The R&D Index for the week ending December 7, 2018 closed at 4,191.80 for the 25 companies in the R&D Index. The Index was down -4.57% (or 200.60 basis points) from the week ending November 30, 2018. The stock of all 25 R&D Index members lost value from -0.71% (Bristol-Myers Squibb) to -10.91% (GlaxoSmithKline).
R&D Index leader Amazon continues to dominate the European (and U.S.) cloud market with a global market share of 51.8% according to research firm Gartner. According to a study last week in the Wall Street Journal, Chinese firm Alibaba (with 4.6% global market share) is attempting to break into the European cloud market. Alibaba opened its second and third European cloud-computing centers, both in London, last month. Amazon opened a new data center in Italy last month and has stated it will add jobs at its UK division.
Investor concerns about the global economic outlook and the U.S.-China trade dispute were the primary factors behind last week’s stock selloff. A slightly weaker jobs report from the Dept. of Labor for November than in past months (155,000 new hires versus a three-month average of 170,000 and an expected rate of 198,000 for November by economists) also added to the stock selloff. While the jobs data was the weakest in a year, it still was the 98th consecutive month of job gains. The unemployment rate held at 3.7%. On Friday, the University of Michigan released its preliminary index of consumer sentiment as 97.5, higher than the expected 97.0. As long as job and income growth remain strong, consumers will ignore rising prices and interest rates, according to the UM report.
The reality of a global economic slowdown should not surprise anyone. Strong growth in 2018 and a slowdown in 2019 have been forecast for several years. Current economic forecasts actually predict the U.S. GDP to fall to 2.5% in 2019 (from 2.9% in 2018) and fall further to 2.0% in 2020. The average for all advanced economies is forecast by the IMF to drop to 2.1% in 2019.
An announcement by London-based financial analyst Dealogic last week revealed that more inbound mergers and acquisitions (M&A) were made in India in 2018 ($38 billion) than were made in China ($32 billion). This is the first time that India has beat out China in this area. India’s economic growth is expected to exceed 7% in the coming years, while China’s growth is slowing and expected to fall to 6.2% in 2019 from 6.6% in 2018. India’s growth is forecast by the IMF to grow by 7.4% in 2019 from 7.3% in 2018.
| R&D Index Week Ending December 7, 2018 |
| Ticker | Exchange | 2018 R&D millions U.S. $ | 11/30/18 | 12/07/18 | 12/7/18 to 11/30/18 | 12/7/18 to 12/29/17 | |
| Amazon | AMZN | NASDAQ | 26,750 | 1,690.17 | 1,629.13 | -3.61% | 39.30% |
| Alphabet/Google | GOOGL | NASDAQ | 18,796 | 1,109.65 | 1,036.58 | -6.58% | -1.60% |
| Apple | AAPL | NASDAQ | 14,037 | 178.58 | 168.49 | -5.65% | -0.44% |
| Intel | INTC | NASDAQ | 13,702 | 49.31 | 46.24 | -6.23% | 0.17% |
| Microsoft | MSFT | NASDAQ | 13,558 | 110.89 | 104.82 | -5.47% | 22.54% |
| Roche Pharm | RHHBY | OTC | 12,284 | 32.43 | 31.50 | -2.87% | -0.25% |
| Johnson & Johnson | JNJ | NYSE | 11,493 | 146.90 | 145.43 | -1.00% | 4.09% |
| Merck & Co. | MRK | NYSE | 11,323 | 79.34 | 76.72 | -3.30% | 36.34% |
| Volkswagen AG | VWAGY | OTC | 10,915 | 16.58 | 15.85 | -4.40% | -60.81% |
| Toyota | TM | NYSE | 10,848 | 121.48 | 119.97 | -1.24% | -5.66% |
| Novartis | NVS | NYSE | 8,934 | 91.53 | 87.08 | -4.86% | 3.72% |
| Honda | HMC | NYSE | 8,180 | 28.17 | 26.89 | -4.54% | -21.10% |
| Pfizer | PFE | NYSE | 7,942 | 46.23 | 43.92 | -5.00% | 21.26% |
| Daimler | DDAIY | OTC | 7,615 | 56.46 | 53.00 | -6.13% | -37.32% |
| General Motors | GM | NYSE | 7,278 | 37.95 | 34.69 | -8.59% | -15.37% |
| Oracle | ORCL | NYSE | 7,001 | 48.76 | 46.00 | -5.66% | -2.71% |
| Bristol-Myers Squibb | BMY | NYSE | 6,981 | 53.46 | 53.08 | -0.71% | -13.38% |
| Eli Lilly Co | LLY | NYSE | 6,769 | 118.64 | 113.58 | -4.26% | 34.48% |
| GlaxoSmithKline | GSK | NYSE | 6,394 | 41.87 | 37.30 | -10.91% | 5.16% |
| Cisco | CSCO | NASDAQ | 6,009 | 47.87 | 46.44 | -2.99% | 21.25% |
| IBM | IBM | NYSE | 5,842 | 124.27 | 119.34 | -3.97% | -22.21% |
| Bayer AG | BAYN | OTC | 5,743 | 18.43 | 18.10 | -1.79% | -41.78% |
| Astra Zeneca PLC | AZN | NYSE | 5,483 | 39.82 | 38.18 | -4.12% | 10.03% |
| Qualcomm | QCOM | NASDAQ | 5,183 | 58.26 | 55.99 | -3.90% | -12.54% |
| Sanofi SA | SNY | NYSE | 4,694 | 45.35 | 43.48 | -4.12% | 1.12% |
| Total | 243,754 | 4,392.40 | 4,191.80 | -4.57% | 10.55% | ||
| Biopharmaceutical | 714.00 | 688.37 | -3.59% | 7.94% | |||
| Automotive | 260.64 | 250.40 | -3.93% | -23.48% | |||
| ICT | 1,727.59 | 1,623.90 | -6.00% | -2.02% | |||
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 2017 were selected based on the latest listings from Schonfeld & Associates’ June 2018 R&D Ratios & Budgets. These 25 companies include pharmaceutical (11 companies), automotive (5), ICT (8) and conglomerate (1) organizations who invested a cumulative total of more than $209 billion in R&D in 2017, or approximately 10% of all the R&D spent in the world by government, industries and academia combined, according to R&D Magazine’s 2018 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 Amazon, Alphabet/Google, Microsoft, Intel, Apple, Volkswagen AG, Roche Pharma, Toyota, Johnson & Johnson, Novartis, General Motors, Pfizer, Bristol-Myers Squibb, Cisco, Qualcomm, Oracle, Honda Motor Company, Astra Zeneca plc, Merck & Company, Daimler, Bayer AG, Sanofi SA, IBM, GlaxoSmithKline and Eli Lilly Co. 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 $4.5 and $17 billion annually on their R&D efforts.
