R&D investment grew by nearly 12% in Q4 of 2020​

Pharmaceutical firms drove R&D investment higher by nearly 12% in Q4 of 2020.

Research and development expenditure grew dramatically in Q4 of 2020—by nearly 12% compared with Q3. However, just three sectors accounted for most of that growth: pharmaceuticals, biotechnology & medical research, and software & IT services.

Excluding these three sectors, R&D expenditure still increased, but at a more modest pace of around 3.5%.

In the Pharmaceutical sector alone, R&D expenditure increased by an estimated $7 billion. Some of this increase is attributable to large pharmaceutical firms’ seeking to bring COVID-19 vaccines and therapies to market through acquisitions and expansion of clinical trials.

Other sectors that saw significant growth (in percentage terms) include:

  • Automobiles & Auto Parts
  • Leisure Products
  • Chemicals
  • Professional & Commercial Services
  • Healthcare Equipment & Supplies

Each of these sectors’ investment in R&D is now significantly above pre-COVID levels.

On the other hand, sectors that decreased R&D investment in Q4 included:

  • Renewable Energy
  • Oil & Gas Related Equipment and Services
  • Metals & Mining
  • Telecommunication Services
  • Aerospace & Defense

At a firm level, seven out of ten of the firms with the largest increase in R&D investment were pharmaceutical or biotech firms. The remaining firms were tech giants Amazon (which is also the largest overall investor in R&D at $12 billion—which they report as “Technology and Content” expense) and Facebook, as well as semiconductor leader Intel.