional Markets

In 2010, the US Scientific Research and Development industry witnessed a near 5% drop in corporate funding following the economic crisis, reports IBIS World. State investment in R&D similarly decreased due to the difficult economic climate. Nonetheless, overall industry revenue recorded yearly growth in excess of 2% to exceed $85 billion. State funding has traditionally been used for basic research, while corporate and private funding often goes to developmental and experimental research to take basic research further. The latter is perceived as more viable, with private investors more likely to invest in this type of research in hope of greater returns.


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