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Global R&D Benchmarking Study: FY2011
 

Global R&D Benchmarking Study: FY2011

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    Global R&D Benchmarking Study: FY2011 Global R&D Benchmarking Study: FY2011 Presentation Transcript

    • GLOBAL R&D BENCHMARKING STUDY - FY2011June , 2012 This report is solely for the use of Zinnov client and Zinnov personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from Zinnov
    • Executive Summary 1 • After witnessing a decline in the FY 2010, Global R&D spending has increased Overall Global R&D significantly in FY 2011. Both Net Sales and R&D Spending has increased spending significantly with a growth of 13.55 percent and 8.2 percent respectively 2 • The R&D spend for NA and EU is 36% and 34% respectively Geographical split of R&D spending • As compared to last year the R&D spending for companies headquartered in APAC has increased by 28% followed by NA 11% 3 • Telecom & Networking, Electrical & Electronic equipment witnessed a Vertical split of R&D marginal increase in their Global R&D spending while Industrial sector spending witnessed a decline 4 • About one-third of the Global 1000 R&D spenders have centers in India India presence of top 1000 R&D spenders • About 30 percent companies with HQs’ in EU are in India and about 15% which have their HQs’ either in Japan or APAC, are in India 5 Vertical wise Intensity • Software and Semiconductor are mature verticals in terms of R&D headcount of top R&D spenders in intensity in India. India • Automotive and Aerospace are fast growing verticalsSource: Zinnov analysis of global top 1000 R&D spenders and India R&D landscape, The analysis has been done for FY2011
    • Vertical and Geo Definitions Verticals Definition Sample Companies Oracle, Microsoft, Amazon, Software/ Internet Includes companies from software domain and Internet based companies SAP Labs, Google Include companies from semiconductors (Chip design, ASIC design) and Semiconductors Intel, TI, AMD, Broadcom power semiconductor companies Includes companies operating in areas of mobile communications, Telecom & Networking Erickson, Nokia, Cisco ,NTT Telecommunication equipment, wireless services and Networking etc. E&E** & Computer Includes companies manufacturing consumer electronic equipment, LG, Sony, Whirlpool, Apple, Hardware motors, heavy electrical equipment Computer Hardware, etc. IBM, HP Includes companies working on designing and manufacturing of EADS, Rockwell Collins, Aerospace & Defense aerospace equipment Boeing, Bombardier Chemicals Includes Chemical companies BASF, Dupont, AKZO Noble Includes companies which are into automotive , Transportation and Toyota, Volkswagen, GM, Automotive commercial vehicles Honda Biotechnology & Includes companies working in areas of healthcare, pharmaceutical GE Healthcare, Novartis, Pharmaceuticals manufacturing, biotechnology United Healthcare Medical Equipment Includes healthcare equipment, device and services companies Medtronic, Baxter, Stryker Nestle, Unilever, Shell, Others Includes BFSI, Energy, FMCG, Media & Entertainment, Retail etc HSBC, Shell, Exxon Mobil Geographies EU NA APAC JAPAN ROW European union North America Asia Pacific Japan Rest of the worldSource: Zinnov analysis of global top 1000 R&D spenders and India R&D landscape. **Electrical and Electronic equipment
    • Agenda Global R&D Investment Analysis R&D Globalization Analysis 4
    • Agenda Global R&D Investment Analysis R&D Globalization Analysis 5
    • Global R&D spend has Increased; however, R&D Spending as percentage of Net Sales has remained constant from 2007-08 to 2010-11 Global R&D Investments Growth Trends, 2007-11 Global Net Sales Trends, 2006-11 (USD Billion) (USD Billion) 600 17,500 16,980* 580 17,000 16,684 582* 16,500 560 16,000 540 549 538 15,500 15,336 520 14,953 15,000 511 500 14,500 480 14,000 460 13,500 2007-08 2008-09 2009-10 2010-11 2007-08 2008-09 2009-10 2010-11  R&D spending in FY 2011 witnessed an increase due to increase in spending of semiconductor, industrial & consumer hardware and Electrical and Electronic equipment companies  Intel, Samsung, General Motors, Pfizer, Volkswagen are the few companies which played a key role in increasing R&D spend in FY 2011Source: Zinnov analysis of global top 1000 R&D spenders*Conversion Ratio from EURO to USD- 1.324. 6
    • The Top 500 R&D spenders account for nearly 90% of the total corporate R&D spending in the world Contribution of Top R&D Investors in the Total Company 2010-11 2009-10 2008-09 Global 1,000 R&D Spend Name Rank Rank Rank Change Change 400000 Roche 1 +1 +3 Pfizer 2 +3 +4 350000 60% of R&D spend in 2010-11 was from top 100 companies, a similar trend from the previous year Microsoft 3 0 -1 300000 Toyota Motor 4 -3 -3 Merck US 5 +11 +20 250000 Volkswagen 6 -2 -3 200000 Samsung 7 +3 +17 Electronics 2010 150000 Novartis 8 -2 +2 General Motors 9 +3 -4 100000 Johnson & 10 -2 -3 Johnson 50000 Nokia 11 -4 -3 0 Intel 12 +5 +5 Daimler 13 +1 0 Sanofi- Aventis 14 -5 -2 R&D Investments rank Panasonic 15 +3 -1 Companies marked in Red have shown continuous decrease in rank in last four years. The Scenario is opposite for companiesSource: Zinnov analysis of global top 1000 R&D spenders marked in Green.
