Keywords: R&D spending, European Union, USA,Japan, Pharmaceuticals, Biotechnology

Corporate R&D investment in 2008: a global increase with EU companies leading USA and Japan; Pharma/biotech top sectors

Article | 16 November 2009

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Worldwide corporate R&D investment increased by 6.9% in 2008, in spite of the economic crisis, according to the 2009 "European Union Industrial R&D Investment Scoreboard" released today on the European Commission’s web site.

With an 8.1% increase, the R&D investment growth of EU companies, defined as those having headquarters within the EU, is significantly higher than US ones for the second year, at 5.7%, and Japanese firms, at 4.4%. Two EU companies feature in the top 10: Volkswagen in the third place with an R&D investment of 5.93 billion euros ($8.8 billion) and Nokia in the eighth. The world's biggest investor in R&D was Toyota Motor, with 7.61 billion. euros The report also shows that companies from emerging countries have the highest R&D investment growth.

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"It is good news that EU companies kept up their R&D investment against the background of the economic crisis in 2008. This is the best strategy to emerge stronger out of the crisis. We must support EU companies' efforts and provide incentives to reinforce the EU research intensive sectors. Building a truly European research area is part of the answer, together with EU actions to promote smart investments in R&D. I also welcome the increase of R&D investment by EU companies active on low carbon energy technologies. They represent new sources of EU growth and jobs," said European Science and Research Commissioner Janez Potocnik.

Sector trends

The R&D growth in the USA is dominated by the high R&D intensity sectors, which includes pharmaceuticals and biotechnology and IT sectors, while R&D growth in the EU is more evenly spread across all sectors.

US companies have reinforced their leading position in the high R&D intensity sector, by increasing their investments 35% in the last four years against only 13.6% in the EU companies. While the total US high R&D intensity sector is twice the size of the EU’s in terms of R&D investment, EU companies in this sector show similar performance than US competitors in terms of R&D and related indicators.

The pharmaceuticals and biotechnology sectors reinforce their position as top R&D investor both worldwide and in the USA, accounting respectively for 18.9% and 25.0%. Many pharmaceutical companies showed a strong increase in R&D investment, eg. Japan’s largest drugmaker Takeda Pharm (+42.7% at 2.19 billion euros), German privately-held Boehringer Ingelheim (+21.9%), US major Schering-Plough (+20.6%, now part of Merck & Co; 2.54 billion euros). However, other US majors, such as Merck &Co at 3.46 billion euros, Johnson & Johnson at 5.45 billion euros and at Pfizer 5.72 billion euros, decreased their R&D investment between 1% and 2%, the Scoreboard revealed. The largest net R&D pharmaceutical investor was Switzerland’s Roche, at 5.88 billion euros, up 5%.

The European Commission EU Industrial R&D Investment Scoreboard shows that, despite the economic crisis, the corporate R&D investment worldwide is still at 6.9%, compared with 9.0% in 2007. EU companies managed to maintain their R&D investment growth barely unchanged at 8.1% from 8.8% in 2007, whereas that of US firms fell from 8.6% in 2007 to 5.7% in 2008. Companies based in emerging economies continued to show the highest R&D growth, led by China with a 40% increase, India (27.3%), Taiwan (25.1%) and Brazil (18.6%). If the impact of the crisis is not yet fully reflected in the corporate R&D investment, it is more visible in other indicators collected by the Scoreboard, such as company operating profits, which dropped by 30.5% for EU companies and by 19.1% for US firms.