The R&D Index for the week ending August 10, 2018 closed at 4,753.37 for the 25 companies in the R&D Index. The Index was up 1.57% (or 73.49 basis points) from the week ending August 3, 2018. Nine R&D Index companies gained value last week from 0.21% (Merck & Co.) to 3.46% (Amazon). Sixteen R&D Index companies lost value last week from -0.22% (Apple Computer) to -5.38% (Toyota).
The Trump Administration last week outlined details for the creation of a sixth branch of the U.S. military—the U.S. Space Force—to defend and protect U.S. resources in space. Creation of the Space Force requires approval by the Congress, however reports state that the Pentagon will start creation—which is expected to take about a year—even before Congressional approval. A proposal is expected to be presented to Congress early in 2019. The Space Force is claimed to be budget neutral, but will require creation of a substantial infrastructure. R&D investments will be an integral part of the Space Force which will likely include increases in DARPA spending.
The Bank of China last week announced that it will greatly increase its investment in innovation-based Chinese R&D. The Bank is one of the four state-owned banks and it expects its R&D investments to be more than 1% of its operating income, according to bank officers. The Bank plans to focus its investments on cloud computing, big data and artificial intelligence.
Economy update
The U.S. Treasury Dept. reported on Friday that the Federal budget deficit widened 21% in the first 10 months of the 2018 fiscal year (October 2017 to July 2018) by $684 billion. The deficit increased partly due to reduced tax rates and increased government spending.
Economists have boosted the U.S. growth rate (GDP) for the remainder of 2018 to 3.0% which increased from a 2.9% forecast in July and 2.4% in 2017. The analysts expect the economic growth to continue into 2019 due to the tax cuts and increased federal spending, but expect the beginnings of a recession to appear after that. The average growth forecast for 2020 is now expected to be 1.8%, which is down from 2.0% quoted in early 2018. The increasing inflation rate and the Fed’s reciprocal interest rate hikes will both act in concert to keep future economic growth rates subdued, according to the analysts.
R&D Index Week Ending August 10, 2018
| Ticker | Exchange | 2018 R&D millions U.S. $ | 08/03/18 | 08/10/18 | 8/10/18 to 8/3/18 | 8/10/18 to 12/29/17 | ||
| 1 | Amazon | AMZN | NASDAQ | 26,750 | 1,823.29 | 1,886.30 | 3.46% | 61.30% |
| 2 | Alphabet/Google | GOOGL | NASDAQ | 18,796 | 1,223.71 | 1,252.51 | 2.35% | 18.90% |
| 3 | Apple | AAPL | NASDAQ | 14,037 | 207.99 | 207.53 | -0.22% | 22.63% |
| 4 | Intel | INTC | NASDAQ | 13,702 | 49.63 | 48.85 | -1.57% | 5.83% |
| 5 | Microsoft | MSFT | NASDAQ | 13,558 | 108.04 | 109.00 | 0.89% | 27.43% |
| 6 | Roche Pharm | RHHBY | OTC | 12,284 | 30.91 | 30.03 | -2.85% | -4.91% |
| 7 | Johnson & Johnson | JNJ | NYSE | 11,493 | 131.95 | 130.75 | -0.91% | -6.42% |
| 8 | Merck & Co. | MRK | NYSE | 11,323 | 65.93 | 66.07 | 0.21% | 17.42% |
| 9 | Volkswagen AG | VLKAY | OTC | 10,915 | 33.18 | 32.33 | -2.86% | -20.05% |
| 10 | Toyota | TM | NYSE | 10,848 | 131.30 | 124.23 | -5.38% | -2.31% |
| 11 | Novartis | NVS | NYSE | 8,934 | 83.33 | 82.10 | -1.48% | -2.22% |
| 12 | Honda | HMC | NYSE | 8,180 | 30.66 | 30.09 | -1.86% | -11.71% |
| 13 | Pfizer | PFE | NYSE | 7,942 | 40.54 | 40.93 | 0.96% | 13.00% |
| 14 | Daimler | DDAIY | OTC | 7,615 | 67.48 | 65.41 | -3.07% | -22.65% |
| 15 | General Motors | GM | NYSE | 7,278 | 37.73 | 36.59 | -3.02% | -10.73% |
| 16 | Oracle | ORCL | NYSE | 7,001 | 48.47 | 48.32 | -0.31% | 2.20% |
| 17 | Bristol-Myers Squibb | BMY | NYSE | 6,981 | 59.16 | 59.31 | 0.25% | -3.21% |
| 18 | Eli Lilly Co | LLY | NYSE | 6,769 | 100.58 | 102.25 | 1.66% | 21.06% |
| 19 | GlaxoSmithKline | GSK | NYSE | 6,394 | 40.82 | 40.15 | -1.64% | 13.19% |
| 20 | Cisco | CSCO | NASDAQ | 6,009 | 42.83 | 43.78 | 2.22% | 14.31% |
| 21 | IBM | IBM | NYSE | 5,842 | 147.70 | 144.48 | -2.18% | -5.83% |
| 22 | Bayer AG | BAYN | OTC | 5,743 | 27.58 | 26.59 | -3.59% | -14.47% |
| 23 | Astra Zeneca PLC | AZN | NYSE | 5,483 | 38.66 | 39.38 | 1.86% | 13.49% |
| 24 | Qualcomm | QCOM | NASDAQ | 5,183 | 65.40 | 64.82 | -0.89% | 1.25% |
| 25 | Sanofi SA | SNY | NYSE | 4,694 | 43.01 | 41.57 | -3.35% | -3.33% |
| Total | 243,754 | 4,679.88 | 4,753.37 | 1.57% | 25.36% | |||
| Biopharmaceutical | 662.47 | 659.13 | -0.50% | 3.35% | ||||
| Automotive | 300.35 | 288.65 | -3.89% | -11.79% | ||||
| ICT | 1,893.77 | 1,919.29 | 1.35% | 15.80% | ||||
About the R&D Index
R&D Magazine’s R&D Market Pulse 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.
