Private Sector R&D

Extracted Attributes

• Primary Scope

  Commercial and applied research and experimental development performed by businesses and non-governmental entities

• Key Growth Drivers

  Software and computer services, Pharmaceuticals and biotechnology, Information technology, Automotive

• Core Investment Barriers

  Appropriability, Scale, Radicalness, and Uncertainty of payoffs

• U.S. Total Spending (2021)

  $602 billion (75% of total $806 billion U.S. R&D expenditure)

• Key Supporting Institutions

  Howard Hughes Medical Institute, Venture Capital firms, Corporate R&D laboratories

• U.S. Spending Allocation (2021)

  79% Development, 14% Applied Research, 7% Basic Research

Timeline

• Vannevar Bush publishes 'Science, The Endless Frontier', establishing the initial modern balance and framework between federal basic research funding and private sector application. (Source: Document cab622bb-9cf9-4cec-a599-60331022c01c)

  1945-07-01

• U.S. private and public sector shares of total research and development funding remain roughly equal. (Source: CSIS Innovation Lightbulb)

  1980-01-01

• U.S. private sector firms in advanced industries spend $359 billion on R&D. (Source: ITIF Report)

  2018-01-01

• Private sector-performed R&D reaches $602 billion in the United States, representing 75 percent of the national total. (Source: CSIS Innovation Lightbulb)

  2021-12-31

• U.S. advanced sector private R&D spending reaches $594 billion, heavily driven by software and computer services. (Source: ITIF Report)

  2022-12-31

Public–private partnership

A public–private partnership (PPP, 3P, or P3) is a long-term arrangement between a government and private sector institutions. Typically, it involves private capital financing government projects and services up-front, and then drawing revenues from taxpayers and/or users for profit over the course of the PPP contract. Public–private partnerships have been implemented in multiple countries and are primarily used for infrastructure projects. Although they are not compulsory, PPPs have been employed for building, equipping, operating and maintaining schools, hospitals, transport systems, and water and sewerage systems. Cooperation between private actors, corporations and governments has existed since the inception of sovereign states, notably for the purpose of tax collection and colonization. Contemporary "public–private partnerships" came into being around the end of the 20th century. They were aimed at increasing the private sector's involvement in public administration. They were seen by governments around the world as a method of financing new or refurbished public sector assets outside their balance sheet. While PPP financing comes from the private sector, these projects are always paid for either through taxes or by users of the service, or a mix of both. PPPs are structurally more expensive than publicly financed projects because of the private sector's higher cost of borrowing, resulting in users or taxpayers footing the bill for disproportionately high interest costs. PPPs also have high transaction costs. PPPs are controversial as funding tools, largely over concerns that public return on investment is lower than returns for the private funder. PPPs are closely related to concepts such as privatization and the contracting out of government services. The secrecy surrounding their financial details complexifies the process of evaluating whether PPPs have been successful. PPP advocates highlight the sharing of risk and the development of innovation, while critics decry their higher costs and issues of accountability. Evidence of PPP performance in terms of value for money and efficiency, for example, is mixed and often unavailable.

Web Search Results

• Private Sector R&D Investment Policies - GOV.UK

  Private sector R&D accounts for around two thirds of overall R&D spending. The private sector spent EUR 75.6 billion on internal R&D activities and awarded research contracts with a value of EUR 21.6 billion to third party service providers and institutes. According to the 2021 EU R&D Investment Scoreboard, eleven of the top twenty most active European R&D companies were situated in Germany (incl. Volkswagen, Daimler, BMW, Robert Bosch). The automotive sector has traditionally accounted for the lion’s share of research spending – equivalent to around one third of total industry R&D spending. Particularly strong increases in the pharmaceuticals, IT and measurement technology sectors can be observed in 2020. [...] There are four key barriers to private sector R&D investment, which policies focus on helping businesses to overcome: (1) Appropriability; (2) Scale; (3) Radicalness; and (4) Uncertainty of payoffs. A policy toolkit is needed to help businesses overcome these barriers and improve overall investment in R&D by the private and public sector (OECD 2021). These policies help channel resources to firms in order to incentivise or reward innovation efforts (Bruce and de Figueiredo 2020). They include direct and indirect R&D support, and both are necessary, given the substantial variation among technologies and between industries. [...] The UK can support improved private sector R&D investment by learning from and adapting successful R&D policies developed in other countries. 15 exemplars of good practice covering a range of policy types are identified from five OECD members: United States, Germany, France, Switzerland, and Japan. These policies are mostly sector non-specific. The key findings were as follows:

