Differences in R&D between firms by value of sales

Table 7 shows the composition of firms in both the UK1000 and G1000 broken down by the value of their sales. Companies with annual sales below £50 million comprised the largest category of the UK1000 in 2008 (40%) followed by companies with annual sales of £50 million to £500 million (36%). There were 237 companies with sales over £500 million, of which 48 reported sales of over £5 billion.

The majority of firms in the G1000 had sales in excess of £500 million. Compared with their global peers, proportionately more of the 46 UK firms in the G1000 had sales over £5 billion: 52% of UK firms had sales in excess of £5 billion compared with 40% of the other 954 G1000 firms. Proportionately, the same amount of firms had sales below £500 million and £50 million.

Table 7: Distribution of firms by firms by value of sales in UK1000 and G1000

Table 8 analyses investment in R&D as a proportion of sales for firms of different sizes in both the UK1000 and G1000. It shows that:

• firms in the UK1000 invested significantly less in R&D as a proportion of sales than their global peers; global companies with sales of more than £5 billion (excluding the 46 UK firms in the G1000) invested 3% of their sales in R&D compared with just 1% for those with similar sales active in the UK.

The results reflect the mix of firms in the UK1000 and G1000. Smaller firms in the UK1000 tend to be more R&D intensive, being concentrated in high-tech sectors such as pharmaceuticals and biotechnology and electronic and electrical equipment, while larger firms include oil and gas companies and banks with high absolute R&D numbers that represent a very small proportion of their total sales. In addition, the sectoral mix of R&D companies is different from that of other countries. These reasons account for the lower R&D intensity among UK firms.

Table 8: R&D and sales by firms’ value of sales