Tuesday, October 31, 2006
UK R&D Scoreboard 2006 - GSK Lifts UK R&D, But Size Does Matter
The UK Department of Trade and Industry (DTI) has just released the figures for the 2006 R&D scoreboard.
The R&D Scoreboard 2006 provides information on the top 800 UK and top 1250 global companies based on R&D investment. The meaning of R&D for the Scoreboard is found in the UK in the Standard Statement of Accounting Practice (SSAP 13), which defines the concept based on the different definitions used by the Organisation for Economic Co-operation and Development (OECD) Frascati manual on expenditure for research and development. For global companies the International Accounting Standard (IAS 38) is used, also based on the Frascati manual.
The SSAP provides the definition of expenditure falling into one or more of the categories of pure or basic research, applied research, and development. The third category is particularly relevant to associated measurements of patent activity, in that it covers the "use of scientific or technical knowledge in order to produce new or substantially improved materials, devices, products ..."
72 UK companies made it into the Global 1250, with an increase in UK R&D expenditure (including 245 foreign owned companies) to £19.2bn (£17bn in 2005). This has been attributed to greater disclosure as well as an increase in R&D, which is particularly strong in pharmaceuticals in the UK. The previous decrease in UK 800 expenditure (1% decrease in 2005) has been replaced by an increase of 4% in 2006. GlaxoSmithKline (GSK) reported one of the larges, at £297million.
But others have criticised the increase as "distorted," pointing to the new accounting rule that insists on greater levels of disclosure in sectors not traditionally driven by or associated with R&D, such as banking. DTI senior industrialist and lead author of the report, Mike Tubbs (pictured right), in a report in The Independent, said "For the first time we had R&D from these companies. We knew they did R&D but we did not know it was that much." But a report in The Times suggests instead that "Britain is losing ground."
The Scoreboard for the Global 1250 shows that the pharmaceutical sector (along with software) is one of the fasting growing sectors with highest profitability. But it is second place in R&D, just behind technology hardware, putting 6 pharmaceutical companies in the top 20 (compared to none just 10 years ago). However, the number of patents granted per £10million is much lower than those for technology hardware and electronics.
Although the centenarian, GSK, is now the second-largest pharmaceutical company in the world (behind Pfizer), but a report in today's IP-Watch suggests that there is a distinct market advantage for small and medium-sized pharmaceuticals (SMEs) when it comes to neglected diseases and diseases in developing countries. Reporting on a seminar at the headquarters of the World Intellectual Property Organization (WIPO), co-organised with the Stockholm Network, IP-Watch notes the importance of "creative licensing deals" and cooperation with larger pharmaceutical companies. On patenting, Nikolaus Thumm, senior economic counsellor of the Swiss Federal Institute of Intellectual Property, told the meeting that there is a need to correct the "common misunderstanding" that the stronger the protection, the more innovation.