#### The Role of Research and Development in the Pharmaceutical Industry

Research and development (R&D) plays a crucial role in the pharmaceutical industry, driving the development and introduction of new medical advances to the market. The pharmaceutical industry invests billions of dollars yearly in R&D, with a significant increase in investment over the past few years, particularly due to the impact of the pandemic.

**Key Points:**
- R&D in the pharmaceutical industry is the key driver in developing and pushing new medical advances to market.
- Pharmaceutical companies have devoted a growing share of their net revenues to R&D activities, averaging about 19 percent over the past two decades.
- The global impact of pharmaceutical R&D extends beyond health, contributing to societal and economic well-being, promoting health equity, and driving economic growth.

#### Funding and Investment in Pharmaceutical R&D

Pharmaceutical research and development (R&D) is funded from a complex mix of private and public sources. Governments mainly support basic and early-stage research through direct budget allocations, research grants, publicly owned research institutions, and higher education institutions. The pharmaceutical industry is active across all phases of R&D but makes the largest contribution to translating and applying knowledge to develop products.

**Key Points:**
- Private sector investment and government funding are crucial for continuous innovation in pharmaceutical R&D.
- Pharmaceutical companies use mergers and acquisitions (M&As) to compensate revenue losses of blockbuster patent expirations, access strategically important intellectual property, exploit technology-based treatment innovations, and develop new core competencies.

#### Impact of Pharmaceutical R&D on Innovation and Future Trends

The pharmaceutical industry is experiencing changes in the product landscape, with new modalities such as cell and gene therapy and mRNA vaccine technology increasing in the drug development pipeline. This shift is likely to bring more fragmentation of technology, new supply chains, and unique product life cycles.

**Key Points:**
- New modalities, such as cell and gene therapy and mRNA vaccine technology, have increased from 11 to 21 percent of the drug development pipeline, indicating the fastest growth ever seen in the sector.

In conclusion, research and development in the pharmaceutical industry is a critical function that drives innovation, contributes to societal and economic well-being, and plays a significant role in the development and introduction of new medical advances to the market.

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