R&D Scoreboard 2006

THE R&D SCOREBOARD2006The top 800 UK & 1250Global companiesby R&D investmentCOMMENTARY AND ANALYSISVolume 1 of 2

The Commentary and Analysisforms part of the data in ‘The 2006R&D Scoreboard’ - Company Datadocument, which is volume two.

What’s in the R&D Scoreboard?This report contains analysis of the top 1250 global companies and top800 UK companies by R&D using information taken from their auditedaccounts. The main contents of this volume are:Brief highlights .................................................................................................................2Ministerial Foreword........................................................................................................4Executive Summary (Key points from the analysis) ....................................................6Detailed list of contents ................................................................................................20Commentaries from UK company CEOs......................................................................22Analysis with information about: Chapter 1: How the Scoreboard is compiled and what is new .....................26 Chapter 2: The role of R&D-active companies in wealth generation ............31 Chapter 3: Business performance of R&D companies ...................................35 Chapter 4: Global 1250 R&D by company, sector and country .....................44 The countries where top R&D companiesare based and the top sectors by R&D The top 50 Global R&D companies and companies with bigincreases/decreases in R&DChapter 5: The relationship between a country’s............................................59mix of sectors and its average R&D intensityChapter 6: Middle-sized companies (sales £50-500m)....................................67 Chapter 7: The relationship between R&D and company performance .......75 Chapter 8: The different levels of patenting activity in 12 R&D sectors .......84Chapter 9: Analysis of UK R&D companies.....................................................93 Top 15 UK sectors Top 25 UK companies Top 21 foreign-owned UK companies Middle-sized UK companiesAbridged data sets for Global 1250 and UK 800 companies ...................................115Volume 2 of the Scoreboard contains full data on all the Scoreboardcompanies and some technical notes on definitions and data sources.

Brief highlightsGlobal 12501 The 2006 R&D Scoreboard contains extensive data on the top 1250global R&D investing companies and the top 800 from the UK.2. The Global 1250 is dominated by companies based in a few majoreconomies (82% of R&D is from companies based in the USA,Japan, Germany, France and the UK), by large companies (61% ofthe R&D is done by the top 100 companies) and by companies inmajor R&D sectors (70% of R&D is in the top 5 sectors: technologyhardware, pharmaceuticals, automotive, electronics and software).3. Growth trends apparent in the Global 1250 as a whole include:Further increases in company profitability and R&D growthover those reported in 2005.Pharmaceuticals and software R&D growing faster than otherlarge sectors (technology hardware, automotive andelectronics) and showing the highest profitability of the top15 sectors.Aerospace & defence growing R&D fastest of the top 15 sectors(+13.5%).Continued high growth of R&D from companies in SouthKorea and Taiwan.4. The Global 1250 companies from different countries have verydifferent sector mixes, with automotive dominating in Germany,pharmaceuticals in the UK and electronics in South Korea, forexample. The proportion of R&D-intensive, Capex-intensive andservice companies also varies considerably by country. Theselarge sector mix differences are the key determinant of averageprofitability, of average R&D intensity and of the patents-to-R&Dratio by country.5. Almost one quarter of the Global 1250 companies are middlesized(sales £50m to £500m); over three quarters of these are frompharmaceuticals, software and technology hardware. The USA hasthe largest proportion of its companies in the middle-sizedcategory. The UK has the second largest proportion amongst thetop 7 R&D nations.6. Middle-sized R&D-active companies can become large veryquickly – several have grown from sales of £300m to over £1bn injust 3 years. There are also several examples of profitable UKR&D-intensive companies that have grown sales fast over the last2 years.2 The 2006 R&D Scoreboard

UK R&D and the UK8007. There are 72 UK-owned companies in the Global 1250, the thirdlargest country group (equal to Germany) which have total R&Dof £13.1bn, an increase over the previous year of over 8%.8. The total R&D of the separate UK 800 (which contains the 72companies in the Global 1250) is £19.2bn compared to £17bnreported in the 2005 Scoreboard. The increase is due both to greaterdisclosure of R&D under IFRS by companies in sectors such asbanks, insurance, media and retail and to an increase in R&Dmore generally (up 4% in 2006 compared to a decrease of 1% in2005). Listed UK companies have grown thier R&D by over 8%.9. UK R&D is particularly strong in pharmaceuticals and aerospaceand contains a growing software sector (119 companies in 2006).The proportion of UK companies with R&D above £2.9m and withhigh R&D intensity (over 10%) is rising and is significantly abovethat of the rest of the EU although still below the USA.10. The top ten foreign-owned UK companies account for just overhalf of the £4.4bn of R&D performed by foreign-owned UKcompanies. Eight of these 10 have higher R&D intensities thantheir overseas parents and this emphasises the attractions of theUK as a location for R&D.R&D investment and company success11. R&D is a major investment contributing to company success alongwith other factors like excellent operations and good strategicchoices. There are well-established links between R&D growth andintensity and sales growth, wealth creation efficiency and marketvalue.12. The Scoreboard contains several technology companies thatincreased R&D from 2001 to 2002 even though sales declinedfollowing the 2000 high in technology stocks. These companiescontinued to increase R&D after 2002, and had strong salesgrowth in later years and are showing good profitability in2005/06. Some UK companies showed similar behaviour from2000 to 2005 and then also increased sales in the latter part of thisperiod with good profitability in 2005/06.The 2006 R&D Scoreboard 3

Ministerial ForewordLord Sainsbury of TurvilleFor the first timewe are seeingsubstantial R&Dfrom UKcompanies…in financialservicesBusiness leadersmust seize theopportunitiesthat majoradvances inscience andinnovation openup for them.By Lord Sainsbury of Turville,Parliamentary Under Secretary of State for Scienceand InnovationThe level of R&D in the UK economy is of vital importance for ourfuture success because it benefits both the companies that investin it, and other companies as well. Technological improvementscan spread into a huge range of products, processes and servicesthat benefit producers and customers alike. Some R&D directlyleads to new products and services such as medicines, aircraft orcomputer games. In other cases, R&D leads to technology thatunderpins the business model of a company – integratingelectronic ordering with stock control and delivery management –or helps deliver public services better.Around two thirds of R&D done in the UK is carried out bycompanies. It has long been a key part of the corporate strategyof many so-called high-tech firms, both in manufacturing and inservices, particularly software companies. For the first time weare also seeing substantial R&D from UK companies outsidethese sectors, particularly in financial services. Much of this R&Dwas previously unreported; some of it represents increases inspending. But the most important point is the ever-wideningrelevance of technology – and the R&D that goes into its creation– for virtually all businesses.That means that virtually every company – and certainly allcompanies that are serious about growth – needs to think aboutinnovation and the role technology plays in it. For many this willmean assessing their level of R&D investment, among otherfactors. The list of the top R&D-active companies in this R&DScoreboard, drawn from the accounts of R&D-active companiesbased in the UK and globally, can provide some usefulcomparators, whether by size, sector or profits. Smaller firms cancompare their R&D intensity (R&D as a percentage of sales) withparticular firms’ or sectors’ R&D intensity.R&D investments are globally mobile, and the UK is an attractivelocation for R&D activities for both UK and non-UK companies.Macroeconomic stability, a strong research and skills base, aforward-looking Technology Programme to support businessR&D in key areas and R&D tax incentives worth around £600m ayear all support decisions to locate and grow an R&D-activebusiness in this country. Eight of the top 10 non UK-owned firmsin the Scoreboard have higher R&D intensities than their parentcompanies – they are located here to make the most of ourstrengths in R&D.4 The 2006 R&D Scoreboard

Global competition remains strong, and growth in Taiwanese andSouth Korean R&D continues apace: over 30% increase over last yearfor Taiwan, and nearly 12% for S Korea. By comparison, the UScompanies in the global Scoreboard grew their R&D by 8.2% over lastyear, a figure that the UK companies matched.The picture that emerges from the Scoreboard is of UK success in twotypes of business. The first is high value added, R&D-intensivesectors: the UK is strong in aerospace & defence and inpharmaceuticals, and in its top 800 R&D companies it has 119software businesses. The second is firms which use technology as akey part of their business but have a low ratio of R&D to sales, suchas telecoms, oil & gas and financial services. These firms showsignificant R&D in cash terms but relatively low R&D intensities. TheUK has relatively fewer of the first type and relatively more of thesecond type in the Scoreboard. Crucially, however, the UK companiesof both types are relatively profitable; they are concentrated in highvalue-added sectors.The UK also shows encouraging signs of growth in its smaller R&Dcompanies. Last year’s Scoreboard found there were 100 morecompanies spending over £300,000 on R&D; this year’s finds 88 moreUK firms spending over £500,000. There are also 105 more companiesspending over £3m on R&D than in the 2003 Scoreboard.The Government is committed to making the UK one of the bestplaces in the world for science and innovation, and we will, therefore,continue our support for companies who use R&D effectively to createcompetitive advantage. We are also doing more to make companiesaware of the UK’s benefits as a location for R&D. At the same timebusiness leaders must seize the opportunities that major advances inscience and innovation open up for them. This Scoreboard illustratesthe greatly increased sales for firms that maintained R&D investmentthrough the difficult times in the early part of this decade. Advances inscience and technology are opening up many opportunities forcompanies to innovate and grow, and I hope that the R&D Scoreboardwill help inform their plans for the future.The 2006 R&D Scoreboard 5

