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Brussels, 6 December 2012
EU Industrial R&D Investment Scoreboard 2012
The European Commission has today published its 2012 EU Industrial R&D Investment Scoreboard. The Scoreboard is based on a sample of 1500 companies, the world's top investors in R&D and equivalent to almost 90% of the total expenditure on R&D by businesses worldwide. Major EU-based firms continue to rely on R&D for their competitive edge. They increased R&D investment by 8.9% in 2011, up from 6.1% in 2010. The increase nearly matches US firms (9%), beats the global average (7.6%) and is far ahead of Japanese companies (1.7%). R&D-intensive sectors tended to show above average employment growth.
What percentage of private R&D spending do the EU firms in the Scoreboard account for?
Out of the 1500 companies gathered in the Scoreboard, 405 are based in the EU. These companies invested €144.6 billion in 2011 (equivalent to 28.85% of the overall investment in R&D by the Scoreboard companies).
Distribution of the 405 EU companies in the 2012 R&D Scoreboard
Germany: 108; UK: 81; France: 58; Sweden: 26; Netherlands: 24; Italia: 22; Denmark: 21; Finland: 14; Spain: 14; Belgium: 12; Ireland: 8; Austria: 7; Poland: 4; Luxembourg: 4; Slovenia: 1; Czech Republic: 1.
Where do EU-based companies perform their research?
In the context of the Scoreboard, companies are allocated to the country of their registered office, which might differ from the place where R&D activities are undertaken. “EU companies” are those whose ultimate parent is registered in an EU Member State. Evidence compiled in the EU and by the OECD show that multinational groups tend to invest around 80% in the region where they are registered, therefore Scoreboard figures correlated fairly closely with the overall private sector R&D investment trends in each region of the world.
EU's top 10 R&D investing companies
Were the effects of the crisis felt in terms of private R&D investment?
Worldwide, the effects of the crisis in private R&D investment were most felt in 2009, when the private R&D investment decreased by 1.9%. In 2008, it had grown by 7% and in 2010 it grew again by 4%.
In the EU, 2011 growth (8.9%) is above the pre-crisis level, as it was 8.1% in 2008 and moves away from the decrease in 2009 (-2.6%). In 2010 it already grew by 6.1%, above global average.
Trends of companies based in the top 10 EU countries in terms of industrial R&D investment
These data have been extracted from an extended list of the top 1000 EU companies by R&D investment.
Which types of companies are doing best in terms of sales?
Worldwide, companies that have at least doubled their sales over the last decade operate in the ICT and health related sectors.
Companies showing the highest average net sales growth between 2002 and 2011 operate in ICT (such as semiconductors, telecom and software) and health (such as pharma, biotech and medical equipment). It is in the software and in the computer services sectors where high performers in terms of sales also show higher levels of profitability (close to an outstanding 30%).
Out of a classification of 50 top high performers, 8 companies are EU-based (in ranking order): Gameloft (France based), IMMSI (Italy), Pace (UK), Axis (Sweden), Dialog semiconductor (UK), Imagination technologies (UK), Sanofi-Aventis (France) and Serco (UK).
What were the amounts invested in R&D by private companies based in the different regions of the world?
Total worldwide R&D investment by leading companies amounted to €510.7 bn. Main players were based in the US: €178.4 bn, EU: €144.6 bn, Japan: €111.5 bn, Switzerland: €21.5 bn, South Korea: €15bn and China: €13.9 bn.
In relative terms, EU, US and Japan companies represent 85.1% of the overall investment (34.9% US, 28.3% EU and 21.8% Japan). Companies based in other countries in the world represent the remaining 14.9%. Significant percentages in this share are those of Switzerland: 4.2%, South Korea: 2.9% and China: 2.7%.
Which sectors invested more in R&D in 2011? And in terms of investment growth?
Worldwide, the top three sectors in terms of R&D investment were: pharmaceuticals and biotechnology, technology hardware and equipment, and automobiles and parts. In the EU, the automobile sector ranked first, followed by the other two sectors, pharma and biotech.
