The sectoral distribution of R&D

R&D spending by companies in the UK1000 was dominated by five sectors: pharmaceuticals and biotechnology; aerospace and defence; software and computer services; automobiles and parts; and banks. Together, these accounted for 60% of R&D (see Figure 3). In a change to last year’s Scoreboard, two of the top five sectors (banking and aerospace and defence) decreased their spending. Both the software and computer services and automobiles and parts sectors increased their R&D investment by around 9%.

As in previous Scoreboards, the pharmaceuticals and biotechnology sector was by far the largest investor, accounting for 35% of the UK1000 total. It invested more than five times as much as the second-largest sector.

Figure 3: Distribution of UK1000 R&D expenditure, by sector

The five biggest sectors together account for 60% of all the money spent on R&D by the UK1000 in 2009. This is similar to the previous year’s results.

Globally, five sectors continued to dominate expenditure by the world’s leading R&D investors. Three of the sectors were also among the five largest-spending sectors in the UK – pharmaceuticals and biotechnology, software and computer services and automobiles and parts. Technology hardware and equipment and electronic and electrical equipment rounded out the global top five.

The pharmaceuticals and biotechnology sector remained the largest sector globally, just ahead of technology hardware and equipment and automobiles and parts. In contrast with the UK, no sector dominated overall R&D spending. However, while the three biggest sectors have broadly similar shares of total R&D investment among the G1000, only the pharmaceuticals and biotechnology sector increased its R&D spending in 2009. Together, the top five sectors accounted for more than 66% of the investment by the G1000 (see Figure 4). This is down slightly from the results of last year’s Scoreboard (68%).

Figure 4: Distribution of G1000 R&D expenditure
Figure 5: R&D expenditure by sector and country in the G1000

As in previous Scoreboards, the most important sectors by R&D investment vary significantly between the leading countries (Figure 5). France, Japan and the US had relatively diversified portfolios, with at least three sectors contributing a significant amount of overall R&D spend. Germany’s R&D continued to be more concentrated, particularly in the automobiles and parts sector. R&D in Switzerland and South Korea remained highly concentrated in pharmaceuticals and biotechnology and electronic and electrical equipment, respectively.

Among the 50 UK firms in the G1000, R&D was heavily concentrated in the pharmaceuticals and biotechnology sector. Owing to a comparatively healthy growth in 2009, the software and computer services sector played a bigger role in diversifying the UK’s R&D portfolio. However, the UK also had the largest amount of R&D (51%) outside the major sectors of all the leading countries covered by the analysis.