Modest spending increases suggest Canadian companies still value R&D

Spending increased 1.3% in 2016

Canadian companies’ R&D spending grew at a modest 1.3% in 2016 to reach $12.8 billion, according to a report of Top 100 Corporate R&D Spenders. The growth in FY16, however, pales in comparison to the 6.9% increase between 2014 and 2015.

Struggling manufacturer Bombardier, Inc. is still at the top of the list of spenders, though its spending dropped by 14.2% to $1.9 billion compared to $2.3 billion in 2015, largely due to the ending of the R&D phase of its controversial C-series aircraft program. Without Bombardier, combined spending of the 99 firms rose by 4.8%, which “signifies strong underlying R&D spending growth for corporate Canada in fiscal 2016,” says Ron Freedman, CEO of Research Infosource Inc, which released the report November 13.

Overall, the modest growth is good news because the spending trend remains on an upward trajectory, Freedman adds. “Companies are doing better than generally believed to be the case. … When two-thirds, or 67 of the 100 of companies’ R&D spending went up, that’s not bad.”

The other top spenders in 2016 grew their R&D spending in single digits, except for generic drug manufacturer Valeant Pharmaceuticals International Inc, which spent $557.7 million, up 30.4%. Communications giant BCE Inc, spent $518.9 million last year, for a 2.1% drop. Rounding up the top five spenders are Magna International Inc. (up 3.6% at $662.4 million) and Canadian Natural Resources Ltd (4.2%, $549 million).

One company, Huawei Canada, is a new addition to 2016’s $100 Million Club, a Research Infosource grouping of firms that spent at least $100 million on R&D. Huawei spent $127.5 million in R&D last year, up 35.8%, increasing club membership to 27.

Canada’s corporate R&D spending still pales in comparison to what other companies worldwide are spending annually. A report by PwC last month names Amazon as the largest corporate R&D spender worldwide at $16 billion in 2017, up from $12.5 in 2016. Six of the top 10 corporate R&D spenders worldwide are from the US. The remainder are: Samsung Electronics (South Korea), Volkswagen AG (Germany), and Roche Holding AG and Novartis AG (both of Switzerland).

Canada’s federal government has recently launched the innovation superclusters initiative (ISI) in the hope of increasing corporate spending in technology, research, development and commercialization, making $950 million available from 2017 to 2022 to be matched with private sector funds.

However, Freedman expresses doubts that the initiative will encourage corporate R&D spending. “It is not clear that the extra money — $950 million over five years – is actually going to encourage any one to spend more on R&D,” says Freedman, in an interview with RE$EARCH MONEY. “It is not clear whether there’s any requirement for companies to spend additional on R&D. $950 million spread over five years at $200 million per year when total R&D spending in the country is in the billions of dollars doesn’t make any substantial difference.”

Neither will small and medium firms or companies that don’t do any R&D at all be encouraged by the initiative. “Companies do what is in their best interest regardless of what policymakers think. And for more companies, R&D spending is an expense,” says Freedman. “A company would not be wise to increase R&D spending when it doesn’t need to. The real issue for companies is to be profitable and not to spend on R&D or anything else.”

Freedman adds that corporate R&D spending in other countries is far greater than Canadian firms because they have bigger companies. In contrast, studies have shown that there aren’t that many global-scale companies in Canada. And many rapidly growing Canadian companies are acquired by foreign companies even before they can grow to global scale, and in the case of some technology companies, even before they can commercialize their R&D.

Bombardier’s spending and five other companies’ spending make the aerospace sector the top R&D spender at $2.7 billion. In second place is the software and computer services sector, where 17 companies spent $2.0 billion. Rounding up the top three sectors is pharmaceuticals/biotechnology with 21 firms spending a total of $1.9 billion.

Geographically, Ontario-based firms account for 42% of total corporate R&D spending at $5.3 billion, spent by 46 companies. Quebec’s 26 companies spent almost the same amount to tie with Ontario for total share of spending. Western Canada rounds up the rest of the spending at $2.1 billion.

