Top R&D Spenders: The Biggest Investors of 2020

Which companies spend the most on research and development?

It’s easy to buy goods and resell them for profit. But this is not the model most companies use to expand. They want to be unique. They want to be the only provider of a certain product. They want to make history.

So what do they do?

They invest heavily in research and development to make sure they come up with the next big thing, as the average R&D spending by industry figures show us.

First, let’s line up the top R&D investors:

Top 10 R&D Spenders

  1. Samsung: $14.9 billion
  2. Alphabet: $14.8 billion
  3. Volkswagen: $14.5 billion
  4. Microsoft: $13.6 billion
  5. Huawei: $12.5 billion
  6. Intel: $12.1 billion
  7. Apple: $10.7 billion
  8. Roche: $9.8 billion
  9. Johnson & Johnson: $9.7 billion
  10. Daimler: $9.6 billion

We have them all listed in this fabulous infographic.

Research and development are crucial for business. Companies pump billions into their R&D divisions. Most of these expenses may never return any benefits. If they do, however, they are likely to generate astonishing amounts of revenue.

Next, we want to focus on the top 20 R&D investors. We will examine what they do and why they need research and development.

While our ranking is based on data from 2018, these companies will continue to be among the biggest investors in research and development.

Top R&D Spenders

You wouldn’t believe the kind of cash these firms inject into R&D!

1. Samsung

R&D Spending: $14.9 billion

(Source: 2018 EU Industrial R&D Investment Scoreboard)

South Korean giant Samsung tops the list of biggest R&D investors among companies. Currently, it is the biggest smartphone vendor and one of the major producers of consumer electronics.

According to its website, Samsung has R&D centers in 12 countries around the world which help the company find new ways to enchant users. One of its flagman products, the Galaxy smartphone, was a major success in part because of innovations like an intelligent camera and up to 1 TB of storage.

How’s that for smart investment in research and development?

2. Alphabet

R&D Spending: $14.8 billion

(Source: 2018 EU Industrial R&D Investment Scoreboard)

Alphabet has been investing heavily in R&D, looking for new ways to monetize the data it collects from users. It spends an astonishing $14.8 billion on innovations. According to Statista estimates, the company’s R&D budget is even bigger, having ballooned to over $21 billion in 2018.

As one of the top investing companies, most of Google spends most of its R&D budget on employee salaries and buildings management. The company is focused on improving its impressive range of products and services while also launching new products.

Alphabet’s main source of income continues to be search and advertising, but that’s not the only niche the company is pouring money into. It owns Calico, a life sciences company that aims to combat aging and associated diseases. Additionally, Alphabet invests in Verily, which has been working on projects like a health-tracking wristband or a spoon for people with tremors.

3. Volkswagen

R&D Spending: $14.5 billion

(Source: 2018 EU Industrial R&D Investment Scoreboard)

German car manufacturer Volkswagen is one of the biggest companies in the world. In 2018, it sold a record breaking 10.8 million vehicles around the globe. The company has over 655,000 employees and owns car plants all over the world.

So, the impressive Volkswagen R&D spending should come as no surprise. The company is all about making reliable convenient cars. To this end, it focuses on improvements on the cars’ connectivity, automation, construction, and use of light materials.

The company takes its innovations seriously. In 2018 it filed a massive 7639 patent applications for employee inventions.

4. Microsoft

R&D Spending: $13.6 billion

(Source: 2018 EU Industrial R&D Investment Scoreboard)

Speaking about patents, check out Microsoft’s list. The company has over 31,000 patents so far, and another 38,000 pending.

Microsoft is one of the top innovation companies. It founded its research subsidiary, Microsoft Research, back in 1991. Since then, it has grown to employ more than 1,000 people.

Apart from that, Microsoft owns research centers all over the world. They focus on activities like machine learning, data mining, linguistics, ad placement, social networking, etc.

5. Huawei

R&D Spending: $12.5 billion

(Source: 2018 EU Industrial R&D Investment Scoreboard)

Huawei rules the world of mobile handsets, but a substantial part of its R&D power goes towards wireless networks. The Chinese company invests in creating superfast networks. It has already introduced 5G commercial products and solutions.

What’s more, Huawei’s global R&D spending has skyrocketed in recent years. In 2018, it introduced SingleRAN Pro – a technology that lets mobile carriers offer multiple wireless services and communications standards on a single network. Huawei claims SingleRAN solution can increase a network’s capacity tenfold.

Now, self-driving cars are another reason why the Chinese company spends so much on R&D. When autonomous automobiles start cruising the streets, they will need a powerful network.

The thing is, bandwidth alone is not enough. These next-generation networks will need artificial intelligence to manage all the processes and data in the network. So Huawei is focusing on wireless AI.

6. Intel

R&D Spending: $12 billion

(Source: 2018 EU Industrial R&D Investment Scoreboard)

The semiconductor manufacturer is no new kid on the block when it comes to innovation. Intel R&D budget numbers prove it. It has one of the biggest R&D expenses among IT companies.

