The R&D Index for the week ending July 27, 2018 closed at 4,658.00 for the 25 companies in the R&D Index. The Index was up 1.80% (or 82.31 basis points) from the week ending July 20, 2018. Twenty R&D Index companies gained value last week from 0.20% (Amazon) to 9.19% (Eli Lilly). Five R&D Index companies lost value last week from -0.24% (Apple Computer) to -8.15% (Intel).
The U.S. Dept. of Commerce reported on Friday that the U.S. economy grew at a seasonally adjusted rate of 4.1% in 2Q, the largest growth period since 3Q 2014. Even when adjusting for trade events, the overall growth rate still exceeds 4%, according to analysts. The Federal Reserve is expected to maintain its current short-term interest rates at its regularly scheduled meeting on August 1, but raise rates to a range between 2.0% and 2.25% at its meeting in September for its third increase in 2018. Analysts expect the strong growth seen over the past several quarters to cool as consumer spending slows as the boost seen from the tax cuts fades.
R&D Index member Qualcomm stated last week that it has ceased its plans to purchase for $44 billion Dutch semiconductor maker NXP, following its failure to obtain Chinese regulatory approval. The trade tensions between the U.S. and China likely became a sticking point in the negotiations. Qualcomm stock rose following the announcement and closed at 7% up for the week. Qualcomm is scheduled to spend $4.95 billion on R&D in 2019, down 4.4% from its $5.18 billion invested in 2018. NXP is expected to spend $2.24 billion on R&D in 2019, up more than 15% from its R&D spending in 2018.
R&D member Intel lost an appeals court ruling with the Internal Revenue Service concerning how companies divide expenses between their domestic and foreign operations. Intel is considering its options for further judicial review. Intel stock slid more than 8% for the week as a result.
R&D Index member General Motors, along with Ford Motor and Fiat Chrysler all lowered their 2018 operating profits last week by more than 10% each primarily due to the 15% to 25% tariffs imposed on imported steel and aluminum products. Sales in China was also cited as a contributing factor for the lower profits as China has imposed retaliatory tariffs on U.S. auto exports. Their lower profits this year are expected to have a subsequent effect on their R&D spending capabilities for 2019. These ‘big three’ auto firms plan to spend a combined $19.7 billion in R&D in 2018 and were expected to increase those amounts by about 3% in 2019 to a combined total of $20.3 billion.
R&D Index Week Ending July 27, 2018
|Ticker||Exchange||2018 R&D millions U.S. $||07/20/18||07/27/18||7/27/18 to 7/20/18||7/27/18 to 12/29/17|
|Johnson & Johnson||JNJ||NYSE||11,493||125.85||131.55||4.53%||-5.84%|
|Merck & Co.||MRK||NYSE||11,323||62.52||63.49||1.55%||12.83%|
|Eli Lilly Co||LLY||NYSE||6,769||88.47||96.60||9.19%||14.37%|
|Astra Zeneca PLC||AZN||NYSE||5,483||37.17||38.23||2.85%||10.17%|
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.