PRESS RELEASE: Worldwide corporate investment in R&D grew by 10% last year

Worldwide corporate investment in R&D grew by 10% last year, according to a new European Commission study

The 2007 edition of the European Commission's annual scoreboard of companies' spending on research and development (R&D) shows that corporate R&D has increased by 10%, with EU-based companies increasing their R&D investment by 7.4%. This compares to 5.3% growth reported in the 2006 edition. The scoreboard also shows an upward trend in companies' profitability all over the world. The world's biggest investor in R&D in the 2007 Scoreboard is Pfizer of the US, with €5.8 billion. The top EU company is DaimlerChrysler of Germany with €5.2 billion

"We are only ever going to improve our R&D performance if more companies see the benefit of investing in research," said European Science and Research Commissioner Janez Potočnik. "The positive upward trend in R&D investment seen in the last two years is encouraging, and leads me to believe that our innovation strategy is on the right track. But we must not allow ourselves to be complacent – quite the opposite: we should reinforce the positive measures already taken to consolidate and improve private investment in R&D."

The EU Industrial R&D Investment Scoreboard is published annually by the European Commission as part of its Industrial Research Investment Monitoring activity. The figures are derived from company accounts for the previous financial year and indicate the investment made by a company from its own funds. The Scoreboard does not reflect where the expenditure was made, just the origin of the company making the investment. The Scoreboard comprises the top1000 R&D companies from the EU and the top1000 R&D companies from the rest of the world. Together, the 2000 Scoreboard companies invested €372 billion in R&D, estimated to represent more than 85% of corporate expenditure on R&D worldwide.

On the downside, the report shows that R&D investment by EU companies is still growing at a lower rate than their non-EU counterparts, a trend identified in every edition of the Industrial R&D Scoreboard published to date. This difference is primarily explained by a growth rate in high R&D-intensive sectors outside the EU of almost twice that within the EU. These sectors also account for a much larger proportion of R&D outside the EU. Nevertheless, the EU did record the highest growth in fixed capital investment. This represents an important part of total corporate investment that also underpins investment in innovation.

In the coming months the European Commission will publish the 2006 EU Survey on R&D Investment Business Trends with information about 110 R&D EU companies' investment expectations for the period 2007-2009. This survey provides new insights into company expectations about future R&D investments and their motivations to invest in research. The preliminary results confirm the positive trends of the 2007 Scoreboard.

Sector trends

Pharmaceuticals & biotechnology becomes the top R&D investing sector, overtaking the technology hardware & equipment sector. This sector is represented by many EU companies. Many pharmaceutical companies show a strong increase of R&D investment, e.g. Merck (+24.3%), AztraZeneca (+15.5%), Roche (+15.5%), Johnson & Johnson (+12.9%), GlaxoSmithKline (+10%).

Chemicals shows a strong recovery in R&D investment (+9.8%), compared to the negative growth of the previous year. This is especially pronounced in the EU group of companies (+17%) where the large chemical companies show impressive R&D growth rates, e.g. Bayer (+30.3%), Solvay (+20.3%) and BASF (+19.8%). This is partly due to processes of acquisitions and concentration in the sector.

Aerospace and defence raised its R&D investment by 12.5% continuing the trend of strong growth of the past years. The sector's most representative companies, EADS and Boeing increased their R&D investment by 21.2% and 47.7% respectively.

Company trends

Three EU companies keep a position within the top 10 R&D ranking: DaimlerChrysler, the top EU company with 5.2 bn EUR (5th), GlaxoSmithKline (7th) and Siemens (8th). Four US companies are in the top positions: Pfizer (5.8 bn EUR), Ford Motor, Johnson & Johnson and Microsoft.

The performance of Scoreboard companies further improved in the past year. Sales of EU companies grew by 10% and sales of US and Japanese companies grew by about 8%. The profitability of EU companies increased further to 11.6% (between 12.9% for the US and 7.4% for Japan).

The 2007 EU Industrial R&D Investment Scoreboard can be downloaded from: http://iri.jrc.ec.europa.eu [1]