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R&D Market Pulse: Apple First to a Trillion, More to Follow

By R&D Editors | August 6, 2018

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.

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R&D and inflation both increasing globally, in this week’s R&D Power Index
2021 R&D Global Funding Forecast

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