A considerable portion of Intel’s R&D expenses go into data-centric innovation. And we all know how important the production of oil is, so you can view data as the new oil.

But data doesn’t just hit you in the face. First, you need to gather it or generate it. Then, you have to make sense of it. That’s why Intel is investing in new technologies that will help process this information.

One of the most innovative companies, Intel is on its way to introduce its 7-nanometer chips in 2021. Should this happen, it would be a happy end to a long and bumpy journey for Intel, which has been trying to move away from its 14-nanometer technology for some time.

7. Apple

R&D Spending: $10.7 billion

(Source: 2018 EU Industrial R&D Investment Scoreboard)

“You can do multi-finger gestures on it, and, boy, have we patented it!” This is what the late Steve Jobs said when he introduced the iPhone back in 2007.

Intellectual property is a big game in technology R&D, and Apple has every reason to file thousands of patents. Throughout the years, it has given us some amazing technologies that have changed the world.

The thing is, Apple relies on these technologies to keep its market dominance, so it makes sure no one is able to copy them.

Here is an amazing fact to get a better understanding of Apple’s R&D efforts:

The company now spends close to 13 times more on R&D than it did in 2009.

This is huge!

Apple may have hit the jackpot with the iPhone, as it delivers around $155 billion in annual revenue. But sales growth is slowing down, and the competition is eating Apple’s share of the phone market.

If the famous Cupertino company wants to be among the top innovative companies in the future, it needs to spend some extra cash.

8. Roche

R&D Spending: $9.8 billion

(Source: 2018 EU Industrial R&D Investment Scoreboard)

Big pharma is no joke.

Pharmaceutical companies make billions selling drugs. But for each new product that comes to the market, billions of investment in research and development are needed.

Sometimes, it can take years and the work of thousands of researchers before a new product can hit the shelves.

But how much do pharmaceutical companies spend on research and development anyway? In Roche’s case, it’s close to $10 billion per year.

This is why the Swiss pharma company is as much an R&D company as it is a healthcare company. One of its primary goals is finding the mechanism of diseases, crafting a cure for them, and patenting its discoveries.

Roche owns a couple of biotechnology companies like Genentech, Ventana, and Chugai Pharmaceuticals. In early 2019, it bought Spark Therapeutics, a gene therapy company, for over $4 billion.

9. Johnson & Johnson

R&D Spending: $9.7 billion

(Source: 2018 EU Industrial R&D Investment Scoreboard)

Looking at research and development statistics, you’ll usually find Johnson & Johnson somewhere close to the top spot. Its actual research and development expenses for fiscal 2018 are $10.8 billion. This is higher than the $9.7 billion figure estimated by the EU Industrial R&D Investment Scoreboard.

Like other pharmaceutical companies, Johnson & Johnson has to deal with expiring patents. Whenever a patent expires, other companies can produce similar drugs and bite off large chunks of the market.

To combat that, Johnson&Johnson’s R&D tech expenditures are aimed at new and better technologies and products. Sometimes, this means buying stakes in companies.

Check this out:

In 2018, Johnson & Johnson spent around $1 billion buying company stakes. It bought shares in Arrowhead, a company working on a hepatitis B drug. Together with an upfront payment of $175 million, this got J & J the global rights for the drug.

And that’s not all:

The deal’s value is expected to be much bigger, and it could turn out to be a gold mine for Johnson & Johnson.

10. Daimler

R&D Spending: $9.6 billion

(Source: 2018 EU Industrial R&D Investment Scoreboard)

How do you keep an iconic car manufacturer on track?

You build an army of researchers. At least that’s what German automaker Daimler is doing. The company employs over 25,000 people in its R&D department. That’s more than the entire active military force of Austria!

Group Research & Mercedes-Benz Cars Development is Daimler’s biggest R&D unit in terms of employees, with a staff of almost 18,000 people. The company also has research and development sites in North America and Asia. It is on track to build a $160 million R&D center in China.

More than a quarter of Daimler’s R&D budget is for development costs. The rest goes mostly into amortization and R&D expenditures.

11. Merck US

R&D Spending: $9.4 billion

(Source: 2018 EU Industrial R&D Investment Scoreboard)

Merck is no exception from pharma companies with their huge research and development budgets. The firm’s US R&D hub employs about 500 scientists, and its German R&D center is even bigger.

The company focuses on finding new therapies in the fields of immunology and oncology.

Apart from that, Merck has R&D facilities in China and Japan.

12. Toyota Motor

R&D Spending: $8.7 billion

(Source: 2018 EU Industrial R&D Investment Scoreboard)

Toyota Motor Corporation is the biggest car manufacturer in the world. So, it should come as no surprise that Toyota R&D spending figures are quite impressive.

It doesn’t just rule the global car market – it is also a leader in hybrid and hydrogen fuel-cell vehicles. While everyone keeps talking about Tesla and eco-friendly vehicles, Toyota has sold millions of Priuses so far. Take that, Elon Musk!

