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European Businesses Expect 4 Percent Annual R&D Growth

Calculator keys (Investor.gov)

(Investor.gov)

A survey of executives from larger companies in Europe shows the executives anticipate spending four percent more per year on research and development in the years 2012 to 2014. The report is based on responses from 187 executives conducted in January through April 2012 in companies that spent €56 billion, which makes up about 40 percent of the total R&D investment of the 1000 EU Scoreboard companies.

The overall expectations of a 4 percent gain are a decline from 5 percent annual growth projected last year. Expectations for higher R&D spending were greatest among executives in software and computer services companies, who foresee spending 11 percent more each year over the next three years.

Chemicals, automotive, and general industrial company executives anticipate annual R&D spending increases of 5 to 7 percent. However, technology hardware manufacturers and pharmaceuticals/biotechnology companies expect lower than average R&D spending, 3.5 and 3.0 percent respectively.

The survey considers pharmaceuticals and biotechnology, technology hardware and equipment, and software and computer services among the high R&D intensity industries. Chemicals, automotive, and general industrial sectors are rated as medium R&D intensity. About half of the respondents (93) come from medium intensity companies, with 54 respondents from high-R&D intensity companies, and 40 respondents from low-intensity enterprises.

Nearly all (95%) of the respondents believe internal R&D is important for company innovation, with a few naming market research for product development. Purchase or licensing of intellectual property is considered relevant, mainly for companies in the high R&D intensity sectors. Collaboration agreements are seen most often as an important means of knowledge sharing, followed by licensing agreements and collaboration with academic or research institutes, particularly for high-R&D intensity sectors.

Germany is the most preferred location for outsourcing R&D among the executives surveyed, after their home countries. The U.S. closely follows Germany as the preferred R&D outsourcing location, leading India and Germany. The U.S. is also preferred by almost half of the respondents as a source for intellectual property rights, through licensing or acquisition of intangible assets.

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