Corporate research and development spending declined in 2007, says survey

Toronto, ON – For the second year in a row, corporate research and development (R&D) spending fell among Canada’s top corporate R&D spenders, from $10.6 billion in fiscal 2006 to $10.3 billion in fiscal 2007. This represents a drop of -3% according to a study released last week by Research Infosource. In fiscal 2007, 61 firms increased their R&D spending while 37 posted declines.

Despite posting declines in R&D spending in fiscal 2007, Nortel Networks down -15.8% and BCE down 13.6% held onto the top 2 spots on the top 100 list. Magna International held onto 3rd place with an increase of 11.3% and Pratt & Whitney Canada remains in 4th with a drop of -7.7%. IBM Canada moves up a spot rounding out the top 5 with an increase in R&D spending of 4.7%.

“R&D spending in Canada is heavily influenced by Nortel Networks and BCE and both posted sharp declines in 2007,” says Ron Freedman, CEO of Research Infosource. “Removing these firms from the equation, R&D spending grew by 3.3%. However, if we correct for inflation, spending remained flat over the period.”

Companies lowered their R&D spending despite increases in revenue. While revenues grew by 9.2%, research intensity (R&D spending as a percentage of revenue) dropped by -12% from 3.6% in fiscal 2006 to 3.2% in 2007.

Only 19 companies made Research Infosource’s $100 Million Club, an elite group of firms that spent $100 million or more on R&D in fiscal 2007. This is a drop from the 24 companies on the list last year. Club members accounted for only 67% of total top 100 R&D spending in 2007, compared with 72% in fiscal 2006. These large R&D spenders posted a significant -10% drop in spending, compared with a healthy jump of 15.3% for companies spending less than $100 million.

$100 million club members are as follows, with rank for 2007, company name and R&D expenditures in 2007:
1 – Nortel Networks, $1.85 billion
2 – BCE, $1.26 billion
3 – Magna International, $725.5 million
4 – Pratt & Whitney Canada, $444 million
5 – IBM Canada, $377 million
6 – Atomic Energy of Canada, $289 million
7 – Research In Motion, $254 million
8 – Alcatel-Lucent, $236 million
9 – sanofi-aventis Group, $207.2 million
10 – Apotex, $181.8 million
11 – AbitibiBowater, $180 million
12 – GlaxoSmithKline Canada, $178.5 million
13 – Bombardier, $149.4 million
14 – Ericsson Canada, $147 million
15 – Cognos, $145.8 million
16 – Biovail, $127 million
17 – Pfizer Canada, $114 million
18 – Merck Frosst Canada, $110 million
19 – Hydro-Qubec, $100 million

Looking across industry sectors, information technology companies, dominated top 100 spending in 2007, accounting for 51% of top 100 spending. The communications/telecom equipment accounted for 27% of the total. The 32 companies in the pharmaceutical/biotechnology sector, accounted for 19% of total spending in fiscal 2007, compared with 18% the prior year.

The full list can be found at http://www.researchinfosource.com/top100.shtml.