According to the ITC, research and development within the US bio-based chemical industry (including pharmaceuticals) grew strongly from 2004 through 2007, with R&D expenditures reaching $3.4bn last year, much larger than that of liquid biofuels R&D (at $152.5m). A small number of large pharma companies accounted for a larger share of bio-chemical R&D expenditures.
The rate of R&D activities in biofuels, however, is faster compared to biochems mostly because government support policies do not target this industry as much as biofuels (since the industry is also much less reliant on ag feedstock compared to biofuels – now you see the connection?).
ITC said that biochemicals (including pharmaceuticals and biodegradable plastics) account for 70 percent of products made with industrial biotechnology, while biofuels account for 30 percent. Still, for biobased chemical producers, operating income as a share of total net sales remained relatively flat.
Among the biggest challenge to the successful development and adoption of industrial biotechnology by the biofuels and biochemical industry, according to ITC, are the rising costs of feedstock and the inability to attract sufficient investment.