1340266361full Global RD Benchmarking 2012

7/28/2019 1340266361full Global RD Benchmarking 2012

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or reproduced for distribution outside the client organization without prior written approval from Zinnov

GLOBAL R&D BENCHMARKING STUDY - FY2011June , 2012


2/20

Overall Global R&D

spending

Geographical split of

R&D spending

Vertical split of R&D

spending

1

2

3

India presence of top

1000 R&D spenders

4

Vertical wise Intensity

of top R&D spenders in

India

5

After witnessing a decline in the FY 2010, Global R&D spending has increased

significantly in FY 2011. Both Net Sales and R&D Spending has increased

significantly with a growth of 13.55 percent and 8.2 percent respectively

The R&D spend for NA and EU is 36% and 34% respectively

As compared to last year the R&D spending for companies headquartered in

APAC has increased by 28% followed by NA 11%

Telecom & Networking, Electrical & Electronic equipment witnessed a

marginal increase in their Global R&D spending while Industrial sector

witnessed a decline

About one-third of the Global 1000 R&D spenders have centers in India

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

Software and Semiconductor are mature verticals in terms of R&D headcount

intensity in India.

Automotive and Aerospace are fast growing verticals

Executive Summary

Source: Zinnov analysis of global top 1000 R&D spenders and India R&D landscape, The analysis has been done for FY2011


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Vertical and Geo Definitions

Source: Zinnov analysis of global top 1000 R&D spenders and India R&D landscape. **Electrical and Electronic equipment

Verticals Definition Sample Companies

Software/ InternetIncludes companies from software domain and Internet based companies

Oracle, Microsoft, Amazon,

SAP Labs, Google

SemiconductorsInclude companies from semiconductors (Chip design, ASIC design) and

power semiconductor companiesIntel, TI, AMD, Broadcom

Telecom & NetworkingIncludes companies operating in areas of mobile communications,

Telecommunication equipment, wireless services and Networking etc.Erickson, Nokia, Cisco ,NTT

E&E** & Computer

Hardware

Includes companies manufacturing consumer electronic equipment,

motors, heavy electrical equipment Computer Hardware, etc.

LG, Sony, Whirlpool, Apple,

IBM, HP

Aerospace & DefenseIncludes companies working on designing and manufacturing of

aerospace equipment

EADS, Rockwell Collins,

Boeing, Bombardier

Chemicals Includes Chemical companies BASF, Dupont, AKZO Noble

AutomotiveIncludes companies which are into automotive , Transportation and

commercial vehicles

Toyota, Volkswagen, GM,

Honda

Biotechnology &

Pharmaceuticals

Includes companies working in areas of healthcare, pharmaceutical

manufacturing, biotechnology

GE Healthcare, Novartis,

United Healthcare

Medical Equipment Includes healthcare equipment, device and services companies Medtronic, Baxter, Stryker

Others Includes BFSI, Energy, FMCG, Media & Entertainment, Retail etcNestle, Unilever, Shell,

HSBC, Shell, Exxon Mobil

Geographies EU NA APAC JAPAN ROW

European union North America Asia Pacific Japan Rest of the world


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Global R&D Investment Analysis

Agenda

4

R&D Globalization Analysis


5/20


Agenda

5



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Global R&D spend has Increased; however, R&D Spending as percentage of Net Sales has

remained constant from 2007-08 to 2010-11

Source: Zinnov analysis of global top 1000 R&D spenders

*Conversion Ratio from EURO to USD- 1.324. 6

511

549

538

582*

460

480

500

520

540

560

580

600

2007-08 2008-09 2009-10 2010-11

Global R&D Investments Growth Trends, 2007-11

(USD Billion)

15,336

16,684

14,953

16,980*

13,500

14,000

14,500

15,000

15,500

16,000

16,500

17,000

17,500

2007-08 2008-09 2009-10 2010-11

Global Net Sales Trends, 2006-11

(USD Billion)

