R&D spend: Just 4 Indian cos in global list

NEW DELHI: India Inc is still far off the mark when it comes to innovations and R&D spending. Barely four Indian companies made it to a list of top 1,000 publicly-traded companies in the world which were the biggest spenders on research and development, two fewer than last year.

The list, prepared by global management consulting firm Booz & Co., has Tata Motors, BHEL, Dr Reddy���s Lab and Sun Pharma this year. Those from last year���s list which did not make it this time are Ranbaxy Laboratories and Aditya Birla Nuvo Ltd.

Even as the four Indian companies featured have had moderate sales growth of 15.5% with $10.8 billion in combined sales in 2008 as against $9.4 billion in 2007, the combined R&D spends by them grew 43% to $516.2 million.

This affirms the critical importance of innovation to their product development. According to the study which carried out the annual analysis of global innovation spending, globally Toyota is no. 1 in R&D spending, followed by Nokia, Roche Holding, Microsoft and General Motors.

Tata Motors (rank: 338) alone spent $246 million as against $150 million the previous year. ���For our long term capital expansion we have not restricted our R&D spends and we���ll continue to spend more this fiscal also,��� says a Tata spokesperson.

It���s followed by BHEL (rank: 590) that put $115 million in 2008, an 82% jump in its R&D spends. Dr Reddy���s Laboratories, ranked 774, committed $84 million which is 7% more than its 2007 spend. So did Sun Pharmaceutical Industries which spent $71 million in 2008, up by just 2.89%.

The top 10 global R&D spenders in 2008 according the study are, in descending order: Toyota, Nokia, Roche Holding, Microsoft, General Motors, Pfizer, Johnson & Johnson, Ford, Novartis and Sanofi-Aventis. Toyota spent $8,994 million in R&D that was 4.4% of their sales. Nokia spent $8,733 million that was 11.8% of its sales. In third rank came Swiss healthcare company Roche Holding that���s spent $8,168 million or 19.4% of its sales.

Overall, R&D outlays for these Global 1000 companies rose by 5.7% to $532 billion, while sales were up 6.5%. The study explains that companies have been maintaining R&D expenditure because innovation is a fundamental component of strategy in the long term.

Product cycles and investment cycles are linked since most commitments are made to product development investments years in advance. ���The recession is viewed as an opportunity to get a leg-up on competition especially as the upturn begins,��� says Thomas A Stewart, chief marketing and knowledge officer with Booz & Co.

In 2008 two-thirds of R&D spending was concentrated in three industries: computing and electronics (28%), health (23%), and automotive (16%). India was in the 28th position of the top 40 countries that spent the maximum on R&D whereas China was 16th. "Both India and China are growing at 30% on their R&D spends, the highest among all countries," says Stewart.