U.S. spending on biomedical research fell from $131 billion in 2007 to $119 billion in 2012. This decline was driven almost entirely by reduced investment by industry, not the public sector. But sequestration of NIH funding will exacerbate this reduction.
The Budget Control Act of 2011 cut the NIH budget for FY 2013 by $1.7 billion, to $29.2 billion — a 5.5% reduction. Federal funding for biomedical research has been declining since 2003.
Meanwhile, Japan increased spending by $9 billion and China increased by $6.4 billion. China has the highest annual growth rate of biomedical research in the world, at 32.8% per year.
One reason for this decline may be that research is cheaper in Asia, with lower-cost labor and greater government subsidies. Conversely, FDA approval has become more expensive in the U.S.
The data suggests that industry may simply be reallocating R&D funding to Asia-Oceana. The authors say, "the lack of a coordinated national biomedical R&D strategy is disappointing."