Industrial R&D spending in the European Union last year jumped 5% over that of 2004, according to the just-published EU Industrial R&D Investment Scoreboard.
The scoreboard is compiled annually by the European Commission as part of its Industrial Research Investment Monitoring activity. This year's effort surveyed 2,000 companies' 1,000 in the EU and 1,000 in other parts of the world.
Among the world's major industrial companies, pharmaceutical and biotechnology firms were the second-biggest spenders, the survey found, topped only by technology hardware and equipment firms. Worldwide, R&D spending by these drug firms in 2005 rose by 8.4% over 2004.
The chemical industry was also among the top 10 sectors. But aggregate R&D spending by the chemical companies among the 2,000 firms accounted for less than 5% of the total, while the drug companies spending comprised 18.4% of the total. Moreover, worldwide spending in chemical R&D was down 0.8% from 2004 levels.
European Commissioner for Science & Research Janez Potonik says he finds the scoreboard "very encouraging." He sees the investment gap between EU and non-EU countries narrowing. And he predicts that, at the Council of Ministers summit meeting in Lahti, Finland, later this month, "European leaders will support the commission's proposals to go further to boost innovation in Europe and give even more impetus to these positive developments." That's important because the EU is putting its faith in innovation to underpin competitiveness in the region.
The survey shows the work still to be done. The 1,000 EU companies, it found, increased their R&D spending by an average of 5.3% in 2005. In contrast, the 1,000 non-EU companies raised their R&D investment by 7.7%.
Nonetheless, there is some ground for Potonik's optimism. The survey notes that the 5.3% average R&D growth in Europe contrasts with the wan growth of 0.7% shown in the 2005 scoreboard and the 2% contraction uncovered in the scoreboard for 2004.
In this year's scoreboard, more companies from sectors with high R&D rates are counted. For the EU group, that is particularly true: The presence of firms in R&D-intensive sectors such as software/computer services and pharmaceuticals/biotechnology has increased.
The EU chemicals sector analyzed by the scoreboard shows 49 companies with combined 2005 R&D spending of $7.6 billion, down nearly 1% from the level shown in the previous scoreboard. Over the past three years, the chemicals sector has shown an average annual decline of 3.2% in R&D spending, the survey points out.
The chemicals sector is somewhat oddly defined. For example, it includes Ahlstrom, the Finnish producer of specialty papers and nonwoven fabrics, and Dyson Ceramic Systems, with its ceramics and metallurgy interests. Bayer, Akzo Nobel, and Solvay also are included in this sector despite the sizable pharmaceutical businesses that all three operate.
On the other hand, there is no question that pharmaceuticals and biotechnology—split into two groups for ease of analysis—are among the strong suits in the EU deck of companies.
The scoreboard shows 57 EU companies in biotechnology, ranging from Merial, which invested just shy of $152 million in R&D in 2005, to BioProgress, which spent $3.3 million on R&D. EU biotech spending totaled $1.2 billion, an increase of 10.5% from the spending reported in the previous scoreboard. The biotech sector's average annual growth rate over the past three years is 7.1%.
The EU pharma group included 64 companies that spent a total of $21.6 billion on R&D, up 6.5% from the previous scoreboard. Although healthy, that growth rate is off from the average annual growth of 9.9% the industry posted over the past three years, the study found. Pharma R&D investment ranged from the $5.4 billion spent by leader GlaxoSmithKline, to the $3.2 million spent by the British company Alliance Pharma.
According to the commission's Directorate for Research, Technology & Development, details of all 2,000 companies' R&D and financial data are available from http://iri.jrc.es. An in-depth analysis of the data will be published before the end of the year, the commission says.