The R&D Market Pulse Index for the week ending May 12, 2017 closed at 1,641.79 for the 25 companies in the R&D Index. The Index was down -1.27% (or 21.04 basis points) over the week ending May 5, 2017. Nine Index companies gained value last week from 0.11% (Johnson & Johnson) to 11.62% (Astra Zeneca). Sixteen Index companies lost value last week, from -0.22% (Bristol-Myers Squibb) to -3.50% (Intel and Honda).
Astra Zeneca’s significant stock rise was attributed to successful stage 3 trial results of its imuno-oncology drug Imfinzi, which reduces the risk of worsening cancer maladies or death in stage 3 lung cancer patients who have undergone chemotherapy with radiation treatments. The treatment costs are estimated at $150,000/year with a U.S. patient base of 100,000. AZ’s announcement came two days after Merck’s immuno-oncology drug Keytruda was granted accelerated approval to treat advanced lung cancer in combination with chemotherapy. AZ says it has a two- to three-year lead on its competitors which include Merck, Bristol-Myers Squibb and Roche.
A report released last week by executive search firm Korn/Ferry International noted that the average base pay for 2017 college graduates rose 3% over 2016 to $49,785, the highest level in at least a decade. The top paying profession was for software developers at $65,232 followed by engineers ($63,036) and scientists/researchers ($58,773).
Index member Toyota last week forecast a 21% decline in profits for the year ending March 2017. They also predicted that profits for the current fiscal year ending in March 2018 are likely to fall another 20%. Reasons for the profit decline included a change in buyer preferences from the sedan market, which Toyota has long dominated, to larger vehicles, such as SUVs and light trucks which U.S. manufacturers are better positioned to produce and sell. Demand for larger vehicles is being fed by low gasoline prices and rising income levels. Toyota’s lower profits—three years in a row now—are likely to limit their R&D spending capabilities which is troubling in a period of electric vehicle and autonomous design needs for the next several years. Toyota’s projected R&D spending, before the current announcement, was already flat at $9.1 billion in 2015, 2016 and 2017. The lower profit projections are likely to depress 2017 and 2018 R&D investments.
At the other end of the scale, VW (the current global vehicle production leader) is claiming to improve its U.S. profits as a result of up to 10 new SUVs and electric vehicles being introduced over the next three years (by 2020), according to a statement last week by its CEO.
R&D Market Pulse Index
| Ticker | Exchange | 2015 R&D billions$ | 05/05/17 | 05/12/17 | 5/12/17 to 5/5/17 | 5/12/17 to 1/1/16 | |
| Microsoft | MSFT | NASDAQ | 12,448 | 69.00 | 68.38 | -0.90% | 23.25% |
| Intel | INTC | NASDAQ | 12,128 | 36.82 | 35.53 | -3.50% | 3.14% |
| Roche Pharm | RHHBY | OTC | 10,242 | 34.22 | 33.75 | -1.37% | -2.09% |
| Toyota | TM | NYSE | 9,112 | 109.91 | 106.46 | -3.14% | -13.48% |
| Johnson & Johnson | JNJ | NYSE | 9,046 | 123.51 | 123.64 | 0.11% | 20.37% |
| Novartis | NVS | NYSE | 8,935 | 77.82 | 80.48 | 3.42% | -6.51% |
| Apple | AAPL | NASDAQ | 8,397 | 148.96 | 156.10 | 4.79% | 48.30% |
| Pfizer | PFE | NYSE | 7,690 | 33.48 | 33.01 | -1.40% | 1.91% |
| General Motors | GM | NYSE | 7,500 | 33.77 | 33.62 | -0.44% | -1.15% |
| Merck & Co. | MRK | NYSE | 6,704 | 63.97 | 63.57 | -0.63% | 20.35% |
| Ford Motor | F | NYSE | 6,700 | 11.14 | 10.92 | -1.97% | -22.50% |
| Cisco | CSCO | NASDAQ | 6,411 | 34.39 | 33.45 | -2.73% | 23.16% |
| Oracle | ORCL | NYSE | 6,042 | 45.58 | 45.08 | -1.10% | 23.41% |
| Astra Zeneca PLC | AZN | NYSE | 5,997 | 30.46 | 34.00 | 11.62% | 0.15% |
| Honda | HMC | NYSE | 5,990 | 29.14 | 28.12 | -3.50% | -11.93% |
| Bristol-Myers Squibb | BMY | NYSE | 5,920 | 55.15 | 55.03 | -0.22% | -20.01% |
| Qualcomm | QCOM | NASDAQ | 5,833 | 54.93 | 55.32 | 0.71% | 10.68% |
| Sanofi SA | SNY | NYSE | 5,519 | 49.12 | 49.21 | 0.18% | 15.38% |
| Eli Lilly Co | LLY | NYSE | 5,331 | 82.51 | 80.19 | -2.81% | -4.81% |
| GlaxoSmithKline | GSK | NYSE | 5,250 | 41.78 | 43.26 | 3.54% | 7.21% |
| IBM | IBM | NYSE | 5,247 | 155.05 | 150.37 | -3.02% | 9.30% |
| Daimler | DDAIY | OTC | 5,169 | 68.52 | 69.07 | 0.80% | -11.34% |
| Siemens | SIE | XETRA | 4,929 | 132.00 | 130.00 | -1.52% | 44.64% |
| Bayer AG | BAYN | XETRA | 4,649 | 115.10 | 116.75 | 1.43% | 0.47% |
| Ericsson | ERIC | NASDAQ | 4,124 | 6.62 | 6.48 | -2.11% | -32.57% |
| Total | 175,313 | 1662.83 | 1641.79 | -1.27% | 7.90% | ||
| Biopharmaceutical | 707.12 | 712.89 | 0.82% | 2.62% | |||
| Automotive | 252.48 | 248.19 | -1.70% | -11.67% | |||
| ICT | 544.73 | 544.23 | -0.09% | 21.90% | |||
About the R&D Market Pulse Index
The R&D Market Pulse 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 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.
About the author
Tim Studt has served in a variety of senior editorial positions at Advantage Business Media (ABM) for the past 27 years, most recently as Editor-in-Chief of R&D Magazine and Laboratory Design. He is the author of the annual Global Funding Forecast, lab trend reports and is a regular editorial contributor. Tim writes R&D Market Pulse published each Monday on the R&D website and serves as an editorial consultant for the R&D 100 Awards, Lab of the Year and special projects for the ABM Science Group.
