The R&D Index for the week ending July 20, 2018 closed at 4,575.69 for the 25 companies in the R&D Index. The Index was up 0.06% (or 2.71 basis points) from the week ending July 13, 2018. Fifteen R&D Index companies gained value last week from 0.03% (Astra Zeneca) to 4.43% (Novartis). Ten R&D Index companies lost value last week from -0.06% (Johnson & Johnson) to -1.46% (Bayer AG).
R&D Index members Pfizer and Novartis both deferred their plans to increase drug prices in 2018 by stating they will freeze the prices of more than 40 drugs for 2018. These actions followed criticisms by President Trump of Pfizer’s plans to increase prices for the drugs by an average of about 4%. Novartis reported last week that its 2Q profit rose to $7.8 billion from $2 billion, benefitting from a $5.7 billion sale of its stake in a consumer healthcare joint venture with R&D Index member GlaxoSmithKline. GSK is expected to increase its R&D by 6.1% in 2019 to $6.8 billion while Pfizer is expected to increase its R&D by 2.2% to $8.1 billion. Novartis is forecast to slightly decrease its R&D by -0.3% in 2019 to $8.9 billion.
R&D Index member Google/Alphabet was hit with a record $5 billion antitrust fine last week by the European Union for antitrust issues related to its Android operating system. Android is used on more than 80% of the world’s cell phones. The fine is equal to about 40% of Google’s 2017 net profit of about $12.6 billion. Google’s stock was not affected by the fine announcement and, overall, Google stock was only down -0.3% for the week. Google is expected to increase its R&D investments in 2019 by nearly 12% to $21 billion.
It was widely reported last week that Korean electronics firm Samsung is readying a new smart phone with a foldable screen for introduction in early 2019. When opened the new phone has a screen similar to a small tablet and when folded it can fit in a user’s pocket. The phone is targeted at reviving a sluggish market which declined 0.3% in 2017 and is expected to decline another 0.2% in 2018, according to market analyst IDC. The Samsung device is expected to cost about $1,500 which is beyond what most users are willing to pay, according to analysts. Apple is also developing a foldable smart phone that they expect to introduce in 2020. Samsung spent about $12.7 billion on R&D in 2017, similar to what it spent in 2016.
China’s ZTE introduced a two-screen blended smart phone in 2017 where the two screens were separated by a hinge and the overall device was somewhat bulky.
|R&D Index Week Ending July 20, 2018|
|Ticker||Exchange||2018 R&D millions U.S. $||07/13/18||07/20/18||7/20/18 to 7/13/18||7/20/18 to 12/29/17|
|Johnson & Johnson||JNJ||NYSE||11,493||125.93||125.85||-0.06%||-9.93%|
|Merck & Co.||MRK||NYSE||11,323||62.89||62.52||-0.59%||11.11%|
|Eli Lilly Co||LLY||NYSE||6,769||89.71||88.47||-1.38%||4.75%|
|Astra Zeneca PLC||AZN||NYSE||5,483||37.16||37.17||0.03%||7.12%|
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 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.