6 major R&D moves this week: Honeywell spinoffs meets Lilly’s pipeline expansion

In early 2025, major aerospace, pharma, and high-tech players continue to revamp their portfolios and global footprints. The latest evidence? Honeywell’s decision to spin off its automation arm to Mitsubishi Chemical’s $3 billion pharma selloff. In other news, HP doubles down on Saudi Arabia with new manufacturing and R&D sites, Nippon Steel makes a partial play for U.S. Steel, and Eli Lilly extends its incretin therapy into new therapeutic areas. Meanwhile, a Trump administration freeze goes into effect on EV charging funds. There’s also Toyota’s Shanghai EV push, Google’s $75 billion AI capex, and SoftBank’s joint venture with OpenAI.

AI & technology

1. Honeywell’s Split: aerospace vs. automation vs. advanced materials

Honeywell International Inc., Charlotte, North Carolina, announced last week that it plans to separate its aerospace division from its automation business and spin off its advanced materials arm. The separation of its automation and aerospace businesses should be completed by the second half of 2026. Honeywell currently makes engines and cockpit systems for Boeing and others. Its aerospace business booked $15 billion in revenues in 2024. However, its industrial and building automation units have not been successful and have dented the company’s overall earnings.

• Broader Impact: By decoupling its aerospace arm, Honeywell can double down on high-margin aviation technology while freeing the automation business to pursue R&D more aligned with digital transformation and Industry 4.0.
• Market Angle: Expect increased M&A activity in automation and building controls, potentially opening the door for smaller players to innovate faster.

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Additional developments

2. Mitsubishi Chemical Group sells $3 billion pharma unit

Mitsubishi Chemical Group, Tokyo, announced last week that it will sell its pharmaceutical unit for more than $3 billion, a deal that would allow the company to focus on its key chemical businesses. The U.S. investment community followed up stating that it will purchase Mitsubishi Tanabe Pharma for $3.4 billion. The drugmaker focuses on developing treatments for central nervous system disorders, inflammation, diabetes and metabolic diseases, as well as vaccines. The Japanese company said large R&D investments are required to strengthen Tanabe’s R&D capacity, which was not available under its current ownership.

• Real-World Impact: Mitsubishi Tanabe Pharma tackles diseases in neurology, immunology, and metabolic disorders—industries that require heavy R&D. This sale hands the reins to an investor group with deeper pockets for R&D expansions.
• Key Takeaway: Big R&D budgets needed for pharma breakthroughs are prompting corporations to streamline. Expect a surge in specialized drug research and possibly faster routes to clinical trials under new ownership.

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AI & technology

3. HP’s regional manufacturing and R&D push

HP Inc. (formerly Hewlett-Packard Co.), Palo Alto, California, announced last week the establishment of a manufacturing facility in Riyadh, Saudi Arabia, and an artificial intelligence (AI) and R&D Centre of Excellence in Dhahran, Saudi Arabia in its mission to provide regional businesses with cutting edge solutions. The company also announced the creation of numerous education programs and local partnerships designed to empower Saudi Arabia’s next generation for a brighter future. HP says it is steadily strengthening its footprint across the Middle East and Africa through its manufacturing facility creation. Its “Made in Saudi” initiative enables a better, more customized experience for customers. This initiative will also foster the development of local talent by creating thousands of new jobs by 2027.

• Regional Tech Boom: Saudi Arabia has been ramping up high-tech initiatives, providing a hub for global R&D players.
• Business/Policy Angle: This move ties into “Made in Saudi” initiatives—regionalizing production can lower costs for HP and speed up custom solutions for Middle Eastern and African markets.

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Automotive & manufacturing

4. Nippon Steel’s partial U.S. Steel investment

Nippon Steel, Tokyo, Japan, announced last week that it is considering investing in—but not owning—U.S. Steel, Pittsburgh, Pennsylvania. Details of the agreement signed by Nippon and the Trump administration were not immediately available. Nippon had previously considered purchasing U.S. Steel for $14.1 billion. The United Steelworkers union had opposed the purchase.