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 2011


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0

50000

100000

150000

200000

250000

300000

350000

400000

2010

Contribution of Top R&D Investors in the Total

Global 1,000 R&D Spend

Company

Name

2010-11

Rank

2009-10

Rank

Change

2008-09

Rank

Change

Roche 1 +1 +3

Pfizer 2 +3 +4

Microsoft 3 0 -1

Toyota Motor 4 -3 -3

Merck US 5 +11 +20

Volkswagen 6 -2 -3

Samsung

Electronics7 +3 +17

Novartis 8 -2 +2

General Motors 9 +3 -4

Johnson &

Johnson10 -2 -3

Nokia 11 -4 -3

Intel 12 +5 +5

Daimler 13 +1 0

Sanofi- Aventis 14 -5 -2

Panasonic 15 +3 -1

The Top 500 R&D spenders account for nearly 90% of the total corporate R&D spending in

the world

Companies marked in Red have shown continuous decrease inrank in last four years. The Scenario is opposite for companies

marked in Green.

R&D Investments rank

60% of R&D spend in 2010-11 was from top 100

companies, a similar trend from the previous year


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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

Source: Zinnov analysis of global top 1000 R&D spenders 8

Split of Top 1000 Companies by Geography Split of R&D Investment of Top 1000 Companies by Geography

APAC

11%

EU32%Japan

20%

NA

35%

ROW

2% APAC, 7%

EU, 34%

Japan, 22%

NA, 36%

ROW, 1%Total R&D Investment USD 582 Billion

Company Geography

Exxon Mobile North America

Royal Dutch Shell Europe

Toyota Motor Japan

China Petroleum & Chemicals APAC

Petro China APAC

Top companies by Net Sales Top companies by R&D investment

Company Geography

Merck US North America

Pfizer North America

Microsoft North America

Roche Europe

Toyota Motor Japan


9/20

R&D investments in year 2008-2011 and split by Geography

A positive sign is that despite widely varying macro economic variables, companies across

regions increased their R&D Investments in FY 2011


0

50000

100000

150000

200000

250000

APAC EU Japan NA Others

R&D in 2008-09 R&D in 2009-10 R&D in 2010-11

28%

6%

3%

6%

11%

Though the number of companies in APACregion has marginally increased from 9.8%

in FY 2010 to 10.6% in FY 2011, the R&D

spend has significantly increased.

Companies with high R&D spending are

Samsung, LG, Huawei, Teva Pharma, etc.

The R&D spending for EU companies did

not increase much but the net sales in this

region went up by 17%.

More than 75% of the North American

companies increased their R&D spend.

Companies headquartered in North

America with increased R&D spending areGoogle, Abott Laboratries, HP, EMC, Apple,

Caterpillar, Dupont, etc.


10/20

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

0 20 40 60 80 100 120

Comparative R&D Spend vs Net Sales for Telecom, EEE, Automotive and Aerospace have

remained constant since last year

Source: Zinnov analysis of global top 1000 R&D spenders. **Electrical and Electronic equipment 10

Total Vertical R&D Investments

(USD Billion)

1. Size of the Bubble Represents the relative

Total Net Sales of the Industry Vertical

2. Arrow indicates whether R&D as a % of

sales increased or decreased compared o

last year

R&DInvestmentsas

PercentageofNetSales

E&E** / Computer

HardwareAutomotive

Total R&D Investments as Percentage of Net Sales (Top 1,000 R&D Spenders) , 2010 -2011

Semiconductors

Software

Telecom &

Networking

Industrial

Aerospace & Defense


11/20

Distribution of R&D Investments Top 1000 Companies in

Industrial Vertical by Geography

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

Geography and Revenue Ranges (USD)

APAC,

10%

EU, 44%Japan,

24%

NA, 20%

ROW, 2%

1720

32

69

3

Company Geography

Siemens Europe

General Electric North America

Honeywell North America

ABB Europe

Mitsubishi Heavy Japan

17

63

20

29

2

4

1

1

2

2

NA EU APAC Japan ROW

1 - 500 Mn 500 Mn - 1 Bn 1 - 10 Bn 10 Bn+


12/20


Semiconductor Vertical by Geography

North America accounts for around 67% of total R&D Spend in Semiconductor vertical


