The R&D Index for the week ending March 23, 2018 closed at 4,020.11 for the 25 companies in the R&D Index. The Index was down -6.56% (or 282.43 basis points) from the week ending March 16, 2018. Twenty-four R&D Index companies posted a loss for the week from -1.21% (Astra Zeneca) to -14.31% (Oracle). Only one R&D Index company posted a gain for the week: 0.38% (GlaxoSmithKline). GSK stock jumped up when it announced it was pulling out of the competition to buy the multibillion-dollar consumer healthcare business of its U.S. rival, and R&D Index member, Pfizer, which was welcomed by GSK shareholders, despite the overall decline of all other R&D Index members due to the politically charged envionment triggered by Trump’s tariff announcements on Thursday.
Specifics of Trump’s announcement of up to 25% tariffs on Chinese imports won’t be announced for two weeks to give the Chinese government time to respond on how to reduce the massive trade imbalance with the U.S.
At its regularly scheduled March meeting last Wednesday, the Federal Reserve voted to raise the short-term interest rate to a range between 1.5% and 1.75%. They also signaled that they expected to raise it another two or three times this year and three times in 2019 – Fed officials say only three increases for 2018, while central bankers expect four increases in 2018. If all increases are enacted, the interest rate could be raised to a range between 3.0% and 3.25% by the end of 2019, which is the Fed’s long-term interest rate goal. The Fed also stated they expect the unemployment rate to drop from the current 4.1% to 3.8% by the end of 2018 and to 3.6% by the end of 2019. Economists expect the unemployment rate to fall even more than the Fed’s forecast.
R&D Index member Bayer won EU antitrust approval last Wednesday for its multibillion-dollar purchase of Monsanto. The EC said Bayer had addressed its concerns with an offer to sell seed and herbicide assets to boost its rival BASF, along with a license to its digital farming data. The merger has been widely criticized by environmentalists over the past two years, with the E creating a 1,285-page ruling that examined more than 2,000 product markets.
Editor’s Note: The below table changed this week with differences noted between current stock valuations and their valuations at the beginning of 2018 (December 29, 2017). The wild stock volatility seen over the past three months made this relationship more meaningful than a comparison to stock valuations at the beginning of 2017, which we documented in previous weeks.
R&D Index Week Ending March 23, 2018
| Ticker | Exchange | 2017 R&D billions$ | 03/16/18 | 03/23/18 | 3/23/18 to 3/16/18 | 3/23/18 to 12/29/17 | ||
| 1 | Amazon | AMZN | NASDAQ | 17,774 | 1,571.68 | 1,495.56 | -4.84% | 27.88% |
| 2 | Alphabet/Google | GOOGL | NASDAQ | 15,845 | 1,134.42 | 1,026.55 | -9.51% | -2.55% |
| 3 | Microsoft | MSFT | NASDAQ | 13,987 | 94.60 | 87.18 | -7.84% | 1.92% |
| 4 | Intel | INTC | NASDAQ | 13,499 | 51.17 | 49.36 | -3.54% | 5.70% |
| 5 | Apple | AAPL | NASDAQ | 11,506 | 178.02 | 164.94 | -7.35% | -2.54% |
| 6 | Volkswagen AG | VLKAY | OTC | 11,260 | 40.36 | 37.87 | -6.17% | -6.36% |
| 7 | Roche Pharm | RHHBY | OTC | 10,174 | 28.84 | 28.26 | -2.01% | -10.51% |
| 8 | Toyota | TM | NYSE | 9,170 | 129.91 | 124.50 | -4.16% | -2.10% |
| 9 | Johnson & Johnson | JNJ | NYSE | 9,060 | 133.68 | 125.10 | -6.42% | -10.46% |
| 10 | Novartis | NVS | NYSE | 7,870 | 82.06 | 78.56 | -4.26% | -6.43% |
| 11 | General Motors | GM | NYSE | 7,468 | 37.94 | 35.17 | -7.30% | -14.20% |
| 12 | Pfizer | PFE | NYSE | 7,288 | 36.78 | 34.49 | -6.23% | -4.78% |
| 13 | Bristol-Myers Squibb | BMY | NYSE | 6,942 | 66.60 | 62.06 | -6.82% | 1.27% |
| 14 | Cisco | CSCO | NASDAQ | 6,827 | 45.01 | 42.42 | -5.75% | 10.76% |
| 15 | Qualcomm | QCOM | NASDAQ | 6,723 | 60.62 | 53.66 | -11.48% | -16.18% |
| 16 | Oracle | ORCL | NYSE | 6,702 | 52.27 | 44.79 | -14.31% | -5.27% |
| 17 | Honda | HMC | NYSE | 6,519 | 34.76 | 32.91 | -5.32% | -3.43% |
| 18 | Astra Zeneca PLC | AZN | NYSE | 6,363 | 34.59 | 34.17 | -1.21% | -1.53% |
| 19 | Merck & Co. | MRK | NYSE | 5,759 | 55.67 | 53.41 | -4.06% | -5.08% |
| 20 | Daimler | DDAIY | OTC | 5,084 | 85.10 | 81.00 | -4.82% | -4.21% |
| 21 | Bayer AG | BAYN | XETRA | 4,880 | 29.47 | 27.75 | -5.84% | -10.74% |
| 22 | Sanofi SA | SNY | NYSE | 4,755 | 40.96 | 39.33 | -3.98% | -8.54% |
| 23 | IBM | IBM | NYSE | 4,628 | 160.26 | 148.89 | -7.10% | -2.95% |
| 24 | GlaxoSmithKline | GSK | NYSE | 4,508 | 37.28 | 37.42 | 0.38% | 5.50% |
| 25 | Eli Lilly Co | LLY | NYSE | 4,489 | 80.49 | 74.76 | -7.66% | -11.48% |
| Total | 209,080 | 4,302.54 | 4,020.11 | -6.56% | 6.02% | |||
| Biopharmaceutical | 626.42 | 595.31 | -4.97% | -6.65% | ||||
| Automotive | 328.07 | 311.45 | -5.07% | -4.83% | ||||
| ICT | 1,776.37 | 1,617.79 | -8.93% | -2.39% | ||||
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.
