Academic journal article Research-Technology Management

See More R&D Spending in 2007

Academic journal article Research-Technology Management

See More R&D Spending in 2007

Article excerpt

Once again, "steady growth" is forecast for R&D spending in the coming calendar year by Schonfeld Associates.

The latest edition of the Libertyville, Illinois consulting firm's annual R&D Ratios & Budgets again expects the pharmaceutical industry to be the biggest R&D investor, with drug companies increasing their budgets 12 percent to $84 billion (see Table, next page). Last year's forecast called for the drug companies to hike their budgets 10.3 percent to $81 billion.

Pfizer is expected to be the biggest spender with $10.6 billion, followed by Johnson & Johnson, GlaxoSmithKline, Novartis, Sanofi-Aventis, and Roche; each is projected to spend over $5 billion. Schonfeld estimates overall growth in pharmaceuticals to be 12 percent in 2007, much of it again spurred by new discoveries and attempts to protect expiring patents.

Schonfeld predicts Pfizer will also be the biggest single R&D investor in 2007, followed by Toyota at $9.8 billion. Two of the top three R&D spenders in 2007 will be auto companies, and the industry as a whole is expected to spend $50 billion, 6.4 percent more than 2006.

The major software companies will spend $24.9 billion on R&D in 2007, an increase of 8.7 percent. Microsoft leads with a budget of $8.4 billion, a 10 percent increase.

An 11.3 percent increase in R&D spending by biotech companies is predicted for next year, bringing 2007 spending to $7.7 billion. Electromechanical apparatus makers, led again by Medtronic, will spend $2.9 billion, 12.1 percent more.

20 Largest R&D Spending Industries
in 2006 and 2007 (by SIC Croup)

                                           R&D Spending
                                           (Millions $)

                                   SIC     2006    2007
Industry                           No.     (1)      (2)

Biological pds, ex diagnostics     2836     7041    7728
Chemicals and allied products      2800     5770    5834
CMP integrated sys design          7373     6620    6427
CMP programming, data process      7370     8492    9176
Computer and office equipment      3570    11689   12073

Computer communication equip       3576     5265    5713
Computer peripheral eq, NEC        3577     4517    4670
Conglomerate                       9997    10489   10904
Electr, other elec eq, ex emp      3600     9274    9518
Electronic computers               3571     6268    6397

Household audio and video eq       3651     6569    7083
Motor vehicle part, accessory      3714     7580    8136
Motor vehicles and car bodies      3711    47487   50071
Petroleum refining                 2911     6637    7170
Pharmaceutical preparations        2834    76875   84291

Prepackaged software               7372    23009   24915
Radio, TV broadcast, comm eq       3663    17518   18618
Radiotelephone communication       4812     9419    9852
Semiconductor, related device      3674    26966   28980
Tele and telegraph apparatus       3661     5207    5167

                                                   Annual
                                  R&D $   R&D $     R&D
                                  as %     as %    Growth
Industry                          Sales   Margin    (3)

Biological pds, ex diagnostics     20. … 
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