Executive SummaryOverview of Global R&D1. The top 1250 R&D-active companies in the world invested£249bn in R&D in 2005/06, up 7% on the previous year(compared to a 5% increase in 2005) and accounting for well over50% of estimated global business R&D. This £249bn of R&D ishighly concentrated in firms from 5 countries (82% in the USA,Japan, Germany, France and the UK), in 5 sectors (70% intechnology hardware, pharmaceuticals, automotive, electronicsand software) and in the top 100 companies (61% of the total).There are 72 UK companies in the Global 1250 contributing over£13bn of R&D, an 8% increase over the previous year. Figure ES1shows the country and sector concentrations.2. Clear growth trends in business performance, sectors andcountries are apparent from a comparison of the 2006Scoreboard with previous DTI Scoreboards:The business performance of companies in 2006 has shown asteady improvement over the last 3 years with growth of R&Dnow 7% (5% in 2005), profitability increased to 11% (9.6% in2005) and market cap up a further 6% over 2005. Only 14 ofthe top 100 companies reduced R&D over the previous yearcompared to 27 in the 2005 Scoreboard.Within the five largest sectors there has been a steady relativeincrease in the volume of R&D performed by companies inpharmaceuticals and software; pharmaceuticals is now insecond place in the Global 1250, just behind technologyhardware. As recently as 1996 there were no pharmaceuticalcompanies in the Global top 20; there are now six. Software isthe fifth largest sector in 2006, just 10% smaller thanelectronics & electrical (see figure ES1). Microsoft is now in 5thposition in the whole Scoreboard but was 65th in 1996.Rapid growth in R&D by companies from some countries inAsia continues. South Korea is now in seventh place in theGlobal 1250 (9th in 2003). Taiwan now has the sixth largestnumber of companies (44) in the Scoreboard, but is in 12thplace by volume of R&D since it has no large R&D companies.The top 50 companies are shown in figure ES2 and are drawnfrom 11 countries. Companies such as BAE Systems, Eli Lilly,Hyundai, Microsoft and Nokia were not in the top 50 of 1996.6 The 2006 R&D Scoreboard

Figure ES3 Profitability vs. investment intensity for the largest 15 sectors in the R&D Global 125025Profitability (Operating Profit as % Sales)2015105Oil & GasFood ProducersHouseholdGeneral IndustrialsIndustrial Engineering ChemicalsAerospaceHealthLeisureSoftwareFixed LineTelecomsTechnology HardwareElectronicsPharmaceuticalsAutomotive00 5 10 15 20Investment Intensity (R&D + Capex) as % SalesThe Importance of Sectors for R&D and Business Performance3. Sectors differ markedly both in their inputs – the R&D andCapex required – and in their outputs such as profitabilityand market cap to sales ratio. The sector mix of the companiesfrom each country in the Scoreboard therefore has a major effecton country average performance measures. There are just 3sectors amongst the 39 which have R&D intensities (R&D as %sales) over 8%: pharmaceuticals, software and technologyhardware. These three together account for 45% of Global 1250R&D. Pharmaceuticals and software also have the highest averageprofitability amongst the 15 largest sectors (see figure ES3).Profitability also varies substantially amongst the variouscompanies within any one sector.The 2006 R&D Scoreboard 9

Executive SummaryFigure ES4 Companies from each of 7 countries drawn from the top 6 in the FT Global 500 and in theR&D Global 1250 as proportions of the totals7.8%4.4%a) FT Global 500USAJapanGermany39.2%France24.6%Switzerland27 OthersCanadaUK2.2%6.0%3.8%12.0%1.9%5.8%b) R&D Global 125017.9%USAJapanGermany43.3%FranceSwitzerland2.7%4.3%32 OthersCanadaUK5.8%18.3%10 The 2006 R&D Scoreboard

4. The groups of companies from different countries showvery different specialisations in two senses. The first is in theproportion of companies that are R&D-intensive as opposed tobeing from Capex-intensive or service sectors. This is illustratedby comparing the proportions of companies in the FT Global 500(the largest companies in the world by market cap) withproportions in the R&D Global 1250 (see figure ES4). R&D ‘heavy’countries like Germany are more strongly represented in the R&D1250 whereas R&D ‘light’ countries like Canada are stronger in theFT 500. The second type of specialisation is seen within the R&DGlobal 1250 where companies from different countries havedifferent sector strengths. This is illustrated by figure ES5 whichhighlights the top 8 sectors in the top 7 countries in the Global1250 and shows:The USA has 63% of its Global 1250 R&D in pharmaceuticals,software & technology hardwareJapan has 71% of its R&D in automotive, technologyhardware, electronics and leisure electronics while SouthKorea has 84% in automotive and electronics and Germany62% in automotive and electronics (nearly 50% in automotive).The UK has 57% of its Global 1250 R&D in pharmaceuticalsand aerospace while Switzerland has 66% in pharmaceuticalsalone.Figure ES5 The top 7 countries with their Global 1250 companies’ proportions of R&D in the top 8 sectors100908070% of country R&D6050403020100USA Japan Germany France UK SwitzerlandS KoreaOther Aerospace AutomotiveChemicalsElectronicsLeisurePharmaceuticalsSoftwareTechnology HardwareThe 2006 R&D Scoreboard 11

Executive SummaryFigure ES6a The R&D in the 5 sector groups for the 5 major countries45403530R&D £bn2520151050USA Japan Germany France UKPharmaceuticals & Health (Group 1) Electronics & IT (Group 2) Engineering & Chemicals (Group 3)Low R&D Intensity Sectors (Group 4)Very Low R&D Intensity Sectors (Group 5)Figure ES6b The sales in the 5 sector groups for the 5 major countries700600500Sales £bn4003002001000USA Japan Germany France UKPharmaceuticals & Health (Group 1) Electronics & IT (Group 2) Engineering & Chemicals (Group 3)Low R&D Intensity Sectors (Group 4) Very Low R&D Intensity Sectors (Group 5)12 The 2006 R&D Scoreboard

5. Country specialisations reflect large sector mix differences intheir Global 1250 companies and have three importantconsequences:The overall profitability of a country’s group of companies inthe Scoreboard reflects its sector mix. Examples are Germanywith a low profitability of 7.1% (large automotive andelectronic & electrical sectors) and Switzerland with a highprofitability of 14.1% (large pharmaceutical sector).The average R&D intensity for a country’s group of Global1250 companies is determined not only by its proportion ofR&D from high R&D intensity sectors but also by its proportionof sales coming from companies with low R&D intensity. TheUK is a clear example of this with a low average R&D intensity(1.8% vs. the USA with 4.4%) caused both by the very largesales of its successful large companies in oil & gas, banks,telecoms, food producers & retailers and by its low overallpresence in electronics & technology hardware (see figure ES6which shows the amounts of both R&D and sales in each of5 sector groups). The substantial difference between UK andUS companies’ average R&D intensity in the Global 1250 isalmost entirely due to sector mix rather than different levels ofR&D intensity within sectors.The numbers of US patents filed by a country’s group of largerGlobal 1250 companies is also determined by sector mix sincethe number of patents granted per £10m of R&D varies by afactor of ten between pharmaceuticals (low at 0.6) andtechnology hardware and electronics (high at 6 to 6.5) – seeFigure ES7 The patents-to-R&D ratio for 12 sectorsPersonal Goods (9) 4.486.49Electronic &Electrical (24)6.46.54TechnologyHardware (50)5.996.38AutomotiveComponents (14)3.523.89Household (7)33.84Chemicals (29)2.733.31Aerospace &Defence (17)2.062.44US Patents per YearAveraged over 2001-2005Health (12)1.571.652005 US PatentsAutomotive(vehicles) (16)Software (21)Pharmaceuticals &Biotechnology (39)Telecoms (12)1.051.021.031.310.810.620.640.630 2 4 6 8US Patents per £10m R&D investment† number of companies used in the calculationThe 2006 R&D Scoreboard 13

Executive Summaryfigure ES7. This explains why the UK with its strong presencein pharmaceuticals and few large companies in electronics andtechnology hardware has no companies in the top 20 for 2005US patents while Japan and South Korea have 12 of the top 20.Middle-Sized Companies in the R&D Scoreboard6. There are some 300 middle-sized companies (sales £50m-£500m) in the Global 1250 and 77% of these are in 3 highR&D intensity sectors – pharmaceuticals, software andtechnology hardware. The USA has a strong presence in these3 sectors and thus accounts for 67% of these middle-sizedcompanies (and over 70% of those in the 3 high R&D intensitysectors) against its 43% of the Global 1250. While the US has 37%of its Scoreboard companies in the middle-sized category, the UKwith 21% has the second largest middle-sized proportion amongstthe top 7 countries in the Scoreboard with Japan, Germany andFrance all having under 10%.7. The 77% of middle-sized companies in pharmaceuticals, softwareand technology hardware can be divided into high, medium andlow growth categories by sales growth 2003/04 to 2005/06 with theUSA having over 60% of its companies in the high and mediumgrowth categories compared to just over 40% for non-UScompanies. The proportions are 38% and 28% respectively for thehigh growth category. This appears to be related to UScompanies’ practice of investing a high proportion of sales intoR&D and other investments in these three sectors in the earlierstages of company growth.Examples are given of a number of very high growth, profitablecompanies whose sales have more than tripled from 2002/03 to2005/06 and which have profitability over 8.5%. Of the thirteenexamples from three sectors, listed in figure ES8, nine are from theUSA with two from Europe (one from the UK, one fromSwitzerland); all were middle-sized in one or more of the four years.UK R&D and the UK 8008. The total R&D of the UK 800 (which includes 245 foreignownedcompanies) has increased by £2.2bn to £19.2bncompared to the £17bn recorded in 2005. There are two mainreasons for this:The introduction of IFRS has led to a higher level of disclosureof R&D in sectors where disclosure was previously rare.Examples of companies included in the Scoreboard for thefirst time in 2006 are, with their R&D in brackets, Royal Bank ofScotland (£329m), HSBC (£245m), Tesco (£115m), Royal & SunAlliance (£122m) and Reed Elsevier (£102m).Companies in the UK 800 increased their R&D by 4% over theprevious year compared to the 1% decrease for the 750companies in the 2005 Scoreboard. A number of largeincreases reported this year by UK companies such as BAESystems (£339m), GlaxoSmithKline (£297m) and BT (£205m)strongly contribute to the overall rise.14 The 2006 R&D Scoreboard

