There is not a single semiconductor company in the top ten
R&D spenders as listed in the Booz & Co
Global Innovation 1000 report, which puts Nokia as the second largest R&D
spender in the world and Microsoft in fourth place.
Samsung gets in at No.12, IBM at No. 13 and Intel at No.14 and
there are other electronics companies in the top 20 like Siemens
(15) Cisco (19) and Panasonic (20). Otherwise it's all drugs and
car companies.
The computing and electronics industry retained its top spot in
R&D spending among the industry sectors, spending $149bn,
accounting for 28% of the total spend. As in previous years, health
care and auto came in second and third, spending 23% and 16%,
respectively.
The world's 1,000 largest publicly traded corporate research and
development spenders increased R&D budgets in 2008, said the
Booz report, with R&D spending at these firms rising 5.7% in
2008, a slower rate of growth than the prior year's 10 percent
increase, but in line with the group's 6.5% increase in worldwide
sales.
More than two-thirds of the companies included in this year's
Global Innovation 1000 maintained or increased R&D spending in
2008, even though a third of the companies reported a financial
loss for the year.
Booz surveyed of nearly 300 senior managers and R&D leaders
from 230 companies, which collectively spent more than US$230bn on
R&D in 2008. The feedback from these corporate leaders revealed
that innovation investment is increasingly viewed as essential to
corporate strategy: More than 90% of the executives surveyed stated
that innovation is critical as they prepare for the upturn, and a
majority have maintained or expanded their portfolios and are
pursuing new products to improve growth and margins.
More than a quarter of the Global Innovation 1000 cut their
innovation budgets in 2008. And many companies were cautious: The
top 20 companies increased R&D spending just 3.% in 2008,
compared to 10.7% in 2007.
Early evidence also indicates that as companies entered 2009,
spending on innovation slowed further. However, that slowdown came
in the face of even steeper declines in sales and income: Among the
522 companies reporting results for the first quarter of 2009,
R&D spending decreased by 7.4%-which is still less than half
the rate of their 18.5% decline in sales.
The survey reveals that seven in 10 companies are now adjusting
their strategies to changing customer requirements. Nearly half of
the respondents report becoming more risk averse in their approach
to innovation, changing the filters they apply when green lighting
new R&D projects. More than 40% said their companies are
focusing on process improvements to change R&D spend during the
downturn, and a similar number say they're getting better at
killing bad projects, as well as focusing more on newer products
that have the potential to grow faster.
Outside of the massive decline in sales that the auto industry
has faced since the spring of 2008, R&D spending in the
industry increased, but only by 0.6%. Aerospace and defence was the
only industry to see R&D spending fall, by 2.3%.
Changes in R&D intensity, however, varied: Five
industries-auto, computing and electronics, consumer, industrials,
and health care-increased R&D intensity, while telecom,
software and Internet, aerospace and defense, and chemicals and
energy saw a decrease. A 1.4% increase in intensity, to 12%,
allowed health care to take over the top spot in R&D intensity
this year, and chemicals and energy decreased its intensity by
10.4%, to 0.9%, the lowest of all the industries.
Companies headquartered in the three major regions-North
America, Europe, and Japan-continued to account for 94% of the
total R&D spending of the Global Innovation 1000, and every
region, including China and India and the rest of the world,
increased its spending.
However, the rates of regional spending growth were slower.
Japan increased its spending by just 0.5%, Europe by 6.3% percent,
and North America by 6.5%. The global five-year compound annual
growth rate was 7.2%.
Overall, the recession has had a noticeable, but relatively
mild, effect on R&D spending thus far. Given the weak growth in
both overall sales and net income, it's no surprise that companies
are spending somewhat more cautiously on innovation.
Long product development cycles have forced companies to
maintain their R&D spending even when revenues decline. And
most companies are fully aware of the need to be in position to
profit from the coming upturn.
Here is the top twenty (company name, spending in millions of
dollars)
- Toyota $8,994
- Nokia $8,733
- Roche Holding $8,168
- Microsoft $8,164
- General Motors $8,000
- Pfizer $7,945
- Johnson & Johnson $7,577
- Ford $7,300
- Novartis $7,217
- Sanofi-Aventis $6,695
- GlaxoSmithKline $6,425
- Samsung $6,413
- IBM $6,337
- Intel $5,722
- Siemens $5,680
- Honda $5,603
- Volkswagen $5,429
- AstraZeneca $5,179
- Cisco Systems $5,153
- Panasonic $5,152