The R&D Index: Market Watch for the week ending Sept. 30, 2016 closed at 1531.82 for the 25 companies in the R&D Index. The Index was down 0.38 percent (or 5.8 basis points) over the week ending Sept. 23, 2016. Eight companies gained value last week from 0.30 percent (Apple and Microsoft) to 9.16 percent (Qualcomm). Seventeen companies lost value from -0.42 percent (Sanofi) to -4.53 percent (Bristol-Myers Squibb).
The big R&D Index gainer for the week, Qualcomm (+9.2 percent), rose in value based on speculation that it will soon acquire NXP Semiconductors NV, an IC fabricator based in the Netherlands for a rumored $30 billion. The deal is expected to take up to three months to finalize and could fail, but NXP stock also rose 17 percent when the discussions were made public in the Wall Street Journal on Thursday indicating both companies’ stock holders approve of the possible acquisition. NXP, founded 60 years ago as Phillips Semiconductors, fabricates semiconductor devices for automotive systems, identification cards and transit cards. NXP acquired Austin, Texas-based Freescale Semiconductors in 2015. Freescale was formed in 2004 by the divestiture of the Semiconductor Products Sector of Motorola. Guido Dierick, NXP’s general counsel and its Netherlands chief, in interviews concerning the possible Qualcomm acquisition indicated that the overall semiconductor industry is heavily fragmented and he expects to see more consolidation over the next several years. Qualcomm is expected to invest $6.7 billion in R&D in 2017, a 6.6 percent increase over the $6.3 billion it invested in 2016. NXP is expected to invest $1.1 billion in R&D in 2017, a 9.3 percent increase over the $0.98 billion it invested in 2016.
Congress avoided a partial government shutdown at midnight on Oct. 1, by passing a short-term spending bill (referred to as a continuing resolution or CR) last Wednesday, which will support government operations through early December. Add-ons to the CR included full-year spending for the Veterans Administration, flood-assistance and funds for Zika virus research, Congressional leaders will also have to decide in November after the national elections, whether to pass another temporary budget extension which would go into the next administration, or to pass a full fiscal year budget (“omnibus”) as it has done in previous years. Omnibus spending bills generally kept spending at the level of the previous fiscal year without any increases. This type of budgeting has been detrimental to R&D spending and has hurt the overall country’s science and engineering research programs.
In other news, R&D Index member Pfizer announced last week that it has decided to not split the company into two divisions—one for new drugs and one for established drugs. Officials did not rule out pursuing this option in the future. The effort to split the company into two parts is estimated to already have cost Pfizer more than $600 million.
| Ticker | Exchange | 2015 R&D billions$ | 09/23/16 | 09/30/16 | 9/30/16 to 9/23/16 | 9/30/16 to 1/1/16 | ||
| 1 | Microsoft | MSFT | NASDAQ | 12,448 | 57.43 | 57.60 | 0.30% | 3.82% |
| 2 | Intel | INTC | NASDAQ | 12,128 | 37.19 | 37.75 | 1.51% | 9.58% |
| 3 | Roche Holdings | RHHBY | OTC | 10,242 | 31.54 | 30.97 | -1.81% | -10.15% |
| 4 | Toyota | TM | NYSE | 9,112 | 117.66 | 116.06 | -1.36% | -5.67% |
| 5 | Johnson & Johnson | JNJ | NYSE | 9,046 | 118.81 | 118.13 | -0.57% | 15.00% |
| 6 | Novartis | NVS | NYSE | 8,935 | 81.48 | 78.96 | -3.09% | -8.27% |
