strategy+business Winter 2013 : Page 37

The top 100 companies on the list accounted for 45 percent of the R&D spending growth and more than 60 percent of the total spent on innova-tion, and the top 20 companies alone made up almost a quarter of both total spending and spending growth. The list of the 20 largest spenders changed somewhat from last year ( see Exhibit B ). Volkswagen took the top spot, Samsung jumped from sixth to second, and Google made its first entrance in the top 20, at number 12. (Some of these shifts were a result of changes in how we accounted for R&D spending; see “Methodology.”) Outside the top 20, 89 new compa-nies entered the Global Innovation 1000. They contributed more than $16 billion in R&D spending, a healthy addition given that the 89 companies leaving the list spent less than $9 bil-lion in 2012. Together, three sectors—com-puting and electronics, healthcare, and auto—accounted for 65 percent of overall R&D spending, about the same proportion as last year ( see Exhibit C ). But this year the software Exhibit C: Spending by Industry, 2013 The computing and electronics segment remains the top R&D spender, accounting for more than quarter of spending worldwide. Computing and Electronics 27% Other 2% Telecom 2% Aerospace and Defense 3% Consumer 4% Chemicals and Energy 6% Software and Internet 8% Industrials 10% Auto 16% Healthcare 22% R&D spending, the software and Internet sector’s growth in spending appears to indicate that the tide is turning in favor of technologies that run our increasingly digitized world ( see Exhibit D ). In contrast, spending in the computing and electronics sector increased by just $3.4 billion—al-most $10 billion less than last year’s growth total. Twelve of the 28 com-puting and electronics companies in the top 100 spent less than last year; even IBM just maintained the same level of spending. Still, the computing and electronics industry remains the highest-spending sector by a wide Source: Bloomberg data, Capital IQ, Booz & Company feature innovation margin—27 percent of the total, com-pared with 22 percent for healthcare, and Internet sector overtook comput-ing and electronics as the largest contributor to the growth in R&D spending. The software and Internet sector added 10 companies to the Global Innovation 1000 and boosted its innovation spending by $9.3 bil-lion—more than any other sector, by both measures. Despite the fact that its spend-ing makes up just 8 percent of total the second-highest spender. Meanwhile, spending growth in the auto sector slowed to just $7.4 billion in 2013 from $13.2 billion last year; the flurry of R&D surrounding the launch of new models in the past several years is clearly abating. The healthcare sector, however, increased spending by $9.2 billion in 2013, up from an increase of $6 billion the year before. The industry received a boost from several healthcare com-panies that increased their spend-Exhibit D: Change in R&D Spending by Industry, 2012–13 The software and Internet sector invested aggressively this year, growing its R&D spending by 22.1 percent. WEIGHTED AVERAGE: 5.8% ing significantly, including Roche in Europe, Gilead in the United States, and Takeda in Japan. The chemicals and energy sector was the only one 37 Software and Internet Telecom Auto Healthcare Other Industrials Consumer Computing and Electronics Aerospace and Defense Chemicals and Energy –5% 3.7% 2.0% 0.5% –4.8% 0% 5% 10% 15% 7.8% 7.1% 6.9% 5.4% 22.1% 21.1% to see a decline in spending this year, falling by $2 billion. The decline was mostly on the chemicals side; energy companies increased their spending overall. With a few notable exceptions, the geographic picture looks similar to last year’s ( see Exhibit E, page 38 ). Innovation spending in companies headquartered in North America outpaced that of compa-(continued on page 38) 20% 25% Source: Bloomberg data, Capital IQ, Booz & Company

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