R&D 2004 Spending Report– Biotechnology Leads the Way

R&D spending fuels innovation especially those related to emerging technologies. The R&D 2004 Spending Report focuses on Corporate spending and highlights some interesting trends. The first is that Biotech is now leading the way. Biotech companies spending increased 69% over the previous year. IT companies spent the same compared to the previous year while Telecom and Computer Hardware companies spent less in 2004 than 2003.

Technology Review calculates an Innovation Index to measure the impact of R&D. It is based on several factors including R&D spending levels, R&D spending increases, and R&D as a proportion of sales.

Based on the Innovation Index, the top five are:
1. Biotechnology
2. Semiconductors
3. Pharmaceutical/medical devices
4. Computer hardware
5. Computer software

Individually, some companies are standouts in their investment in R&D. Again Biotech leads the way. The top ten companies ranked by the innovation index are as follows:
1. Sanofi/Aventis
2. Microsoft
3. Biogen
4. General Motors
5. Merck
6. Pfizer
7. Johnson & Johnson
8. Intel
9. DaimlerChrysler
10.Glaxosmithkline


The research dollar continues to pour into the life science space. Six of the top ten companies are in the life science space, two are in the automotive space, one is computer software and one is computer hardware. According to Drug Researcher Pharma appears to be slowing down a little in spending although the dollar volume is still quite high. A pharma company spent $1.2B for each NME (new molecular entity) approved in 2004. This is down from $1.82B in 2002, but is up four times from what was spent in 1995 ($317M).

Spending in computer software, pharma, and heavy industry is up 10%, telecom is down by 10%, and most others are flat. I can remember when Lucent’s Bell Labs held a vaunted position in the research world. It’s no longer in such an enviable place. In fact, it’s down by 36% in 2004. You can see more details at the scorecard.

The federal government provides R&D funding through its agencies. According to the American Institute of Physics the federal government budget proposals for 2006 show an increase of R&D funding by 1% overall with an increase in developmental funding and a decrease in basic research. It appears that NIST, NSF and NIH agencies are up for increases in their budgets, but the rest of agencies are in for flat or declining levels.

If you have an opinion about R&D spending, I would like to hear from you. You can reach me at hall.martin@ni.com.

Best regards,
Hall T. Martin