Annual Global Funding Forecast Predicts R&D Spending Growth Will Continue While Globalization Accelerates

Battelle-R&D Magazine's 2012 Funding Forecast shows promising global growth but high expectations for commercial payoff

The full Global R&D Funding Forecast can be found at http://www.battelle.org/ABOUTUS/rd/2012.pdf.

(COLUMBUS, Ohio) - The Battelle-R&D Magazine annual Global R&D Funding Forecast released today shows global research and development (R&D) spending is expected to grow by about 5.2 percent in 2012 to more than $1.4 trillion.

The full Global R&D Funding Forecast can be found at http://www.battelle.org/ABOUTUS/rd/2012.pdf.

One of the most remarkable findings of the report is that R&D funding growth will largely be driven by Asian economies-a number projected to increase by nearly 9 percent in 2012. Elsewhere in the world, growth remains strong and stable in the aftermath of the global recession. Greece is the only country among the world's top 40 R&D spenders that is not expected to increase its R&D budget during the next year.

The closely watched study also predicts that overall European R&D will grow by about 3.5 percent while North American R&D will grow by 2.8 percent.

Experts from Battelle and R&D Magazine forecast that a 2.1 percent growth in United States R&D expenditures will be balanced against an estimated 2 percent inflation rate, suggesting that U.S. R&D investments will remain flat in real terms over the next year. That $436 billion in forecasted spending is expected to be broken down in the following way:

•       U.S. Private Industry will spend by far the largest amount with a projection of $279.6 billion in R&D in 2012, up 3.75 percent over 2011.
•       U.S. Federal Government spending will reach $125.6 billion in 2012, a decrease of 1.16 percent.
•       Academia in the U.S. will spend $12 billion on research in 2012, up 2.85 percent over last year.
•       Non-profits will increase spending in 2012 by 2.7 percent to $14.5 billion and other government entities in the U.S. will round out total R&D expenditures by increasing 2.72 percent to $3.8 billion.

Another notable trend the Funding Forecast reveals is the increased expectation that R&D investments will provide financial returns and positive commercial outcomes. Several years ago, only 10 percent of U.S. industries calculated return on investment (ROI) from R&D efforts, while data from a survey that is part of the Funding Forecast now indicates that 40 percent measure that figure.

"The pharmaceutical industry illustrates this trend best as it faces increased scrutiny of R&D spending versus limited productivity and weak pipelines for blockbuster drugs," said Martin Grueber, Battelle Research Leader and co-author of the report. "However, industry isn't the only sector under the ROI microscope. There also are increasing demands that public sector R&D investments show real economic and policy outcomes."

With 18 U.S. corporations among the top 50 firms ranked by R&D spending, the U.S. remains dominant in manufacturing R&D. However, translating this level of R&D and innovation into output, products and jobs is a challenge faced by both U.S. corporations and government. There is wide agreement that technology collaborations are important to growth with many manufacturers planning on increasing collaborative activity such as knowledge sharing, shorter development cycles and the availability of proprietary technologies.

Survey respondents identified the top three ways government could help support manufacturing R&D as: providing tax credits to companies with active R&D programs, supporting academic R&D in manufacturing and increasing tech transfer support from U.S. national labs to industry.

Health and Life Science Industry Snapshot

Life Science: United States R&D spending in the life science industry is expected to decline by 5.7 percent to $73.2 billion in 2012 as pharmaceutical firms tighten their R&D budgets. Global R&D spending in the industry also is forecast to decline by 2.2 percent to $147.3 billion.

This sector includes such diverse firms as multi-national pharmaceutical corporations, large medical device and instrument companies and both large and small biotechnology firms.

A major change in the funding and performing of life science R&D is the convergence in public and private sector R&D toward open innovation and open source information-especially in areas needing considerable fundamental research. It is due, in part, to the pharmaceutical industry's retrenchment from its conventional model to a more reduced internal R&D function and focuses more on collaboration and ROI. The ripple effects of impending patent expirations and the widely reported decline in productivity in the development and approval of significant new medicines are driving the strategic changes.

Hard copies of the full R&D Funding Forecast report will be available by request Jan. 3 by contacting Sandy Walker at (614) 424-7619 or at walkers@battelle.org.

As the world's largest independent research and development organization, Battelle provides innovative solutions to the world's most pressing needs through its four global businesses:  Laboratory Management; National Security; Health and Life Sciences; and Energy, Environment and Material Sciences. It advances scientific discovery and application by conducting $6.5 billion in global R&D annually through contract research, laboratory management and technology commercialization.  Headquartered in Columbus, Ohio, Battelle oversees 22,000 employees in more than 130 locations worldwide, including seven national laboratories which Battelle manages or co-manages for the U.S. Department of Energy and the U.S. Department of Homeland Security and a nuclear energy lab in the United Kingdom.

Battelle also is one of the nation's leading charitable trusts focusing on societal and economic impact and actively supporting and promoting science, technology, engineering and mathematics (STEM) education.