The R&D Market Pulse Index for the week ending September 22, 2017 closed at 3,464.62 for the 25 companies in the R&D Index. The Index was down 0.67% (or 23.23 basis points) over the week ending September 15, 2017. Seventeen R&D Index companies gained value last week from 0.49% (Intel) to 4.37% (Astra Zeneca). Eight R&D Index companies lost value last week from -0.14% (Bayer AG) to -5.00% (Apple).
At its regular September meeting last Wednesday, the Federal Reserve indicated that it is still on track to implement a third interest rate increase before the end of the year—at its Oct 31/Nov 1 or (most likely) its Dec 12-13 regularly scheduled meeting. The Fed also unanimously agreed to reduce its securities portfolio starting in October. The Fed’s approximately $4.2 trillion in holdings were created following the 2008-2010 economic recession to lower borrowing costs and stimulate the economy. The Fed also expects to see three rate increases in 2018, two in 2019 and one in 2020 with little need for further increases. Assuming these projections occur, the short-term interest rate at the end of 2020 would be 3.00% to 3.25% compared to its current rate range of 1.00% to 1.25%.
Toshiba Corp.’s board agreed last week to sell its memory-chip business to U.S. private-equity firm Bain Capital for approximately $18 billion. Bain’s members include Apple Inc., Seagate Technology, Dell Technologies and Kingston Technology. The sale would provide Apple with a secure source for memory chips, putting it on a competitive level with smart-phone rival Samsung, the global memory-chip leader.
Harvard Univ. last week announced “disappointing” 8.1% return on its $37.1 billion endowment for the fiscal year ending June 30, 2017. While improved from the -2.0% return in FY2016, the return still lags behind the average 12.7% returns from the more than 400 institutions tracked by Cambridge Associates. MIT, for example, posted a 14.3% return for its $14.8 billion endowment. Harvard has the largest endowment of those 400+ institutions, almost 50% more than second place Yale. Endowments are used by universities to fund various activities including R&D and faculty salaries. Harvard has an annual research budget of $1.014 billion, the 10th largest academic research budget.
Corporations plan to keep budgets for employee raises relatively flat in 2018, while continuing to budget more monies to performance-based pay, according to survey results released last week from consulting firm Aon Hewitt. Despite low unemployment figures and increased competition for skilled workers (including researchers), companies are hesitant to implement across the board pay raises. An average of 12.5% of payroll budgets will be devoted to incentive and bonus pay in 2018, according to the survey.
| R&D Index Week Ending September 22, 2017 | ||||||
| Ticker | Exchange | 2017 R&D billions$ | 09/15/17 | 09/22/17 | 9/22/17 to 9/15/17 | 9/22/17 to 1/1/17 | ||
| 1 | Amazon | AMZN | NASDAQ | 17,774 | 986.79 | 955.10 | -3.21% | 27.37% |
| 2 | Alphabet/Google | GOOGL | NASDAQ | 15,845 | 935.29 | 943.26 | 0.85% | 19.03% |
| 3 | Microsoft | MSFT | NASDAQ | 13,987 | 75.31 | 74.41 | -1.20% | 19.75% |
| 4 | Intel | INTC | NASDAQ | 13,499 | 37.00 | 37.18 | 0.49% | 2.51% |
| 5 | Apple | AAPL | NASDAQ | 11,506 | 159.88 | 151.89 | -5.00% | 31.14% |
| 6 | Volkswagen AG | VLKAY | OTC | 11,260 | 33.59 | 34.57 | 2.92% | 20.54% |
| 7 | Roche Pharm | RHHBY | OTC | 10,174 | 31.72 | 32.02 | 0.95% | 12.23% |
| 8 | Toyota | TM | NYSE | 9,170 | 117.69 | 120.63 | 2.50% | 2.93% |
| 9 | Johnson & Johnson | JNJ | NYSE | 9,060 | 134.45 | 131.39 | -2.28% | 14.04% |
| 10 | Novartis | NVS | NYSE | 7,870 | 85.58 | 86.16 | 0.68% | 18.23% |
| 11 | General Motors | GM | NYSE | 7,468 | 38.88 | 39.42 | 1.39% | 13.15% |
| 12 | Pfizer | PFE | NYSE | 7,288 | 35.36 | 35.96 | 1.70% | 10.71% |
| 13 | Bristol-Myers Squibb | BMY | NYSE | 6,942 | 62.48 | 63.36 | 1.41% | 8.42% |
| 14 | Cisco | CSCO | NASDAQ | 6,827 | 32.44 | 33.37 | 2.87% | 10.42% |
| 15 | Qualcomm | QCOM | NASDAQ | 6,723 | 52.19 | 52.09 | -0.19% | -20.11% |
| 16 | Oracle | ORCL | NYSE | 6,702 | 48.74 | 48.16 | -1.19% | 25.25% |
| 17 | Honda | HMC | NYSE | 6,519 | 29.34 | 29.91 | 1.94% | 2.47% |
| 18 | Astra Zeneca PLC | AZN | NYSE | 6,363 | 32.53 | 33.95 | 4.37% | 24.27% |
| 19 | Merck & Co. | MRK | NYSE | 5,759 | 66.16 | 65.13 | -1.56% | 10.63% |
| 20 | Daimler | DDAIY | OTC | 5,084 | 66.25 | 66.60 | 0.53% | -5.82% |
| 21 | Bayer AG | BAYN | XETRA | 4,880 | 110.25 | 110.10 | -0.14% | 11.07% |
| 22 | Sanofi SA | SNY | NYSE | 4,755 | 48.43 | 50.34 | 3.94% | 24.48% |
| 23 | IBM | IBM | NYSE | 4,628 | 144.82 | 145.13 | 0.21% | -12.57% |
| 24 | GlaxoSmithKline | GSK | NYSE | 4,508 | 40.24 | 40.58 | 0.84% | 5.38% |
| 25 | Eli Lilly Co | LLY | NYSE | 4,489 | 82.44 | 83.91 | 1.78% | 14.09% |
| Total | 209,080 | 3,487.85 | 3,464.62 | -0.67% | 16.17% |
| Biopharmaceutical | 729.64 | 732.90 | 0.45% | 13.57% | |
| Automotive | 285.75 | 291.13 | 1.88% | 3.74% | |
| ICT | 1,485.67 | 1,485.49 | -0.01% | 13.70% | |
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.
