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
Jun 3, 2026 - Government Funding Sustains US Technological Leadership
- Government-funded but privately owned patents make up just 2% of all patents but account for roughly 20% of medium-term fluctuations in US productivity and GDP growth, according to the Centre for Economic Policy Research (CEPR). Government agencies have long been the "entrepreneurial state", de-risking the fundamental research that private firms later commercialize. Public–private patents disproportionately feature in the most disruptive breakthroughs in health and biotechnology, according to CEPR researchers.
- The rate of competitive awards made by the National Institutes of Health has slowed down significantly this fiscal year, according to the American Association of Universities (AAU). The NIH has awarded less than half the number of grants so far this fiscal year compared to the same period last year. The slowdown is disrupting the nation’s biomedical research enterprise, according to the AAU. A large portion of grant money goes to support trainees in labs, according to The Washington Post, so when funding dries up, every kind of young scientist is affected.
- 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 two months of 2026, according to the US Bureau of Labor Statistics. Physical, engineering, & life science research industry sales are forecast to grow at a 5.9% compounded annual rate from 2026 to 2030, 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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