ICT and E-Comm sector contributes 10 companies in comparison to 8 from pharmaceuticals & biotech and 6 from automobile vertical in the recent survey of Global Innovation 1000 study which analyses spending at the world’s 1,000 largest publicly listed corporate R&D spenders.
In the Global Innovation 1000 Study, Amazon leads R&D spending with investment of $16.1 billion in 2017 followed by Alphabet at $13.9 billion, Intel at $12.7 billion and Samsung Electronics at $12.7 billion.
The annual worldwide R&D spending breaks through $700 billion for the top 1,000 corporate R&D spenders for first time according to an annual analysis of R&D spending across 1000 global public companies by PwC’s Strategy&. The study shows corporate R&D spending increased a steady 3 per cent in the past year, bouncing back from less than 1 per cent increase previously.
Overall, Software & Internet industry companies continue to increase their year-on-year R&D spending and the analysis shows that by 2018, healthcare and biotech companies will surpass computing & electronics to become the largest industry in terms of R&D spending – the first time in 12 years of analysis.
R&D spending by companies based in China declined for the first time and for Japan it has increased in Japan for first time in 4 years, and continued to grow moderately in North America. R&D spending by China-based companies declined by 3.3 per cent — the first decrease since we created the Global Innovation 1000 in 2005. Together, these trends make the country particularly vulnerable to disruptions of R&D investment that may come from abroad.
ICT & E-Comm Companies in 2017 Global Innovation 1000 Study
Rank – Company – 2017 R&D Expenditure ($ bn)
- Amazon – 16.1
- Alphabet – 13.9
- Intel – 12.7
- Samsung Electronics – 12.7
- Microsoft – 12.0
- Apple – 10.0
- Oracle – 6.8
- Cisco – 6.3
- Facebook – 5.9
- IBM – 5.8
Source: 2017 Global Innovation 1000 Study
However, in a global survey with 562 executive participants, R&D leaders expressed concerns about the growing heat of rhetoric about economic nationalism – and its potential impact on where companies invest in R&D how they conduct innovation.
Nearly 33% of R&D executives surveyed, report that they have already felt the effects of economic nationalism on their R&D talent acquisition or retention because of visa or work restrictions — either losing employees, seeing less talent available, or in hiring more local talent.
Survey participants believed US, UK, and China could be most at risk from potential changes in policy that could impact R&D investment. Both the US and UK’s talent flow could be at risk of potential disruption while China’s decline in corporate R&D spending and reliance on R&D investment from abroad could be at risk.
“It’s been a year of highs and lows for R&D. Record levels of investment, next to unprecedented drops in alignment between innovation and business strategies. There’s no doubt that uncertainty is causing concern for medium and long term plans, irrespective of whether policy realities actually follow political rhetoric,” comments Barry Jaruzelski, Principal, PwC US, Strategy&.
“Although the goals and levels of investment in corporate innovation will likely not change if economic nationalism continues to develop, the global innovation model would need to evolve. At many companies, what is now a nimble, interdependent network may become a group of more autonomous hubs, hiring specialist technical talent in local regional markets and opening future R&D centers in regional markets. It could mean companies losing efficiency and taking on higher costs if it is not managed effectively,” commented Jaruzelski.
This year Strategy&, PwC’s strategy consulting business, identified the 1,000 public companies around the world that spent the most on R&D during the last fiscal year, as of June 30, 2017. The Global Innovation 1,000 companies collectively account for 40 per cent of the world’s R&D spending, from all sources, including corporate and government sources.
For each of the top 1,000 companies, Bloomberg and Capital IQ provided the key financial metrics for 2012 through 2017, including sales, gross profit, operating profit, net profit, historical R&D expenditures, and market capitalization. All sales and R&D expenditure figures in foreign currencies were converted into U.S. dollars according to an average of the exchange rate over the relevant period; for data on share prices, we used the exchange rate on the last day of the period.
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