Physical, Engineering & Life Sciences Research Services NAICS 541715
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Industry Summary
Speculation
The field of research is highly speculative and offers no guarantee of success.
Competition from Alternative Sources
Research providers compete with the in-house R&D resources of their clients, academic institutions, and hospital research facilities.
Recent Developments
Feb 4, 2026 - New Federal Funding Law Ensures NIH Funding Through September
- A funding package signed into law in early 2026 keeps federal funding for science agencies roughly flat compared with 2025, according to NBC News. Legislation that will ensure funding for almost all of the federal government through the end of September 2026 includes a modest increase for research funding through the National Institutes of Health (NIH), denying President Trump’s request to cut its funding by more than 40%. Joanne Padrón Carney, chief government relations officer for the American Association for the Advancement of Science, said that the organization expects the Trump administration to continue trying to defund science on topics it doesn’t favor. She also pointed to an executive order requiring approval from senior political appointees for many grants.
- Boston’s biotech sector, long a hub of the biotech industry, is struggling, according to The Wall Street Journal. Cutbacks in venture capital and government funding are key causes of the struggles. Venture-capital funding in the first half of 2025 reached the lowest point since the same period in 2017, according to MassBio. Nearly 28% of greater Boston’s laboratory space sat empty in September 2025, according to real estate firm CBRE. "Every stage of the life cycle has been impacted by policy or regulatory uncertainty," said Kendalle Burlin O’Connell, chief executive of MassBio, an industry trade group. The impact has hit startups especially hard, she said. "There was so much money that the sector got overbuilt," said Alexis Borisy, founder of Boston-based Curie.Bio, a biotech venture firm that has raised more than $1 billion for early-stage biotechs. "If there was a good idea, there’d be 10 companies all built at the same time to go do it."
- Failure to consider long-term supply chain implications of tariffs can undermine early-stage biotechnology companies by inflating their commercial costs, shrinking their pool of potential acquirers, or complicating regulatory approval, according to the Biospace news site. Tariffs rarely matter when an early-stage company is only focused on research but it’s hard to reverse course when a contract manufacturing organization or contract development and manufacturing organization has been chosen and shipping needs grow more complex. Early-stage biological specimens carry nominal values but investigational drug products do not. In most countries, customs requires a commercial value even though the product isn’t on the market, creating both risk and variability. If companies declare too low, they risk compliance issues once the drug is commercialized and subject to customs’ reviews. Declare a higher value and tariffs can start impacting companies’ profit margins once their drugs are commercial.
- Physical, engineering, & life science research industry employment decreased slightly and average wages for nonsupervisory employees increased slightly during the first 11 months of 2025, according to the US Bureau of Labor Statistics. Physical, engineering, & life science research industry sales are forecast to grow at a 3.96% compounded annual rate from 2025 to 2029, slower than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc.
Industry Revenue
Physical, Engineering & Life Sciences Research Services
Industry Structure
Industry size & Structure
The average physical, engineering, and life science research facility employs about 65 workers and generates between $15 million and $20 million annually.
- The physical, engineering, and life science research services industry consists of about 10,500 firms that employ about 670,000 workers and generate almost $200 billion annually.
- About 9% of companies are tax-exempt organizations.
- The industry is concentrated at the top and fragmented at the bottom; the top 50 companies account for over 50% of industry revenue.
- Companies that generate less than $1 million annually account for over 45% of firms and 1% of sales. Firms that generate $25 million annually or more account for about 6% of firms and almost 85% of total industry sales.
- Large organizations include the National Energy Technology Laboratory (NETL), Cold Spring Harbor Laboratory, and Charles River Laboratories.
- The business sector is the largest source of funding for applied R&D. The federal government is the largest source of funding for basic science R&D. Higher education is the largest performer of basic R&D in the US, according to the Aspen Economic Strategy Group.
- The Department of Defense (DoD) accounts for the largest share of federal R&D investment, followed by the National Institutes of Health (NIH), the Department of Energy (DOE), and the National Aeronautics and Space Administration (NASA).
Industry Forecast
Industry Forecast
Physical, Engineering & Life Sciences Research Services Industry Growth
Source: Vertical IQ and Inforum
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