The R&D Market Pulse Index for the week ending January 19, 2018 closed at 4092.02 for the 25 companies included in the Index. The Index was up 0.48 percent (or 16.53 basis points) from the week ending January 12, 2018. Seventeen R&D Index companies gained value last week from 0.28 percent (Bayer AG) to 4.47 percent (Merck & Co.). Eight R&D Index companies lost value last week from -0.40 percent (Sanofi SA) to -3.43 percent (Roche Pharmaceuticals).

R&D Index member IBM reported 3.6 percent higher revenue in the fourth quarter of 2017 for the first time in 23 quarters (since 2011). However, the company noted that it still had a $1.05 billion loss for the fourth quarter due to pretax profit losses in software and hardware divisions. 

R&D Index member Alphabet Inc.’s Google and China’s Tencent Holdings have agreed to license each other’s technology patents. This new relationship could help Google improve its standing in the Chinese marketplace, while accelerating the global presence of Tencent. The long-term agreement covers a wide range of products and technologies. The companies also indicated that they were open to more cooperative agreements in the future. Tencent is China’s largest technology company in terms of capitalization and makes most of its revenue from videogames. It also has a social network app that dominates in China, but is relatively unknown elsewhere. Google’s search tools are currently blocked in China.

Investors are expecting the accelerating global economy and favorable corporate earnings to continue lifting the stock market this year, which has had its best start to a year in 2018 since 1987 (31 years). The tax cut bill also allows companies to bring back profits they held overseas for a reduced tax rate. Most large corporations with these holdings are planning to return them to the U.S., including R&D Index member Apple, who has one of the largest holdings. Apple stated last week that it would pay a one-time tax of $38 billion on these overseas holdings, which are being taxed at an equivalent rate of just 15.5 percent. The company also stated that it would invest $30 billion in capital spending over the next five years and spend up to $5 billion for advanced manufacturing programs in the U.S. Even with these investments, Apple will still have monies to build another new campus, buy back stock, pursue acquisitions, return capital to investors, and possibly increase R&D investments as well. These investments are similar to what the other companies with offshore cash holdings are planning.

R&D Index Week Ending January 19, 2018

	Ticker	Exchange	2017 R&D billions$	01/12/18	01/19/18	1/19/18 to 1/12/18	1/19/18 to 1/1/17
Amazon	AMZN	NASDAQ	17,774	1,305.20	1,294.58	-0.81%	72.64%
Alphabet/Google	GOOGL	NASDAQ	15,845	1,130.65	1,143.50	1.14%	44.30%
Microsoft	MSFT	NASDAQ	13,987	89.58	90.00	0.47%	44.83%
Intel	INTC	NASDAQ	13,499	43.21	44.82	3.73%	23.57%
Apple	AAPL	NASDAQ	11,506	177.09	178.46	0.77%	54.08%
Volkswagen AG	VLKAY	OTC	11,260	44.34	45.70	3.07%	59.34%
Roche Pharm	RHHBY	OTC	10,174	31.78	30.69	-3.43%	7.57%
Toyota	TM	NYSE	9,170	137.20	139.85	1.93%	19.33%
Johnson & Johnson	JNJ	NYSE	9,060	145.76	147.36	1.10%	27.91%
Novartis	NVS	NYSE	7,870	86.65	86.94	0.33%	19.36%
General Motors	GM	NYSE	7,468	44.07	43.15	-2.09%	23.85%
Pfizer	PFE	NYSE	7,288	36.54	36.86	0.88%	13.49%
Bristol-Myers Squibb	BMY	NYSE	6,942	62.81	62.28	-0.84%	6.57%
Cisco	CSCO	NASDAQ	6,827	40.87	41.29	1.03%	36.63%
Qualcomm	QCOM	NASDAQ	6,723	65.38	68.04	4.07%	4.36%
Oracle	ORCL	NYSE	6,702	49.51	50.58	2.16%	31.55%
Honda	HMC	NYSE	6,519	35.93	36.24	0.86%	24.15%
Astra Zeneca PLC	AZN	NYSE	6,363	35.65	35.44	-0.59%	29.72%
Merck & Co.	MRK	NYSE	5,759	58.66	61.28	4.47%	4.09%
Daimler	DDAIY	OTC	5,084	90.25	91.95	1.88%	30.01%
Bayer AG	BAYN	XETRA	4,880	31.96	32.05	0.28%	18.57%
Sanofi SA	SNY	NYSE	4,755	44.78	44.60	-0.40%	10.29%
IBM	IBM	NYSE	4,628	163.14	162.37	-0.47%	-2.18%
GlaxoSmithKline	GSK	NYSE	4,508	37.50	38.50	2.67%	-0.03%
Eli Lilly Co	LLY	NYSE	4,489	86.98	85.49	-1.71%	16.23%
Total			209,080	4,075.49	4,092.02	0.48%	37.21%
		Biopharmaceutical		659.07	661.49	0.37%	2.51%
		Automotive		351.79	356.89	1.45%	27.17%
		ICT		1,759.43	1,779.06	1.12%	36.17%

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 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.