Figure ES8 Fast growing companies in 3 R&D-intensive sectorsR&D as % Sales Sales £m Exports2002 2005 2004 2003 2002 fromCompany Country 2006 /03 Profitability /06 /05 /04 /03 Sector* RegionBiogen Idec USA 30.9 22.5 8.7% 1411 1288 396 235 P n/aGilead Sciences USA 13.7 28.9 54.7% 1182 772 506 272 P 51%Celgene USA 27.8 56.6 14.3% 313 220 158 79 P n/aActelion Switzerland 25.8 46.1 23.0% 293 209 136 57 P 52%Kos USA 16.4 25.5 24.1 438 290 171 101 P n/aPharmaceuticalsGoogle USA 9.8 9.2† 32.9% 3576 1858 854 256 S 39%Red Hat USA 14.7 24.7 31.7% 162 114 73 53 S n/aUnited Online USA 7.6 14.8 16.5% 306 261 162 98 S n/aJuniper USA 17.2 29.6 21.7% 1202 778 409 318 TH n/aNetworksSanDisk USA 8.4 11.7 25.2% 1343 1035 629 315 TH 54%Research Canada 7.6 18.2 20.4% 1203 787 346 179 TH n/ain MotionSunplus Taiwan 10.4 12.2 8.5% 480 336 197 153 TH n/aTechnologyCSR UK 12.4 45.5 23.0% 283 147 39 16 TH 89%† R&D intensity 15.7% in 2003*P = Pharmaceuticals S = Software TH=Technology Hardware9. The UK 800 shows marked concentration of R&D with 65%in the top 5 sectors (pharmaceuticals, aerospace,automotive, technology hardware, software), 85% in the top100 companies and 70% in UK-owned companies. There is amarked difference in overall performance between UK listedcompanies, which increased R&D by more than 8% over the prioryear, and foreign-owned companies that decreased R&D by 9%(large reductions by 3 companies accounted for most of thedecrease). Average profitability for the UK listed companies was13.5% compared to 4.8% for the foreign-owned companies.Two-thirds of the R&D of the foreign-owned UK companies iscarried out by the top 20 companies and just over half by the topten; eight of the top ten have a higher R&D intensity than theiroverseas parents.The 2006 R&D Scoreboard 15

Executive Summary10. The UK has an increasing number of companies in theScoreboard with high R&D intensity. A comparison of similarsizedUS-owned (from the US Scoreboard), UK-owned and EU(excluding UK)-owned (both from the EU Scoreboard) companies(figure ES9) shows that the USA has a higher proportion ofcompanies in the high intensity range (R&D over 10% of sales)than the EUexUK companies and a lower proportion of companieswith very low intensity (2% or less). The UK-owned companies liebetween the US and EUexUK at both intensity levels. This reflects anincreasing number of UK companies in high R&D intensity sectors.Figure ES9 R&D Intensity distributions for US, EUexUK and UK companies in the same range%40Proportion of companies in band30201000-2% 2-4% 4-6% 6-10% 10-20% >20%R&D Intensity bandUSA UK EU ex UK16 The 2006 R&D ScoreboardMiddle-sized Companies in the UK80011. The UK has a growing set of middle-sized companies andthere are 144 UK companies in the Scoreboard with sales inthe range £25m to £500m and with R&D intensity of at least4%, with 104 being UK-owned. The pharmaceutical, softwareand technology hardware sectors together account for 59 of theUK-owned and 21 of the foreign-owned companies. The numberof UK software companies in this size range has increasedmarkedly over the last few years and there are now 119 softwarecompanies in the UK 800, over 90% of them UK-owned. Sevenexamples are given of UK-owned, middle-sized companies from4 sectors with R&D intensity over 4% and profitability of 10% ormore which have shown sales growth of 70% to over 600% duringthe last two years (see figure ES10).

R&D and Company Performance12. R&D is linked to company success: companies succeedconsistently by making good strategic choices,demonstrating operational excellence and making wise andbalanced investments which include R&D. Innovation is animportant component of all three. R&D is therefore linked tocompany performance but good R&D does not assure strongfinancial performance since a company could make poor strategicchoices (e.g. a bad acquisition), have indifferent operations orunbalanced investments (e.g. a neglect of market development orbrands). Equally, underinvestment in R&D compared to sectorpeers leads to a less competitive range of products and servicesand this will be reflected in business performance. It is thereforenot surprising that the Scoreboards do show links between R&Dgrowth and intensity on the one hand and performance measureson the other such as above average wealth creation efficiency,higher sales growth and portfolio value growth – the group ofhigher R&D intensity companies in the FTSE 100 has shown highervalue growth than the FTSE 100 index from 1997 (before the1999/2001 rise & fall of technology stocks) to 2006 (see figureES11). From 2002 growth in the portfolio is only just larger.Figure ES10 Fast growing, profitable R&D-intensive UK-owned companies2006 Scoreboard ExportsR&D Sales Sales from MarketSector Company Profitability Intensity Sales £m 2004/05 2003/04 Region CapTechnology ARM 15.1% 34.5% 232 153 128 86% £1586mHardware CSR 23.0% 12.4% 283 147 39 89% £1462mWolfson 22.8% 12.9% 97 69 44 n/a £534mSoftware & Autonomy 10.0% 22.8% 56 38 33 62% £759mComputer AVEVA 17.1% 21.2% 66 58 38 53% £231mServicesOil Equipment Sondex 18.8% 8.3% 51 32 18 85% £174m& ServicesHousehold Dyson 17.5% 4.6% 426 277 235 48% n/lJamesThe 2006 R&D Scoreboard 17

Executive SummaryThere can be benefits for companies that increase R&Dthrough a recession. For example, all but one of the 19 largetechnology hardware companies showing positive R&D growth2001-2004 also showed positive sales growth 2001-2005 but 13 ofthe 17 companies with 10% or more R&D decrease 2001-04 alsoshowed sales decrease 2001-05. In addition, a number oftechnology hardware companies increased R&D after 2001 whentheir sales were decreasing in the technology downturn but thisresulted in increased sales growth in 2004 & 2005 together withgood profitability (see figure ES12). Similar behaviour was seenfor several UK companies for the period 2000 to 2005 also withsubsequent increases in sales and good profitability in the 2006Scoreboard (see figure 7.2.3b).Figure ES11 Percentage change in value of R&D portfolio and FTSE100 index from 1997250200% change from 100% in 199715010050097 98 99 2000 2001 2002 2003 2004 2005 2006FTSE 100R&D Portfolio18 The 2006 R&D Scoreboard

Figure ES12 R&D and sales growth 2001 to 2005 for 6 companies150140SalesR&D% Change from 100% in 200113012011010090802001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005Intel (37%)† Nokia (13%) Altera (19%)2001 Sales £15.4bn £21.4bn £489m2001 R&D £2.2bn £2.3bn £96m250SalesR&D% Change from 100% in 2001200150100502001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005AMD (2%) Juniper Networks (22%) Adobe (37%)2001 Sales £2.3bn £517m £716m2001 R&D £379m £91m £131m† The number in brackets is the 2006 Scoreboard profitabilityThe 2006 R&D Scoreboard 19

ContentsBrief highlights................................................................................................2Ministerial Foreword....................................................................................4Lord Sainsbury of TurvilleParliamentary Under Secretary of State for Science & InnovationExecutive Summary.....................................................................................6Contents...........................................................................................................20CommentariesSir David McMurtry .....................................................................................22Chairman & Chief Executive, Renishaw plcDouglas Caster.............................................................................................24Chief Executive, Ultra Electronics plcAnalysis.............................................................................................................26Dr Mike Tubbs, Senior IndustrialistDTI Business Finance & Investment Unit1. IntroductionSummary......................................................................................................261.1 Improvements to the Scoreboard for 2006..........................................281.2 The R&D and Value Added Scoreboards .............................................291.3 The Importance of R&D for Companies...............................................292. R&D-Active Companies’ Role in the Global EconomySummary......................................................................................................312.1 The FT Global 500 and R&D Global 1250.............................................322.2 Value Added and Sector Mix ................................................................343. Overview of Companies R&D and Business PerformanceSummary......................................................................................................353.1 The Dataset ............................................................................................363.2 Business Performance of R&D Companies in 2005/06 vs. 2004/05....373.3 Business Performance of the Top 15 Sectors ......................................373.4 Changes in the Largest R&D Companies from 1992 to 2006 .............383.5 Companies with large one year changes in R&D................................403.6 Capitalised R&D .....................................................................................413.7 The Concentration of R&D ....................................................................434. Global 1250 R&D by Company, Sector and CountrySummary......................................................................................................444.1 R&D by Region and Country.................................................................464.2 R&D by Sector .......................................................................................484.3 The Top Global Companies by R&D, Growth and R&D Intensity.......5220 The 2006 R&D Scoreboard

