EU companies still lagging behind in R&D investment

EU companies continue to lag behind major competitors from the US and China in R&D investment, according to the European Commission's latest Industrial R&D Investment Scoreboard published today (18 October).

On the bright side, the table shows investment by EU companies recovering strongly in 2010, with a 6.1 per cent rise increase over 2009.

The European Union has 15 companies in the top 50, and only one – Volkswagen – in the Top 10 of the world’s 1,400 leading companies. This is not good enough, said Máire Geoghegan-Quinn, Commissioner for Research, Innovation and Science, urging companies to take action. “We’re facing an innovation emergency, we need much more innovation in Europe, and we need it fast. Business as usual is no longer an option. Europe has to continue to strengthen its knowledge base to remain competitive.”

It is a moot point as to whether the scoreboard reflects improvements, or not, in the EU’s knowledge base, since the table records overall investment, but does not say where the money is spent.

The US, with five companies in the Top 10, saw investment up by 10 per cent, following a 5.1 per cent drop in 2009. Asian firms continued to show very strong growth in R&D investment levels, with a 29.5 per cent rise for Chinese companies and 20.5 per cent for those from South Korea.

Geoghegan-Quinn stressed that Europe’s future depends on a competitive industry that is able to grow and create jobs, “This means investment in research and new technology and creating a climate that boosts innovation.”

Overall, the data shows a positive trend in 2010, as global R&D investment increased by 4 per cent on average, a robust up-turn after the 1.9 per cent drop observed in 2009. The global Top 50 in terms of total research investment includes 15 EU companies, 18 US firms and 13 from Japan.

Two pharmaceutical companies occupied the top spots: Roche from Switzerland (€7.2 billion) followed by Pfizer from the US (€7 billion). Volkswagen (€6.3 billion), in sixth place, is the biggest EU-based investor in R&D, followed by Nokia (11th at €4.9 billion), Daimler (13th at €4.8 billion) and Sanofi-Aventis (14th with €4.4billion).

The EU Industrial R&D Investment Scoreboard is published annually and ranks 400 companies based in the EU and 1,000 outside, by their investments in R&D. It measures the total value of their global investment, irrespective of the location where the research takes place.

Geoghegan-Quinn did not only point to the need for Europe’s industry to increase investment, but also urged the member states to spend more on R&D. The Commissioner called for quick adoption of new innovation policies. “The fact that we’re lagging behind global competitors, shows we have to improve further. We need quick adoption and implementation of recent and upcoming European Commission proposals on the unified patent, on standards, on public procurement and risk capital,” she said.

More than two thirds of R&D investment by EU Scoreboard companies is by those located in the three biggest member states, with German companies showing the highest one-year growth (8.1 per cent). This is mostly due to the car manufacturers Daimler, Volkswagen and BMW. UK companies' R&D investment was up by 5.8 per cent, close to the EU average, while investment by French companies rose by 3.8 per cent.

In other member states, a few large players account for high shares of R&D investment growth. These include Novo Nordisk (27.3 per cent) and Vestas (49.8 per cent) in Denmark and Banco Santander (56.3 per cent), Telefonica (16 per cent) and Amadeus (33.2 per cent) in Spain. Fast growing companies such as TomTom (Netherlands) in the electronic equipment sector, Autonomy (UK) and Gameloft (France) in software and Morphosys (Germany) in biotech, are highlighted as success stories showing very good performance in 2010.

The 1,400 companies in the Scoreboard employed more than 40 million people in 2010, a 3 per cent increase over 2009. An analysis of the past eight years' trends shows that employment growth in R&D-intensive sectors is generally higher than in other sectors and less affected by the economic crisis.