R&D expenditure up – but Europe still lags

Worldwide, corporate investment in R&D grew by 10 per cent last year, but EU-based companies continue to lag, increasing their investment by 7.4 per cent in comparison.

Although this better than the 5.3 per cent growth reported in 2006, EU companies have had lower rates of growth in R&D spending in every edition of the Scoreboard.

The world’s biggest investor in R&D is the US pharmaceutical firm, Pfizer, at €5.8 billion, while the top in the EU is DaimlerChrysler of Germany at €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 and takes its figures from company accounts for the previous financial year for investments made by a company from its own funds.

The scoreboard, based on the top 1,000 R&D companies from the EU and the top 1,000 R&D companies from the rest of the world, does not reflect where the expenditure was made, but the origin of the company making the investment.

In total the 2,000 Scoreboard companies invested €372 billion in R&D, which is estimated to represent more than 85 per cent of corporate expenditure on R&D worldwide.

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

In a reflection of the extra investment going into filling drugs pipelines, pharmaceuticals and biotechnology has become the top R&D investing sector, overtaking the technology hardware & equipment sector. Companies showing a strong increase in R&D investment, include Merck, up 24.3 per cent, AstraZeneca and Roche, both up 15.5 per cent, and Johnson & Johnson and GlaxoSmithKline, both up 10 per cent.

Chemicals made something of a comeback, with an increase of 9.8 per cent, compared to shrinking budgets in the previous year. EU chemicals companies increased R&D expenditure by 17 per cent, with Bayer up 30.3 per cent, Solvay 20.3 per cent and BASF 19.8 per cent.

Aerospace and defence raised R&D investments by 12.5 per cent, with EADS and Boeing increases their spending by 21.2 per cent and 47.7 per cent respectively.

There are three EU companies in the top 10: DaimlerChrysler, at €5.2 billion, GlaxoSmithKline at 7th and Siemens at 8th. US companies take the top four positions, led by Pfizer, Ford Motors, Johnson & Johnson and Microsoft.