Summary

This short report summarises the findings of the 2009 R&D Scoreboard, an investigation of the performance of the top UK and global corporate investors in R&D during calendar year 2008. The data in the 2009 R&D Scoreboard report was compiled by Company Reporting (Bespoke Databases), and the analysis and case studies were written by the Economist Intelligence Unit.

The 2009 R&D Scoreboard

Key Facts

The 1,000 UK companies that invested the most in R&D spent £26.6 billion in 2008 – a 9.2% rise over the previous year.
81% of UK R&D, carried out by the 1,000 top R&D investing companies, was conducted by just one hundred of these companies, and is dominated by the pharmaceuticals and biotechnology sector.
Globally, the 1,000 companies most active in R&D invested £396 billion in 2008, an increase of 7% on the previous year. The 46 UK companies in this group increased their R&D spend at a faster rate (11.1%).
80% of investment in R&D by the global 1,000 companies occurs in five countries: the US, Japan, Germany, France and the UK.
Global R&D intensity (R&D expenditure as a proportion of sales) stood at 3.4%. Among the UK’s 1,000 leading companies, R&D intensity stood at only 1.6% and at 1.5% for the 46 UK companies listed in the Global 1000.
Ranked by their value-added contribution, the top 50 UK R&D companies contributed some £385 billion to the broader economies in which they operate. Three fifths of this amount derived from just ten companies. With the exception of the banks, all increased their value-added contributions compared with the previous year.

The UK's top R&D companies

In 2008, the 1000 UK companies undertaking the most R&D (the “UK1000”) increased their investment by 9.2% compared with the previous year, to £26.6 billion. This growth was largely due to increased spending by firms in the pharmaceuticals and biotechnology, aerospace and defence, software and computer services and banking sectors.

R&D continues to be a substantial part of corporate expenditure in many sectors, continuing to add value and help sustain and increase the viability of business. However, in 2008 most firms did not invest more in R&D than they earned in profits, although the few that did often invested several times the value of their operating profits.

The UK’s 46 biggest investors – which are also part of the largest R&D spenders worldwide (“G1000”) – conducted 62% of the UK1000’s R&D. They grew their R&D by 11.1% over the previous year, while their global peers averaged a 7% increase.

The UK1000’s R&D has grown almost twice as fast (9.2%) as the number of their employees, which increased by 5.1% over the same period (see appendix UK1000 ranking).

In 2008, the relationship between sales growth and R&D growth was not as clear as in past Scoreboards. R&D grew faster than sales in pharmaceuticals and biotechnology and software and computer services, but in other sectors including automobiles and parts and fixed line telecommunications, sales growth outstripped R&D. R&D as a proportion of sales increased in these two sectors, but declined among the former two.

The Global picture

Global R&D spending by the G1000 rose by 7% year on year to £396 billion. Companies registered in just five countries continue to dominate this global spending: the US, Japan, Germany, France and the UK. Together, these companies contributed 80% of R&D by in the G1000.

In the G1000, UK companies have the third highest R&D spend in the EU in absolute terms behind France and the leader Germany.

Figure 1 shows average R&D growth among companies in the five biggest EU countries and Switzerland by investment. Taking growth in R&D investment over a 4-year period, only Swiss companies increased their R&D at a faster rate than those from the UK. In 2008, UK companies in the G1000 grew their investment as fast as their Swiss peers, faster than their German, French and Dutch counterparts, but slower than their Swedish peers.

Figure 1: R&D growth among G1000 companies in EU and Switzerland by country (%)

R&D investment in the global pharmaceuticals and biotechnology sector remained the largest global R&D sector, growing by 7.6% in 2008. None of the ten largest sectors grew as fast as in previous years. Software and computer services increased investment most with 9.3% growth.