Research and development expenditure: U.S. pharmaceutical industry 1995-2018

The Pharmaceutical Research and Manufacturers of America (PhRMA) trade group represents the leading biopharmaceutical research companies in the United States. In 2018, the research and development (R&D) expenditure of its member companies reached 79.6 billion U.S. dollars worldwide.

How much does the pharmaceutical industry spend on R&D relative to revenue?

The development of a new drug costs in the region of 2.6 billion U.S. dollars and can take up to 15 years. In relation to sales, the pharmaceutical sector invests more money in R&D than many other industries: PhRMA members spent around 19.5 percent of their combined global revenues on R&D in 2018 – this share increased to around 22 percent when only considering the sales and R&D expenditure from the domestic market of the United States.

Charting the rise of R&D expenditure

Founded in 1958, PhRMA is headquartered in Washington, D.C. and has offices located around the United States. The group’s members collectively invested two billion U.S. dollars into the research and development of medicines worldwide in 1980, but by the start of the 21st century, this figure had increased to around 26 billion U.S. dollars – expenditure has increased threefold in the years since.

Research and development expenditure of total U.S. pharmaceutical industry from 1995 to 2018 (in billion U.S. dollars)*

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Source

Release date

2019

Region

United States

Survey time period

1995 to 2018

Supplementary notes

* This statistic was assembled from several editions of the same report.
Including PhRMA and non-PhRMA members until 2010.
** Figure for total pharma estimated.
*** No data available for total pharma since 2011.

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