Research and development expenditure: U.S. pharmaceutical industry 1995-2023

The Pharmaceutical Research and Manufacturers of America (PhRMA) trade group represents the leading biopharmaceutical research companies in the United States. In 2023, the research and development (R&D) expenditure of its member companies reached some 96 billion U.S. dollars worldwide. 

How much does the pharmaceutical industry spend on R&D relative to revenue?

The development of a new drug costs around 2.6 billion U.S. dollars and can take up to 15 years. In relation to sales, the pharmaceutical sector invests more money in R&D than many other industries: PhRMA members spent 21 percent of their combined global revenues on R&D in 2023 – this share increased to nearly 23 percent when only considering the sales and R&D expenditure from the domestic market of the United States.

Charting the rise of R&D expenditure

Founded in 1958, PhRMA is headquartered in Washington, D.C. and has offices located around the United States. The group’s members collectively invested two billion U.S. dollars into the research and development of medicines worldwide in 1980, but by the start of the 21st century, this figure had increased to around 26 billion U.S. dollars.