In a survey of the world’s 1,000 biggest publicly listed corporate R&D spenders, known as the “Global Innovation 1000,” data indicated that 2018 R&D expenditures jumped 11.4% to $782 billion, a record high figure. R&D spending increased in all regions and almost all industries. Eighty-eight companies, categorized as high-leverage innovators, experienced sales growth that was 2.6 times greater from 2012 to 2017 than other companies on the Global Innovation 1000, and market capitalization growth that was 2.9 times greater. These companies achieved this while keeping their R&D intensity, defined as R&D expenditures as a percentage of sales, lower than the industry average.

Year over year spending growth in 2018 was approximately four times greater than growth between 2016 and 2017, and revenues for the Global Innovation 1000 also grew 11.4%, while R&D intensity remained the same from 2017 at 4.5%. Total spending on R&D by the top 20 companies in the Global Innovation 1000 was $214.5 billion, 27% of total spending. The top 20 list was led by Amazon, with R&D spending of $22.6 billion, a 40.6% increase. Similar to last year, Amazon was followed by Alphabet, with R&D spending of $16.2 billion, up 16.3%.

Industry wise, chemicals and energy were among the few industries that did not increase R&D expenditures in 2018, while computing and electronics, health care, auto, and software and internet accounted for 76% of total R&D spending among the Global Innovation 1000. China and Europe were the regions with the greatest investments in R&D at 34% and 14%, respectively. Companies in North America, Japan and Rest of World increased R&D spending in the single digits. North America led the number of innovative companies across a variety of sectors, including health care, for which it accounted for 49% of companies.

Source: PwC Strategy + Business