43

4

128

5

3

2

2

5

1

1

NA EU APAC Japan

1 - 500 Mn 500 Mn - 1 Bn 1 - 10 Bn 10 Bn+

53

8 10

Distribution of Top 1000 Companies in Semiconductor Vertical by


APAC,

12%

EU, 13%

Japan, 8%

NA, 67%

15

Company Geography

Intel North America

STMicroelectronics Europe

Advanced Micro Devices North America

Broadcom North America

Texas Instruments North America


13/20


Telecom & Networking Vertical by Geography

Companies from North America and Europe have a significant R&D spend in the Telecom &

Networking vertical


20

13

42

2

1

1

1

3

3

2

1

NA EU APAC Japan ROW

1 - 500 Mn 500 Mn - 1 Bn 1 - 10 Bn 10 Bn+

25

17

6

1

Distribution of Top 1000 Companies in Telecom & Networking

Vertical by Geography and Revenue Ranges (USD)

APAC,

10%

EU, 43%

Japan,

9%

NA, 37%

ROW, 1%

4Company Geography

Nokia Europe

Cisco Systems North America

Alcatel-Lucent Europe

Ericsson Europe

NTT Japan


14/20


Automotive Vertical by Geography

Japanese and European corporations account for around 76% of the R&D spend in the

Automotive vertical


18

15

18

12

1

4

34

108

1

NA EU Japan APAC

1 - 500 Mn 500 Mn - 1 Bn 1 - 10 Bn 10 Bn+

13

23

29

Distribution of Top 1000 Companies in Automotive Vertical by


APAC, 4%

EU, 42%

Japan,

34%

NA, 20%29

Company Geography

Toyota Motor Japan

Volkswagen Europe

General Motors North America

Honda Motors Japan

Daimler Europe


15/20


Agenda

15



16/20

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

Note: The companies in the Others vertical (which include companies in Pharmaceuticals, Biotechnology, FMCG etc.) have not been included in the above table

Source: Zinnov analysis of R&D landscape in India. **Electrical and Electronic equipment 16

Globalization Landscape of

Top 1000 R&D Spenders

Top 1000 India

687 396

313 Total MNC Subsidiaries = 709

Industrial Semiconductor SoftwareE&E**/ Comp.

HW

Telecom &

NetworkingAutomotive

Aerospace/

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

India MNC Subsidiaries Across Verticals & Geographies

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 area


17/20

India accounts for a small proportion of the total R&D investments by global companies

despite having a strong talent pool across verticals

17

MNC Subsidiary R&D Investment in India (USD millions)

Total India Market Size =

USD 6.9 Bn

MNC Subsidiary Talent Pool in India

Software/

Internet

34.0%

Telecom &

Networking

17.0%

Semiconduct

ors

10.0%

Industrial

7.0%

Others

8.0%

Automotive

9%

Computer

Hardware

and E&E**

12%

Aerospace &

Defense

2%

MNC Subsidiary Installed Talent Pool in

India = ~220,000

Source: Zinnov analysis of R&D landscape in India. **Electrical and Electronic equipment

MNC R&D spend on headcount in India= 7.0 7.5 billion USD

Automotive

773

Others

660

Industrial595

E&E** and Computer Hardware

971

Aerospace & Defense

149

Semiconductors

799

Software/Internet

2841

Telecom & Networking

1322


18/2018

Note: 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 India

Source: Zinnov analysis of R&D landscape in India. **Electrical and Electronic equipment

0%

20%

40%

60%

0 5 10 15 20 25

R&DHeadcountIntensityasPercentage

ofTotalGlob

alR&DHeadcount

Years Since Inception in India

Denotes companies with global R&D

spend > 1bn USD


spend between 500 m-1bn USD


spend < 500m USD

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 India

E&E** and computer hardware R&D Intensity

Large companies from Japan and APAC dominate R&D spending in Electrical and Electronic

Equipment; most India centers are currently operating at low intensity


19/2019

Note: 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 India

Source: Zinnov analysis of R&D landscape in India

0%

20%

40%

60%

0 5 10 15 20 25

R&DHeadcountIntensityasPercentage

ofTotalGlob

alR&DHeadcount

Years Since Inception in India


spend > 1bn USD


spend between 500 m-1bn USD


spend < 500m USD

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 year

Aerospace & Defense R&D Intensity

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


20/20

Thank You

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