The R&D Index for the holiday-shortened week ending January 4, 2019 closed at 4,130.27 for the 25 companies in the R&D Index. The Index was up 3.42% (or 136.70 basis points) from the week ending December 28, 2018. The stock of 20 R&D Index members gained value from 0.09% (Pfizer) to 7.51% (Bayer AG). The stock of five R&D Index members lost value from -0.30% (Sanofi SA) to -7.95% (Bristol-Myers Squibb).
Last week’s negative stock swing was triggered on Thursday by the ISM (Institute for Supply Management) December Index being the lowest since 2016 and Apple’s lower than expected 1Q sales projections, along with Monday’s news concerning a drop in Chinese manufacturing in December. The positive stock swing on Friday was triggered by a 312,000 rise in non-farm payrolls in December and the Fed chairman Jerome Powell’s remarks suggesting a break in interest rate increases over the next several months (and possibly no rate increases at all in 2019).
Powell, reinforcing the Fed’s recent spate of interest rate increases, stated that “U.S. data so far remain on track to sustain recent economic momentum.” He implied that the recent investor sell-off has been triggered by investors who have placed greater weight on risks to the economic outlook that haven’t yet shown up substantially in U.S. economic data.
The net result of these countering news items was a 3.4% increase for the week (DJIA), which had swung as low as nearly -400 basis points from the previous week by close of trading on Thursday. Investor nervousness relating to the slowing global economy (particularly in China), trade issues and financial policy vacillations are expected to continue these volatility effects.
A report issued last week by energy consulting firm Rystad Energy AS noted that two-thirds of the U.S. shale wells drilled over the past five years may have overly optimistic production rates that are 10% more than originally forecast. This could threaten U.S. energy independence.
R&D Index member BMS fell nearly 8% for the week following news on Thursday of its intent to purchase cancer-drug manufacturer Celgene for $74 billion—the third largest ever biopharm M&A. Celgene’s stock rose 25% on the news on a dramatically down day (Thursday). Analysts expect this deal is just the first of several in this industry to occur in 2019, following a relatively quiet year for these types of deals in 2018.
| R&D Index Week Ending January 4, 2019 |
| Ticker | Exchange | 2018 R&D millions U.S. $ | 12/28/18 | 01/04/19 | 1/4/19 to 12/28/18 | 1/4/19 to 12/31/18 | ||
| 1 | Amazon | AMZN | NASDAQ | 26,750 | 1,478.02 | 1,575.39 | 6.59% | 4.89% |
| 2 | Alphabet/Google | GOOGL | NASDAQ | 18,796 | 1,046.68 | 1,078.07 | 3.00% | 3.17% |
| 3 | Apple | AAPL | NASDAQ | 14,037 | 156.23 | 148.26 | -5.10% | -5.97% |
| 4 | Intel | INTC | NASDAQ | 13,702 | 46.75 | 47.22 | 1.00% | 0.62% |
| 5 | Microsoft | MSFT | NASDAQ | 13,558 | 100.39 | 101.93 | 1.53% | 0.35% |
| 6 | Roche Pharm | RHHBY | OTC | 12,284 | 30.84 | 31.80 | 3.11% | 2.32% |
| 7 | Johnson & Johnson | JNJ | NYSE | 11,493 | 127.27 | 127.83 | 0.44% | -0.97% |
| 8 | Merck & Co. | MRK | NYSE | 11,323 | 75.37 | 76.27 | 1.19% | -0.27% |
| 9 | Volkswagen AG | VWAGY | OTC | 10,915 | 15.83 | 16.02 | 1.20% | 2.69% |
| 10 | Toyota | TM | NYSE | 10,848 | 116.34 | 119.73 | 2.91% | 3.17% |
| 11 | Novartis | NVS | NYSE | 8,934 | 85.26 | 85.89 | 0.74% | 0.21% |
| 12 | Honda | HMC | NYSE | 8,180 | 26.41 | 27.31 | 3.41% | 3.25% |
| 13 | Pfizer | PFE | NYSE | 7,942 | 42.96 | 43.00 | 0.09% | -1.49% |
| 14 | Daimler | DDAIY | OTC | 7,615 | 52.55 | 53.89 | 2.55% | 2.12% |
| 15 | General Motors | GM | NYSE | 7,278 | 33.92 | 33.33 | -1.74% | -0.36% |
| 16 | Oracle | ORCL | NYSE | 7,001 | 44.82 | 46.71 | 1.86% | 3.46% |
| 17 | Bristol-Myers Squibb | BMY | NYSE | 6,981 | 50.94 | 46.89 | -7.95% | -9.79% |
| 18 | Eli Lilly Co | LLY | NYSE | 6,769 | 114.20 | 114.66 | 0.40% | -0.92% |
| 19 | GlaxoSmithKline | GSK | NYSE | 6,394 | 38.15 | 38.62 | 1.23% | 1.07% |
| 20 | Cisco | CSCO | NASDAQ | 6,009 | 42.77 | 42.92 | 0.35% | -0.95% |
| 21 | IBM | IBM | NYSE | 5,842 | 113.03 | 117.32 | 3.80% | 3.21% |
| 22 | Bayer AG | BAYN | OTC | 5,743 | 17.31 | 18.61 | 7.51% | 5.92% |
| 23 | Astra Zeneca PLC | AZN | NYSE | 5,483 | 37.77 | 39.18 | 3.73% | 3.16% |
| 24 | Qualcomm | QCOM | NASDAQ | 5,183 | 56.81 | 56.60 | -0.37% | -0.54% |
| 25 | Sanofi SA | SNY | NYSE | 4,694 | 42.95 | 42.82 | -0.30% | -1.36% |
| Total | 243,754 | 3,993.57 | 4,130.27 | 3.42% | 2.55% | |||
| Biopharmaceutical | 663.02 | 665.57 | 0.38% | -0.80% | ||||
| Automotive | 245.05 | 250.28 | 2.13% | 2.40% | ||||
| ICT | 1,607.48 | 1,639.03 | 1.96% | 1.79% | ||||
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.
