The 2019 edition of the EU Industrial R&D Investment Scoreboard rankings of the top 2,500 business research and development spenders in the world range from the top-ranked Alphabet — the parent company of Google — at €18.3bn to both Japanese and Chinese companies at ranks 2,499 and 2,500 with spending of €30.7m each. Ireland has 4 entries including 2 banks and another 22 mainly American firms that are technically "Irish" as they have headquarters in Ireland for tax avoidance purposes — this process is called a tax inversion. The total on the chart above should be 26 for Ireland (22 redomiciled companies and 4 Irish firms) as Dublin-based Pentair changed its headquarters to London when in 2017 it spun-out a new firm in Dublin, named nVent.
Amazon would have been in the first place had its annual report given a figure for R&D alone. Recode, the tech news service has reported that FactSet — a data service — estimated in 2018 that Amazon’s “technology and content” were its R&D expenditure, which in 2017 was at $22.6bn, 41% more than in 2016; $28.8bn in 2018, up 27.6% on 2017, and $37.3bn in 2019, up 24.6% on 2018.
Compared with Amazon, in France in 2019 'business expenditure research and development' (BERD) amounted to €35bn ($39bn).
In most European economies, businesses bear the burden of R&D: in the EU28 (including the UK), businesses accounted for 65.6% of research effort (BERD/GERD: government expenditure research and development ) in 2017. The ratio was 69.3% in Germany; 67.6% in the UK; 65% in France and 61.4% in Italy. In Japan, businesses contributed 78.8% and 73.1% in the United States.
The R&D expenditure of a firm may be in several countries and not necessarily in the home country of the company — an Amerian policy brief noted in 2019 "While US MNCs’ foreign R&D expenditures have increased dramatically, they still conducted about 83% of their R&D in the United States in 2015 (down from 92% in 1989)."
The Joint Research Centre (JRC) of the European Commission published the final R&D data for 2018 in 2020 and it covers 44 countries for a total of €823.4bn — an annual rise of 9% — which is about 90% of the world’s business-funded R&D. They include 551 EU companies for 25% of the total; 769 US companies for 38%; 318 Japanese companies for 13%; 507 Chinese for 12% and 355 from the rest-of-the-world (RoW) for 12%.
The UK has 127 companies in the EU total while the US firm total would be about 860 if the total of so-called US tax inversions of about 60 since 1994 were added.
East Asia-Pacific has more than 1,000 firms in the rankings. Russia has one entry at 2,124.
Superstar companies dominate R&D with the top 10, top 50 and top 100 accounting for 15%, 40% and 52% of the total.
The JRC says that within the top 50 there are 17 from the EU, 22 from the US, 6 from Japan, 2
each from China and Switzerland and one from S. Korea.
R&D is also concentrated by sector with 3 broad sectors accounting for 76.6% of the total: ICT at 38.7%; health (biopharmaceuticals) at 20.7% and automotive at 17.2%.
The JCT says that over the last 15 years 8 firms have moved up in the global ranking by 70 or more places: Alphabet, Huawei, Apple, Facebook, Alibaba, Celgene, Gilead Sciences and Continental, indicating the rising importance of ICT and biotechnology. The ranking of the top 50 large global companies by R&D intensity — the ratio of spending to firm revenues and all these firms have an intensity of 13.3% or more — also highlights the importance of these two technologies with 23 companies from biopharmaceuticals and 24 from ICT.
A January 2020 article in the Harvard Business Review, 'Why Stock Buybacks Are Dangerous for the Economy' noted that:
"The investment in the knowledge base that makes a company competitive goes far beyond R&D expenditures. In fact, in 2018, only 43% of companies in the S&P 500 Index recorded any R&D expenses, with just 38 companies accounting for 75% of the R&D spending of all 500 companies. Whether or not a firm spends on R&D, all companies have to invest broadly and deeply in the productive capabilities of their employees in order to remain competitive in global markets."
The JRC says that the top R&D investors own 50% of patents filed in the EPO (European Patent Office) and USPTO (United States Patent and Trademark Office) offices from 2012 to 2015.
The share of green patents was at 9% of the total while 53% of these patents belong to the top R&D companies.
Most of the green patents owned by the Scoreboard companies (about 80%) are concentrated in companies headquartered in Japan (30.9%), the US (26.8%), Germany (11.8%) and South Korea (10.5%). EU companies show comparative advantages in most green technologies, with the exception of ICT applications for energy.
Toyota had most green patents but the top 25 global companies by the number of green patents comprise EU firms such as Bosch, Volkswagen, Airbus and Rolls-Royce.
EU's top 1000
The JRC says that in its separate listing of the top 1,000 EU companies, the threshold for annual R&D is €8.6m.
R&D is concentrated with the top three EU countries (Germany, UK, France) accounting for 68.4% of EU R&D while 903 companies based in the top 10 member states accounted for 97% of the total R&D. Volkswagen heads the rankings with the expenditure of €1.4bn.
Germany leads in automotive and industrial engineering with 37.4% of the EU 1000 companies while the UK leads in biopharmaceuticals, software and IT hardware with 35.9% of the companies.
In 2018, R&D growth in the EU was driven mainly by the automotive sector, in particular by French and German companies, and to a lesser extent by companies from the Health and ICT industries.
French companies made the largest contribution to the growth of the EU 1000 sample. They increased R&D by 10.5% and net sales by 6.5%.
The JCT says that apart from the then top 3 member states, companies from Denmark and Sweden increased considerably their R&D investments (13.6% and 11.9% respectively.
Ireland
On the EU Global 2500, Kerry has a 436 ranking with 2018 spending of €286m. It is followed by Allied Irish Banks (AIB) at 542 with a spend of €217m and Bank of Ireland at 565 with an expenditure of €207m.
Glanbia is ranked at 2249 with a spend of €36m.
Kerry and Glanbia are Foods Producers and are among a total of 24 on the EU 1000. Kerry is in 4th place among EU producers.
In Europe [EU + RoW (rest of world) in Europe] Nestlé S.A of Switzerland had an R&D expenditure of €1.8bn.
In the EU Kerry has a rank of 114; AIB and BOI are at 147 and 153. Glanbia is at rank 511.
On the EU 1000 rankings, there are 2 Irish additions compared with the EU's Global 2500.
Kingspan, a building materials firm, has a rank of 553 with a spend of €30m and Trinity Biotech is at 830 with an expenditure of €9m.
The redomiciled total is 23 foreign firms that claim to be "Irish.'
Conclusions
1) In the EU Top 1000 R&D Firms Ireland has only 4 indigenous industrial firms that spend more than €8.6m annually on R&D;
2) Austria and Belgium have a total of 33 firms each among the EU Top 1000 R&D Firms. Denmark is at 44; Finland 35; Netherlands 53 and Sweden 78. Germany's firm total is 218;
3) With Britain no longer a member of the European Union, the loss of British biopharmaceutical firms from 2020 results in a greater EU concentration on automotive and industrial engineering;
4) The United States dominates in ICT and biopharmaceuticals;
5) With over 1,000 East Asia-Pacific firms in the Global 2500 R&D Firms, this region is bound to grow further;
6) 112 French companies made the largest contribution to the growth of the EU 1000 sample. They increased R&D by 10.5% and net sales by 6.5%. Italy and Spain have 39 and 21 firms respectively in the rankings.
The 2019 EU Industrial R&D Investment Scoreboard — including links to Excel charts
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