European R&D investments stagnant since 2010

European private research and development investments have stagnated since 2010, according to a new report.

The total amount of health R&D in the European Union was €47 billion in 2011 – 60% invested by pharma and 40% by the member states and the European Commission. Private investments have stagnated for the first time, staying at €29 billion and public investment decreased by 1% to €18 billion.

Within Europe, the major investors in health R&D are Germany with a total of €9.4 billion, followed by France (€8.3 bln €), the UK (€7.4 bln €), Switzerland (€5.3 bln €) and Italy (€2.4 billion).

According to the report, this decline is due to the current economic situation, reinforced by the uncertainty about future market conditions, and increasingly limited reward mechanisms for innovative technologies, amongst others. The findings are worrying in the light of Europe's increasing disease burden and aging population, as well as the millions of people whose health cannot be improved without new health care approaches.

"The major focus of research is a medical one, to find new and better treatments for patients, yet at the same time the benefits of that always outweigh the costs for society. Today, the innovations of yesterday have become cheap and have become available to all. But you need the discovery and development of new drugs first. The incredibly high risks of pharmaceutical innovation are only sustainable if the rewards are adequate and fair. Everybody benefits from this: the patient, society and the industry. We cannot afford not to innovate".

Jane Griffiths, Company Group Chairman, Janssen EMEA.

Healthcare costs in Europe are expected to increase to 12-15% of GDP by 2030.

Increased health R&D investment is even more important to address in the context of growing healthcare expenditure. For example, new technologies improve the quality of healthcare provision, leading to improved outcomes and increased life expectancy. New technologies also lead to efficiency gains, as their cost tends to decrease over time for both medicines and medical devices. Improved health leads to better productivity among the working population and may even increase the maximum working age. Health R&D investments also have the potential to provide high economic yields, both in terms of return on investment and deploying a highly educated workforce with technical skills.

The report was commissioned by Janssen Pharmaceutica NV and the research was conducted by Deloitte Health Economics group.