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

Abacus (Anssi Koskinen/Flickr)The European Commission’s 2010 “EU Industrial R&D Investment Scoreboard” shows that R&D investment by the world’s top 1,400 companies dropped by nearly 2 percent in the companies’ 2009 fiscal years, but with pharmaceutical/biotech companies and companies in Asian countries increasing their R&D spending.

The worldwide economic recession, the report indicates, is taking its toll on industrial R&D spending. The 2009 total of €402.2 billion ($US 556.5 billion) is 1.9 percent less than in 2008, the first annual drop after four straight years of gains. The report notes, however, that these same companies suffered overall losses of 10.1 percent in net sales and 21 percent in profits, which suggests a recognition of the strategic importance of R&D to these enterprises.

The top 10 companies in R&D investments were …
1. Toyota Motor, Japan
2. Roche, Switzerland
3. Microsoft, USA
4. Volkswagen, Germany
5. Pfizer, USA
6. Novartis, Switzerland
7. Nokia, Finland
8. Johnson & Johnson, USA
9. Sanofi-Aventis, France
10. Samsung Electronics, Korea

Pharmaceutical and biotech companies continued to be the top industry in total R&D spending, with more than of €70 billion, and one of the few sectors registering an increase (5%) compared to 2008. Pharma/biotech companies were also among the few industries enjoying increases in sales. Technology equipment recorded a sizable percentage decrease of 7 percent, despite ranking second in R&D and logging more than €60 billion in spending. Auto companies ranked third and also spent 12 percent less in R&D, the largest decrease for any industry.

Companies in Asia displayed aggressive R&D spending strategies, compared to their counterparts in Europe and the U.S. Chinese enterprises increased their R&D investments by 40 percent in 2009, as did companies in India (+27.3%), Hong Kong (+14.8%), Korea (+9.1%), and Taiwan (+3.1%). Japanese companies maintained their R&D spending levels, despite a 10 percent drop in sales and an 88 percent fall in profits. U.S. companies, on the other hand, reduced their R&D spending by 5.1 percent in 2009, as did companies in the EU countries that decreased their R&D expenditures by 2.6 percent.

The composition of companies in the top 1,400 also showed a shift in the direction to Asia. Some 6 new companies from China joined the list, as did 4 each from Taiwan and Korea, 3 from Japan, and 2 each from India, Hong Kong, and Singapore. A total of 57 companies from the U.S. dropped out of the list, but the U.S. remained the country most represented with 504. And while China added 6 companies, the country’s total is only 21. Korea, by contrast, has 26 companies included.

Photo: Anssi Koskinen/Flickr

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