The R&D World Index (RDWI) for the week ending August 4, 2023, closed at 2,905.30 for the 25 companies in the RDWI. The Index was down -2.77% (or -82.89 basis points). Three of the 25 RDWI members gained value last week from 0.55% (IBM) to 2.18% (Toyota Motor). Twenty-two of the 25 RDWI members lost value last week from -1.50% (Bristol-Myers Squibb) to -7.07% (Apple).
Sherwin-Williams Company, Cleveland, Ohio, announced last week the topping off of its new Global R&D Center, in the Cleveland suburb of Brecksville, Ohio. Construction of the $250 million, 600,000-ft2 R&D center was started in 2021 and is scheduled to be completed in late-2024. The company also plans to build a new global headquarters in downtown Cleveland, which is expected to be a million square feet in size. The company expects to invest more than $600 million to build the headquarters and R&D center. The R&D center is expected to house about 900 employees, including technical researchers and support staff.
RDW Index member Toyota Motor Corporation, Tokyo, last week announced plans to consolidate its R&D resources in China and ramp up its focus on electric vehicles (EVs). As part of its Chinese R&D consolidation, its name will change to Intelligent ElectroMobility R&D Center by Toyota (China) Co. Ltd. Toyota engineers from its three Chinese ventures will be moved to a new facility in Changshu, Jiangsu province. The company will also strengthen local development of EVs including battery, hybrid, and plug-in hybrid models and accelerate the development of an electric powertrain with its two largest suppliers, Denso Corp. and Aisin Corp. According to analysts, the new Chinese organizational structure could pose challenges in terms of coordination with Toyota’s Japanese headquarters.
RDW Index member Apple, Cupertino, California, announced last week that its overall revenue declined for the third consecutive quarter. Overall iPhone revenue fell 2.4% to $39.7 billion compared with 2022. In June 2023, Apple became the first corporation to close with a market capitalization exceeding $3 trillion. Analysts expect the company to return to a slight revenue growth in Apple’s fiscal fourth quarter, which ends in September, which is also when its next iteration, iPhone 15 will be introduced.
Pacific Gas and Electric Company (PG&E), Oakland, California, announced last week that it has curtailed its tree-trimming efforts which were performed to lessen the impact of wildfires on utility lines. Instead, the company will rely more heavily on the installation of new power line settings that quickly shut off when branches or other objects touch them, reducing the risk of sparks. The previous tree-trimming operations were found to be largely ineffective. The new approach is expected to be safer and less expensive. Another new approach to bury 10,000 miles of power lines is expected to cost PG&E at least $20 billion which will be challenging following its complex bankruptcy restructuring.
RDW Index member Pfizer, New York City, announced last week that its second-quarter revenue fell short of analysts’ expectations as sales from its COVID-19 vaccine products (Paxlovid) diminish. Excluding Paxlovid, Pfizer’s sales grew by 5%, driven partially by products recently acquired through deals, including migraine treatment Nurtec and sickle-cell disease drug Oxbryta. The company also expects to release its new COVID-19 shot in September, assuming the latest version targeting newer strains is cleared by regulators and available by the end of August.
The U.S. Department of Labor (DOL), Washington D.C., reported last week that the U.S. added 187,000 jobs in July, matching June’s 185,000 gain. Healthcare and social assistance accounted for half of these gains. These statistics are down significantly from 2022 when the average monthly gain was about 400,000. The unemployment rate also fell to 3.5% in July, from 3.6% in June. The job market is still on a slow but steady path towards a soft landing, according to economic analysts, referring to the Fed’s target 2% inflation rate.
A recent report by the Pew Research Center, Washington, D.C., found that one in five workers is likely to have their jobs aided or replaced by artificial intelligence (AI). Jobs that rely on analytical skills like critical thinking, writing, science, and math tend to be more exposed to AI. Workers in industries more exposed to AI are more likely, however, to say they think AI will help rather than hurt their jobs, according to the Pew survey. Jobs with high exposure to AI include budget analysts, data entry personnel, tax preparers, technical writers, and web developers. Jobs with medium exposure include chief executives, veterinarians, interior designers, fundraisers, and sales managers. About 32% of information technology (IT) workers say that AI will help, more than hurt them, compared to 11% who believe the opposite. It’s not clear how many jobs will be displaced by AI, according to Pew.
A recent report in the Wall Street Journal noted that while general inflation has cooled in many countries, food prices are still likely to continue to increase. A combination of unusually hot weather and disrupted exports due to the Russia-Ukraine war will continue to accelerate the food inflation spiral. An additional risk to food supply and inflation is the Pacific Ocean’s El Nino warming condition which can lead to changes in weather patterns and reduced harvests of some crops. Australia has already issued an alert stating that there is a 70% chance that the El Nino weather pattern would emerge this year.
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 2020 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) which invested a cumulative total of nearly 260 billion dollars in R&D in 2019, or approximately 10% of all the R&D spending 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.