| 7 | Apple | AAPL | NASDAQ | 8,397 | 112.71 | 113.05 | 0.30% | 7.40% |
| 8 | Pfizer | PFE | NYSE | 7,690 | 34.26 | 33.87 | -1.14% | 4.57% |
| 9 | General Motors | GM | NYSE | 7,500 | 32.12 | 31.77 | -1.09% | -6.59% |
| 10 | Merck & Co. | MRK | NYSE | 6,704 | 62.96 | 62.41 | -0.87% | 18.16% |
| 11 | Ford Motor | F | NYSE | 6,700 | 12.17 | 12.07 | -0.82% | -14.34% |
| 12 | Cisco | CSCO | NASDAQ | 6,411 | 31.34 | 31.72 | 1.21% | 16.71% |
| 13 | Oracle | ORCL | NYSE | 6,042 | 39.23 | 39.28 | 0.13% | 7.53% |
| 14 | Astra Zeneca PLC | AZN | NYSE | 5,997 | 33.97 | 32.86 | -3.27% | -3.21% |
| 15 | Honda | HMC | NYSE | 5,990 | 29.49 | 28.92 | -1.93% | -9.43% |
| 16 | Bristol-Myers Squibb | BMY | NYSE | 5,920 | 56.48 | 53.92 | -4.53% | -21.63% |
| 17 | Qualcomm | QCOM | NASDAQ | 5,833 | 62.75 | 68.50 | 9.16% | 37.05% |
| 18 | Sanofi SA | SNY | NYSE | 5,519 | 38.35 | 38.19 | -0.42% | -10.46% |
| 19 | Eli Lilly Co | LLY | NYSE | 5,331 | 81.16 | 80.26 | -1.11% | -4.72% |
| 20 | GlaxoSmithKline | GSK | NYSE | 5,250 | 43.42 | 43.13 | -0.68% | 6.89% |
| 21 | IBM | IBM | NYSE | 5,247 | 154.98 | 158.85 | 2.50% | 15.46% |
| 22 | Daimler | DDAIY | OTC | 5,169 | 63.52 | 62.71 | -1.28% | -19.50% |
| 23 | Siemens | SIE | XETRA | 4,929 | 106.20 | 104.20 | -1.88% | 15.93% |
| 24 | Bayer AG | BAYN | XETRA | 4,649 | 91.48 | 89.43 | -2.24% | -23.04% |
| 25 | Ericsson | ERIC | NASDAQ | 4,124 | 6.93 | 7.21 | 4.04% | -24.97% |
| Total | 175,313 | 1537.63 | 1531.82 | -0.38% | 0.67% | |||
| Biopharmaceutical | 673.91 | 662.13 | -1.75% | -4.68% | ||||
| Automotive | 254.96 | 251.53 | -1.35% | -10.48% | ||||
| ICT | 495.63 | 506.75 | 2.24% | 13.51% | ||||
About the R&D Index/Market Pulse
R&D Magazine’s R&D Index is a weekly stock market summary of the top international companies involved in research and development. The top 25 industrial spenders of R&D in 2014 were selected based on the latest listings from Schonfeld & Associates’ June 2015 R&D Ratios & Budgets. These 25 companies include pharmaceutical (11 companies), automotive (5), ICT (7) and conglomerate (2) organizations who invested a cumulative total of more than $170 billion in R&D in 2014, or approximately 10.8% of all the R&D spent in the world by government, industries and academia combined, according to R&D Magazine’s 2014 Global R&D Funding Forecast. The stock prices used in the R&D Index are tabulated from NASDAQ, NYSE, XETRA and OTC common stock prices (in U.S. dollars) for the companies selected at the close of stock trading business on the Friday preceding the publication of the R&D Index in R&D Magazine’s R&D Daily eNewsletter.
The companies used in the R&D Index include Microsoft, Intel, Roche Holdings, Novartis, Johnson & Johnson, Pfizer, Toyota Motor, General Motors, Merck & Co., Ford Motor, Cisco, Apple Computer, Sanofi SA, Qualcomm, IBM, Astra Zeneca plc, Honda Motor, Daimler, Oracle, GlaxoSmithKline, Siemens, Eli Lilly Co., Ericsson, Bristol-Myers Squibb and Bayer AG. Stock prices are based on those stocks traded on the U.S. exchanges. R&D Index trends (in the stock prices) are just one indicator of the amount of capital available to these high-technology companies to invest in R&D and should not be implied to indicate the absolute value of R&D investments made by these organizations. The companies chosen for the R&D Index have very large sophisticated internal and global R&D organizations with each company investing between $4.3 and $11.7 billion annually on their R&D efforts.
