Research and development (R&D) spending by the pharmaceutical industry Europe is being outpaced by the US - and faces increasing competition from China.
Europe’s spending on pharmaceutical R&D grew on average at 4.4% per year between 2010 and 2022.
But that failed to keep pace with developments elsewhere: over the same time-frame R&D spending growth in the US stood at 5.5%, and in China it reached 20.7%, according to research published by the European Federation of Pharmaceuticals Industries and Associations (EFPIA).
The research warned that the impact of this R&D gap can be seen in the relative decline in the number of new molecule entities (NME) developed in Europe, which is a strong indicator of R&D activity.
EFPIA director general Nathalie Moll said: “Despite R&D spending growing slowly, the scale and pace of the downward trends in Europe’s global share of R&D investment shows that there is only a finite time to turn things around. Boosting European competitiveness to kickstart growth requires concerted, collective action; urgent implementation of a coherent life sciences strategy for Europe would be a good start to futureproofing the sector.”
The report found that Europe and the US had similar levels of R&D expenditure until 2014, but since then the gap has widened.
In Europe, R&D expenditure in pharmaceuticals has grown an average of 4.4% each year between 2010 and 2022, from €27.8 billion to €46.2 billion. However, over the same time, US R&D expenditure in pharmaceuticals has gone from €30.7 billion to €71.5 billion, while in China, pharmaceutical R&D expenditure has increased by an average of 20.7% each year over the same period, from €1.7 billion to €14.8 billion.
Alongside this, NME growth has been increasing in China since 2018. Even though China’s total R&D investment stood at a quarter of Europe’s in 2022, China still produced a similar number of NMEs in 2022 – and in 2023 it overtook Europe and is rapidly narrowing the gap on the US.
Between 2018 and 2023, 91 NMEs came from Europe, compared to 187 from the US and 75 NMEs from China. Pharma contributed a total of €311 billion to the EU-27 economy in 2022, directly supporting 729,600 jobs. The pharmaceutical industry in Europe is three times as productive as the European economy as a whole EFPIA said: however, the report noted the gross value added impact per hour in the US is double that of the EU.
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