The R&D Market Pulse Index for the week ending January 12, 2018 closed at 4,132.32 for the 25 companies in the R&D Index. The Index was up 2.71% (or 109.18 basis points) from the week ending January 5, 2017. Eighteen R&D Index companies gained value last week from 0.14% (General Motors) to 6.19% (Amazon). Seven R&D Index companies lost value last week from -0.03% (GlaxoSmithKline) to -3.87% (Intel).
U.S. car sales fell 1.8% in 2017 to 17.2 million vehicles. China car sales only rose 1.4% in 2017 to 28.9 million vehicles, their lowest growth in 15 years following a 14% increase in 2016. Used car sales in China which were up 20% in 2017, is also depressing new car sales. Chinese car sales now account for about a third of global sales, the largest single market. Electric vehicle sales in China, however continue to expand, growing 72% in 2017 to 578,000 vehicles. These sales declines are not expected to affect automotive R&D investments in 2018 as all automotive R&D Index members expect to increase their R&D spending in 2018, along with other non-R&D Index companies, such as Ford, Nissan and Fiat-Chrysler.
For the first time, U.S. automakers failed to meet Environmental Protection Agency (EPA) emissions standards for 2016 automotive model year vehicles, it was announced last week. These vehicles had 9 grams/mile more emissions than the standards allowed. Automakers, however, avoided violating the EPA standards by using regulatory credits earned in previous years for exceeding targets. The Trump Administration is expected to ask for a roll back or delay of future emissions standards in April.
Samsung Electronics spent $44 billion on capital investments in 2017, nearly doubling its 2016 investments in new or existing facilities for manufacturing semiconductors, displays and other products. The second largest capital spending in 2017 was listed by S&P as PetroChina with $29 billion.
R&D Index member Intel stock lost significant value for the second week last week as fallout of its chip-based security failures continued. Microsoft noted that Intel software patches could have noticeable performance losses – some analysts noted that performance losses of up to 5% could be expected from the patches. Some long-time Intel high-performance product customers also noted that they were considering switching to competitive products manufactured by Advanced Micro Devices or ARM Holdings. Since the Intel failures were announced on January 3, Intel stock is down 4.7%.
R&D Index member Pfizer announced last week that it would stop trying to discover new drugs for Alzheimer’s disease and Parkinson’s disease, abandoning costly but mostly unsuccessful R&D programs. These restructurings will switch R&D funding to the development of other drugs. Pfizer stock was down about 1% for the week.
R&D Index Week Ending January 12, 2018
|Ticker||Exchange||2017 R&D billions$||01/05/18||01/12/18||1/12/18 to 1/5/18||1/12/18 to 1/1/17|
|9||Johnson & Johnson||JNJ||NYSE||9,060||141.71||145.76||2.86%||26.52%|
|18||Astra Zeneca PLC||AZN||NYSE||6,363||35.87||35.65||-0.61%||30.49%|
|19||Merck & Co.||MRK||NYSE||5,759||56.99||58.66||2.93%||-0.36%|
|25||Eli Lilly Co||LLY||NYSE||4,489||86.57||86.98||0.47%||18.26%|