The R&D Index for the holiday-shortened week ending December 28, 2018 closed at 3,993.57 for the 25 companies in the R&D Index. The Index was up 4.93% (or 187.71 basis points) from the week ending December 21, 2018. The stock of 23 R&D Index members gained value from 0.10% (Daimler) to 7.30% (Amazon). The stock of two R&D Index members lost value from -0.64% (Johnson & Johnson) to -1.49% (Volkswagen AG).
Last week’s 1,086.25 (DJIA) stock rally offset its previous four session losing trend but left analysts wondering, since no events prefaced the rally. Even Thursday’s trading saw an 871-point swing before closing 1.1% higher. Still, stock prices were down at the end of the week more than 9% for the month of December. To many investors, the volatility of the current market is symptomatic of the market’s mostly computer-controlled sensitivities (about 85% of all trading is controlled by computer-based models). Oil prices also had their largest one-day increase in two years on Wednesday ending the session up 8.7% higher at $46.22 per barrel.
A report released by Deloitte this month on the return on investment (ROI) on R&D in the pharmaceutical industry revealed that ROI fell to just 1.9% in 2018, its lowest level in more than a decade. The reasons behind this decline, the report says, is the continuing rise in the costs to bring a new pharmaceutical compound to market, while peak sales per drug candidate have fallen. The productivity decline has seen a steady decline from more than 10% in 2010. The average cost to develop a new drug in the 12-large cap pharmaceutical firms studied by Deloitte is just over $2.1 billion, which is in line with data from the Tufts Center for the Study of Drug Development.
Another Chinese smartphone developer, Oppo, noted last week that it is doubling its R&D investment to $1.2 billion in 2019 to develop next-generation 5G telecom devices and networks. Development will include work in AI, cloud computing and virtual reality technologies.
President Trump last week signed into law H.R. 6227, “the National Quantum Initiative Act” which establishes a National Quantum Initiative program to accelerate Federal government efforts to develop quantum information science and technology applications. The act authorizes the Secretary of Energy to allocate up to $25 million annually in each of five technology centers to be established for the next five years while also authorizing NSF funding of up to $10 million annually.
R&D Index Week Ending December 28, 2018
| Ticker | Exchange | 2018 R&D millions U.S. $ | 12/21/18 | 12/28/18 | 12/28/18 to 12/21/87 | 12/28/18 to 12/29/17 | |
| Amazon | AMZN | NASDAQ | 26,750 | 1,377.45 | 1,478.02 | 7.30% | 26.38% |
| Alphabet/Google | GOOGL | NASDAQ | 18,796 | 991.25 | 1,046.68 | 5.59% | -0.64% |
| Apple | AAPL | NASDAQ | 14,037 | 150.73 | 156.23 | 3.65% | -7.68% |
| Intel | INTC | NASDAQ | 13,702 | 44.84 | 46.75 | 4.26% | 1.28% |
| Microsoft | MSFT | NASDAQ | 13,558 | 98.23 | 100.39 | 2.20% | 17.36% |
| Roche Pharm | RHHBY | OTC | 12,284 | 30.20 | 30.84 | 2.12% | -2.34% |
| Johnson & Johnson | JNJ | NYSE | 11,493 | 128.09 | 127.27 | -0.64% | -8.91% |
| Merck & Co. | MRK | NYSE | 11,323 | 72.90 | 75.37 | 3.39% | 33.94% |
| Volkswagen AG | VWAGY | OTC | 10,915 | 16.07 | 15.83 | -1.49% | -60.86% |
| Toyota | TM | NYSE | 10,848 | 113.96 | 116.34 | 2.09% | -8.52% |
| Novartis | NVS | NYSE | 8,934 | 83.35 | 85.26 | 2.29% | 1.55% |
| Honda | HMC | NYSE | 8,180 | 25.90 | 26.41 | 1.97% | -22.51% |
| Pfizer | PFE | NYSE | 7,942 | 41.93 | 42.96 | 2.46% | 18.61% |
| Daimler | DDAIY | OTC | 7,615 | 52.50 | 52.55 | 0.10% | -37.85% |
| General Motors | GM | NYSE | 7,278 | 32.98 | 33.92 | 2.85% | -17.25% |
| Oracle | ORCL | NYSE | 7,001 | 44.00 | 44.82 | 1.86% | -5.20% |
| Bristol-Myers Squibb | BMY | NYSE | 6,981 | 49.82 | 50.94 | 2.25% | -16.87% |
| Eli Lilly Co | LLY | NYSE | 6,769 | 109.42 | 114.20 | 4.37% | 35.21% |
| GlaxoSmithKline | GSK | NYSE | 6,394 | 37.58 | 38.15 | 1.52% | 7.56% |
| Cisco | CSCO | NASDAQ | 6,009 | 41.85 | 42.77 | 2.20% | 11.67% |
| IBM | IBM | NYSE | 5,842 | 110.94 | 113.03 | 1.88% | -26.33% |
| Bayer AG | BAYN | OTC | 5,743 | 17.19 | 17.31 | 0.70% | -44.32% |
| Astra Zeneca PLC | AZN | NYSE | 5,483 | 37.51 | 37.77 | 0.69% | 8.85% |
| Qualcomm | QCOM | NASDAQ | 5,183 | 54.85 | 56.81 | 3.59% | -11.26% |
| Sanofi SA | SNY | NYSE | 4,694 | 42.32 | 42.95 | 1.49% | -0.12% |
| Total | 243,754 | 3,805.86 | 3,993.57 | 4.93% | 5.32% | ||
| Biopharmaceutical | 650.31 | 663.02 | 1.95% | 3.96% | |||
| Automotive | 241.41 | 245.05 | 1.51% | -25.12% | |||
| ICT | 1,536.69 | 1,607.48 | 4.60% | -3.01% | |||
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.
