The R&D World Index (RDWI) for the week ending January 7, 2022, closed at 5,472.25 for the 25 companies in the RDWI. The Index was down -2.79% (or -157.25 basis points) from the week ending December 31, 2021. The stock of 16 RDWI members gained value from 0.17% (Roche Holdings AG) to 17.67% (Ford Motor). The stock of nine RDWI members lost value from -0.38% (AbbVie) to -6.62% (Microsoft).
At last week’s Consumer Electronics Show (CES) in Las Vegas, Sony Group Corp., Tokyo, announced that it would explore entering the electric vehicle (EV) market. Sony revealed a prototype seven-seat sport utility vehicle with all-wheel drive at the show. The company had first displayed an EV sedan at the 2019 CES, but did not say at the time that it would sell a car, that prototype was only meant to reveal Sony’s image sensor products. Sony was expected to invest more than $5 billion in R&D in 2020. Other electronics companies as well have indicated their plans to create and sell EVs. RDW Index member Apple has explored this market for several years, while never revealing any explicit details. Apple supplier Foxconn Technology Group, Taipei, Taiwan, has also indicated its intent to enter the EV market and displayed three prototypes last October. Last week, Foxconn announced that it would launch its first MIH EV model in Taiwan in 2023. Foxconn said it would supply up to three million EVs annually by 2027. The government of Taiwan’s Ministry of Economic Affairs currently offers 40% to 50% subsidies to many of the country’s more than 800 automotive suppliers. This support also includes the recycling of EV batteries which will amount to more than 1,000 tons by 2025 in Taiwan alone. Foxconn invested more than $3.5 billion in R&D in 2021, which doubled over the past four years.
In other EV news, RDW Index member Ford Motor Co., Dearborn, Michigan, last week announced that it would double its previous forecast for 2022 production of its electric version of its F-150 pickup truck to more than 150,000 EVs. In a production-plagued year due to shortages of semiconductor chips, RDW Index member Toyota Motor Corp., Toyota Aichi, Japan, announced last week that it had sold more vehicles in the U.S. than General Motors (GM), Detroit, for the first time ever. At $9.3 billion, Toyota invests about 13% more in R&D than GM, and about 25% more than Ford.
LG Energy Solution, Seoul, South Korea, last week announced that it plans to start selling company shares in late-January, which could raise as much as $10.8 billion. LG currently supplies EV batteries for Tesla, GM and Hyundai Motor Co., The share sale would be the largest IPO (initial public offering) in South Korea, more than doubling the IPO for Samsung Life Insurance Co. in 2010. The money raised in the IPO would be used to boost capital expenditures (including R&D), repay debt and meet working capital needs. LG Energy Solution currently invests about $350 million in R&D.
The minutes of the Federal Reserve system’s December 14-15 meeting were released last week and officials at that meeting noted rising inflation rates and a continued tight labor market could call for raising short-term interest rates sooner or at a faster pace than they had earlier anticipated. Some Fed officials noted in the minutes that they should start shrinking their $8.8 trillion portfolio of assets soon after beginning to raise interest rates to tighten financial conditions and cool the booming U.S. economy. The meeting minutes implied a high probability that the Fed would raise interest rates in March 2022, instead of earlier indications that would happen in June. Analysts expect three 0.25% interest rate increases in 2022.
South Korean shipbuilders announced last week that they are opening a string of R&D centers in Korea’s Pangyo district located just outside of Seoul, which is often referred to as Korea’s version of California’s Silicon Valley. Shipbuilding conglomerate Hyundai Heavy Industries Group is building a 19-story global R&D center there, which is scheduled to be completed in late 2022. About 5,000 researchers are expected to work at the Hyundai R&D center. Samsung Heavy Industries Co. relocated its headquarters to Pangyo after building an R&D center there in 2014. Major Korean IT companies, investment firms and ICT companies are also clustered in the Pangyo technology region.
NEO Battery Materials, Vancouver, British Columbia, Canada, announced last week that the company had established its R&D Scale-Up Centre at the Yonsei University of South Korea through its wholly owned subsidiary NEO Battery Materials Korea Co. NEO and Yonsei University entered into a Collaborative Development Agreement in 2020 for the development and commercialization of the company’s proprietary nanocoating technology for silicon anode materials. NEO is focused on lithium-ion battery materials for EV and energy storage applications. NEO also recently formed a research consortium with the University of Toronto, Canada, for similar EV battery materials development.
RDW Index member Sanofi SA, Paris, announced last week it had formed a new alliance with artificial intelligence (AI) biotech Exscienta, Oxford, U.K., to develop up to 15 small molecule drugs for cancer and immunology applications. The two companies have already created a novel drug candidate currently in development in immunology. The new alliance has Sanofi paying $100 million up front to begin a larger drug discovery alliance. The two companies first began working together in 2016. Depending upon the new research progress, Exscienta could earn up to $5.2 billion in milestone payments and royalties from the resulting drug’s commercialization. Exscienta also has drug development alliances with Bristol Myers Squibb, Sumitomo Dainippon Pharma, EQRx and the Bill and Melinda Gates Foundation. Amgen, Thousand Oaks, California, also announced last week that it formed a drug research alliance with Generate Biomedicines, Cambridge, Massachusetts, to begin protein drug research covering three targets. Also last week, Absci, Vancouver, Washington, added Merck, Kenilworth, New Jersey, to its list of pharmaceutical partners in an alliance covering up to three drug targets.
R&D World’s R&D Index is a weekly stock market summary of the top international companies involved in R&D. The top 25 industrial R&D spenders in 2019 were selected based on the latest listings from Schonfeld & Associates’ June 2020 R&D Ratios & Budgets. These 25 companies include pharmaceutical (10 companies), automotive (6 companies) and ICT (9 companies) who invested a cumulative total of nearly 260 billion dollars in R&D in 2019, or approximately 10% of all the R&D spent in the world by government, industries and academia combined, according to R&D World’s 2021 Global R&D Funding Forecast. The stock prices used in the R&D World Index are tabulated from NASDAQ, NYSE and OTC common stock prices for the companies selected at the close of stock trading business on the Friday preceding the online publication of the R&D World Index.