R&D Market Pulse Index for the holiday-shortened (Labor Day) week ending September 8, 2017 closed at 3,450.55 for the 25 companies in the R&D Index. The Index was down 0.45% (or 15.68 basis points) over the week ending September 1, 2017. Fifteen R&D Index companies gained value last week from 0.05% (Microsoft) to 7.11% (Astra Zeneca). Ten R&D Index companies lost value last week from -0.04% (Johnson & Johnson) to -4.63% (Qualcomm).
R&D Index member Eli Lilly & Co., announced last week that it plans to cut roughly 8% of its global workforce or about 3,500 positions, including about 2,000 in the U.S. The company cited several issues plaguing it including the need to cut costs and raise investments in the development of new drugs before the patent expirations of older existing drugs. Lilly expects most of the reductions to come through voluntary early-retirement packages, site closures and layoffs. The company, as with other pharmaceuticals as well, also is under pressure from insurers, investors and politicians to cut drug prices, improve the success rates of costly R&D development and counter the increasing competition from low-cost generics. Lilly stock was up nearly 4% following the announcement of the cost reductions and was up 3.6% for the week. Lilly is expected to spend $5.63 billion on R&D in 2018, an increase of 3.3% from the $5.45 billion it will spend in 2017.
The U.S. Food and Drug Administration (FDA) rebuked R&D Index member Pfizer last week for failing to thoroughly investigate product failures of its EpiPen devices even in cases of patient deaths. The device was sold by Mylan, but manufactured by Pfizer’s Meridian Medical Technologies unit. An FDA letter to Pfizer noted that the company had received hundreds of letters concerning product failures during life-threatening emergencies and ordered the company to correct the product violations. Failure to do so could result in legal action including seizure and injunctions. Pfizer stock was basically unchanged following the announcement and mostly unchanged for the week.
Hurricanes Harvey, Irma and possibly Jose are expected to raise the cost of energy, and resulting inflation, throughout the U.S. due to refinery closures and damages during Harvey in the Houston area and increased energy losses and usage during Irma. The economic impact is expected to be temporary and could eventually increase the local economic growth from the need to invest in and rebuild damaged infrastructures and buildings.
The estimated $2 billion in losses in the R&D facilities in the Texas Medical Center during hurricane Allison in June 2001 resulted in infrastructure improvements. These prevented losses to research facilities in that area during hurricane Harvey despite the increased massive flooding seen in the overall area.
| R&D Index Week Ending September 8, 2017 |
| Ticker | Exchange | 2017 R&D billions$ | 09/01/17 | 09/08/17 | 9/8/17 to 9/1/17 | 9/8/17 to 1/1/17 | ||
| 1 | Amazon | AMZN | NASDAQ | 17,774 | 978.25 | 965.90 | -1.26% | 28.81% |
| 2 | Alphabet/Google | GOOGL | NASDAQ | 15,845 | 951.99 | 941.41 | -1.11% | 18.80% |
| 3 | Microsoft | MSFT | NASDAQ | 13,987 | 73.94 | 73.98 | 0.05% | 19.05% |
| 4 | Intel | INTC | NASDAQ | 13,499 | 35.09 | 35.19 | 0.28% | -2.98% |
| 5 | Apple | AAPL | NASDAQ | 11,506 | 164.05 | 158.63 | -3.30% | 36.96% |
| 6 | Volkswagen AG | VLKAY | OTC | 11,260 | 31.19 | 32.79 | 5.13% | 14.33% |
| 7 | Roche Pharm | RHHBY | OTC | 10,174 | 31.69 | 31.49 | -0.63% | 10.38% |
| 8 | Toyota | TM | NYSE | 9,170 | 113.03 | 114.97 | 1.72% | -1.90% |
| 9 | Johnson & Johnson | JNJ | NYSE | 9,060 | 131.03 | 130.98 | -0.04% | 13.69% |
| 10 | Novartis | NVS | NYSE | 7,870 | 83.81 | 85.63 | 2.17% | 17.56% |
| 11 | General Motors | GM | NYSE | 7,468 | 37.36 | 37.00 | -0.96% | 6.20% |
| 12 | Pfizer | PFE | NYSE | 7,288 | 33.96 | 34.01 | 0.15% | 4.71% |
| 13 | Bristol-Myers Squibb | BMY | NYSE | 6,942 | 59.90 | 62.62 | 4.54% | 7.15% |
| 14 | Cisco | CSCO | NASDAQ | 6,827 | 32.30 | 31.48 | -2.54% | 4.17% |
| 15 | Qualcomm | QCOM | NASDAQ | 6,723 | 52.05 | 49.64 | -4.63% | -23.86% |
| 16 | Oracle | ORCL | NYSE | 6,702 | 50.62 | 51.58 | 1.90% | 34.15% |
| 17 | Honda | HMC | NYSE | 6,519 | 28.21 | 28.46 | 0.89% | -2.50% |
| 18 | Astra Zeneca PLC | AZN | NYSE | 6,363 | 30.11 | 32.25 | 7.11% | 18.05% |
| 19 | Merck & Co. | MRK | NYSE | 5,759 | 63.83 | 64.27 | 0.70% | 9.17% |
| 20 | Daimler | DDAIY | OTC | 5,084 | 61.80 | 64.83 | 4.90% | -8.83% |
| 21 | Bayer AG | BAYN | XETRA | 4,880 | 108.35 | 108.65 | 0.28% | 9.60% |
| 22 | Sanofi SA | SNY | NYSE | 4,755 | 49.31 | 49.37 | 0.12% | 22.08% |
| 23 | IBM | IBM | NYSE | 4,628 | 144.08 | 142.45 | -1.13% | -14.18% |
| 24 | GlaxoSmithKline | GSK | NYSE | 4,508 | 40.20 | 40.05 | -0.37% | 4.00% |
| 25 | Eli Lilly Co | LLY | NYSE | 4,489 | 80.08 | 82.92 | 3.55% | 12.74% |
| Total | 209,080 | 3,466.23 | 3,450.55 | -0.45% | 15.70% | |||
| Biopharmaceutical | 712.27 | 722.24 | 1.40% | 11.92% | ||||
| Automotive | 271.59 | 278.05 | 2.38% | -0.92% | ||||
| ICT | 1,504.12 | 1,484.36 | -1.31% | 13.61% | ||||
About the R&D Index
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.
