4 ms·

Actually, last year the NIH budget was $48B, 4/5ths of that went straight out as grants for research, and another 11% went to internal labs: https://www.nih.gov

Actually, last year the NIH budget was $48B, 4/5ths of that went straight out as grants for research, and another 11% went to internal labs: https://www.nih.gov/about-nih/what-we-do/budget https://www.nih.gov/about-nih/what-we-do/budget And you have to be very careful about what counts as R&D, for example Merck reported $30B in R&D, but one half of that was actual for mergers and acquisitions (of research related companies). I have yet to find anyone who has good numbers on this, which is why the study in this article is interesting: it sounds like the article is going to be very transparent about what it means. And for absolute candor here, you have to remember that once the NIH grants arrive at a university somewhere between 15% and 60% (really, it varies wildly) is taken off the top for University expenses, some of which are related to the research (e.g.: building costs), and some of which are not (arguably: university administration).

leetnewb 2y ago
Why wouldn't you consider dollars spent on M&A to effectively be R&D? M&A of those companies before they get to market is basically paying prior stages of investors in the company back for funding the R&D up to that point. Acquired companies in drug development are essentially spending investor money on R&D until: a) they get to market standalone (unlikely, risky, too expensive), b) the clinical trials fail hopelessly early on, or c) they get acquired by a drug company with a large balance sheet and expertise to finish trials and commercialize the drug.
- swores 2y ago
  > "Why wouldn't you consider dollars spent on M&A to effectively be R&D?" Because M&A includes likely profits for the sellers? As a simple example using unrealistically low figures: if I spend $100 developing a drug, and the drug is so good that you decide it's worth buying the patent from me for $1M, you surely wouldn't argue that $1M has been spent on R&D?
  - dchftcs 2y ago
    In a relatively efficient market, you can reason about the average M&A profit. The typical PE/VC fund has 15% annual return (which is not really compounded) and a 5-10 year horizon. So let's say the average profit over 5 years is somewhere around 100% on the invested capital, or around 50% overhead. But before you complain about that, R&D paid to universities also include overhead for the universities, and it is quite significant. In US it is over 50%. The universities partly act like investors in this way, the administration invest money (e.g. start-up grants, some professor salary) into research groups and expect them to bring external grants, and the overhead partially pays for that. Depending on what you want to measure, you need to include the cost of people and resources involved in the production of the thing you want, and not just the marginal unit cost of the thing. It may not be easy to draw the line, but you have roughly two choices: 1. Deduct a reasonable percentage from both university grants and M&A 2. Accept that without profit, people would not have funded certain research (which carries risks and requires selection), so you include those as costs of doing business in your assessment Another way to think about it is that the money you spend on research itself containts other people's profits too. If you buy equipment, the equipment company makes a profit. Staff has savings. The govt always takes a cut. It's profit all the way down.

leetnewb 2y ago

Why wouldn't you consider dollars spent on M&A to effectively be R&D? M&A of those companies before they get to market is basically paying prior stages of investors in the company back for funding the R&D up to that point. Acquired companies in drug development are essentially spending investor money on R&D until: a) they get to market standalone (unlikely, risky, too expensive), b) the clinical trials fail hopelessly early on, or c) they get acquired by a drug company with a large balance sheet and expertise to finish trials and commercialize the drug.

swores 2y ago
> "Why wouldn't you consider dollars spent on M&A to effectively be R&D?" Because M&A includes likely profits for the sellers? As a simple example using unrealistically low figures: if I spend $100 developing a drug, and the drug is so good that you decide it's worth buying the patent from me for $1M, you surely wouldn't argue that $1M has been spent on R&D?
- dchftcs 2y ago
  In a relatively efficient market, you can reason about the average M&A profit. The typical PE/VC fund has 15% annual return (which is not really compounded) and a 5-10 year horizon. So let's say the average profit over 5 years is somewhere around 100% on the invested capital, or around 50% overhead. But before you complain about that, R&D paid to universities also include overhead for the universities, and it is quite significant. In US it is over 50%. The universities partly act like investors in this way, the administration invest money (e.g. start-up grants, some professor salary) into research groups and expect them to bring external grants, and the overhead partially pays for that. Depending on what you want to measure, you need to include the cost of people and resources involved in the production of the thing you want, and not just the marginal unit cost of the thing. It may not be easy to draw the line, but you have roughly two choices: 1. Deduct a reasonable percentage from both university grants and M&A 2. Accept that without profit, people would not have funded certain research (which carries risks and requires selection), so you include those as costs of doing business in your assessment Another way to think about it is that the money you spend on research itself containts other people's profits too. If you buy equipment, the equipment company makes a profit. Staff has savings. The govt always takes a cut. It's profit all the way down.