The pharmaceutical industry’s spending on research and development as a proportion of its revenue dwarfs virtually all other manufacturing sectors, but those costs do not really impact pricing, according to a new analysis by the Congressional Budget Office.
Drugmakers spend up to 25% of its net revenue (sales less expenses and rebates) on R&D, totaling $83 billion in 2019, up from $38 billion in 2000. That ratio compares to about 2% to 3% of net revenue allocated to R&D for all other industries. Even the R&D-intensive software and semiconductor sectors spend significantly less than 20% on finding and creating new products.
The pharmaceutical industry’s spending on research and development as a proportion of its revenue dwarfs virtually all other manufacturing sectors, but those costs do not really impact pricing, according to a new analysis by the Congressional Budget Office.
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