Academic journal article Research-Technology Management

U.S. R&D Spending to Grow in 2008

Academic journal article Research-Technology Management

U.S. R&D Spending to Grow in 2008

Article excerpt

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

The latest edition of the Libertyville, Illinois consulting firm's annual R&D Ratios & Budgets expects the pharmaceutical industry to again be the biggest R&D spender, with drug companies increasing their budgets 8.7 percent to $91 billion (see Table, below). Last year's forecast called for the drug companies to increase their budgets 12 percent to $84 billion.

Johnson & Johnson is expected to be the biggest pharma spender with $9 billion, 8.5 percent above the estimate for 2007, followed by Sanofi-Aventis, GlaxoSmithKline, Novartis, Pfizer, Roche, Merck, and Abbot--each projected to spend over $5 billion.

Schonfeld predicts J&J will also be the biggest single R&D investor in 2008, followed by Toyota at $8.7 billion. Two of the top three R&D spenders in 2008 will again be auto companies, and the industry is expected to spend $51 billion, 3.4 percent more than 2007.

The major software companies should spend $27 billion on R&D in 2008, an increase of 9 percent. Microsoft continues to lead with a budget of $7.9 billion, up 7.4 percent. Oracle, SAP, Electronic Arts, and Symantech will be joined by Google and Yahoo in investing over $1 billion in R&D.

Semiconductor companies will increase their budgets 7.9 percent to $31.6 billion, topped by Intel with $16.8 billion.

Schonfeld's forecasts are drawn from a database of 3,000 public companies, relying on data compiled from Form 10K reports to the Securities and Exchange Commission and a proprietary econometric model. The model combines individual firms' historical R&D spending with the major R&D drivers, which include profits and sales.

20 Largest R&D Spending Industries in 2007 and 2008 ft SIC Group)

                                        R&D Spending
                                        (Millions $)
                                 SIC
Industry                         No.    2007 (1)   2008 (2)

Biological pds, ex diagnostics   2836    13882      16042
Chemicals and allied products    2800     6297       6223
CMP programming, data process    7370    16540      17591
Computer and office equipment    3570     7678       7954
Computer communication equip     3576     6462       6984
Conglomerate                     9997    11207      11817
Electr, oth elec eq, ex CMP      3600    11406      11318
Electronic computers             3571     7107       7511
Household audio and video eq     3651     4383       4241
Motor vehicle parts, accessory   3714     7697       7828
Motor vehicles and car bodies    3711    49592      51186
Petroleum refining               2911     7144       7835
Pharmaceutical preparations      2834    84291      91328
Phone comm ex radiotelephone     4813     4542       4622
Prepackaged software             7372    24911      27105
Radio, TV broadcast, comm eq     3663    20703      22621
Radiotelephone communication     4812    10091      10626
Semiconductor, related device    3674    29368      31626
Surgical, med instr, apparatus   3841     7847       9200
Tele and telegraph apparatus     3661     5544       5771

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

Biological pds, ex diagnostics    36. … 
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