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Written by Jeff Lagasse, Associate Editor of Healthcare Finance.

Healthcare currently ranks below the computing and electronics industry worldwide, but that’s likely to change over the next couple of years.

Right now, the healthcare industry ranks second among all industries when it comes to the amount it spends on research and development, but it likely won’t stay that way for long. New research from PricewaterhouseCoopers projects healthcare will take the top spot by 2020.

Healthcare currently ranks below the computing and electronics industry worldwide, based on figures culled from 1,000 publicly listed R&D spenders.

IMPACT

Among all industries, $782 billion was spent on R&D in 2018, 11.4 percent more than last year. The bulk of that spending is concentrated in a handful of industries, including healthcare, electronics, auto, software and the internet.

In all, those industries represent about 76 percent of the total R&D spend this year.

As R&D spending has increased, so do revenues in those industries, which rose by 11.4 percent to match the initial investment. Spending on innovation stayed at 4.5 percent, the same as last year.

Both of the top industries, electronics and healthcare, saw a rise in their R&D spend from 2017 to 2018. Healthcare leapt from $159 billion to $169.5 billion over that time, while R&D investments in the computing and electronics industry climbed from $161.8 billion to $175.7 billion.

THE TREND

PwC singled out 88 companies as “high leverage innovators” for 2017. In other words, they financially outperformed the rest of their industry as a whole for five years while spending less on R&D as a percentage of sales.

Healthcare boasted 23 such companies, including Hologic, Mylan, Medtronic and Fresenius Medical Care.

A 2017 report found that total investment in medical and health research and development in the U.S. grew by 20.6 percent from 2013 to 2016, led by industry and the federal government.

Twitter: @JELagasse

Email the writer: jeff.lagasse@himssmedia.com

SOURCE: Healthcare Finance News, Nov 12, 2018 – https://www.healthcarefinancenews.com

Matt is the entrepreneurial founder and director of Ortho Consulting Group. Founded in 2010, Matt has identified and grown two distinct business brands in the Group; Orthoexecutive (2010), Orthoconnections (2012).