In terms of R&D investment growth, worldwide, the banking sector shows the highest growth rate (21.8%) followed by industrial engineering (16.5%) and automobiles and parts (13.1%). In the EU, there was a similar situation, with banks ranking first (19.5% increase), automobiles second (16.2%), and industrial engineering third (15.6%).
R&D ranking of industrial sectors and share of main world regions for the world's top 1500 companies
Why does the EU lag behind US in terms of overall investment and R&D intensity?
The EU/US R&D gap is largely explained by the US' relative specialisation in high R&D intensity sectors (such as health and ICT), which represent 69% of the total R&D investments of US Scoreboard companies. For the EU sample, companies in the high-tech sectors only account for 37% of the total R&D investment figure.
These differences in the industrial structure of EU and US Scoreboard companies also explain the differences in the total R&D intensity (R&D as a percentage of sales) of the two samples: 4.5% for the US versus 2.6% for the EU. In fact, the scoreboard shows that, individually, top EU players have similar R&D performance to that of their US counterparts, pushed mainly by the constraints of global competition.
What kind of data does the Scoreboard present?
Data correspond to the companies´ latest published accounts (corresponding in most cases to the fiscal year 2011). Consolidated group accounts have been used to maximise completeness and avoid double counting.
The R&D investment included in the Scoreboard is the cash investment that is funded by the companies themselves. It excludes R&D funded by contracts with third parties such as governments or other firms. It also excludes the companies’ share of any associated company or joint venture R&D investment when disclosed. If R&D costs have been capitalised, the additions to the appropriate intangible assets are included to calculate the cash investment and any amortisation eliminated.
Open access to data
A new feature in this website: http://iri.jrc.ec.europa.eu will soon allow user-friendly and interactive access to individual company data or groups of companies aggregated by industrial sector and country.
The world's top 50 companies by their total R&D investment in the 2012 Scoreboard
Do R&D investments from foreign firms in Europe matter?
Foreign-owned firms contribute a considerable share to gross R&D expenditure notably in small EU countries such as Ireland, Belgium, Austria, the Czech Republic or Sweden (see Figure 1). And in absolute terms, R&D expenditure by foreign-owned firms is also sizeable in larger countries. It increased in every single country between 2003 and 2007 except France and Sweden where it remained stable.
These foreign R&D investments are a big source of employment and competitiveness in Europe. The study "Internationalisation of business investments in R&D and analysis of their economic impact"1 shows a positive and significant relationship between R&D expenditure and labour productivity of foreign-owned firms and labour productivity of domestic firms.
Is Europe an attractive place for R&D investments from third countries?
The European Union is an attractive R&D location for firms from outside the EU. Europe remains the most attractive place for foreign R&D investment of US firms that represent 2/3rd of R&D FDI in the world. While between 1995 and 2000, the share of the EU in overseas R&D expenditures of US firms had declined from 70% to 60%, since 2000 it been stable at about 61-62%, which in the context of the emergence of new scientific and technological powers is quite remarkable. Further, multinationals from India, China, Brazil or other emerging economies are just about to make first steps into the EU as a location for their R&D activities.
Strengths of the EU as a location for R&D include developed markets with a sophisticated demand (‘lead markets’), the quality and quantity of its pool of skilled labour, public support to R&D and the quality of its scientific and technological base. These strengths and their exploitation have been reinforced through the reforms of the research and innovation systems made since 2000 in line with first the EU Lisbon strategy and then the Europe 2020 strategy.
Are R&D investments of EU firms abroad made to the detriment of their investments within the EU?
EU firms are very active in performing research and development activities abroad. These activities help them to open up new markets and expand globally. The home countries may benefit from the global expansion and from reverse knowledge spillovers. The empirical evidence available suggests that R&D abroad and R&D in the home country are complementary. Much importantly, there is no indication that more R&D activities of EU firms outside Europe lead to less R&D in the European Union member states at the aggregate level.
EC 2012, "Internationalisation of business investments in R&D and analysis of their economic impact":