    • From a geography perspective, the North American and EU region continues to dominate both in terms of numbers as well as the overall R&D spend Split of Top 1000 Companies by Geography Split of R&D Investment of Top 1000 Companies by Geography ROW Total R&D Investment USD 582 Billion ROW, 1% 2% APAC, 7% NA APAC 35% 11% NA, 36% EU EU, 34% Japan 32% 20% Japan, 22% Top companies by Net Sales Top companies by R&D investment Company Geography Company Geography Exxon Mobile North America Merck US North America Royal Dutch Shell Europe Pfizer North America Toyota Motor Japan Microsoft North America China Petroleum & Chemicals APAC Roche Europe Petro China APAC Toyota Motor JapanSource: Zinnov analysis of global top 1000 R&D spenders 8
    • A positive sign is that despite widely varying macro economic variables, companies across regions increased their R&D Investments in FY 2011 R&D investments in year 2008-2011 and split by Geography • Though the number of companies in APAC 250000 R&D in 2008-09 R&D in 2009-10 R&D in 2010-11 region has marginally increased from 9.8% in FY 2010 to 10.6% in FY 2011, the R&D 11% spend has significantly increased. 3% Companies with high R&D spending are 200000 Samsung, LG, Huawei, Teva Pharma, etc. • The R&D spending for EU companies did 150000 not increase much but the net sales in this 6% region went up by 17%. 100000 • More than 75% of the North American companies increased their R&D spend. Companies headquartered in North 50000 28% America with increased R&D spending are Google, Abott Laboratries, HP, EMC, Apple, 6% Caterpillar, Dupont, etc. 0 APAC EU Japan NA OthersSource: Zinnov analysis of global top 1000 R&D spenders
    • Comparative R&D Spend vs Net Sales for Telecom, EEE, Automotive and Aerospace have remained constant since last year Total R&D Investments as Percentage of Net Sales (Top 1,000 R&D Spenders) , 2010 -2011 20.0% Semiconductors 1. Size of the Bubble Represents the relative 18.0% Total Net Sales of the Industry Vertical Software 2. Arrow indicates whether R&D as a % of 16.0% sales increased or decreased compared o last year 14.0% Telecom & Percentage of Net Sales Networking R&D Investments as 12.0% 10.0% E&E** / Computer 8.0% Hardware Aerospace & Defense Automotive 6.0% 4.0% 2.0% Industrial 0.0% 0 20 40 60 80 100 120 Total Vertical R&D Investments (USD Billion)Source: Zinnov analysis of global top 1000 R&D spenders. **Electrical and Electronic equipment 10
    • Companies in the Industrial vertical are Small/Medium sized that contribute aggressively towards R&D investments; companies from APAC are on the rise in this vertical Distribution of Top 1000 Companies in Industrial Vertical by Distribution of R&D Investments Top 1000 Companies in Geography and Revenue Ranges (USD) Industrial Vertical by Geography ROW, 2% 69 APAC, 10% 2 NA, 20% 4 EU, 44% Japan, 24% 32 63 2 1 20 17 29 Company Geography 20 3 Siemens Europe 17 General Electric North America 1 Honeywell North America 2 NA EU APAC Japan ROW ABB Europe 1 - 500 Mn 500 Mn - 1 Bn 1 - 10 Bn 10 Bn+ Mitsubishi Heavy JapanSource: Zinnov analysis of global top 1000 R&D spenders 11
    • North America accounts for around 67% of total R&D Spend in Semiconductor vertical Distribution of Top 1000 Companies in Semiconductor Vertical by Distribution of R&D Investments Top 1000 Companies in Geography and Revenue Ranges (USD) Semiconductor Vertical by Geography 53 APAC, 5 12% 5 EU, 13% Japan, 8% NA, 67% 43 15 1 10 8 2 Company Geography 2 1 Intel North America 3 12 8 STMicroelectronics Europe 4 Advanced Micro Devices North America NA EU APAC Japan Broadcom North America 1 - 500 Mn 500 Mn - 1 Bn 1 - 10 Bn 10 Bn+ Texas Instruments North AmericaSource: Zinnov analysis of global top 1000 R&D spenders 12
    • Companies from North America and Europe have a significant R&D spend in the Telecom & Networking vertical Distribution of Top 1000 Companies in Telecom & Networking Distribution of R&D Investments Top 1000 Companies in Vertical by Geography and Revenue Ranges (USD) Telecom & Networking Vertical by Geography ROW, 1% 25 APAC, 10% 3 NA, 37% 2 17 EU, 43% 3 Japan, 1 9% 20 6 13 4 Company Geography 2 1 Nokia Europe 4 1 1 2 Cisco Systems North America 1 Alcatel-Lucent Europe NA EU APAC Japan ROW Ericsson Europe 1 - 500 Mn 500 Mn - 1 Bn 1 - 10 Bn 10 Bn+ NTT JapanSource: Zinnov analysis of global top 1000 R&D spenders 13