5. The Interpretation of R&D Intensity DifferencesBetween Companies in the Major CountriesSummary......................................................................................................595.1 Overview ................................................................................................595.2 Sector Group Analysis...........................................................................615.3 R&D Intensity Distributions...................................................................656. Middle-Sized CompaniesSummary......................................................................................................676.1 Global 1250 Middle-Sized Companies by Sector and Country...........686.2 Sector Mix for Middle-Sized Companies from Different Countries....696.3 Sales Growth of Middle-Sized Companies ..........................................716.4 High Growth Companies in the Global 1250 .......................................737. R&D and Company PerformanceSummary......................................................................................................75Introduction..................................................................................................757.1 Links between R&D and Business Performance .................................767.2 The Growth of R&D and Sales in R&D-Intensive Sectors...................777.3 Share Price Performance of UK R&D-Intensive Companies...............818. Patents and R&DSummary......................................................................................................84Introduction..................................................................................................848.1 The Patents-to-R&D Ratio .....................................................................858.2 Patents from Major Companies............................................................878.3 The Patents-to-R&D Ratio for Companies in 4 Sectors.......................899. R&D for the Top 800 CompaniesSummary......................................................................................................93Introduction..................................................................................................949.1 Overview and Concentration ................................................................949.2 Business Performance of UK 800 Companies .....................................959.3 The Top Sectors in the UK 800 .............................................................969.4 The Top UK 800 Companies by R&D,Growth of R&D and Intensity................................................................989.5 Foreign-Owned Companies in the UK 800 ........................................1039.6 Middle-Sized UK Companies ..............................................................1039.7 Examples of Successful Middle-Sized Companies............................1059.8 The Intensity Distribution of UK-Owned Companies ........................107Conclusion..................................................................................................108References............................................................................................109Appendix 1: Assignment of Global 1250 ...............................110Sectors to the Five Sector GroupsAppendix 2: Sector Group Analysis of R&D Intensity .....112Abridged Data Sets ..................................................................................115Accessing the Full Data Using the Website...............................140The 2006 R&D Scoreboard 21

CommentaryBy Sir David McMurtry CBE, RDI, CEng, FIMechE, FREng,Chairman & Chief Executive, Renishaw plcSir David McMurtryBy pioneering anew marketsector…weensured our earlypatentedproducts wereunique…givingus the profits weneeded todevelop sales,marketing andmanufacturingfacilities to meetgrowing demandand, importantly,to re-invest inR&D to providefurtherinnovations.22 The 2006 R&D ScoreboardAchieving sustained growththrough innovationRenishaw fundamentally believes that success comes frompatented and innovative products and processes, high qualitymanufacturing, and the ability to provide local customer supportin all its markets, around the globe.Differentiation through innovationWhen I last wrote a commentary for the 2002 edition of thispublication, I remarked how global competition is turning manyproducts into commodities, and how this makes innovationessential to avoid being priced out of business. The only thingthat has changed in the intervening years is the intensity of thispressure. It is no longer possible to succeed as a ‘me too’producer based in the UK.Throughout its 33-years’ history, Renishaw has pursued a simpleand effective business strategy based on innovation. Bypioneering a new market sector – touch-trigger probing on coordinatemeasuring machines (CMMs) – we ensured that ourearly patented products were unique. This allowed us to securehealthy margins, giving us the profits we needed to develop oursales, marketing and manufacturing facilities to meet growingdemand and, importantly, to re-invest in R&D to provide furtherinnovations.Success soon gets noticed and our growth could have beenquickly suppressed if a firm with greater resources had enteredour market, reducing prices to commodity levels. Our patents,which we vigorously defended, provided us with the space weneeded to build a global network of sales, service and supportcompanies, which provided steady year-on-year growth inrevenues.Innovation as a long-term strategy for growthPatented innovation remains at the core of Renishaw’s businessstrategy today. The key to our commercial success has beensustained investment in research and product development,which has provided a stream of inventions. Each successfulproduct provides a flow of margins that fund the development offuture products and processes.Renishaw continues to apply innovation in its core markets –probing on CMMs and machine tools – to continually regenerateits products to keep ahead of the changing demands of itsmanufacturing customers. As each new generation of productsreplaces the last – most recently the revolutionary Renscan5TM 5-axis CMM scanning technology – it provides higher performanceand productivity, whilst we benefit from existing and newcustomers seeking to further improve their manufacturingprocesses.

Profits from innovative products can fund expansion into newmarkets and enable a long-term perspective to be taken. A goodexample of this is our position encoder product line, which took morethan five years to develop into a profitable business, but which is nowa major contributor to current turnover and future growth.In recent years, Renishaw has looked for new market sectors in whichto apply our core skills of precision measurement and manufacturing.These include manufacturing applications such as semi-conductorfabrication, electronics assembly and packaging automation; medicalfields such as cancer research, dentistry and neurosurgery; as well asdiverse arenas such as forensic analysis, materials science and evenart restoration. In many cases we work closely with leading UKresearch universities to develop practical applications of the newtechnologies that we generate.Making innovations in the factoryAnother pillar of our strategy is to manufacture and assemble asmany of our products as possible ourselves. This goes against thegrain of modern business practice, where manufacturing is often seenas a ‘non-core’ process to be outsourced. We take a different view – ifyou make products that are used by other manufacturers, it helps noend if you know how best to use them yourself. Consequently,process innovation is a vital element of our strategy, requiring regularinvestment in capital equipment and ongoing development of newmanufacturing processes, ensuring that we keep costs on adownward path and that we are in full control of our quality.Renishaw assembles many of its products in the UK, whilst coremanufacturing processes such as CNC machining and electronicsassembly are also based here. Such co-location with our R&D staffhelps us to bring new products to market faster. However, we alsorecognise the need to control manufacturing costs, especially inlabour-intensive processes, where the UK is no longer competitive.The company is now investing in new, wholly owned facilities in Indiato produce mature, lower-margin products in a cost-effective manner.Influencing our own futureInnovation cannot insulate a company totally from competition, orfrom the business cycle, but it offers the best prospect of underlyinggrowth in turbulent markets. Although the waters have been a littlesmoother in the last few years, many of Renishaw’s product marketsare cyclical, and the distribution of business around the world is inconstant flux. Despite this, our organic growth strategy has allowedus to build a continuously profitable business with an annual turnoverin excess of £175 million of which over 90% is exported, that employsover 1,400 UK staff and an additional 600 in 30 countries globally.The best way to influence your future is to create it, rather than be atthe mercy of events. Recognising this, we continue to expand ourR&D and engineering investments – nearly £30 million last year – theengine that will secure the long-term success and growth of ourbusiness.Patentedinnovationremains at thecore ofRenishaw’sbusinessstrategy today.The key to ourcommercialsuccess hasbeen sustainedinvestment inresearch andproductdevelopment,which hasprovided astream ofinventions.Our organicgrowth strategyhas allowedus to build acontinuouslyprofitablebusiness withan annualturnover inexcess of£175m.The 2006 R&D Scoreboard 23

CommentaryBy Douglas Caster, Chief Executive, Ultra Electronics Holdings plcDouglas Casterfollowing a majorR&D programmewith somesupport from theDTI, Ultra…withits UK teamingpartner GKN,has developeda revolutionarynew system forprotecting aircraftstructures fromice build upduring flight.This innovativesystem hasbeen selectedby Boeingfor its new787 Dreamliner.R&D for product innovation anddifferentiationUltra Electronics is a successful group of twenty specialistbusinesses offering a through-life product and services portfoliothat includes high technology electronic and electro-mechanicalsystems, sub-systems, products and components for defence,security, aerospace and transport applications worldwide. Ultra’sproducts and services are used on platforms such as aircraft,ships, submarines and armoured vehicles as well as insurveillance and communications systems, airports and transportsystems around the world.In Ultra’s main defence markets in recent times, expenditure hasbeen increasing on battlespace IT systems and equipment toprovide military customers with better situational awareness,quicker and more reliable command and control and the ability tosynchronise military firepower with much improved accuracy.Armed forces are being equipped to allow the rapid deploymentof light, mobile troops and to enable the exploitation of superiorintelligence of the military situation through the use ofbattlespace IT. Ultra has pursued a strategy that has positionedthe Group to benefit from these trends and constantly seeksopportunities to direct its R&D expenditure in order to offer newniche products and services to meet such customerrequirements.In the civil aerospace market, development programmes for newaircraft types provide Ultra with opportunities to win positionswith new and innovative solutions. For example, Ultra hasestablished itself as the world leader in cabin quietening forturboprop aircraft as a result of a continuous programme offocused R&D. More recently, following a major R&D programmewith some support from the DTI, Ultra, in conjunction with its UKteaming partner GKN, has developed a revolutionary new systemfor protecting aircraft structures from ice build up during flight.This innovative system has been selected by Boeing for its new787 Dreamliner aircraft for which it is a key technology enabler ofthe high efficiency wing that will help the aircraft achieve a 20percent improvement in fuel efficiency.Ultra believes that sustainable success is derived from a focus onpositioning its products and services on a broad range of majorinternational platforms and programmes. Such successfulpositioning is achieved by ensuring that Ultra’s offerings aredifferentiated from those of the competition in a manner that thecustomer values. Focus is sustained on creating and maintainingthis differentiation in the future and on continuing to provideinnovative solutions to satisfy customer requirements throughthe careful application of the company’s R&D funds.24 The 2006 R&D Scoreboard

