The R&D Index:
Market Watch for the week ending August 5, 2016 closed at 1,555.52 for the 25 companies in the R&D Index. The Index was up 0.31% (or 4.8 basis points) over the week ending July 29, 2016, or a gain of 9.8% over the past six weeks. Twelve of the 25 R&D Index companies saw gains from Oracle (0.2%) to Merck (8.9%). Thirteen stocks had losses for the week from Roche (-0.2%) to Bristol-Myers Squibb (-15.4%). For the fifth consecutive week the average for the automotive and ICT R&D Index categories rose in value last week, however the average for the biopharmaceutical R&D Index category fell for the first time in five weeks.
Nine of the eleven companies in the biopharmaceutical category lost value last week, only Merck and Astra Zeneca gained value. Most of Merck’s nearly 9% gain came on Friday following the announcement of the FDA’s approval of its Keytruda cancer drug on late-Thursday.
Merck was also noted as having interest in acquiring large biotech Biogen—Allergen has also shown interest in acquiring Biogen, a leader in central nervous system drugs. Biogen has a current market value exceeding $70 billion, making an acquisition pricey for any potential buyer. Biogen also has a strong research pipeline containing drugs for experimental drugs for Alzheimers.
The 16% loss in Bristol-Myers Squibb also on Friday came from a downgrading of its stock by Morgan Stanley following the failure in late-stage clinical trials of the long-anticipated BMS Opdivo lung cancer drug.
Many of the R&D Index companies gained significant value on Friday, following the U.S. Labor Dept.’s announcement on Friday of 255,000 jobs being added to the U.S. economy in July, which exceeded the expected 180,000 job additions. Hourly wages also moved higher, increasing by $0.08 or an annualized rate of 2.6%.
The continuing stock market growth and increasing job creation adds strength to the possibility that the Federal Reserve will create another rate increase at its next meeting in September.
Economic trends in the automotive industry appear to be changing the policies of several auto companies. Japan’s strengthening yen in causing some Japanese-based manufacturers, such as Toyota, Honda and Nissan, to shift at least some of their vehicle and parts production from their Japan-based factories to their U.S.-based manufacturing facilities. This is also coupled with the anticipation of a softening of global sales expected for the second half of 2016.
|Ticker||Exchange||2015 R&D billions$||07/29/16||08/05/16||8/5/16 to 7/29/16||8/5/16 to 1/1/16|
|5||Johnson & Johnson||JNJ||NYSE||9,046||125.23||124.24||-0.79%||20.95%|
|10||Merck & Co.||MRK||NYSE||6,704||58.66||63.86||8.86%||20.90%|
|14||Astra Zeneca PLC||AZN||NYSE||5,997||34.14||34.28||0.41%||0.97%|
|19||Eli Lilly Co||LLY||NYSE||5,331||82.89||81.56||-1.60%||-3.18%|
About the R&D Index
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 2015 were selected based on the latest listings from Schonfeld & Associates’ June 2016 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 $175 billion in R&D in 2015, or approximately 11% of all the R&D spent in the world by government, industries and academia combined, according to R&D Magazine’s 2016 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 $4.1 and $12.4 billion annually on their R&D efforts.