• Geopolitical Context: Government policy can drastically alter foreign acquisitions—especially in critical industries like steel.
• R&D Dimension: Partial ownership may still facilitate joint R&D on advanced steel alloys and sustainable metallurgy, yet less direct control means fewer corporate synergies.

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Additional developments

5. Eli Lilly expands incretin drug pipeline

RDW Index member Eli Lilly & Co., Indianapolis, Indiana, announced last week that it is looking to test new applications for its FDA approved tirzepatide incretin therapy—currently approved for weight loss, diabetes, and sleep apnea. Incretins are hormones that are released after eating, affecting the body’s insulin response. The company’s objective is to test the drug across disease in neurology and immunology indications. It is currently considering applications in chronic weight management, obstructive sleep apnea and knee osteoarthritis among people with obesity who are overweight.

• Market & Health Impact: A successful expansion in tirzepatide’s label could reshape chronic disease management, from obesity to neurological disorders.
• R&D Edge: This underscores pharma’s shift toward multi‑indication therapies to maximize ROI on existing R&D investments.

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Additional developments

6. Spinoffs everywhere: The week’s other big moves

• • Trump Administration Freezes EV Charging Funds: The Trump administration last week halted federal funding to states for new electric vehicle (EV) charging stations. About $5 billion was planned to be provided to states to build fast chargers along interstate exits. A Transportation Department letter was issued stating that it will issue new program guidance this coming spring. About 940 locations were initially awarded funding for the charging stations, with 56 now completed and hundreds currently in some stage of construction.
    • Reality Check: ~$5 billion was planned for new fast-charging stations; the pause creates uncertainty for automotive R&D and EV infrastructure.
    • Looking Ahead: Potential for private-public solutions if policy remains stalled.
  • Toyota’s Shanghai EV Unit: RDW Index member Toyota Motor, Tokyo, Japan, announced last week that its new Shanghai, China unit will develop and manufacture Lexus-branded battery EVs. This unit will also produce batteries for the group’s other businesses and product lines. Like other foreign carmakers in China, Toyota has struggled in a cutthroat price war with Chinese EV carmakers. Toyota currently manufactures vehicles in the U.S., imports them from Japan and also Mexico for sale in the U.S.
    • Production Goals: Up to 100,000 Lexus-branded battery EVs annually by 2027 or later.
    • Competitive Edge: Toyota must innovate rapidly to counter China’s homegrown EV leaders.

• Google’s $75B Capex for AI Data Centers: RDW Index member Google, Mountain View, California, announced last week that revenue growth in its cloud unit underperformed company forecasts. Google is accelerating its investments in the data centers that power AI for the company and other clients of its cloud-computing businesses. Google plans to invest $75 billion on capital expenditures in 2025, compared to the $52 billion it spent on capex areas in 2024.
  • Growth Pressure: Cloud revenue growth underperformed, so Google invests heavily in AI infrastructure.
  • Takeaway: Another signal that hyperscale data centers and AI R&D remain a primary battleground for big tech.
• SoftBank + OpenAI Partner in Japan:
  SoftBank Group, London, United Kingdom and OpenAI, San Francisco, California, announced last week that they plan to team up to offer AI services, initially targeting Japanese businesses to lay the groundwork for a potential global expansion. SoftBank said that it will assign 1,000 employees in 2025 to the joint venture with its SB OpenAI Japan division. The Japanese service will be provided with $3 billion annually to use OpenAI’s technology access. SoftBank said artificial general intelligence, in which computers have human-level cognitive abilities, will be realized faster in the world of big corporations than that of individuals because corporations have ample financial resources and vast amounts of specific data to train the computers.
  • Focus: A $3 billion yearly investment to bring advanced AI services to large Japanese corporations.
  • Implication: AGI discussions ramp up—especially in corporate contexts flush with data and capital.