AnalysisThe 2006 R&D Scoreboard 25

Analysis of the 2006 R&D ScoreboardBy Dr Mike Tubbs, Senior Industrialist,DTI Business Finance & Investment Unit1. IntroductionDr Mike TubbsThis is the 16thannual editionof the DTI’sR&D Scoreboard,the premiersource ofinformation andanalysis on R&Dactivecompaniesboth globallyand in the UK.It analyses R&Dby company,sector andcountry and isused bycompanies andinvestors as abenchmarkingtool and bybusiness policymakers.SummaryThe Scoreboard is designed to help companies (who useit as a benchmarking tool), investors and organisationsconcerned with technology and business policy.Improvements to the Scoreboard for 2006 include anincrease in the number of companies (the global list isnow 1250 compared to 1000 in 2005), the use of ICBsectors, data on companies’ exports from their homeregions, data on the proportion of R&D that iscapitalised and an increased emphasis on middle –sized company R&D.The 2006 dataset shows two main differences from2005: the increased representation of financial companies(an effect of IFRS) and a much smaller number of largecompanies reducing R&D (only 14 in the top 100compared to 27 in 2005).R&D is important for companies since it generates thenew products, processes and services that drive organicgrowth and higher value added. It is also a largeinvestment – larger than the sum of Capex and dividendsfor sectors such as pharmaceuticals, software andtechnology hardware.This is the 16th annual edition of the DTI’s R&D Scoreboard, thepremier source of information and analysis on global and UKR&D-active companies. The Scoreboard contains extensiveinformation on the largest 1250 R&D-active companies in the worldincluding R&D and Capex investment, financial performance(sales, operating profits, employees and growth), marketcapitalisation, market breadth and patents. All of this data exceptthat on market capitalisation and patents has been taken directlyfrom audited company accounts. A similar set of data covers thetop 800 UK-based companies of which 72 are in the Global 1250(the third equal largest number of companies from any country).The R&D Scoreboard is designed to help companies (who use itas a benchmarking tool), investors and organisations concernedwith technology and business policy (see the list of 16 endorserson the inside back cover).Industrial R&D (Research and Development) is a key componentof sustainable innovation-led growth since it helps to create thehigher value added product, processes and services on which thefuture of UK companies increasingly depends.26 The 2006 R&D Scoreboard

How the Scoreboard data is compiled:Data in the R&D Scoreboard is compiled from the latest auditedcompany annual reports and consolidated accounts by CompanyReporting Ltd under contract to the DTI. The latest accounts areused up to a ‘cut-off’ date of 31st July 2006. The Scoreboardrankings look at the R&D cash spending of the companiesinvolved; to arrive at the figure given in the Scoreboard, weexclude R&D paid for by external customers but include any R&Dthat has been capitalised. Full details of the methods andassumptions used are given at the back of the data section of theScoreboard (volume 2 pages 248 to 256). Since the majority ofcompanies use a December or March financial year end, thismeans that most are reporting activity in calendar year 2005 orthe year April 2005 – March 2006; a few companies are includedwith April or May 2006 year ends.Companies are classified into the ICB sectors used by FTSE andDow Jones and assigned to the country where the overall groupis incorporated. All FTSE 100 companies are assigned to the UK.In the Global ranking of R&D companies, we are thereforeshowing the performance of companies based in particularcountries and not the R&D activity within the borders of thosecountries, which is better measured by national businessexpenditure on R&D (BERD) statistics.The separate ranking of UK companies by R&D also includesforeign–owned UK companies with their UK R&D investment(although part of this could be carried out overseas) so that theirR&D activity can be assessed alongside that of UK-ownedcompanies. The global R&D is quoted for the latter since they arenot required to report in their accounts what proportion of theirR&D is performed in the UK. No subsidiaries of any kind areincluded in the global listing to avoid double counting of R&D.The Scoreboard does not cover all R&D activity undertaken bycompanies. Those investing too little to feature in the lists arenecessarily excluded; the minimum for the Global 1250 is £19m,while the UK 800 requires at least £370,000 of R&D to enter.Companies that do not identify R&D in their accounts are also notincluded. In addition, the Scoreboard measures only the R&Dfunded by a company itself, so publicly funded R&D or work doneunder contract is excluded.Definition of R&DThe R&D reported in the Scoreboard comes from accountsprepared in line with generally accepted accounting principles(GAAP). UK companies use the SSAP 13 or IAS 38 standard.These accounting definitions are based on the Frascati manual,which defines R&D for statistical purposes.The 2006 R&D Scoreboard 27

Analysis of the 2006 R&D ScoreboardThe R&D and VAScoreboards arecomplementarysince R&D isan input to thewealth creationprocess whilevalue added isan outputmeasure of thewealth createdby a company.1.1 Improvements to the Scoreboard for 2006As part of our policy of continuous improvement, the 2006 R&DScoreboard has six main enhancements over previous editions:The number of global R&D investing companies has beenincreased to 1250 from 1000 in 2005 and companies investing only£19.2m are now included compared to £22.4m in 2005. Theincrease means that the number of companies from the largerEuropean countries has risen significantly (e.g. the UK from 54 to72 companies) and the Scoreboard contains many more middlesizedcompanies (sales £50-500m).The number of UK companies in the separate UK listing has beenincreased from 750 to 800. The minimum R&D for inclusion hasnevertheless risen from £0.3m to £0.37m. This reflects growth inthe number and size of UK R&D-active companies with 88 morecompanies this year with R&D over £0.5m.The names and labelling numbers of sectors have been changedto ensure commonality between Scoreboard sectors and thoseused in the new international sector classifications agreedbetween FTSE and Dow Jones and brought into use on 3rdJanuary 2006 (the ICB sectors). The total number of sectors is now39 and these same ICB sectors were also used in the 2006 ValueAdded Scoreboard (reference 1).The introduction of IFRS 1 in Europe has also meant that morecompanies have capitalised part of their R&D and that R&D mustbe disclosed. This has, as in previous years, been de-capitalisedand added to the revenue R&D so that the Scoreboard quotes thetotal company funded R&D. Since companies are required underIFRS to capitalise R&D that meets the criteria (i.e projects forwhich the outcome is predictable), the ratio of revenue tocapitalised R&D (where it is disclosed) gives a first estimate of therisk profile of a company’s R&D portfolio.The percentage of a company’s sales exported from its homeregion are given in the main data tables for the first time. Forexample, a European company with 60% of its sales outsideEurope would have a figure of 60% in this column. There isevidence 2 to suggest that many successful companies have higherthan average exports to other leading economies at an early stageof their growth.The increased number of middle-sized companies in theScoreboard this year enables more analysis of this category –companies having sales up to £500m – and, in particular,companies with R&D intensity over 4%. Given this focus onmiddle-sized companies, the commentaries this year are fromsuccessful middle-sized UK companies.1 International Financial Reporting Standards which apply to the EU but not yet to the USA.2 From interviews with CEOs and founders of R&D-active companies28 The 2006 R&D Scoreboard

1.2 The R&D and Value Added ScoreboardsIn addition to the R&D Scoreboard, the DTI also publishes a ValueAdded Scoreboard which looks at the performance of the Europeanand UK companies that create the most wealth. The R&D and ValueAdded Scoreboards are complementary since R&D is an input to thewealth creation process while value added is an output measure ofthe wealth created by a company. A direct comparison of the two ispossible for European companies (the top 700 European companiesby value added are listed in the 2006 VA Scoreboard) but not for USor Japanese companies since the limitations of US GAAP 3 mean thatthere is not enough information in the accounts of companies fromthe US and Japan to enable value added to be calculated.The R&D Scoreboard has a long history and it is therefore possible totrack the progress of companies up and down the rankings from theearly 1990’s to 2006. These movements reflect both changes in theimportance of sectors and of the relative performance of companieswithin each sector. Lists of the top 20 R&D companies in 1992 and2006 are given in chapter 3 (figure 3.4.1) and only 7 of the companiesin the 1992 top 20 appear in the 2006 top 20. There were nopharmaceutical companies in 1992 but six in 2006.1.3 The Importance of R&D for CompaniesMost companies in the R&D Global 1250 are in R&D-intensive sectors;for example, nearly 80% of the 1250 companies are in sectors withaverage R&D intensity (R&D as % sales) of at least 2.5% and over 50%are in sectors with R&D intensity of 5% or more. For this latter group,R&D investment is typically a large proportion of operating profit.There are three main reasons why R&D is important for a company inan R&D-intensive sector:R&D generates the new products, processes and services that givea company a competitive edge in the market. A company thatconsistently under-invests in R&D relative to its best competitors(allowing for size and sub-sector differences) will find that itsproducts are relatively less attractive to customers and that it isincreasingly competing on price in the lowest value added segmentof the market. A company that invests in R&D wisely and at a levelat least that of its best competitors, on the other hand, is much morelikely to gain customers and maintain or increase its value added.R&D is a substantial financial investment for R&D-intensivecompanies relative to other expenses such as Capex or dividendsand is a substantial proportion of operating profit. This isillustrated by figure 1.1, which shows the relative sizes of theseFigure 1.1 R&D vs. other major expenses for 3 sectorsR&D is importantsince it generatesnew products,processes andservices togive a companyits competitiveedge, is asubstantialfinancialinvestment andis an importantdriver for organicgrowth.Sector R&D Capex Dividends Operating Profitas % Sales as % Sales as % Sales as % SalesPharmaceuticals and Biotechnology 14.9% 4.9% 6.4% 20.2%Software and Computer Services 10.4% 3.9% 2.3% 19.6%Technology Hardware 8.2% 5.6% 1.2% 8.4%3 US GAAP is the US accounting standard also used by most Japanese companiesThe 2006 R&D Scoreboard 29

