Big Tech Closes Gap with Big Pharma on R&D Spending

Big Tech is rapidly closing the gap in research and development (R&D) spending with Big Pharma, according to recent figures. Alphabet and Meta reported a combined $118.5 billion in R&D expenses for 2025, nearly matching the $123.7 billion spent by the top 10 pharmaceutical companies by revenue. This includes giants like J&J's medtech and Roche's diagnostics units.

Notably, Alphabet's R&D budget has surpassed that of Merck & Co., which once rivalled Google in research spending. In 2013, Merck's R&D expense of $7.5 billion edged out Google's $7.1 billion, but in 2025, Alphabet spent $61.1 billion, nearly four times Merck's $15.8 billion.

Big Pharma is also shifting its focus towards collaboration with Big Tech firms. For instance, Merck & Co. has partnered with Google Cloud for a multi-year alliance worth up to $1 billion. Additionally, Eli Lilly has set up a supercomputer, the LillyPod, built with NVIDIA, which enables it to run complex models without any token or budget limits.

Anthropic, a Frontier AI lab, is also making strides in life sciences by setting up a wet lab in the San Francisco Bay Area for physical biology experiments. The company has partnered with Basecamp Research on its EDEN biological models and has acquired Coefficient Bio, a small New York startup, in a stock deal valued at just over $400 million.