The Health Sector Reinvested 12.9% of Its Income in Innovation in 2022

Health is the sector that reinvests most of its income in Research and Development (R&D). In 2022, companies in the health sector allocated 12.9% of their income to develop their research and development areas, according to the twentieth edition of the EU Industrial Research & Development Investment Scoreboard published by the European Commission, which analyzes the 2,500 companies with the greatest investment in innovation worldwide.

Specifically, health invested €261 billion in R&D in 2022, becoming the second sector that allocated the most capital to R&D, only behind the €285 billion invested by information technology companies and communication (ICT).

The sector has been increasing its investment in R&D for years. If between 2012 and 2019 investment in R&D by healthcare companies grew by 6.7% on average annually, this figure rose to 9.2% and 17.1% in 2021 and 2022 , respectively. However, although in 2022 the value was reduced to 7.3%, it was still higher than pre-pandemic records.

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Within the different companies in the health sector, the report has highlighted the growth of biotechnology companies

Within the sector, 20% of investment in R&D came from the ten largest companies by investment, which allocated €53.9 billion, €10 billion more than the previous year. This list was led by Merck, which invested €11 billion. They were followed in this classification by AstraZeneca and Sanofi, with €8.9 billion and €6.7 billion, respectively.

Within the different companies in the health sector, the report has highlighted the growth of biotechnology companies, which have more than doubled since 2012, going from occupying 125 positions on the list to 271 companies. Investment by biotechnology companies totaled €66.5 billion in 2022, and their resources allocated to R&D grew by an annual average of 14.5% over the last decade.

Regarding pharmaceutical companies, their investment in 2022 rose to over €167 billion, which resulted in an average increase of 5.3% annually over the last ten years. As for the other companies in the health sector, together they totaled 27 billion euros of investment in R&D in 2022. In their case, the average annual growth of the last decade registered an increase of 6.5 %.

The United States has been the country that has led efforts in R&D within health, gathering 52.4% of the total figure

Since 2012, the United States has been the country that has led R&D efforts within health, gathering 52.4% of the total figure. Within the North American market, the report has highlighted the role of biotechnology companies, which in 2022 totaled €66.5 billion of investment in R&D.

The European Union has occupied third place, very close to the rest of the world group (which includes countries such as Switzerland and the United Kingdom), occupying second position, concentrating 16.8% of the total R&D figure. However, in both the European Union and Japan (contrary to the trend noted in China), the number of companies in the health sector has decreased compared to 2012 figures; For example, in the EU, the number of companies has fallen from 81 to 69 companies over the last ten years.

This report from the European Commission analyzes the main trends in innovation of the thousand most relevant investing companies in the European Union and contrasts them with global competitors to understand the structural trends in R&D over the last ten years, placing special emphasis on the activity deployed during the global financial crisis and the Covid-19 pandemic.

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(Featured image by geralt via Pixabay)

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First published in PlantaDoce. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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