According to its website, Toyota has 15 R&D centers on four continents. They deal with everything from basic research to advanced engineering to vehicle evaluation.

13. Novartis

R&D Spending: $8.1 billion

(Source: 2018 EU Industrial R&D Investment Scoreboard)

Novartis takes R&D investment seriously: it gives a job to about 6000 people. Known as Novartis Institutes for BioMedical Research, this structure is responsible for developing new technologies, therapies, and products.

Here’s the deal:

It relies on a team of chemists, biologists, and computer scientists to find new molecules that can be used as weapons against diseases. When scientists discover promising molecules, they test them and provide proof-of-concept.

And that’s how new drugs enter the market.

14. Ford Motor

R&D Spending: $7.4 billion

(Source: 2018 EU Industrial R&D Investment Scoreboard)

According to Statista, Ford increased its research and development expenses by $2 billion in five years. While that’s not nearly as impressive as the spending of some other companies on our list (like Apple), it represents Ford’s efforts to step up innovation.

Ford has been a pioneer in American car manufacturing for more than a century, so innovation is nothing new for the company. The famous car brand focuses on connectivity and data analysis, as many experts see them as the future of the automobile industry.

15. Facebook

R&D Spending: $7.2 billion

(Source: 2018 EU Industrial R&D Investment Scoreboard)

Advertising is a killing business. There are plenty of companies on the market, so you have no other choice but to innovate if you want to stay ahead of the competition.

Facebook R&D spending stats are a good example. The company may be generating billions from placing ads, but Facebook’s co-founder Mark Zuckerberg knows that’s not enough. To make sure it keeps the top spot on the market, Facebook invests in R&D mostly related to AI.

Artificial intelligence can improve revenues by providing more relevant ads to users. Facebook is also one of the big players in the virtual reality niche.

16. Pfizer

R&D Spending: $6.8

(Source: 2018 EU Industrial R&D Investment Scoreboard)

One of the  biggest pharmaceutical companies in the world, Pfizer has been pouring lots of money into innovation. The company has R&D centers around the globe that develop, test and improve its products.

As one of the top R&D spenders, Pfizer has been focusing on consolidation. In 2019, it decided to merge its off-patent drugs business with generic drugmaker Mylan. The deal is supposed to generate around $20 billion in revenue.

Pfizer also decided to spend over $10 billion on purchasing ArrayBioPharma in a move designed to expand its position in the cancer treatment segment.

17. BMW

R&D Spending: $6.8 billion

(Source: 2018 EU Industrial R&D Investment Scoreboard)

For BMW, it’s pedal to the metal when it comes to research and development. While its R&D budgets isn’t as big as some of its competitors’, the German car manufacturer invests the money in various activities.

Those include studying the habits of users and exploring new business models. As with other companies in the automotive business, this has to do with connectivity. The Internet of Things is changing human behavior. It also gives opportunity for new products, services, and market niches. And BMW R&D spending numbers will help the giant be there when those opportunities arrive.

18. General Motors

R&D Spending: $6.7 billion

(Source: 2018 EU Industrial R&D Investment Scoreboard)

General Motors has a good record in terms of research and development. Throughout the years, it has developed or successfully launched products that were very innovative at the time.

In 1939, it created the world’s first car with automatic transmission.

In the 1960s, it developed a hydrogen-fueled vehicle. It was expensive and impractical to drive, but it showed the effort GM puts into crafting new technologies.

In 2018, GM teamed up with Honda, some of the most popular brands in the world, to create an autonomous vehicle. Cruise Holdings, which is co-owned by the two car brands, is valued at about $15 billion. What’s more, it has attracted investments from other companies like Softbank.

19. Robert Bosch

R&D Spending: $6.6 billion

(Source: 2018 EU Industrial R&D Investment Scoreboard)

Companies with high research and development costs tend to have a long history of inventing stuff. Such is the case with Robert Bosch.

The company obtained its first patent in 1897. It was for an oscillating sleeve for Bosch’s magneto ignition device.

Ever since then, Bosch has been expanding its R&D operations. Today, the company has research and development sites in 12 locations around the world.

20. Siemens

R&D Spending: $6.1 billion

(Source: 2018 EU Industrial R&D Investment Scoreboard)

We finish the list of the top 20 R&D investors with German conglomerate Siemens. According to healthcare statistics, it has operations in that industry as well as in multiple others like energy.   So research and development is a vital part of the business.

As of September 2017, Siemens had 40,000 people working in R&D. It’s an astounding number, and it highlights Siemens as one of the top innovative companies.

Wrap Up

Research and development is no guarantee of profits. Companies spend years and sacks of money in R&D that sometimes turn nothing.

Nevertheless, R&D is vital for many companies. They use it to expand its market share and increase sales.

The top R&D spenders on this list have made a difference on the market, providing breakthrough technologies and products that have changed our lives.

Sources:

  1. 2018 EU Industrial R&D Investment Scoreboard
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