• Innovation Lightbulb: Breaking Down Private Sector Research and Development

  Funding for private sector-performed R&D totaled $602 billion in 2021 across all sectors, accounting for 75 percent of the U.S. total ($806 billion) and with the majority ($527 billion) being self-funded. Going a level deeper, the bulk of that spending, about 79 percent, was focused on development, while 7 percent and 14 percent were allocated to basic and applied research respectively. [...] Photo: chokniti/Adobe Stock Photo: chokniti/Adobe Stock Newsletter by Gregory Arcuri and Julia Yoon Published May 22, 2024 Image Innovation Lightbulb Banner Remote Visualization Over the past decade, total U.S. expenditure on research and development (R&D) has nearly doubled. However, this growth has been unequal across performing sectors (public, private, academic, and non-profit). At the beginning of the 1980s, the private and public shares of total U.S. R&D funding were roughly equal, but by the 2020s, the private sector was investing over three times more than the public sector, a trend we explored in a previous newsletter. This week, we dive into private-sector R&D and look at which industries are driving this surge in R&D activity. [...] Beyond grant programs and tax credits, to support these sectors, lawmakers must promote a policy environment which eases the path to commercialization for innovations derived from long- and medium-term R&D. This includes maintaining a robust and predictable intellectual property protection regime, responsibly lowering barriers to international scientific collaboration, and investing in the basic research performed at universities, federal agencies, and National Laboratories.

• Private and public sector R&D make a great marriage for innovation

  Another Johnson & Johnson co-authored study, published in Nature Drug Discovery, provides the first peer-reviewed methodology to account for all private sector R&D spending, revealing that it exceeded $276 billion across 4,191 firms worldwide in 2021. The figure is more than double the most frequently cited previous estimates. The study underscores that the bulk of investment in R&D is underwritten by the private sector, ranging from small VC-funded startups to large pharmaceutical companies. This estimate puts industry R&D at 49 times the dedicated NIH funding for clinical trials. Even the entire NIH budget – mostly not focused on applied medicine research – was less than 16% of private R&D investments in 2021. [...] May 13, 2025 May 13, 2025 Delivering cures and new treatments to patients in the United States relies on the complementary contributions of private-sector pharmaceutical companies and government support for R&D. While some have suggested replacing private-sector investment with government funding, that could lead to a dead end in the long road to developing innovative medicines, as research by Johnson & Johnson and academic co-authors suggests. [...] In short, successful innovation requires a synergistic system in which each stakeholder plays an important role. The U.S. should build on its historic track record of supporting complementary, innovative R&D policies. This approach will incentivize — rather than replace — each sector’s contributions and, most importantly, accelerate access to medical innovation for patients in the U.S.

• A Closer Look at US Private Sector R&D Spending in a Global Context | Blogs | Feb 9, 2024 | ITIF

  Skip to content ITIF Logo ITIF Search # A Closer Look at US Private Sector R&D Spending in a Global Context By Trelysa Long | February 9, 2024 Private sector research and development spending is key to higher U.S. productivity, economic growth, and global competitiveness. This is because the private sector is more likely to use its R&D investment to conduct applied research, resulting in novel products and processes that solve practical problems. As a result, these innovations can encourage greater productivity, leading to greater economic growth for the nation and a competitive advantage for U.S. firms competing in the global economy. [...] U.S. firms in advanced sectors’ R&D spending rose from 2018 to 2022. During this period, their R&D spending increased from $359 billion to $594 billion. This increase in spending made the United States the highest spender of the top 10 nations with firms that spent the most on R&D in advanced sectors in 2022. (See Figure 4 for a list of nations.) The majority of this increase can be traced back to firms in the software and computer services sector. Of the $235 billion increase, $136 billion came from firms in this sector while $99 billion came from the remaining eight advanced sectors. (See figure 3.) In other words, firms in the software and computer services sector are the main drivers of the nation’s high private sector R&D spending and ranking in advanced sectors. [...] sector are key drivers of the nation’s size-adjusted private sector R&D spending and its large growth.

• Private Sector R&D - Research!America

  Skip to content Research America - Discovery. Innovation. Health. Search Search Research America on Twitter Research America on LinkedIn Research America on Facebook Research America on YouTube Home » Research Ecosystem » Private Sector R&D # Private Sector R&D Though many organizations invest in medical research and development, the private sector is by far the largest U.S. funder of medical R&D. The private sector supports millions of U.S. jobs, and the scientific innovations it has funded have taken many forms, including treatments, diagnostic tools, medical devices, preventative measures, and more. ## Report: U.S. Investments in Medical and Health Research and Development (January 2022) ### Key Stats: