The study, published in the New England Journal of Medicine, found U.S. research and development spending dropped from $131 billion to $119 billion, when adjusted for inflation, from 2007 to 2012, while Japan increased spending by $9 billion and China increased by $6.4 billion.
Overall, Asia's share of spending grew from 18 percent to 24 percent, while Europe held steady at 29 percent, the study said.
Study author Dr. Reshma Jagsi of the University of Michigan Health System said prior analyses suggested the United States' share of global expenditures were once as high as 80 percent.
"The United States has long been a world leader in driving research and development in the biomedical science. It's important to maintain that leadership role because biomedical research has a number of long term downstream economic benefits, especially around job creation," Jagsi said in a statement.
Despite reductions in funding from the National Institutes of Health -- including a 20 percent drop in purchasing power since 2003 -- the researchers found U.S. decline was driven almost entirely by reduced investment from industry, not the public sector. This includes support for clinical trials testing potential new therapies.
"We were surprised the impact of industry funding was that dramatic, but it's key to note that government funding is equally important to maintain or grow," said study author Justin Chakma, a venture capital investor with Thomas, McNerney & Partners in La Jolla, Calif. "Research funded through the National Institutes of Health helps scientists understand how diseases work -- this will happen slower as National Institute of Health funding continues to be cut."
Historically, about half of drugs approved by the U.S. Food and Drug Administration had some federal government funding during the course of the research and development, the study said.