Drop in Funding Loses U.S. Its Biotech Lead

BOSTON (TheStreet) -- The United States used to be considered the premiere, pioneering country when it came to scientific breakthroughs, particularly in the field of biomedical research and technology. In recent years, however, the U.S. has been losing serious ground.

Research out of the University of Michigan finds that U.S. spending on biomedical research has declined significantly in the past few years, while in many other countries it's been holding steady or increasing.

The U.S. global share of biomedical research fell from 51% in 2007 to 45% in 2012 -- an overall drop from $131 billion to $119 billion adjusted for inflation. Meanwhile, Japan and China have increased spending dramatically -- by $9 billion and $6.4 billion, respectively -- leading to an overall rise in Asia's share of research spending from 18% to 24%. Europe remained steady at 29% of the global share.

The results of the study, published this month in the New England Journal of Medicine, indicates that the decline in spending is a direct result of reduced investment from the industry. Even when taking into account decreased funding from the National Institutes of Health, the public sector was accountable for very little of the overall reduction in investment.

"We were surprised the impact of industry funding was that dramatic, but it's key to note that government funding is equally important to maintain or grow," venture capital investor with Thomas, McNerney & Partners and study co-author Justin Chakma said in a press release. "Research funded through the National Institutes of Health helps scientists understand how diseases work -- this will happen slower as NIH funding continues to be cut."

The U.S. once hovered at a historic high of approximately 80% of the global share in biomedical research spending. And about half of the drugs approved by the U.S. Food and Drug Administration have traditionally been at least partially funded by the federal government during the research and development phase.

"The United States has long been a world leader in driving research and development in the biomedical science," study co-author Reshma Jagsi, an associate professor of radiation oncology at the University of Michigan Health System, said in a press release. "It's important to maintain that leadership role because biomedical research has a number of long-term downstream economic benefits, especially around job creation."

Jagsi believes Asia's growing share of research expenditures may be due to China and Japan having access to cheaper labor and infrastructure, as well as less restrictive laws and bureaucratic policies. Jagsi also suggested Asian governments may be more heavily subsidizing research, as compared with the U.S.

The study's authors -- which included research scientists, economists and industry representatives -- concluded that increased funding for the NIH and increased incentives to invest in biomedical research would be critical steps toward helping the U.S. regain its foothold.

"The federal government is the main financier of biomedical research in America, and Congress is reneging on its obligation to its constituents by cutting research funds," said an op-ed in The Baltimore Sun from four Johns Hopkins doctoral students last fall. "What this means ... is that fewer researchers may be studying and curing the diseases ... not just now, but also in the upcoming decades."

The op-ed noted that U.S. biomedical workforce levels are so low that it takes longer for a drug to come to the market -- more than a decade -- thereby compromising the health of the general public. In the meantime, researchers are feeling the crunch in a field where professional opportunities and funding are waning.

"My generation has been feeling the strain of the NIH budget for over a decade," Rebecca Burdine, Associate Professor in the Department of Molecular Biology at Princeton University, told Science Daily last year. "This prevents really good science from being done. I've seen many of my peers spiraling down the drain. They are slowly shutting down their labs and leaving science."

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