Analysis of the 2006 R&D ScoreboardR&D is alsoimportant forCapex-intensivesectors and forcompanies thatbenefit fromthe R&D oftheir suppliers.quantities for three of the largest R&D-intensive sectors. In allthree cases R&D exceeds the cost of Capex plus dividends andranges from over 50% to 98% of operating profit. The sheer sizeand importance of the company’s R&D budget in these sectorsmeans that the management of R&D for timely and effectiveresults is a key concern of top management. For sectors whereR&D is a significant investment, a company’s investors will beinterested both in the intensity of the investment relative tocompetitors and the results flowing from it. For example, apharmaceutical company will be asked by investors about its newproduct ‘pipeline’ and about the likely launch dates for productsfrom the pipeline which will replace medicines due to come offpatent. Similar questions are now being asked of companies inother sectors, particularly in view of evidence that R&D intensity islinked to company performance (see chapter 7 for details).Finally, R&D is an important driver for organic growth. Mostcompanies have a growth target and, given that majoracquisitions are associated with reduced shareholder returns insome two thirds of cases (references 2-5), organic growth throughR&D coupled with small bolt-on acquisitions of R&D-activecompanies is the preferred route to meet the growth targets set bymanagements and valued by investors.The discussion so far has concentrated on R&D-intensive sectors.However, R&D is also important in less R&D-intensive sectors asfollows:Companies in Capex-intensive sectors use often modest levels ofR&D to select the best equipment or production process (best forcost, quality, yield) for a new product or operation. There areimportant examples of this for companies in oil & gas and foodprocessing, both sectors where the UK has a strong position.Companies that benefit from the R&D of their suppliers. Examplesinclude software for financial institutions or retailers or animproved machine tool that lowers cost and/or improves qualityand throughput for a manufacturer.Given the importance of R&D, the Scoreboard provides a referencetool to help companies judge whether they are investing the rightamount in R&D relative to the best global or regional competitors intheir sector.Although the Scoreboard is a internationally-respected source ofinformation on company R&D, it does not pretend to be the only suchsource. we would encourage companies to assess evidence from theScoreboard and elsewhere in the context of their technical strategiesand business plans.The R&D reported in companies’ annual accounts is not the onlymeasure of innovation. Investments in capital equipment, marketdevelopment, skills, brands, new ways of working, new businessprocesses, other intangible assets and linkages with otherorganisations are all methods of gaining competitive advantage.30 The 2006 R&D Scoreboard

2. R&D-Active Companies‘ Role in theGlobal EconomySummaryThe Sector mix of R&D-intensive, Capex-intensive and servicesectors is different for different countries and the proportion oftotal wealth created by R&D intensive companies is thereforealso different. This proportion can be estimated approximatelyby comparing the percentages of total R&D Scoreboardcompanies from each country in the R&D Global 1250 withthose in the FT Global 500. For European companies, the ValueAdded Scoreboard (where European companies are ranked bythe wealth created) can be used instead of the FT Global 500.The results of a comparison of the R&D Global 1250 with theFT Global 500 highlight R&D-heavy countries such asGermany and Japan which have over 50% larger proportionsof companies in the R&D Global 1250 and R&D-light countriessuch as Canada with more than twice the proportion in theFT 500 as in the R&D 1250. The USA is more balanced withcomparable proportions of companies in both groups.These differences in sector mix between the sets of companiesfrom different countries also have a major effect on theaverage R&D-intensity (R&D as % sales) for the companiesfrom different countries in the R&D Global 1250 Scoreboard.This will be analysed in more detail in chapter 5. There arealso sector mix differences for different countries’ economiesbut these are likely to be of different size.IntroductionThe R&D Global 1250 companies carry out £249bn of R&D and havesales of £6,868bn and operating profits of £757bn. These are largesums but represent only part of the wealth created by largercompanies in the global economy. Companies from the R&D Global1250 account for only 214 of the 500 companies in the FT Global 500,the 500 largest companies in the world by market capitalisation. Theother companies in the Global 500 do less or no R&D and yet createsubstantial wealth in Capex-intensive or service sectors. Theproportion of wealth created by R&D-active companies varies fromcountry to country and it is helpful to estimate the proportions of R&DGlobal 1250 companies contributed by each major country asopposed to companies in other sectors since analysing R&D-intensivecompanies alone may give an erroneous impression of relative wealthcreation for some countries. There are two methods of estimation: The proportions of companies in the FT Global 500 (the top 500companies in the world by market capitalisation) can be comparedwith proportions in the R&D Global 1250. A country with a higherproportion of companies in the R&D Global 1250 than in the FTGlobal 500 is clearly likely to have a higher than averageproportion of companies in R&D-intensive sectors.The Global 1250companies carryout £249bn ofR&D but R&Dactivecompaniescreate onlypart of thewealth in theglobal economy.The 2006 R&D Scoreboard 31

Analysis of the 2006 R&D ScoreboardFor the UK, Germany and France, the Value Added Scoreboard(reference 1) provides a direct measure of the proportions ofEurope’s top 700 companies (by Value Added which measureswealth created) in R&D-intensive, Capex-intensive and servicesectors. It is not possible to include US and Japanese companiesin the Value Added Scoreboard since they do not give enoughinformation in their accounts to enable value added to be calculated.Figure 2.1.2 R&D-heavy and R&D-light countries in the FT Global 500 & R&D Global 1250% of Companies % of CompaniesCountry in R&D 1250 in FT Global 500R&D ‘Heavy’ Countries Japan 18.3% 12.0%Germany 5.8% 3.8%‘Balanced’ Countries USA 43.3% 39.2%R&D ‘Light’ Countries Canada 1.9% 4.4%UK 5.8% 7.8%2.1 The FT Global 500 and R&D Global 1250Differences inpresence in theGlobal 1250 andFT Global 500reflect sectormix differencesin companiesfrom the variouscountries.Figure 2.1.1 shows two pie charts for companies from seven leadingcountries comprising the top six in the R&D Global 1250 and the FTGlobal 500. The first – figure 2.1.1a – shows each country’s proportionof the 500 companies in the FT Global 500, the largest companies bymarket capitalisation. The second – figure 2.1.1b – shows each country’sproportion of the Global 1250 R&D-active companies. The proportionsin the two figures are significantly different for some of the countriesand these are highlighted by the three categories of figure 2.1.2.R&D ‘heavy’ countries such as Japan and Germany have muchlarger proportions of the companies in the R&D Global 1250 thanin the FT Global 500. This arises since they have large automotivesectors but small oil & gas sectors and smaller services sectorsthan the USA or UK.R&D ‘light’ countries such as Canada (and, to a lesser extent, theUK) which have much larger proportions of the FT Global 500companies than of those in the R&D Global 1250. The UK, forexample, has twice the number of companies of Germany in theFT Global 500. These differences can be understood since Canada,for example, has strong natural resources companies in the FTGlobal 500 and many of these do not have enough R&D to gainentry to the R&D Global 1250.Relatively ‘balanced’ countries such as the USA which havecomparable proportions of companies in both the FT Global 500and R&D Global 1250 (slightly larger in the latter).These differences reflect sector mix differences in the sets ofcompanies from the various countries that are represented in theFT Global 500 and R&D Global 1250 rankings. These sector mixdifferences can be accurately displayed for European companiesusing value added data as is shown in Figure 2.2.1.32 The 2006 R&D Scoreboard

Figure 2.1.1 Companies from 7 countries drawn from the top 6 in the FT Global 500 and in theR&D Global 1250 as proportions of the totals7.8%4.4%a) FT Global 500USAJapanGermany39.2%France24.6%Switzerland27 OthersCanadaUK2.2%6.0%3.8%12.0%1.9%5.8%b) R&D Global 125017.9%USAJapanGermany43.3%FranceSwitzerland2.7%4.3%32 OthersCanadaUK5.8%18.3%The 2006 R&D Scoreboard 33

Analysis of the 2006 R&D ScoreboardFigure 2.2.1 Proportions of European 700 Value Added in each of 3 sector groups for UK, German &French companies706050% of Value Added403020100R&D-Intensive Sectors Capex-Intensive Sectors Service SectorsUKGermanyFranceThe UKcompanies in theVA Scoreboardhave the largestproportion ofVA and thehighest growthand wealthcreationefficiency.It should be emphasised that these are comparisons betweencompanies headquartered in particular countries and not between thecountries themselves. Sector mix differences are also seen in the datafor countries but these may well be of different size.2.2 Value Added and sector mixCompanies from the UK, Germany and France account for 64% of thevalue added of the top 700 European companies listed in the 2006Value Added Scoreboard (reference 1). The proportions of these threecountries’ value added in each of three groups of sectors are shownin figure 2.2.1. The groups are R&D intensive sectors (R&D over 2.5%of sales). Capex-intensive sectors (Capex over 4.3% of sales but R&Dbelow 2.5%) and service sectors (R&D and Capex both below theintensities quoted). It can be seen that the UK has the largestproportions of value added in the Capex-intensive and service sectorsbut the smallest in the R&D-intensive sectors 4 . However, for theEuropean 700 companies as a whole, the UK group of companieshave the largest proportion of value added and also the highestgrowth and wealth creation efficiency. This UK out-performance is theresult both of sector mix differences and of the strong performance ofUK companies within their sectors.4 Although the group of UK companies have the lowest proportion of R&D-intensive companies, they havea larger proportion of value added in sectors with a high wealth creation efficiency. This reflects the UKcompanies’ strength in pharmaceuticals while German and French companies have a much higherproportion of R&D in sectors such as automotive and engineering which have a much lower average wealthcreation efficiency.34 The 2006 R&D Scoreboard

