The R&D Index for the week ending August 3, 2018 closed at 4,679.88 for the 25 companies in the R&D Index. The Index was up 0.47% (or 21.88 basis points) from the week ending July 27, 2018. Seventeen R&D Index companies gained value last week from 0.15% (GlaxoSmithKline) to 8.91% (Apple Computer). Eight R&D Index companies lost value last week from -0.33% (Oracle) to -3.18% (Volkswagen).
R&D Index member Apple Computer was announced last Thursday as the first U.S. company to reach a market valuation of $1 trillion. For the week, Apple rose nearly 9% to close at $208. The company had its best-ever quarter ending in June for revenue in typically its weakest quarter. Other R&D Index members with large valuations, Amazon and Google, are within 12% and 16% respectively of the trillion-dollar threshold. Apple was noted as spending a record $3.7 billion in R&D in the June quarter which would put it nearly 6% above what we estimated they would spend on R&D in 2018. We now estimate that Apple will increase its R&D investments nearly 14% in 2019 to $15.9 billion, which still might be conservative. Apple’s R&D spending as a percent of revenue has been steadily rising over the past several years and is about 5.3% as of June 2018.
The Federal Reserve held its regularly scheduled meeting last Wednesday and stated that it would likely maintain its current plans for another short-term interest rate increase at its next meeting on September 25-26. Analysts noted a 70% likelihood of a fourth 2018 interest rate hike at the Fed’s December 18-19 meeting. This would bring the rates to a range of 2.25% to 2.50% by the end of 2018 from their current 1.75% to 2.00% range. The Fed expects to raise rates another three times in 2019, bringing the December 2019 rates to a range of 3.00% to 3.25%. The June 2018 CPI was 2.2% higher than that in June 2017.
R&D Index member Pfizer announced last Tuesday that it plans to increase its R&D spending to about $8 billion from its current $7.5 billion and focus on smaller projects to accelerate the delivery of potential blockbuster new products. We estimate that Pfizer could increase its R&D spending a further 3% in 2019 to about $8.2 billion. The company expects up to 30 NDEs to be approved by the FDA by 2022. The company said it is no longer interested in a large deal to merge or acquire another biopharma which has taken up its energies over the past few years.
R&D Index Week Ending August 3, 2018
| Ticker | Exchange | 2018 R&D millions U.S. $ | 07/27/18 | 08/03/18 | 8/3/18 to 7/27/18 | 8/3/18 to 12/29/17 | ||
| 1 | Amazon | AMZN | NASDAQ | 26,750 | 1,817.27 | 1,823.29 | 0.33% | 55.91% |
| 2 | Alphabet/Google | GOOGL | NASDAQ | 18,796 | 1,238.50 | 1,223.71 | -1.19% | 16.17% |
| 3 | Apple | AAPL | NASDAQ | 14,037 | 190.98 | 207.99 | 8.91% | 22.90% |
| 4 | Intel | INTC | NASDAQ | 13,702 | 47.68 | 49.63 | 4.09% | 7.52% |
| 5 | Microsoft | MSFT | NASDAQ | 13,558 | 107.68 | 108.04 | 0.33% | 25.95% |
| 6 | Roche Pharm | RHHBY | OTC | 12,284 | 30.60 | 30.91 | 1.01% | -2.12% |
| 7 | Johnson & Johnson | JNJ | NYSE | 11,493 | 131.55 | 131.95 | 0.30% | -5.56% |
| 8 | Merck & Co. | MRK | NYSE | 11,323 | 63.49 | 65.93 | 3.84% | 17.17% |
| 9 | Volkswagen AG | VLKAY | OTC | 10,915 | 34.27 | 33.18 | -3.18% | -17.95% |
| 10 | Toyota | TM | NYSE | 10,848 | 134.46 | 131.30 | -2.35% | 3.25% |
| 11 | Novartis | NVS | NYSE | 8,934 | 83.49 | 83.33 | -0.19% | -0.75% |
| 12 | Honda | HMC | NYSE | 8,180 | 30.33 | 30.66 | 1.09% | -10.04% |
| 13 | Pfizer | PFE | NYSE | 7,942 | 38.41 | 40.54 | 5.55% | 11.93% |
| 14 | Daimler | DDAIY | OTC | 7,615 | 68.81 | 67.48 | -1.93% | -20.20% |
| 15 | General Motors | GM | NYSE | 7,278 | 37.53 | 37.73 | 0.53% | -7.95% |
| 16 | Oracle | ORCL | NYSE | 7,001 | 48.63 | 48.47 | -0.33% | 2.52% |
| 17 | Bristol-Myers Squibb | BMY | NYSE | 6,981 | 56.92 | 59.16 | 3.94% | -3.46% |
| 18 | Eli Lilly Co | LLY | NYSE | 6,769 | 96.60 | 100.58 | 4.12% | 19.09% |
| 19 | GlaxoSmithKline | GSK | NYSE | 6,394 | 40.76 | 40.82 | 0.15% | 15.08% |
| 20 | Cisco | CSCO | NASDAQ | 6,009 | 42.57 | 42.83 | 0.61% | 11.83% |
| 21 | IBM | IBM | NYSE | 5,842 | 145.15 | 147.70 | 1.76% | -3.73% |
| 22 | Bayer AG | BAYN | OTC | 5,743 | 28.03 | 27.58 | -1.61% | -11.29% |
| 23 | Astra Zeneca PLC | AZN | NYSE | 5,483 | 38.23 | 38.66 | 1.12% | 11.41% |
| 24 | Qualcomm | QCOM | NASDAQ | 5,183 | 62.69 | 65.40 | 4.32% | 2.16% |
| 25 | Sanofi SA | SNY | NYSE | 4,694 | 43.37 | 43.01 | -0.83% | 0.02% |
| Total | 243,754 | 4,658.00 | 4,679.88 | 0.47% | 23.42% | |||
| Biopharmaceutical | 651.45 | 662.47 | 1.69% | 3.88% | ||||
| Automotive | 305.40 | 300.35 | -1.65% | -8.22% | ||||
| ICT | 1,883.88 | 1,893.77 | 0.52% | 14.26% | ||||
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.
