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Booz & Company Study Finds Top Corporate Spenders on R&D Boosted Investments to Nearly Half a Trillion Dollars in 2007
Date:10/21/2008

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India and China-based companies are still small R&D players – but they are growing fast. Though tiny players on the worldwide R&D stage, accounting for just 1% of Innovation 1000 total spending, companies headquartered in India and China increased their absolute R&D spending by 22%, outpacing the worldwide compound annual growth rate of 5.6%. Europe boosted its spending by 12%, increasing its share of global R&D spending to 31%. North America had a lower growth rate in spending at 9%, but maintains the largest share of R&D spending in the Innovation 1000 at 42%. In all, companies headquartered in North America, Europe and Japan accounted for 94% of the Innovation 1000 spending, a proportion that is down 1% from last year.

Two-thirds of R&D spending was concentrated in just three industries in 2007: computing and electronics (29%), health (22%), and automotive (16%). Their R&D footprints reflect different competitive and management challenges:

In computing and electronics, access to talent and ideas drives the global R&D footprint as a significant portion of research can be used in products for sale in just about any market. Fully 70% of this sector's R&D spending originates in companies headquartered in just two countries – the U.S. and Japan – yet less than 40% of this spending actually takes place there. The rest is spread among more than 20 different countries. In health, about 30% of R&D spend is devoted to research, and 70% to product development, and for the latter, about two-thirds is spent in emerging markets in order to recruit clinical trial participants cost-effectively. The research side has been slower to establish a presence in emerging markets; in 2007 close to 95% of R&D went to drug discovery in the U.S., Europe and Japan. While 83% of the automotive industry's 2007 R&D spending came from three countries—the U.S., Germany and Japan—just 60% of
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