VW tops global R&D ranking, but EU companies put in mixed performance

For the first time since 2004, an EU company – the German carmaker Volkswagen – is the world’s largest private sector R&D investor. Volkswagen tops the European Commission's 2013 EU Industrial R&D Investment Scoreboard with an investment of €9.5 billion in 2012. Overall, EU-based firms (527 companies) stepped up R&D investment by 6.3%, just above the average of the 2000 firms in the Scoreboard (+6.2%). However, like last year they lagged behind their US counterparts (+8.2%). EU companies also showed a mixed performance depending on the sector, with strong R&D growth in some but stagnation or decline elsewhere. EU Scoreboard companies surveyed expect to increase their R&D investments by 2.6 % on average per year for the period 2013-2015, a fall in expectations over the previous year.

Research, Innovation and Science Commissioner Máire Geoghegan-Quinn said: "The EU still lags behind its main competitors in business investment in R&D, and there are some worrying signs in these latest reports. Despite the positive results of top EU companies in important industrial sectors such as automobiles, we are still too weak in high tech sectors such as biotechnology and software."

The 6.2% increase on average in R&D growth of the Scoreboard companies came despite a slowdown of net sales growth (+4.2% vs +9.9% in 2011) and a 10.1% decline in operating profits in 2012. The EU's overall positive results were largely driven by the R&D growth rates of German companies, particularly in the automobile sector.

Second place in the ranking goes to Samsung Electronics from South Korea with an investment of €8.3bn. Other companies in the top-10 include five based in the US (Microsoft, Intel, Merck, Johnson & Johnson and Pfizer), two in Switzerland (Roche and Novartis) and one in Japan (Toyota).

EU based companies in the Automobiles & Parts sector showed strong R&D growth (+14.4% vs -2.6% for their US counterparts). EU companies also outperformed US ones in Industrial Engineering (+12.3% vs +9.4%) and Aerospace & Defence (+9.5% vs -1.3%). Results of EU companies in the ICT sector were mixed, with Software and Computer Services performing well (+14.2%) but showing a decline in IT Hardware (-2.3%). In contrast, US-based companies performed well across both sectors (+12.6% and +14.8% respectively).

An analysis of trends over the past ten years shows that the US continue to increase its specialisation in R&D intensive sectors such as ICT and health (70% share of the total R&D investments made by US Scoreboard companies in 2012 vs 64 % in 2004).

Despite the strong US lead in these highly R&D intensive sectors, a closer look at the lower ranks of the EU companies shows a significant number of good performers in sectors such as Software and Biotech, companies which might become leaders in the future.

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Background

The EU Industrial R&D Investment Scoreboard is published annually by the European Commission (DG Research and Innovation and Joint Research Centre). The 2013 Scoreboard is based on a sample of 2,000 companies, top investors in R&D who together account for an investment value equivalent to more than 90% of the total expenditure on R&D by businesses worldwide. It measures the total value of their global R&D investment financed with their own funds, irrespective of the location where the relevant R&D takes place. The sample comprises companies that invested more than €22.6 million in R&D in 2012 and are based in the EU (527), the US (658), Japan (353) and other countries (462) including China, South Korea, Switzerland, India, Canada, Australia, Israel, Norway and Brazil.

The EU Survey on Industrial R&D Investment Trends complements the EU Industrial R&D Investment Scoreboard by gathering qualitative information on factors and issues surrounding and influencing companies' current and prospective R&D investment strategies. The 2013 survey results are based on 172 responses of mainly larger companies from the 1,000 EU-based companies in the 2012 EU Industrial R&D Investment Scoreboard. These responses were collected between April and June 2012.

MEMO/13/1000

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