Corporate R&D a mix-bag of gainers and losers as overall spending remains stagnant

Extraordinary R&D growth at Telus Corp in 2009 was one of the few positive highlights in an otherwise difficult year for corporate R&D spending as the preliminary impact of the economic downturn weighed down on performance, resulting in a small decline in total spending. The Vancouver-based telecommunication services firm ramped up R&D spending in 2009 by 211% to $653 million in support of new wireless and Internet-protocol television initiatives, moving closer to its much larger rival BCE Inc, which reduced R&D outlays by 18% from 2008.

"Both capex and R&D peaked in 2009 because several projects came together," says TELUS spokesperson Shawn Hall. "We're really hitting our stride in the impact that it's having. R&D will remain important at TELUS but 2009 was a peak. There's a time to reap and a time to sow."

For the first time, Research In Motion (RIM) vaulted to the #1 spot on Canada's Top 100 Corporate R&D Spenders list with expenditures of $1.1 billion (see chart). The Waterloo ON-based maker of the Blackberry has displayed impressive growth in recent years to reach the pinnacle of corporate R&D spending, but its outlays are just one quarter of what former corporate R&D champion - Nortel Networks Corp - registered at its peak in 2000.

The data were compiled by Research Infosource Inc, a sister firm to RE$EARCH MONEY.

Collectively, the Top 100 spent $10.22 billion on R&D, down 1.8% from 2008 when the total was $10.4 billion. Top 100 revenues experienced a sharp decline, dropping 16.4%, due primarily to the economic downturn.

The mixed results of previously stellar performers included encouraging gains from the likes of IBM Canada Ltd, Ericsson Canada Inc and Atomic Energy of Canada Ltd, and declining spending by Pratt & Whitney Canada and Merck.

Communications and telecom equipment manufacturers accounted for the single largest share of Top 100 outlays, with 13 firms spending $2.8 billion, down 10.9% from 2008 when these firms racked up $3.1 billion in R&D.

Pharmaceutical and biotechnology firms accounted for the second largest R&D-spending sector, with 28 companies spending a total of $1.7 billion, down 5.7% from 2008 when these firms spent $1.8 billion.

The remarkable growth of Telus' R&D expenditures helped boost the telecommunications services sector to third place, with $1.6 billion spent by four firms. That's up 22.2% from 2008 when these firms collectively spent $1.3 billion.

Software and computer services companies spent $962 million on R&D, up 30.8% from 2008, while the five ranking aerospace firms spent $749 million, down 7.7% from the previous year.

In addition to Telus, other firms experiencing large increases in R&D expenditures were Enablence Technologies, up 183.1% to $16.8 million for the #86 spot, Sierra Wireless Inc, up 83.9% to $94.7 million for the #24 spot, Enobia Pharma, up 62.2% to $23.2 million for the #69 spot, Ericsson Canada, up 56.3% to $197 million for the #10 spot and Evertz Technologies, up 54.2% to $28.7 million for the #59 spot.

For more detail and analysis, go to www.researchinfosource.com.

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