3. Overview of Companies’ R&D andBusiness PerformanceSummaryThe 2006 dataset of 1250 companies shows three maindifferences from 2005. These are the larger proportion of USand UK companies in the last 250, the increasedrepresentation of financial companies (an effect of IFRS) andthe much smaller number of large companies reducing R&Dover the previous year. Indeed for 2005/06, amongst the top120 companies, 20 increased R&D by over £200m compared toonly 3 that reduced it by this much.The business performance of the Global 1250 R&D companieshas improved further over the previous year with sales up 9%,R&D up 7% and profitability up to 11% from 9.6% in 2005.Amongst the largest 15 sectors by R&D, pharmaceuticals andsoftware show the highest profitability and also the highestR&D intensity.There have been major sectoral changes in the group of thelargest R&D companies since 1992 with the rise ofpharmaceutical companies being the most obvious – the top20 companies by R&D contained none from pharmaceuticalsin 1992 but 6 in 2006.The Scoreboard has recorded those companies thatcapitalised part of their R&D. Disclosure of capitalised R&Dvaries by country and sector with under 10% of companiesdisclosing capitalised R&D in pharmaceuticals but 30% insoftware and automotive. Global 1250 R&D is concentrated in the top 5 countries (82%),the top 5 sectors (70%) and the top 100 companies (61%).The majority of company results for the 2005/06 financial year 5covered by this Scoreboard show improvements in businessperformance and increases in R&D investment, reflecting the healthierbusiness climate for most sectors with sizeable R&D investment. Thischapter provides an overview of the dataset and of some highlights ofthe 2006 Scoreboard. More analysis by company, sector and countryappears in chapter 4.5 The majority of companies in the Scoreboard have financial years ending in December or March.The 2006 R&D Scoreboard 35

Analysis of the 2006 R&D Scoreboard3.1 The DatasetThe number of listed and unlisted companies in the worldwidedataset has been increased to 1250 for 2006 compared to 1000 for2005. The minimum R&D for inclusion is now just over £19m. Formost major countries it has been possible to identify a representativenumber of companies in the size band of 1001 to 1250 and this issummarised in figure 3.1.1 where the number of companies in the last250 is compared with that in the first 1000 for the five majorcountries.Figure 3.1.1 Size distributions of R&D Global 1250 companies for 5 countriesTotal companies Total companies Companies in last 250Country in first 1000 1001-1250 as % of first 1000All countries 1000 250 25%USA 418 123 29.4%Japan 196 33 16.8%Germany 63 9 14.3%UK 53 19 35.8%France 45 9 20.0%The majorimpacts of IFRSare on thecapitalisationof R&D andon improveddisclosureof R&D.It can be seen that the USA and UK have much higher percentagesof smaller companies by R&D compared to Japan and Germany.This may either reflect genuine differences in the size distributions(such as a lower rate of middle-sized company formation in Japancompared to the USA) or some greater difficulty in identifying smallerR&D companies in Japan and Germany. Amongst the other largerAsian countries in the Scoreboard, Taiwan has a ratio of almost 23%but South Korea has only one company in the last 250 out of a total of17; however, the notes in volume 2 explain that accounts are eithernot available or do not disclose R&D for a number of South Koreancompanies identified as possibly having sufficient R&D to be includedin the Scoreboard. There are two other noticeable features of the 2006dataset:The impact of IFRS which has been adopted by many Europeanlisted companies for the first time. The major differences IFRSmakes from previous years are that the criteria on R&Dcapitalization are more strict (where the criteria are met, R&Dmust be capitalised) and that R&D must be disclosed. This has ledto improved disclosure of R&D in some sectors where there waspreviously little disclosure. For example, in the 2005 Scoreboardbanks, insurance and general financial companies accounted for£125m of R&D but in 2006 this has risen to nearly £1400m, about0.6% of Global 1250 R&D, and these same sectors account fornearly 5% of UK 800 R&D.36 The 2006 R&D Scoreboard

To minimise the impact of the transition to IFRS, prior yearcomparatives given in the latest accounts are used where possiblerather than the prior year accounts since the former give morereliable one year growth figures (see notes in volume 2 for furtherdetails).The number of large companies reducing R&D over the previousyear has decreased significantly. For example, only 14 of the top100 companies in the 2006 Scoreboard reduced R&D compared to27 in 2005; of these reductions, only 3 in 2006 were of 10% ormore compared to 8 in 2005.3.2 Business performance of R&D Companies in 2005/06The overall business performance of R&D companies has improvedover the last year as illustrated by the data in figure 3.2.1. This showsthat profitability is higher than that reported in the 2005 Scoreboard forall three world regions and that there have been significant increasesin both sales and R&D. The big increase in average profitability for UKcompanies within the Global 1250 is partly a result of the improvedIFRS disclosure of R&D which brings in several profitable companiesin financial sectors which are in the 2006 Scoreboard but not the 2005Scoreboard. The overall change in R&D was 7% in 2006 vs. 5% in 2005but the increase for the Americas was the largest (8.3% vs. 7% in 2005)with Asia-Pacific 6.2% and Europe 5.8% for 2005/06 over 2004/05.The overallbusinessperformanceof R&D-activecompanieshas improvedagain over thelast year.Figure 3.2.1 Business performance of R&D-active companies in 2005/06 vs. 2004/05Global RoW (mainly UK within1250 Americas Japan) Europe EuropeNumber of Companies 1250 575 316 359 72Change in Sales 8.9% 11.0% 8.8% 6.9% 5.5%over Previous YearProfitability 11.0% 12.3% 8.3% 11.6% 12.5%(operating profit as % sales) (9.6%)* (11.3%)* (8.0%)* (9.2%)* (9.5%)*Change in R&D 7.0% 8.3% 6.2% 5.8% 8.2%(5% in 2005) (7% in 2005) (6% in 2005) (2% in 2005) (1% in 2005)* The figure in brackets is from the 2005 Scoreboard for the R&D Global 10003.3 Business performance of the top 15 R&D SectorsThe overall company profitability data shown in figure 3.2.1 areaverages over all sectors. The top 15 sectors in the R&D Global 1250all account for 1% or more of the total R&D but have very differentprofiles of investment intensity (R&D plus Capex as % sales) andprofitability (operating profit as % sales). This is illustrated by figure3.3.1 which shows the 15 sectors exhibited on a chart with dottedlines showing investment intensity and profitability levels of 10% 6 .The 15 sectors can be characterised as follows:6 GE has been removed from General Industrials for the purposes of this figure since it has very substantialturnover and operating profit from financial services.The 2006 R&D Scoreboard 37

Analysis of the 2006 R&D ScoreboardFigure 3.3.1 Profitability vs. investment intensity for the largest 15 sectors in the R&D Global 125025Profitability (Operating Profit as % Sales)2015105Oil & GasFood ProducersHouseholdGeneral IndustrialsIndustrial Engineering ChemicalsAerospaceHealthLeisureSoftwareFixed LineTelecomsTechnology HardwareElectronicsPharmaceuticalsAutomotive00 5 10 15 20Investment Intensity (R&D + Capex) as % SalesThere were nopharmaceuticalcompanies in thetop 20 of 1992but six in 2006.The sectors with average investment intensities above 10% arefound in two groups – one with high profitability led by softwareand pharmaceuticals and one with profitability below 10% led bytechnology hardware.The sectors with average investment intensity below 10% are ledby oil & gas followed by a group of 6 sectors just above andbelow the 10% profitability line.Amongst the five sectors with the highest profitability, two are veryCapex-intensive (oil & gas and telecoms) and three R&D-intensive.There is, of course, a wide spread of company performance within eachof these four groups so that, for example, 5 of the top 10 automotivecompanies have higher profitability than 4 of the top 10 softwarecompanies. However, all the top 10 pharmaceutical companies havehigher profitability and higher investment intensity than all the top10 automotive companies (pharmaceuticals, software & health).3.4 Changes in the largest R&D companies from 1992 to 2006The 20 largest companies in the world by R&D are shown in figure3.4.1 for the 2006 and 1992 Scoreboards (see reference 6 for thelatter). Just seven companies are common to both lists although threeothers (Volkswagen, Sony and Honda) were placed just outside thetop 20 in 1992 (between 21 and 24).The major differences between top 20 sectors and regions in 1992 and2006 are summarised in figure 3.4.2 which shows that the largest38 The 2006 R&D Scoreboard

change is the presence of 6 pharmaceutical companies in 2006 (fourbeing from Europe) compared to none in 1992. This increase inpharmaceutical company presence has been accompanied by areduction in the number of electrical & electronics, chemical andtelecoms companies in the top 20. There are a number of companiesthat have moved well up or down the rankings during this period.Examples are Nokia moving from 165th place in 1992 to 17th in 2006,Microsoft from 158th to 5th, Pfizer from 61st to 2nd and, in the oppositedirection, ABB from 16th in 1992 to 113th in 2006, Fujitsu from 10th to51st and Fiat from 15th to 62nd.Figure 3.4.1 The top 20 R&D companies in 1992 and 20061992 2006Rank Company R&D Rank Company R&D1. General Motors £3.2bn 1. Ford £4.7bn2 Daimler-Benz £3.0bn 2 Pfizer £4.3bn3 Siemens £2.8bn 3 General Motors £3.9bn4 IBM £2.7bn 4 Daimler Chrysler £3.9bn5 Hitachi £2.1bn 5 Microsoft £3.8bn6 Ford £2.0bn 6 Toyota £3.7bn7 Toyota £1.8bn 7 Johnson & Johnson £3.7bn8 AT&T £1.7bn 8 Siemens £3.5bn9 Matsushita Electric £1.6bn 9 Samsung Electronics £3.2bn10 Fujitsu £1.4bn 10 GlaxoSmithKline £3.1bn11 Toshiba £1.3bn 11 IBM £3.1bn12 Philips £1.2bn 12 Intel £3.0bn13 NEC £1.2bn 13 Novartis £2.8bn14 NTT £1.2bn 14 Volkswagen £2.8bn15 Fiat £1.0bn 15 Matsushita Electric £2.8bn16 ABB £1.0bn 16 Sanofi-Aventis £2.8bn17 Hoechst £1.0bn 17 Nokia £2.7bn18 Nissan Motor £1.0bn 18 Sony £2.6bn19 Bayer £1.0bn 19 Roche £2.5bn20 Digital Equipment £0.9bn 20 Honda £2.3bnTotal £33.1bn Total £65.2bnThe 2006 R&D Scoreboard 39