• Focus: A $3 billion yearly investment to bring advanced AI services to large Japanese corporations.
• Implication: AGI (Artificial General Intelligence) discussions ramp up—especially in corporate contexts flush with data and capital.

		Ticker	Exchange	2020 R&D Billions $	01/31/25	02/07/25	1/31/25 to 2/7/25	1/1/22 to 2/7/25
1	Alphabet/Google	GOOGL	NASDAQ	27.303	205.60	187.14	-8.98%	29.20%
2	Microsoft	MSFT	NASDAQ	17.198	415.06	409.75	-1.28%	21.83%
3	Volkswagen AG	VWAGY	OTC	17.259	10.34	9.97	-3.58%	-65.86%
4	Apple	AAPL	NASDAQ	18.667	236.00	227.63	-3.55%	28.19%
5	Facebook/Meta	META	NASDAQ	13.874	689.19	714.52	3.68%	112.43%
6	Intel	INTC	NASDAQ	14.503	19.43	19.10	-1.70%	-62.91%
7	Johnson & Johnson	JNJ	NYSE	13.750	152.15	153.12	0.64%	-10.49%
8	Roche Holdings AG	RHHBY	OTC	14.143	39.25	39.77	1.32%	-23.06%
9	Merck & Co.	MRK	NYSE	11.381	98.82	87.28	-11.68%	13.88%
10	Novartis	NVS	NYSE	9.387	104.72	106.26	1.47%	21.48%
11	Toyota	TM	NYSE	10.724	188.93	183.98	-2.62%	-71.00%
12	Pfizer	PFE	NYSE	8.336	26.52	25.74	-2.94%	-56.41%
13	Alibaba	BABA	NYSE	6.006	98.84	103.51	4.72%	-12.86%
14	GM	GM	NYSE	6.727	49.46	47.39	-4.19%	-19.17%
15	Honda	HMC	NYSE	8.806	28.34	27.87	-1.66%	-2.04%
16	Ford	F	NYSE	9.340	10.08	9.24	-8.33%	-55.51%
17	AbbVie	ABBV	NYSE	13.949	183.90	190.60	3.64%	40.77%
18	Sanofi SA	SNY	NYSE	7.750	54.34	53.35	-1.82%	6.49%
19	Cisco	CSCO	NASDAQ	6.331	60.60	62.27	2.76%	-1.74%
20	Bristol-Myers Squibb	BMY	NYSE	7.130	58.95	56.85	-3.56%	-8.82%
21	Astra Zeneca PLC	AZN	NYSE	6.056	70.76	71.99	1.74%	23.59%
22	IBM	IBM	NYSE	5.368	255.70	252.34	-1.34%	88.79%
23	Oracle	ORCL	NYSE	6.928	170.06	174.46	2.59%	100.05%
24	Eli Lilly & Co.	LLY	NYSE	8.606	811.08	878.31	8.29%	217.97%
25	Stellantis NV	STLA	NYSE	5.309	13.13	12.94	-1.45%	-33.78%
	Total			269.522	4051.25	4105.38	1.34%	45.59%
	ICT				2150.48	2150.72	0.01%	48.36%
	Automotive				300.28	291.39	-2.96%	-14.77%
	Biopharmaceutical				1600.49	1663.27	3.93%	61.76%

The R&D World Index

R&D World’s R&D Index is a weekly stock market summary of the top international companies involved in R&D. The top 25 industrial R&D spenders in 2020 were selected based on the latest listings from Schonfeld & Associates’ June 2020 R&D Ratios & Budgets. These 25 companies include pharmaceutical (10 companies), automotive (6 companies) and ICT (9 companies) who invested a cumulative total of nearly 260 billion dollars in R&D in 2019, or approximately 10% of all the R&D spent in the world by government, industries and academia combined, according to R&D World’s 2021 Global R&D Funding Forecast. The stock prices used in the R&D World Index are tabulated from NASDAQ. NYSE, and OTC common stock prices for the companies selected at the close of stock trading business on the Friday preceding the online publication of the R&D World Inde