As detailed in the November 15 issue of IBO, an annual review by the EU showed that spending by 1,000 of the world’s largest publicly held companies that engage in substantial R&D activities declined last fiscal year. This month, the UK released its annual R&D spending review, which provided further evidence of the trends documented by the EU’s report.

According to the UK’s 2010 R&D Scoreboard, R&D expenditures by the 1,000 global companies “most active in R&D in 2009” increased 1.9% to £344.0 billion ($537.5 million = £0.64 = $1) in fiscal 2009. R&D as a proportion of sales was 3.6%. Eighty percent of fiscal 2009 R&D spending was contributed by the top 100 companies.

Eight-two percent of global R&D spending was by companies based in the US, Japan, Germany, France, Switzerland and the UK. The six largest EU contributors also included Sweden and the Netherlands. However, only the Swiss companies registered an increase in total R&D spending last fiscal year. Chinese and Indian companies in the global 1,000 increased their R&D spending last year and together represented 1.8% of R&D spending.

The industry sector that accounted for 19%, the largest percentage, of R&D spending in fiscal 2009 by the 1,000 companies was pharmaceuticals and biotechnology. This sector’s spending increased 5.5% last year. The four other largest sectors were technology hardware and equipment (17%), automobile and parts (16%), software and computer services (7%), and electronic and electrical equipment (7%). R&D expenditures by the technology hardware and equipment and the automobile and parts sectors declined 6.3% and 11.6%, respectively, last year following four years of growth.

R&D expenditures by UK companies did not fare as well in fiscal 2009 compared to global companies. R&D spending by the 1,000 UK companies with the largest R&D budgets declined 0.6% to £25.3 billion ($39.5 billion) last year. R&D intensity was 1.7%. The 100 UK companies that invested the most in R&D represented 80% of fiscal 2009 R&D expenditures by the 1,000 UK firms.

The report found that the decline in UK companies’ R&D spending was largely due to the fixed-line telecommunications, banking, and aerospace and defense sectors. R&D spending by pharmaceutical and biotech companies, the largest R&D sector among the 1,000 UK companies at 35%, increased 0.9% to £8,922.0 million ($13,940.6 million). Among the top 10 R&D sectors, spending by the automobile and parts industry increased the fastest, growing 9.1% to £1,529.0 ($2,389.1 million). R&D spending by aerospace and defense companies, oil and gas producers, and food producers declined 5.0%, 7.3% and 3.4%, respectively. The industries with the largest R&D as a percentage of capital expenditures were pharmaceuticals and biotech (321%) and software and computer services (281%).

Outside the top 10 R&D sectors for the 1,000 UK companies, gas, water and multi-utilities companies grew their R&D spending 94.6% last year to £90 million ($140.6 million). Oil equipment, services and distribution companies grew their R&D 15.6% to £62.0 million ($96.9 million).