[Pharm-policy] New (1997) IRS data on R&D expenditures -- 7.4 percent of global sales

[James Love]

This is the new 1997 data from the US IRS, regarding pharmaceutical R&D,
based upon US tax returns.  I have also compared this to the PhRMA
survey.


1.   PhRMA survey of domestic US R&D       $15,516.6 million

2.   Amount claimed for domestic US R&D 
     on tax returns                        $ 9,152.2 million


3.   Amount from tax return as percent
     of PhRMA survey                        59 percent

----------------------------------------------


4.   Global sales, from tax returns:    $175.3 billion

5.   PhRMA estimate of percent of total R&D in USA in 1997
          
                                   81.6 percent

6.   Adjustment for 35 percent "haircut" on contract research 
     not allowed by IRS:

                 $ 1,376.6 million


7.  Adjusting for "haircut" on contract research, and 
    Assuming US R&D is 81.6 percent of total, global 
    R&D would be:

         ( 9,152.2 + 1,376.6 ) / .816 =

        $  12,903.0 million

8.  Global R&D, based upon US IRS definition and returns,
    with adjustments in (6), as percent of global sales:

         12.903/175.3 = 7.4 percent


Note.  The IRS defintion of R&D for purposes of the increasing R&D tax
credit (form 6765), is more restrictive than the definition used by
PhRMA on its survey.

   Jamie    


=======================================================
James Love, Director           | http://www.cptech.org
Consumer Project on Technology | mailto:love@cptech.org 
P.O. Box 19367                 | voice: 1.202.387.8030
Washington, DC 20036           | fax:   1.202.234.5176
=======================================================