Recession
The recession appears to have ended in most countries, with a return to positive economic and R&D growth. For most "advanced economies," this positive growth is likely to be relatively small, from 0.5% to 3.5% GDP growth. In these economic times, GDP growth and R&D growth have been closely linked, which suggests that nations with low GDP growth are also likely to have relatively small R&D growth as well. In most countries, the recession brought with it severe unemployment. In the U.S., national unemployment currently exceeds 10%. This 'jobless' economic recovery is not expected to bring employment levels back to their pre-recession levels for up to five years, or 2014. Some concerns have also been expressed about a double- or triple-dip recession as soon as inventories have been restored.
Stimulus
Nearly $2 trillion in economic stimulus funds were created by a number of countries, including the U.S., Japan, and China, in response to the global recession. Much of these stimulus funds was targeted for tax reductions and infrastructure improvements, but a significant portion was related to R&D. The R&D stimulus funds were released in early-2009 but will likely be distributed for research projects that carry over into 2010, 2011, and even 2012. This round of stimulus funds appears to have helped mitigate economic damage from the recession. As of this writing, a second round of stimulus funds was being prepared by Japan and the U.S. to offset economic problems with small and medium enterprises (SME) and to support job creation. These particular stimulus packages do not have any R&D component to them.
Globalization
Globalization, outsourcing, and ICT (information and communications tech-nologies) have combined over the past ten years to basically level the playing field for the R&D community. Technology orga-nizations can now outsource the development of new technology-based products to various countries that have many of the technology resources once limited to advanced economies—the U.S., Japan, and Europe. Emerging economies that include China, India, Korea, Brazil, and Eastern Europe are now able to compete with the former technology triumvirate for development of the most sophisticated and technologically complex new products.
Asian Economy
The Asian economy is likely to drive R&D growth for years to come. These low cost and technologically advancing nations now have the economic resources—collected from years of supplying the manufactured goods to Europe, the U.S., and even Japan—to support development of ever stronger technology infrastructures. The "emerging economies" are using their double-digit economic growth to fuel dou-ble-digit R&D growth (15% to 20%) and development. All of this is occuring during a period where the advanced economies are only financially capable of supporting R&D growth in the 3% to 5% ranges.
Industrial R&D
Overall, the U.S. economy and its R&D infrastructure will continue to recover in 2010 from the depressed levels experienced in 2009. U.S. industrial R&D is expected to increase in 2010—up 2.85% to $260 billion—but will still trail the $268 billion spent on R&D in 2008.
European R&D
European R&D spending is expected to continue to slide compared to the rest of the world. The relatively low annual rate of increases and the absolute values are inadequate to compete against the large increases seen in China and India and the absolute values seen in the U.S. A goal of investing 3.0% of GDP in R&D would help alleviate this technological slide, but this level has not even been close to being achieved; the current level of R&D spend-ing is only 1.7% GDP.
BRIC
Brazil, Russia, India, and China will dominate future R&D growth, overwhelming Europe and Japan and, eventually, matching the investments in the U.S. At the current levels of spending, China alone will outspend Japan in R&D in mid-2010, match assumed aggressive spending in all of Europe combined in 2018, and match U.S. R&D spending in 2022.
Future Tech
Energy, climate change, and healthcare are expected to be the top technology drivers in the future. While energy and climate change technologies are expected to be developed on an equally strong global basis, with no particular country dominating, the U.S. should be able to maintain a strong lead in the development of new technologies due to its existing strong infrastructure, massive R&D spending, and strong intellectual property base.
U.S. Leadership
The U.S. is expected to maintain technology leadership in specific areas over the next ten years, including healthcare and medicine, basic energy research, carbon dioxide sequestration, and security and defense. Massive annual investments, strong infrastructure, dedicated strategic policies, and strong personnel and technology resources will help to maintain and ensure that leadership.
Asian Leadership
Asian countries, including China, India, South Korea, and Japan, are expected to grow technology capabilities and leadership in certain areas of energy, pharmaceutical, and space technologies. Development of an extensive automotive production infrastructure also is likely to ensure their continued dominance in electric vehicle R&D.
Asian Population
The growing population base in Asia, primarily China and India will continue to drive market opportunities for potentially all global firms. R&D for consumerrelated products and technologies, such as consumer electronics, foods, and transportation, is likely to increase in direct relation to the population growth trends.
The Lab
Overall, the laboratory products market in the U.S. is expected to grow about 2.4% to $13.7 billion in 2010, and 4.2% ($14.2 billion) in 2011, according to research by research collected by Frost & Sullivan for the Laboratory Products Association. Instruments and equipment will comprise a third of this market, chemicals and reagents a quarter, and kits (14%), consumables (11%), and plasticware/glassware (15%) the remainder.
The 2010 Market: Pharmaceucticals
As pharmaceutical companies face increasing cost pressures from the declining number of new products in the research pipelines (and the increasing number of generic drugs), their investments in R&D will be less vigorous. Annual growth of R&D in this sector is only anticipated at 2.2% from 2008 to 2011. The actual pharmaceutical market is expected to decline by 1% to 2% in 2009, the first contraction in more than 50 years.
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The 2010 Market: Biotech
The market for biopharmaceutical products in 2008 was about $500 billion, or about 70% of total global pharmaceutical sales. Continued industry consolidation is likely to decrease the total number of companies, resulting in an overall decline in the amount of R&D funds being spent in this sector. The decline in the availability of venture capital investments that resulted from the banking crisis of 2008 is at least partially responsible for this overall market decline.
The 2010 Market: Industrial Research
The industrial research market in the U.S. contracted more than any other research lab segment, shrinking about 15.3% in terms of actual operating budgets from the levels of 2008, according to research by Frost & Sullivan. The recovery expected in 2010 is projected to reverse this trend, with flat spending expected for 2010 (for laboratory products) and 3.0% growth for 2011.
The 2010 Market: Academic Research
Overall academic spending is expected to increase 6.4% in 2010, following more than 5% growth in 2009 from 2008 spending levels. Stimulus funding will support some of this increased spending, but academic research has maintained an inherent strength in this market over the past decade. While federal government programs continue to support academia, the current crises affecting state government budgets may limit continued increases until the economy sees substantial growth improvement.
R&D Beyond 2010
Research by Frost & Sullivan has revealed three technologies that will continue to be supported in U.S. research labs over the next five to seven years and drive expanded research funding:
• Stem Cells - The recent release by Executive Order from President Obama of federal funds for research on human embryonic stem cell (HESC) lines is expected to cause a dramatic expansion of stem cell research conducted and funded by the federal government. (This technology was restricted by President Bush since 2001). The first thirteen HESC lines were approved for research studies by the NIH in early-December 2009; 96 more lines are under review and are expected to be approved in 2010.
• Personalized Medicine – Rapid discoveries involving the human genome, gene expression, and their relation to disease foster results in emerging personalized medicine. Pharmaceutical and diagnostics companies are now partnering to develop companion diagnostics and therapeutics utilizing the fundamental research and methodologies born from academic research institutions.
• Nantotechnology – Growth in the nanotechnology field is due in part to awareness of its potential for creating new products across many industries. Academic labs continue to be at the forefront of nanotechnology research. Many universities have created nanotechnology-focused laboratories. The field has the ability to bridge scientific innovation with many industries and has great potential for creating new products. Additionally, a substantial amount of research is currently underway to investigate the long-term health effects and risks of working with, manufacturing, and integrating nanoparticle-based materials into products.
