The R&D Market Pulse Index for the week ending July 28, 2017 closed at 3,492.35 for the 25 companies in the R&D Index. The Index was down -1.75% (or 62.38 basis points) over the week ending July 21, 2017. Four R&D Index companies gained value last week from 0.51% (Honda) to 2.70% (Toyota). Twenty-one R&D Index companies lost value last week from -0.28% (Novartis) to -11.10% (Astra Zeneca PLC).
Astra Zeneca’s dramatic drop in value came as it announced the results of a study showing that a combination of two injectable immunotherapy drugs were no more effective at shrinking tumors in patients with advanced lung cancer than traditional chemotherapy. Analysts noted that this drop was an over-reaction and that all four of the large immuno-oncology drug firms (all R&D Index members: Roche, Merck, Bristol-Myers Squibb and Astra Zeneca) have had cancer trial set backs in recent months. Additionally, Astra Zeneca still has a number of drugs in clinical trials with promising results.
The Dept. of Commerce reported last Friday that the U.S. economy grew at a 2.6% growth in GDP in the second quarter, marking the ninth consecutive year of economic expansion, the third longest since World War II, but also the slowest. GDP has averaged 2.1% annual growth over those nine years. This, however is less than the average 3.6% annual growth seen in the 1990s. Also reporting last week, an index tracking confidence in the current economy jumped to 113.4, its highest level since July 2005. The longest economic growth periods seen were 10 years beginning in 1991 and 8.5 years beginning in 1961.
A pickup in global growth and the weakening dollar were also noted as helping to support the year-long stock market rally for companies that do business overseas by boosting their profits. These earnings have helped maintain U.S. economic growth, despite the political uncertainty in the U.S. and overseas.
The U.S. Food and Drug Administration (FDA) noted last week that they want tobacco companies to lower the nicotine content in cigarettes so that they are no longer addictive. Tobacco companies Altria Group (Marlboro) and British American Tobacco (Camel) fell 9.5% and 6.8% on the news. Philip Morris actual rose 0.3% and Imperial fell 3.8%.
Royal Dutch Shell issued a report last week that it is preparing for a global situation where crude oil prices may never regain pre-crash prices ($100/barrel) and petroleum demand will continue to decline or “lower forever” as they stated. This situation is especially strong in Europe where local and national governments are working to phase out vehicles with internal combustion engines and encourage vehicle electrification to reduce overall carbon emissions.
R&D Index Week Ending July 28, 2017
|Ticker||Exchange||2017 R&D billions$||07/21/17||07/28/17||7/28/17 to 7/21/17||7/28/17 to 1/1/17|
|Johnson & Johnson||JNJ||NYSE||9,060||135.31||131.85||-2.56%||14.44%|
|Astra Zeneca PLC||AZN||NYSE||6,363||34.05||30.27||-11.10%||10.80%|
|Merck & Co.||MRK||NYSE||5,759||62.63||64.11||2.36%||8.90%|
|Eli Lilly Co||LLY||NYSE||4,489||84.66||83.10||-1.84%||12.98%|
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 2017 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 2017 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.