The R&D Market Pulse Index for the week ending December 15, 2017 closed at 3,874.53.48 for the 25 companies in the Index. The Index was up 1.37% (or 52.32 basis points) from the week ending December 8, 2017. Seventeen R&D Index companies gained value last week from 0.44% (Intel) to 4.08% (Pfizer). Eight R&D Index companies lost value last week from -0.02% (Bristol-Myers Squibb) to -2.62% (Oracle).
As expected, the Federal Reserve raised short-term interest rates at their scheduled December meeting last Wednesday to a range between 1.25% to 1.50%. This was the third increase in 2017 and the fifth in the past two years. At their meeting, they reaffirmed their plans to have three quarter-point increases in 2018, and two each in 2019 and 2010. Two Fed presidents (Chicago and Minneapolis) cast dissenting votes citing the current weak inflation rates. Fed officials also predicted that the U.S. economy would grow 2.5% in 2018, up from the 2.1% they predicted in September. They also predicted that unemployment would fall to 3.9% (from the current 4.1%) by the end of 2018. They also predicted that inflation would rise to their 2.0% target by 2019.
R&D Index member Toyota, the largest car manufacturer (10.2 million vehicles in 2016), announced last week that hybrid, electric and fuel-cell vehicles would make up half of their total global sales by 2030. Of those projected 5.5 million vehicles, 4.5 million would be hybrids and plug-in hybrids, while the remaining 1.0 million would be fully electric and fuel cell vehicles. R&D Index member Honda, the seventh largest manufacturer (5.0 million vehicles in 2016), stated in 2016 that two-thirds of its global sales would be hybrid, fully electric and fuel cell vehicles by 2030. Toyota also announced that it was collaborating with Panasonic on battery R&D. The surge in demand for electric vehicles has doubled the price of key-battery constituents (lithium and cobalt) commodities prices over the past two years.
Harvard University’s endowment, at $37.1 billion being the largest of the Ivy League’s endowment funds, slashed the value of its assets by up to 25% in 2016, reducing the return to 8.1%, the only Ivy League school with a sub-10% return. Harvard is restructuring its endowment fund, which is used to fund research salaries and pensions, but this may take up to five years to complete.
Teva Pharmaceutical, the largest seller of generic drugs, stated last week that it was cutting its staff by 25% (or 14,000 employees), and closing factories and research centers to cut costs and reduce its debt. It expects to cut $3 billion in costs by the end of 2019.
| R&D Index Week Ending December 15, 2017 |
| Ticker | Exchange | 2017 R&D billions$ | 12/08/17 | 12/15/17 | 12/15/17 to 12/8/17 | 12/15/17 to 1/1/17 | ||
| 1 | Amazon | AMZN | NASDAQ | 17,774 | 1,162.00 | 1,179.14 | 1.48% | 57.25% |
| 2 | Alphabet/Google | GOOGL | NASDAQ | 15,845 | 1,049.38 | 1,072.00 | 2.16% | 35.28% |
| 3 | Microsoft | MSFT | NASDAQ | 13,987 | 84.16 | 85.85 | 2.01% | 38.16% |
| 4 | Intel | INTC | NASDAQ | 13,499 | 43.35 | 43.54 | 0.44% | 20.04% |
| 5 | Apple | AAPL | NASDAQ | 11,506 | 169.37 | 173.97 | 2.72% | 50.21% |
| 6 | Volkswagen AG | VLKAY | OTC | 11,260 | 40.10 | 39.95 | -0.37% | 39.30% |
| 7 | Roche Pharm | RHHBY | OTC | 10,174 | 30.22 | 30.90 | 2.25% | 8.31% |
| 8 | Toyota | TM | NYSE | 9,170 | 124.45 | 124.34 | -0.09% | 6.09% |
| 9 | Johnson & Johnson | JNJ | NYSE | 9,060 | 140.59 | 142.98 | 1.70% | 24.10% |
| 10 | Novartis | NVS | NYSE | 7,870 | 83.96 | 84.86 | 1.07% | 16.50% |
| 11 | General Motors | GM | NYSE | 7,468 | 42.02 | 40.95 | -2.55% | 17.54% |
| 12 | Pfizer | PFE | NYSE | 7,288 | 35.74 | 37.20 | 4.08% | 14.53% |
| 13 | Bristol-Myers Squibb | BMY | NYSE | 6,942 | 62.42 | 62.41 | -0.02% | 6.79% |
| 14 | Cisco | CSCO | NASDAQ | 6,827 | 37.61 | 38.19 | 1.54% | 26.37% |
| 15 | Qualcomm | QCOM | NASDAQ | 6,723 | 64.24 | 64.76 | 0.81% | -0.67% |
| 16 | Oracle | ORCL | NYSE | 6,702 | 49.60 | 48.30 | -2.62% | 25.62% |
| 17 | Honda | HMC | NYSE | 6,519 | 33.29 | 33.68 | 1.17% | 15.38% |
| 18 | Astra Zeneca PLC | AZN | NYSE | 6,363 | 32.74 | 33.13 | 1.19% | 21.27% |
| 19 | Merck & Co. | MRK | NYSE | 5,759 | 55.57 | 56.24 | 1.21% | -4.47% |
| 20 | Daimler | DDAIY | OTC | 5,084 | 70.30 | 71.01 | 1.01% | 0.41% |
| 21 | Bayer AG | BAYN | XETRA | 4,880 | 104.70 | 106.50 | 1.72% | 7.43% |
| 22 | Sanofi SA | SNY | NYSE | 4,755 | 43.24 | 43.17 | -0.16% | 6.75% |
| 23 | IBM | IBM | NYSE | 4,628 | 154.81 | 152.50 | -1.49% | -8.13% |
| 24 | GlaxoSmithKline | GSK | NYSE | 4,508 | 35.17 | 34.99 | -0.51% | -9.14% |
| 25 | Eli Lilly Co | LLY | NYSE | 4,489 | 73.18 | 73.97 | 1.08% | 0.57% |
| Total | 209,080 | 3,822.21 | 3,874.53 | 1.37% | 29.91% | |||
| Biopharmaceutical | 697.53 | 706.35 | 1.26% | 9.46% | ||||
| Automotive | 310.16 | 309.93 | -0.07% | 10.44% | ||||
| ICT | 1,652.52 | 1,679.11 | 1.61% | 28.52% | ||||
About the R&D Index
R&D Magazine’s 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 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.
