The R&D World Index (RDWI) for the week ending January 20, 2023, closed at 2,434.01 for the 25 companies in the RDWI. The Index was down -0.80% (or -19.53 basis points) from the week ending January 13, 2023. Seven of the 25 RDWI members gained value during the past week from 0.41% (Microsoft) to 6.41% (Alphabet/Google). Eighteen of the 25 RDWI members lost value last week from -0.39% (Sanofi SA) to -5.73% (Pfizer).
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RDW Index member General Motors, Detroit, and LG Energy Solutions, Seoul, South Korea, are collaborating on developing three automotive lithium battery production factories in Ohio, Tennessee, and Michigan through their 50-50 joint venture Ultium Cells LLC with an investment of more than $6.5 billion. The companies announced last week that they are freezing indefinitely development of a fourth production facility in the U.S. GM is also talking with another battery supplier concerning a battery cell facility. Details for why this production effort was paused were not provided but LG is also involved in developing other battery production efforts with RDW members Stellantis and Honda to be built in Ontario, Canada, and Ohio, respectively.
As expected, RDW member Microsoft, Redmond, Washington, announced last week that it was laying off about 10,000 people in response to the global economic slowdown, noting that some parts of the world are already in a recession and other parts are expecting a recession. Microsoft follows Amazon which recently said it was cutting its global workforce by 18,000. Separately, Microsoft announced last week that it was moving to incorporate artificial intelligence (AI) tools from OpenAI into its products and services. This includes OpenAI’s chatbox called ChatGPT which was launched a month ago and outputs conversational answers to queries and can even create full essays. Microsoft has already invested about $1 billion into the development of OpenAI and is looking to invest more. Microsoft’s CEO Satya Nadella stated last week that every Microsoft product will have AI capabilities to completely transform the product.
Data released last week by automotive forecaster LMC Automotive, Troy, Michigan, reveals that fully electric vehicles account for more than 10% of total global production. U.S. EV production is about 5.8% of total production, with 25% in Europe. Analysts warn that the global economic slowdown could affect 2023 EV sales, but EV component shortages are easing.
Boeing Co., Chicago, announced last week that it had won a NASA contract to develop a new fuel-efficient airliner which is scheduled for first flights by 2028. The airliner would include longer, thinner wings supported from below on a single aisle fuselage. Development is being funded by $425 million from NASA over seven years and $725 million from Boeing and its partners. Operational issues including deicing and fueling would also be involved in the development.
RDW Member Johnson & Johnson, New Brunswick, New Jersey, announced last week that its strong reputation for innovation amid changing economic conditions will be maintained because of its continuing large investments in R&D. According to analysts, J&J has a different organizational model for R&D than most pharmaceutical companies. Other companies have separate discovery and development groups, but J&J’s R&D teams are set up end-to-end and organized by therapeutic areas, such as cardiology, immunology, and mental health.
Advisors from the U.S. National Institutes of Health (NIH), Bethesda, Maryland, last week proposed measures to enhance security of pathogen research. Part of that would include reviews of risky research for altering a virus in a way that could make it more transmissible or virulent where it could pose a threat to public health or national security. The advisors also proposed expanding reviews on research that might make a virus react in ways that could help it evade immunizations or resistance to drugs. The advisors also want to investigate the NIH’s links to an institute in Wuhan, China, that conducts pathogen research.
The U.S. Food and Drug Administration (FDA) last week rejected RDW member’s Eli Lilly & Co.s, Indianapolis, proposed Alzheimer’s disease treatment stating that they need more data from clinical testing. This setback could delay a potential commercial introduction of the highly anticipated drug, donanemab, by at least several months. Based on the FDA feedback, Lilly is running an additional late-stage study testing on more subjects with results expected in the second quarter. Even with new testing, the company is limited because of a new Medicare policy limiting coverage of new Alzheimer’s drugs.
Telecom supplier Ericsson AB, Stockholm, Sweden, warned last week that it faced an uncertain start to 2023 as telecom operators held off placing new 5G equipment orders amid economic uncertainty. The trend was noticed in 4Q 2022, and the company expects it to continue during the first half of 2023. The rollout of next-generation 5G technology was anticipated by Ericsson, China’s Huawei Technologies, and Finland’s Nokia Corp., as cellular operators invest in new equipment to offer customers faster wireless speeds.
Consumer price inflation in Japan reached a 41-year high of 4% in December 2022, according to data released last week from the Bank of Japan. The inflation was double the BOJ’s inflation target and above the BOJ’s 2% target for nine consecutive months. There are also signs that Japan’s core inflation is growing. Consumer prices excluding fresh food and energy jumped 3% from 2021 in December, higher that the 2.8% increase in November.
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) which 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 Index
