PwC: Healthcare will outspend all other industries on R&D by 2020
- Healthcare is on track to be the No. 1 industry for global research and development spending, according to new analysis from PricewaterhouseCoopers. The industry currently ranks second behind computing and electronics but is expected to pull ahead by 2020.
- PwC highlighted 88 "high-leverage innovators" — companies that bested their industry groups on seven measures of financial success for the previous five years, while spending less on R&D as a percentage of sales. Of those, 23 are in healthcare, including Medtronic, Fresenius Medical Care and Thermo Fisher Scientific.
- Across all industries, R&D spending was $782 billion, up 11.4% from 2017. PwC based its projections on data from 1,000 publicly listed companies that report R&D spending.
The report reflects the fast pace of innovation seen across healthcare, from digital health startups to tech giants to drug and medical device companies. Areas seeing major advancements include precision medicine, artificial intelligence and data analytics.
Amazon leads the top 20 list of R&D spenders for 2018, with $22.6 billion or 12.7% of revenue, a 40.6% increase over 2017. Other top 20 companies include Alphabet, Samsung, Microsoft, Apple, Roche, Novartis and Pfizer.
High-level innovators were rated on seven financial metrics: average operating margin, average gross margin, gross profit growth, relative total return, operating income growth, sales growth and market cap growth.
R&D spending in healthcare is expected to exceed $180 billion by 2020, up from about $86 billion in 2005. If the industry meets expectations, it should beat computing and electronics, where growth has been slowing in recent years.
Software and internet, another sector that has demonstrated sustained growth in R&D spending, is forecast to reach about $175 billion, up from just over $20 billion in 2005.
- PriceWaterhouseCoopers The 2018 Global Innovation 1000 study
- Healthcare Finance Healthcare will spend the most on R&D of any industry by 2020, says PwC