    • Japanese and European corporations account for around 76% of the R&D spend in the Automotive vertical Distribution of Top 1000 Companies in Automotive Vertical by Distribution of R&D Investments Top 1000 Companies in Geography and Revenue Ranges (USD) Automotive Vertical by Geography APAC, 4% 29 29 NA, 20% 23 8 10 EU, 42% 4 3 Japan, 1 4 34% 13 1 18 18 15 12 Company Geography Toyota Motor Japan Volkswagen Europe NA EU Japan APAC General Motors North America Honda Motors Japan 1 - 500 Mn 500 Mn - 1 Bn 1 - 10 Bn 10 Bn+ Daimler EuropeSource: Zinnov analysis of global top 1000 R&D spenders 14
    • Agenda Global R&D Investment Analysis R&D Globalization Analysis 15
    • 30% of the Top 1,000 R&D spenders have a center in India. Less than 24% of the companies headquartered in APAC, EU and Japan have an India R&D set-up for specific verticals Top 1000 India Globalization Landscape of Top 1000 R&D Spenders 687 396 313 Total MNC Subsidiaries = 709 India MNC Subsidiaries Across Verticals & Geographies E&E**/ Comp. Telecom & Aerospace/ Industrial Semiconductor Software Automotive HW Networking Defense APAC 2/ 22 2/ 15 6/ 7 3/ 22 2/ 6 4/ 14 -/ 2 EU 14/ 70 4/ 8 14/ 24 6/ 19 5/ 20 12/ 28 7/ 15 Japan 2/ 32 -/ 10 -/ 3 8/ 38 2/ 4 8/ 29 -/ 1 NA 9/ 21 34/ 53 44/ 58 15/ 31 16/ 27 13/ 23 8/ 14 ROW -/ 3 -/ - 1/ 2 -/ - -/ 1 -/ - -/ 1 Note: Fields highlighted in green color shows opportunity areas for new centers in India opportunities with 50% have been considered however for aerospace we have considered 40% as opportunity areaNote: The companies in the Others vertical (which include companies in Pharmaceuticals, Biotechnology, FMCG etc.) have not been included in the above tableSource: Zinnov analysis of R&D landscape in India. **Electrical and Electronic equipment 16
    • India accounts for a small proportion of the total R&D investments by global companies despite having a strong talent pool across verticals MNC Subsidiary R&D Investment in India (USD millions) MNC Subsidiary Talent Pool in India MNC R&D spend on headcount in India MNC Subsidiary Installed Talent Pool in = 7.0 – 7.5 billion USD India = ~220,000 Aerospace & Software/Internet Defense 2% 2841 Computer Hardware Telecom & Networking and E&E** 12% 1322 Automotive E&E** and Computer Hardware 9% 971 Total India Market Size = Others USD 6.9 Bn Semiconductors 8.0% Software/ Internet 799 34.0% Automotive Industrial 773 7.0% Industrial 595 Semiconduct ors Aerospace & Defense 10.0% 149 Telecom & Networking Others 17.0% 660Source: Zinnov analysis of R&D landscape in India. **Electrical and Electronic equipment 17
    • Large companies from Japan and APAC dominate R&D spending in Electrical and Electronic Equipment; most India centers are currently operating at low intensity E&E** and computer hardware R&D Intensity 60% Denotes companies with global R&D R&D Headcount Intensity as Percentage spend > 1bn USD of Total Global R&D Headcount Denotes companies with global R&D spend between 500 m-1bn USD 40% Denotes companies with global R&D spend < 500m USD 20% 0% 0 5 10 15 20 25 Years Since Inception in India Recent Relevant India News  Recently Panasonic opened its India R&D center in NCR region  LG, Samsung, Toshiba has huge plans to increase the R&D spending in IndiaNote: The data set analyzed in the chart on the right is a sample list from the top 1000 r&d spenders which have an R&d center in IndiaSource: Zinnov analysis of R&D landscape in India. **Electrical and Electronic equipment 18
    • North America and Europe dominate the Aerospace and Defense vertical. Many India centers were started in the last few years and many more are expected to enter this space Aerospace & Defense R&D Intensity 60% Denotes companies with global R&D R&D Headcount Intensity as Percentage spend > 1bn USD of Total Global R&D Headcount Denotes companies with global R&D spend between 500 m-1bn USD 40% Denotes companies with global R&D spend < 500m USD 20% 0% 0 5 10 15 20 25 Years Since Inception in India Recent Relevant India News  Honeywell recently invested USD 34 million to build a new technology center in NCR, India  Boeing had submitted a USD 300 million plan for investment in the Indian defence industry last yearNote: The data set analyzed in the chart on the right is a sample list from the top 1000 r&d spenders which have an R&d center in IndiaSource: Zinnov analysis of R&D landscape in India 19
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