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Global R&D Spending Among Innovators Declines in 2009

Abacus (Anssi Koskinen/Flickr)Total R&D spending among the world’s top spenders on innovation dropped in 2009 for the first time in the 13 years studied, according to the annual survey by management consulting firm Booz & Company. At the same time, most science-related companies, especially those in the health care industry, increased their R&D spending, with the pharmaceutical company Roche now the number 1 spender on corporate R&D.

Booz & Company’s 2010 Global Innovation 1000, released today (3 November), says the 1,000 companies that spent the most on research and development decreased their total R&D spending by 3.5 percent to $503 billion in 2009. In 2008, despite the recession, R&D spending continued to grow. In comparison, revenues for the these 1000 enterprises dropped 11 percent to $13.4 trillion in 2009, nearly three times the rate of decline in R&D spending. As a result, R&D spending as a percentage of revenue increased, from 3.5 percent in 2008 to 3.8 percent in 2009.

Changes in R&D spending varied markedly from one industry to the next. The automobile industry accounted for two-thirds of the $18 billion overall decline in R&D, dropping 14.3 percent from 2008. Companies in the computing and electronics industry registered a a smaller (6.7%) decline in R&D. Both industries suffered significant revenue drops in 2009. As an industry overall, however, computing and electronics retained its leadership as the top R&D spender.

Other companies based on science and engineering increased their R&D spending in 2009: health care, software and Internet, telecom, chemicals and energy, and aerospace and defense. Health care companies (including pharma) increased their R&D by 1.5 percent in 2009, while revenues also grew by 6 percent. As an industry, health care moved up to the number two spot in R&D spending in 2009. The automotive industry ranked third overall.

The pharmaceutical company Roche ranked first for innovation spending in 2009, increasing its R&D by 11.6 percent to $9.1 billion. Toyota Motor, ranked no. 1 in 2008, cut spending nearly 20 percent and fell to fourth place. Microsoft, Nokia, and Pfizer ranked 2, 3, and 5 respectively. Health care companies took 5 of the top 10 spots on the list, and 7 of the top 20.

Companies in Asia registered both increases and decreases in R&D spending, while other regions generally recorded declines. Japanese-based companies cut their R&D by nearly 11 percent in 2009, while enterprises in China and India boosted their R&D spending almost 42 percent. Chinese and Indian representation in the Booz & Company survey, however, is rather small, accounting for about 1 percent of total corporate R&D expenditures. North American R&D spending declined by 2.8 percent, while Europe’s spending stayed about the same as in 2008, declining by just 0.2 percent.

Related:  Worldwide Corporate R&D Drops, Pharma/Biotech Bucks Trend

Photo: Anssi Koskinen/Flickr

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