Summary

Highlights

The 850 UK firms making the largest investment in Research & Development (R&D) in 2007 grew their R&D by 6% to £21.6 billion in the last year.
The 88 UK companies with the most R&D – which are part of the 1,400 largest global investors - increased their investment by 10.3% -- more rapidly than their global peers.
In contrast, R&D spending by other smaller UK investors amongst the 850 most active UK companies grew 1.2%.
Oil & gas production was the fastest growing sector in 2007, increasing spending by 36%. The pharmaceuticals & biotechnology sector remained the largest investor overall in R&D in the UK.
Pharmaceuticals & biotechnology companies also remained the biggest investors in R&D worldwide, having remained ahead of firms in the technology sector.

What the Scoreboard means for companies and investors

The 2008 R&D Scoreboard draws on data on R&D expenditure and other measures of financial performance which have been taken from the published accounts of UK-based and global companies. It uses the latest accounts as of 28th July 2008, and refers to business activity largely in 2007.

This analysis offers insights to both companies examining their R&D investment needs and to analysts and investors concerned with identifying good performance in companies.

The UK’s top R&D companies

In 2007, the 850 UK companies undertaking the most R&D (the ‘UK850’) increased their investment by 6% compared to the previous year to £21.6 billion. This was largely due to increased spending by firms in the pharmaceuticals, oil and gas production, software & computer services and banking sectors.

The UK’s forest and paper sector showed the fastest growth in R&D spending over the last year – it was up by 871% in the last year. Pharmaceuticals remained the largest sector in the UK – it was up by 7% over the previous year. Of the sectors making the most significant investment in R&D, firms in both the oil and gas producing and banking sectors reported average R&D growth of 36% and 19% respectively.

R&D is a key expenditure in many sectors. UK aerospace, automobiles, pharmaceuticals and software and technology firms invested substantially more in R&D than they earned as profits.

The UK’s 88 biggest R&D investors – which also form part of the ‘G1400’ largest R&D spenders worldwide – conducted two thirds of the UK850’s R&D. They grew their R&D by 10.3% over the previous year whereas their global peers averaged a 9.5% increase.

The UK850’s R&D has grown significantly faster (6%) than their number of employees, which increased by 4% over the same period.

In the last year, for the UK850 firms as a whole, whilst sales growth has outstripped R&D growth, R&D has increased as a proportion of their sales.

The global picture

Global R&D spending by the G1400 rose by 9.5% to £274 billion. It continues to be dominated by companies registered in just five countries – the USA, Japan, Germany, France and the UK – which contributed 79% of R&D by the G1400. Globally, average R&D intensity remains broadly similar at 3.3% of sales.

R&D investment in the global pharmaceuticals sector grew by 12% in the last year; it has remained as the largest global R&D sector. Other rapidly growing sectors amongst the ten largest investors were the software and technology and hardware sectors which both grew at more than 12%.

Analysis in this Scoreboard suggests that, overall; the UK850 companies in the G1400 have increased their R&D expenditure more quickly than their global peers in the aerospace, fixed line communications, oil and gas producing and software sectors. In many sectors, however, UK firms increased their R&D more slowly than their global peers – such as in banking, electronic and technology sectors.

Key Facts