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Brussels, 16 November 2009
2009 "EU Industrial R&D Investment Scoreboard" - Questions & Answers
What kind of data does the Scoreboard present?
The "EU Industrial R&D Investment Scoreboard" presents information on the top EU and non-EU companies investing the largest sums in research and development (R&D). The data are drawn from the latest available audited companies' accounts (2008).
As in most of cases these accounts do not include information on the place where R&D is actually performed, the company’s whole R&D investment in the Scoreboard is attributed to the country in which it has its registered office.
The term "EU companies" therefore refers to companies whose ultimate parent company has its registered office in a Member State of the EU.
What sample of companies has been used?
Data come from the top 1000 EU and top 1000 non-EU R&D investment companies in the world (table 1). Such EU and non-EU groups include companies with different volumes of R&D investment. This year, the R&D investment threshold for the EU group is €4.34 million and that for the non-EU group is €31.51 million.
In order to compare EU and non-EU companies on a similar basis, it is only EU companies with R&D above the non-EU threshold that were considered. This results in a sample of the world's top 1350 R&D investors that can be used for comparative purposes between world regions (e.g. EU, US, Japan).
Which is the scope of the analysis?
The Scoreboard is a benchmarking tool which provides reliable up-to-date information on corporate R&D investment and other economic and financial data, with a unique EU-focus. The 2000 companies listed in this year’s Scoreboard is equivalent to about 80% of worldwide business enterprise expenditure on R&D. The data in the Scoreboard are published as a four-year time-series to allow further trend analyses to be carried out, for instance, to examine links between R&D and business performance.
How are world companies doing in R&D investment?
In 2008, industrial R&D investment globally grew by 6.9%, lower than the average 9% reached in 2007 and 10% in 2006. This growth is similar to 2005 (7%). (figure 1 in the IP)
Companies from emerging economies, which account for a small share of the total R&D investment, continued the trend of high R&D growth e.g. China (40%), India (27.3%) and Taiwan (25.1%).
And EU companies?
Despite the global deceleration of R&D investment in 2008, for the second straight year the R&D growth rate of EU companies (8.1%) has been higher than that of the US (5.7%) (table 2). It also outpaced Japanese companies (4.4%) for the fourth straight year.
But do EU companies invest in the same sectors than US companies?
In the US, over 2/3 of the R&D investment is placed on high R&D-intensity sectors. In the EU, only 1/3 goes to those sectors, whereas 1/2 of the investment is allocated into medium-high R&D-intensity sectors.
Sectors contributed differently to the R&D growth of Scoreboard companies. In the EU, the largest contribution to R&D growth was from medium R&D-intensity. In the US, most of high R&D-intensity sectors showed R&D growth above the US's average (5.7%).
This confirms a trend seen over the past years, with a strengthening of high R&D-intensity sectors in the US that increased their investments by 35% in the last four years against only 13.6% in the EU companies (figure 3 in the IP).
However, in terms of R&D intensity, i n 11 out of the top 15 sectors by R&D investment (which account for 93% of the total R&D investment by Scoreboard companies) , the average R&D intensity of EU companies in the particular sector is higher than that of the US companies.
These include technology hardware & equipment, automobiles & parts, aerospace & defence and electronic & electric equipment. Furthermore, grouping companies into sectors of high, medium-high, medium-low and low R&D intensity shows aggregate R&D intensities of EU companies greater than US companies
What are the results if we compare the overall R&D intensities?
The overall R&D intensity of companies in most regions remained practically unchanged, at 2.7% for the EU group, 4.5% for the US and 3.4% for Japanese companies (table 3). The aggregate R&D intensity of EU companies is lower than that of their non-EU counterparts because of their lower weight of the high R&D intensity sector (as discussed above). (table 4)
Are there significant differences among the EU companies' R&D investment growth?
Companies based in Germany (the largest R&D investor) increased their R&D investment by 8.9%. EU Member States where companies grew their R&D well above the EU's average were Italy (20.4%), Sweden (17.0%), Denmark (16.4%) and the UK (11.3%). The lowest performance in the EU was the R&D investment by companies based in Finland (1.6%), France (0.7%) and Belgium (-0.8%).
Which are the top companies in R&D investment?
In the list of top 10 R&D investors, Toyota Motor (€7.61 bn) has taken the first place.
The EU has two companies, Volkswagen (€5.93 bn), becoming the biggest EU R&D investor, and Nokia (€5.32 bn).
The US keeps five companies, Microsoft (€6.48 bn), General Motors (€5.76 bn), Pfizer (€5.72 bn), Johnson & Johnson (€5.4 5 bn) and Ford Motor (€5.25 bn).
The other two companies among the top 10 are from Switzerland, Roche, (€ 5.88 bn) and Novartis (€ 5.19 bn).
Among the top 50 R&D investors, the EU and the US account respectively for 16 and 18 companies (for both, 2 less than last year) and Japan for 13 (4 more than last year).
And by sector? Which is the sector with the highest R&D investment worldwide?
The pharmaceuticals & biotechnology sector continued in the top position of the R&D ranking, accounting for 18.9 % of the overall R&D investments by Scoreboard companies.
Europe appears well placed in the technological race of this sector, showing similar performance than competitors in terms of R&D and related indicators. For example, among the 10 pharmaceutical companies with the fastest R&D growth rates over the last three years, 4 companies are based in the EU, 5 in the US and 1 in Japan.
Is there any other sector with a significant increase in industrial R&D investment?
Among the top 15 Scoreboard sectors (accounting for 93% of the total R&D investment), the highest one-year R&D growth rate was showed by the following sectors: oil & gas producers (+15.8%), industrial engineering (+14.1%) and food producers (+11.4%).
In addition, the outstanding R&D trends of companies in the field of energy that were observed in the past Scoreboard were maintained in 2008. In particular, companies developing alternative energy technologies, driven by security of energy supply and environmental issues boosted again their R&D investments (figure 4 in the IP).
Can the effects of the crisis be perceived?
The full effects of the crisis, especially on R&D, tend to lag and are not yet captured in this Scoreboard . However, some effects of the crisis are already reflected in the company results, namely on indicators such as sales, operating profits and market capitalisation.
The growth rate of net sales increased in the low R&D-intensity sector, mainly because of the high oil prices in 2008 that benefited the oil-related sectors. In contrast, the other sectors saw a reduction in their growth rate of net sales. This was particularly pronounced in the high R&D-intensity sector and especially for EU companies that grew net sales at a rate less than half of that achieved by their US counterparts.
Market capitalisation of companies also shows clearly the effects of the economic crisis by sector and region since the previous reporting period (up to August 2008). The market capitalisation was further reduced over the last reporting period (August 2008 – August 2009). The largest impact for EU companies is on medium-high R&D-intensity sectors whereas for US companies, it is on the medium-low R&D intensity ones. Companies in high R&D-intensity sectors appear less affected in the US group.