Research and development expenditure

The growth of the pharmaceutical industry is heavily dependent on its constant research into new products and the enhancement of those products already on the market. The money spent on research and development (R&D) in the pharmaceutical sector compared to other sectors reflects this. However, the costs for R&D have also risen over time.

Figure 1 – UK pharmaceutical R&D expenditure by type 2000–2011

Expenditure on research and development by the pharmaceutical industry has grown by £800m per year since 2000. During this period R&D capital expenditure has declined by around £400m per year.

UK pharmaceutical R&D expenditure by type 2000–2011

Source: ONS UK Business Enterprice Research and Development, 2011

 

Figure 2 – R&D expenditure in key business sectors

There was more R&D performed in the pharmaceutical sector than any other in 2011, representing 28% of all expenditure on R&D in UK businesses. Other sectors reporting significant R&D expenditure are, for example, aerospace and motor vehicles and parts. The graph below shows the R&D expenditure for a selection of sectors in the UK.

R&D expenditure in key business sectors

Source: ONS Business Enterprise R&D 2011

Figure 3 – UK R&D expenditure by industry sector, 2002–2011

The graph below shows how the pharmaceutical industry’s R&D expenditure compares to other business sectors. The costs for R&D have also risen over time which accounts for some of the growth profile for R&D investments.

UK R&D expenditure by industry sector, 2002–2011
Source: ONS Business Enterprise R&D 2011

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Figure 4 – R&D expenditure: European comparison

The graph below shows how pharmaceutical R&D in the UK compares to other countries in Europe. Expenditure in the UK is greater than other European countries with established domicile pharmaceutical sectors.

R&D expenditure: European comparison
Source: EFPIA, The Pharmaceutical Industry in Figures, 2011

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Figure 5 – R&D expenditure: Global comparison

The graph below shows how pharmaceutical R&D in the UK compares to other countries in the world. The US has by far the largest pharmaceutical R&D sector.

R&D expenditure: Global comparison

Source: National Trade Associations

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Figure 6 – R&D as a percentage of sales in key UK manufacturing industry sectors, 2009–2011

The table below shows the R&D expenditure, and R&D as a percentage of sales (intensity), between 2008 and 2010 for core business sectors in the UK.

Product group​ ​R&D expenditure (£million) ​ ​ ​R&D as a percentage of sales ​ ​ ​
2009 2010 2011​ 2009​ 2010​ 2011​
Pharmaceuticals​​ 4424

4681

​4850 36.2 34.6 38.9
Aerospace​ 1466 1437 ​1417 7.8​ 8.0 7.6
Electrical equipment​ 577​ 513 ​509 5.3 4.2 4.0
Chemicals​ 610 666 689 3.0 3.0 3.0​
Motor vehicles and parts​ 1039 1237 1525​ 3.9 3.4​ 4.0​
Other manufactured goods​ 98 136 147 0.6 0.9 ​0.9
Manufacturing total (inc all of the above + all other manufactured goods)​ 11230 11593​ ​12552 3.7 3.5 3.7
 

Source: ONS Business Enterprise Research and Development, 2011

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