University Top 50

RESEARCH Infosource also recently released the top 50 universities ranked by R&D income led by Univ of Toronto which received $1 billion in 2016, a mere 1% increase over the previous year. In contrast, McGill Univ, the second top R&D income earner, posting an increase of 15.7% to $547 million. Rounding up the top three R&D income universities is Univ of British Columbia, which dipped 1.7% from the previous year to $532 million. All together, the R&D income of Canada’s top 50 universities in 2016 increased to $6.8 billion, up 2.2% from the previous fiscal year.

The granting councils and the Canada Foundation for Innovation accounted for the majority of R&D income growth and a healthy 23.7% increase from non-corporate sources such as individuals. Foreign government support increased by 6.5% while contributions by not-for-profit foundations were up 9.7%. Dragging down the otherwise impressive gains was funding from endowments and other investments, which declined by 27.4%.

For the full lists, go to


Canada’s Top 100 Corporate R&D Spenders 2017
Company 2016
R&D Spending
R&D Spending
Research Intensity
(R&D as % of Revenue)
Bombardier Inc* 1 1
9.1 Aerospace
Magna International Inc* 2 2
1.4  Automotive
Valeant Pharmaceutical International Inc* 3  8
30.4 $12,816,115 4.4  Pharmaceuticals/Biotechnology
Canadian Natural Resources Ltd 4 5
$527,000 4.2 $11,098,000 4.9 Energy/Oil & Gas
BCE Inc 5 4
$21,719,000 2.4 Telecommunications Services
Pratt & Whitney Canada Corp (fs) 6 6
nd  Aerospace
Rogers Communications Inc 7 9
$13,702,000 3.5  Telecommunications Services
IBM Canada Ltd (fs) 8 7 $478,000 $477,000
 nd  Software & Computer Services
Constellation Software Inc* 9 10
$2,815,314 14.8  Software & Computer Services
 BlackBerry Ltd* ++ 10 3
$1,734,163 23.4  Comm/Telecom Equipment
Company 2016
R&D Spending
R&D Spending
Research Intensity
(R&D as % of Revenue)
Ericsson Canada Inc. (fs) 11 11 $315,000 $316,000
 Comm/Telecom Equipment
Apotex Inc 12 12
$274,505 13.6  $2,142,975  14.6
CGI Group Inc 13 13 $267,082 $257,177 3.9 $10,683,264
 Software & Computer Services
General Motors of Canada Ltd (fs) 14 18 $261,518 $190,000  37.6
Open Text Corp* 15 14 $257,087
 Software & Computer Services
AMD Canada (fs) 16 19
nd  Electronic Systems & Parts
Suncor Energy Inc 17 16
$27,072,000 0.7  Energy/Oil & Gas
Imperial Oil Ltd 18  17
 Energy/Oil & Gas
BRP Inc++ 19  21 $184,100  $164,400
 Other Manufacturing
Telus Corp 20 15
$12,799,000  1.4  Telecommunications Services
Company 2016
R&D Spending
R&D Spending
Research Intensity
(R&D as % of Revenue)
CAE Inc 21 22
$138,900 8.0 $2,512,600  6.0  Aerospace
Cisco Canada (fs) 22 26
$114,926 16.6 nd  Comm/Telecom Equipment
Sanofi (fs) (a) 23 23
$698,189 18.6  Pharmaceuticals/Biotechnology
Mitel Networks Corp* 24 20
 $1,308,372 9.8  Comm/Telecom Equipment
Huawei Canada (fs) 25 29
$93,840 35.8 nd  Comm/Telecom Equipment


1. Data were obtained through annual reports, financial statements, securities commission filings, or through a survey.
2. Research Infosource attempted, whenever possible, to provide gross R&D spending before deduction of investment tax credits
or government grants.
3. Research Infosource attempted, wherever possible, to provide revenue net of interest and investment income.
4. FY2015 R&D spending figures may have been adjusted as more accurate information became available.
5. Canadian-owned company results included worldwide revenue and R&D spending; foreign subsidiaries (fs) for their Canadian operations only
*Converted to CDN$ at annual average 2016 = 1.3248; 2015 = 1.2787 (Bank of Canada)
** Based on companies with $2 million or more of revenue
+ Not current name/acquired/merged
++ Fiscal 2017 figures were used for year-ended January or February
fs = Foreign subsidiary (included revenue and R&D spending for Canadian operations only)
nd = Not disclosed
(a) Sanofi Pasteur Limited and Sanofi-Aventis Canada Inc. (including Genzyme Canada).