Research and development

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 2000–2012

Expenditure on research and development by the pharmaceutical industry has grown by £1 billion since 2002, albeit with a decline of £700 million in the last year. During this period, R&D capital expenditure has declined by around £359 million.
UK pharmaceutical R&D expenditure by type 2000–2011
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Source: ONS UK Business Enterprice Research and Development, 2013

Figure 2 – R&D expenditure in key business sectors

There was more R&D performed in the pharmaceutical sector than any other in 2012, representing 25% 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
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Source: ONS Business Enterprise R&D 2013

Figure 3 – UK R&D expenditure by industry sector, 2002–2012

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
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Source: ONS Business Enterprise R&D 2013

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
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Source: EFPIA, The Pharmaceutical Industry in Figures

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

Figure 6 – R&D as a percentage of sales in key UK manufacturing industry sectors, 2010–2012

The table below shows the R&D expenditure, and R&D as a percentage of sales (intensity), between 2010 and 2012 for core business sectors in the UK.
Product group ​R&D expenditure (£million) ​R&D as a percentage of sales
2010 2011 2012​ 2010​ 2011 ​2012
Pharmaceuticals​​ 4,673 4,933 4,206 31.7 35.5 33.8
Aerospace​ 1,437 1,438 1,518 8.0 7.7 7.5
Electrical equipment​ 513 509 466 4.2 3.9 3.7
Chemicals​ 666 523 591 3.0 2.2 2.6
Motor vehicles and parts​ 1,237 ​1,525 1,732 3.4 4.0 ​4.4
Other manufactured goods​ 136 146 139 0.9 0.9 0.9​
Manufacturing total (inc all of the above + all other manufactured goods)​ 11,585 12,466 12,235 3.3 3.6 3.4

Source: ONS Business Enterprise Research and Development, 2013

Figure 7 - Sources of funds for pharmaceutical business R&D undertaken in the UK 2012

In 2012, £17.1 billion was spent on research and development (R&D) undertaken across all UK business sectors, an decrease of 2.1% on the previous year. Total R&D expenditure in 2012 represented 1.1% of GDP, in line with recent years.
 
UK-based pharmaceutical companies themselves funded the majority of business R&D in the UK, 66% of the total £4.6 billion. The second largest source of funding for R&D in the UK was from the parent/subsidiary companies operating outside the UK, 23% of the total.
Own funds 56%, Overseas 36%, UK Government <1%, Other UK business 8%
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Notes: These figures are industrial R&D only, and do not include charities or NHS
Source: ONS UK Business Enterprise Research and Development, 2013
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