EU companies cut their research and development (R&D) investments by 2.6% in 2009, the new Industrial R&D Investments Scoreboard reveals. It is the first time that business R&D investments have fallen in a number of years. It should be noted, however, that sales and profits fell by 10% and 21% respectively, and that R&D investment decisions for 2009 were taken in late 2008, at the height of the financial crisis. Under these circumstances, the fact that R&D investments fell so little demonstrates the importance of R&D to businesses.

According to the 2010 edition of the Industrial R&D Scoreboard, companies worldwide cut their R&D investments by an average of 1.9%, less than the EU figure. This report which is published annually by the European Commission's Joint Research Centre, brings together information on the R&D investments of the world's top 1,400 companies.

Pharmaceuticals and alternative energy, leading sectors in R&D

Analysing the figures by region reveals that US companies reduced their R&D spending by over 5%, while Asian businesses boosted their R&D investments. The report also highlights large differences between sectors. For example, the pharmaceuticals sector cemented its position as the leading R&D investor, increasing R&D by 5.3%. Another sector boasting an increase in R&D spending is the alternative energy sector, which posted a 28.7% increase in R&D investments. One sector which was particularly hard hit by the financial crisis was the automobile and parts sector, and its R&D investments dropped by 11.6%. Also reporting a fall in R&D spending was the technology, hardware and equipment sector (down 6.4%).

Within Europe, national differences largely reflect the way different sectors are distributed across the region. Most of the decrease in R&D for German and French companies was due to automobiles and parts companies, where R&D investment dropped by 7.4% and 14.1% respectively, the report explains.

Some countries with strong reputations for innovation, such as Sweden and Finland, posted declines in the region of 6%; this can be attributed to their large IT hardware sectors, which were severely affected by the crisis. One country that reported an impressive rise of 15.4% is Spain, where some large companies raised their R&D spending significantly - examples are Telefónica (16%) and Acciona (29%).

For the second year in a row, the Japanese car maker Toyota tops the list as the world's biggest R&D investor, after forking out EUR 6.8 billion on R&D. With a budget of EUR 5.8 billion, Volkswagen is Europe's biggest business R&D investor and the fourth biggest investor globally. Just 2 other EU-based companies make the top 10 - Nokia (Finland), which is ranked 7, and Sanofi-Aventis (France), which comes in at number 9.