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R&D spending, politically
incorrect research, and keeping score
You may complain that there's never enough money, but it just ain't so, say
Cientifica, the market research house. It has just reported that the global Top 100 R&D spenders bumped up their budgets 5.4% to some $254 billion last year, outstripping the estimated rise in total global R&D spending which it reckons hit 4.9%.
Top spender among the consumer products firms was Procter & Gamble (curiously listed under Pharma and Healthcare), followed by
Unilever, and Altria, parent to Kraft Foods and
Philip Morris, with Nestle the sole food firm. And for some reason the researchers included DNA-based therapeutics firm Amgen under Consumer Products.
Perhaps it's worth spending the 705 euros to get the full report and spreadsheet to see how proper categorisation changes the numbers.
With that caveat, unsurprisingly the biggest-spending sectors were drugs/healthcare ($59.3bn) and auto ($58.8bn), with food way behind at around $250 million.
In terms of R&D invested per sales dollar, food lags the rest of the sectors at about 1.8% compared to software at 18%. But, led by Nestle, which increased its R&D spending by almost 20%, it has shown consistent growth over the past three years, unlike the Top 100 average which has dropped about 0.6% a year.
Cientifica notes the emergence of state-owned Chinese firms as R&D spenders. Although none makes the Top 100, their Top 10 boosted budgets almost 80%a year to total $5.4 billion.
Given the salary differences for raw brainpower, that's likely to increase, says a new OECD paper that reports on the growing popularity of off-shoring R&D. "In Hungary and Ireland foreign companies account for 70% of industrial R&D but the role played by foreign affiliates varies widely around the world," it says. "At over 40%, the share of R&D conducted by multinationals is also high in the Czech Republic, Portugal, Spain and Sweden, compared to less than 5% in Japan."
Here's a wonderfully politically incorrect story. A slightly mysterious plant R&D firm by the name of
22nd Century Ltd is growing a genetically-modified tobacco plants with enriched-nicotine content. It hopes to use the GM weed to produce a "potential reduced- exposure product (PREP)".
Company blurb says "These efforts align with evidence from human-smoking research studies which suggest that enriching the nicotine content of tobacco, and therefore cigarette smoke, may potentially reduce the health risks associated with smoking."
Joseph Pandolfino, the company's president, says the tinkering with the tobacco genes produces nicotine levels from almost zero to double the current dose.
Back in 1996, Jack Henningfield, then the US's top addiction expert, quoting medical sources, said in correspondence "Nicotine, cocaine, heroin, and alcohol all meet criteria as addictive or dependence producing drugs…and the occurance of ... dependence among current users ranges from about 2 to 10 times greater for cigarettes than for these other drugs."
Perhaps Rolling Stones guitarist Keith Richards could volunteer to test the new smokes. For more on 22nd Century's research programme go to http://www.xxiicentury.com/.
Finally, just because we all like to keep score, even if it's not for public consumption, here is the latest ranking of CPG brands from
Interbrand. (We don't think Microsoft (at Number 2) is a CPG brand, no matter how hard it tries.)
Top 100 Global Brands
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Top 100 rank
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Brand
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Value ($bn)
|
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1
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Coca-cola
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67.5
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8
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McDonald's
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26.0
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15
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Gillette
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17.5
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23
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Pepsi
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12.4
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24
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Nescafe
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12.2
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26
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Budweiser
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11.9
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39
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Kellogg's
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8.3
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47
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Heinz
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6.9
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52
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L'Oreal
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6.0
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|
57
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Wrigley
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5.5
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|
59
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Avon
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5.2
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|
60
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Colgate
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5.2
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61
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KFC
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5.1
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62
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Kodak
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5.0
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63
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PizzaHut
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5.0
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64
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Kleenex
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4.9
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65
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Chanel
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4.8
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66
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Nestle
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4.7
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67
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Danone
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4.5
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69
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Kraft
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4.2
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80
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Duracell
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3.7
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86
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Hennessy
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3.2
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88
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Smirnoff
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3.1
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91
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Johnson & Johnson
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3.0
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92
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Moet & Chandon
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3.0
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98
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Nivea
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2.6
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|
99
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Starbucks
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2.6
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|
100
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Heineken
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2.4
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Source: Interbrand 2005
Until next time.
--
Ian Grant
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