U.S. Medical Research Spending Drops While Asia Makes Gains

America's share of global research spending fell 6 percent in five years, while Japan and China surged.

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Although the United States once accounted for more than three-quarters of the world's research spending, its share has continued to drop in recent years, while countries in Asia saw a dramatic increase.

In a study published Wednesday in the New England Journal of Medicine, researchers found the United States comprised 51 percent of global research spending, at $131 billion in 2007. But by 2012, that number dropped to $119 billion, or 45 percent of the world's biomedical research spending. By comparison, Japan and China increased their spending by $9 billion and $6.4 billion, respectively, during the same time. In 2012, Japan and China accounted for 13.8 percent and 3.1 percent of the world's total research spending.

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"The United States has long been a world leader in driving research and development in the biomedical sphere," study author Reshma Jagsi, an associate professor at the University of Michigan, said in a statement. "It's important to maintain that leadership role because biomedical research has a number of long term downstream economic benefits, especially around job creation."

Despite the fact that the National Institutes of Health has received significant funding reductions since 2003, the researchers found the United States' decline in research spending was almost entirely driven by reduced investment from the private sector.

In 2007, industry investment accounted for more than 60 percent of the United States' research spending, at $83.3 billion. But by 2012, that number dropped by $12.9 billion, to $70.4 billion, while public investment -- such as spending from the government, educational and research organizations and charities -- held steady. Public spending in the United States actually increased from $48 billion in 2007 to $48.9 billion in 2012.

Public research spending in the United States climbed to $51.4 billion in 2010, and accounted for about 41 percent of the country's total research spending. But NIH funding cuts, including the 5.5 percent (or $1.55 billion) cuts that took effect in March 2013 as part of the sequester, partially caused public spending to decline.

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"We were surprised the impact of industry funding was that dramatic, but it's key to note that government funding is equally important to maintain or grow," Justin Chakma, a venture capital investor in California and study author, said in a statement. "Research funded through the National Institutes of Health helps scientists understand how diseases work -- this will happen slower as NIH funding continues to be cut."

While most other countries examined by the researchers also saw relatively stable contributions from the public sector, no other country saw as drastic a decline in private investment as the United States. The only other region with a decline in industry contributions was Europe, which decreased from $55.9 billion in 2007 to $53.6 billion in 2012, according to the study.

Meanwhile, countries such as Japan and China saw a surge in investment from the private sector. Industry contributions to research spending in China increased from $1.5 billion in 2007 to $6.3 billion in 2012. In Japan, such investment increased by $6.7 billion, to $27.6 billion in 2012.

Globally, private investment has remained relatively flat, which means companies are simply reallocating research funds to other countries, the authors suggest.

One explanation for the shift, the authors write, is the fact that conducting research in the Asia-Oceania region is much more affordable -- labor is cheaper and more government subsidies are available.

The heavy weight private investment carries, coupled with the fact that U.S. public expenditures are already two to three times the size of Europe and Asia, means increasing NIH funding alone may not do the trick.

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In addition to boosting NIH funding, the authors write, the federal government should look for ways to give incentives to the private sector to reinvest in U.S. biomedical research.