Analysis of the 2006 R&D ScoreboardFigure 3.4.2 Changes in sectors & regions for top 20 companies 1992 to 2006.2006 1992Sectors Automotive 6 6Pharmaceuticals 6 0Electronics & technology hardware 6 9Software 2 1Telecoms 0 2Chemicals 0 2Regions Europe 8 7Americas (USA) 7 5Asia-Pacific 5 (Japan 4) 8 (Japan)There are 20companies in thetop 120 thathave increasedR&D by over£200m but onlythree whohave reduced itby this much.3.5 Companies with large one year changes in R&D.The overall change in R&D for the Global 1250 companies over theprevious year reflects the changes in its constituent companies,particularly the top 100 which accounted for 61% of total R&D in 2006.Only 14 of the top 100 companies in 2006 reduced R&D over theprevious year compared to 27 in the 2005 Scoreboard. Figure 3.5.1lists those of the top 120 companies that increased or decreased theirR&D by more than £200m over the previous year 7 .It is clear from figure 3.5.1 that large increases outnumber largedecreases by more than 6 to 1 and that all but two of the companieslisted are in the top 50. The 23 companies shown (20 with largeincreases) are mainly drawn from the automotive (6) andpharmaceutical (5) sectors but with contributions from technologyhardware (3), software (3), aerospace (2), electronics (2), telecoms (1)and chemicals (1). The 20 companies with large increases contributeover one third of the increase in R&D for the Global 1250 over theprevious year; three of them are from the UK.Several of the companies listed in figure 3.5.1 as increasing R&D byover £200m had also increased their R&D by over £200m in theprevious year. Examples are Hyundai, Intel, Johnson & Johnson,Nissan, Novartis and Samsung. Johnson & Johnson, Novartis andSamsung Electronics have increased R&D by at least £200m for threeyears or more in succession.7 Outside the top 120, the only company with a change over £200m is Deutsche Telekom (153rd) whichreduced R&D by £321m.40 The 2006 R&D Scoreboard

3.6 Capitalised R&DFor the first time the percentage of a company’s R&D that wascapitalised was recorded where this was disclosed in the company’saccounts. This gives an indication of the risk profile of the R&Dprogramme. Unfortunately, the disclosure of capitalised R&D variessubstantially by sector and by country. A major factor is thatcompanies in Europe that have adopted IFRS are much more likely todisclose at present than companies in the USA and Japan. The mainaspects of disclosure are:In the USA and Canada only 9% of companies disclose capitalisedR&D and only one Japanese company has done this.In Europe, the percentage of companies disclosing for the UK,Germany & France is 40% but this rises to 60% for Scandinavia(Denmark, Finland and Sweden). For sectors, low levels of capitalised R&D – below 10% – aredisclosed for pharmaceuticals, technology hardware andchemicals but this rises to much higher levels for automotive(26%), software (30%) and industrial engineering (over 30%).All nine banks in the Scoreboard capitalise 100% of their R&D.It would be anticipated that software companies would capitalise asmaller proportion of R&D than automotive (vehicle makers) sincenew vehicle development programmes are a more predictableinvestment. This is observed with the median vehicle makercapitalising 40% of all R&D compared to the median softwarecompany capitalising under 17%. A major automotive componentmaker such as Robert Bosch capitalises only 7% of R&D, much lessthan a vehicle maker; most new automotive technologies are nowdeveloped by first line component makers.The medianvehicle makercapitalises 40%of R&D but amajor automotivecomponentmaker onlycapitalises 7%.The 2006 R&D Scoreboard 41

Analysis of the 2006 R&D ScoreboardFigure 3.5.1 Companies from the top 120 companies having largeincreases/decreases in R&D over the previous yearCompany Sector Change in R&D1. Johnson & Johnson Pharmaceuticals +£646m2. Novartis Pharmaceuticals +£372m3. Motorola Technology Hardware +£361m4. Toyota Motor Automotive +£360m5. Ford Motor Automotive +£349m6. Samsung Electronics Electronics +£344m7. BAE Systems Aerospace +£339m8. GlaxoSmithKline Pharmaceuticals +£297m9. Roche Pharmaceuticals +£270m10. Ericsson Technology Hardware +£265m11. Hyundai Motor Automotive +£245m12. Microsoft Software +£233m13. Oracle Software +£222m14. Nissan Motor Automotive +£216m15. Intel Technology Hardware +£214m16. Renault Automotive +£208m17. BT Fixed Line Telecoms +£205m18. BMW Automotive +£204m19. Symantec Software +£203m20. Finmeccanica Aerospace +£201mDecreases over £200m21. Bayer Chemicals -£356m22. Matsushita Electric Electronics -£250m23. AstraZeneca Pharmaceuticals -£247m42 The 2006 R&D Scoreboard

3.7 The concentration of R&DAs in previous years, the R&D of the Global 1250 companies isconcentrated in companies from a few major countries and sectorsand from the top 100 companies. These three dimensions ofconcentration are summarised in figure 3.6.1 which shows thatcompanies from the largest five countries account for 82% of theGlobal 1250 total R&D with the other 34 countries contributing only18%. The top 5 sectors and the top 100 companies also account forlarge proportions of the total with the smallest 150 companiescontributing only 1.3% of the total. The reason for including them isboth to identify R&D-intensive companies that may show rapid growthin future years and to capture enough middle-sized companies to beable to compare companies of this type between the major countries.Global 1250 R&Dis stronglyconcentrated bycompany, sectorand country.Figure 3.6.1 The concentration of R&DDimension of% of total R&D ofconcentration Global 1250 companies DetailsLargest 5 Countries from 38 82.1% USA, Japan, Germany, France & UKLargest 5 Sectors from 39 69.5% Technology hardware, pharmaceuticals,automotive, electronics & softwareTop 100 companies* by 61.4% Americas: 41 (USA 39)R&D from Global 1250Europe: 36 (UK+GER+FR=32)Asia Pacific: 23 (Japan 20)* Note that the last 150 companies contribute only 1.3% of the total.The 2006 R&D Scoreboard 43

Analysis of the 2006 R&D Scoreboard4. Global 1250 R&D by Company, Sectorand CountrySummary There are 39 countries with companies in the Global 1250but 5 of them contribute 82% of the total and 12 contribute96%. The smaller countries tend to have their R&D dominatedby one or two relatively large companies which contribute asubstantial proportion of the country’s total.The top 15 sectors show very different growth rates of R&Dwith aerospace & defence having the highest growth butsoftware and pharmaceuticals have the highest growthamongst the top five sectors.The major countries show different sector specialisationswith the US having over 60% of its R&D in pharmaceuticals,software and technology hardware, Japan having 70% inautomotive, electronics (including leisure electronics) andtechnology hardware, Germany with almost 50% inautomotive and the UK with nearly 60% in pharmaceuticalsand aerospace.Sectors also differ in their requirements for R&D and Capexand range from R&D ‘heavy’ sectors such as pharmaceuticalsand software to Capex ‘heavy’ sectors such as resources,utilities and telecoms.The top 50 companies by R&D show changes over the last fewyears with companies in pharmaceuticals, aerospace and fromSouth Korea rising in the rankings. The top 15 companies fromeach World region are drawn mainly from the top 5 sectors butthere are no pharmaceutical companies in the top 15 from Asia.The top 12 companies by one year growth from the 60 largestR&D investors are led by BAE systems and contain 3 eachfrom aerospace, pharmaceuticals and technology hardware.The top 20 companies by R&D intensity amongst those largeenough to be in the FT Global 500 are (all except one) drawnfrom pharmaceuticals, software and technology hardware.44 The 2006 R&D ScoreboardThe R&D investment of the Global 1250 companies (selected as thelargest by size of R&D) is analysed by world region 8 , by country 9 withinregion, by sector and major company in chapters 4 to 6 as follows:The proportions of total Global 1250 R&D by region, country, sectorand major groups of companies are described in this chapter. The intensity of R&D (R&D as % sales) is analysed in chapter 5with special reference to the effects of sector mix in determiningthe average R&D intensity for each country’s group of companies.The R&D of middle-sized companies with high R&D intensity isdiscussed in chapter 6 which includes a comparison of middlesizedcompanies from different countries.8 Asia Pacific is taken to include the Middle East and Africa which together account for only £0.4bn of R&D.9 Companies are assigned to the countries where they have their registered offices, with all FTSE 100companies assigned to the UK.

Figure 4.1.1 The 3 world regions’ share of Global 1250 R&D24.2% By region:Americas42.8%EuropeAsia Pacific33.0%Figure 4.1.2 The top 15 countries by R&D in the Global 12505.3%5.7%3.6%10.32.9%1.3%1.7%2.2%1.1%1.2%0.9%0.5%0.4%2.1%41.3%By country:USAJapanGermanyFranceUKSwitzerlandS KoreaNetherlandsSwedenFinlandItalyTaiwanCanadaDenmarkBelgium24 Other Countries19.5%The 2006 R&D Scoreboard 45

Analysis of the 2006 R&D ScoreboardThe top 12countries outof 39 accountfor 96% ofGlobal 1250R&D.South Korea andTaiwan haveshown stronggrowth ofR&D over thelast few years.4.1 R&D by region and countryFigure 4.1.1 shows how the £249bn of Global 1250 companies’ R&D isdivided between the three world regions (Americas, Europe and AsiaPacific 8 ) and figure 4.1.2 illustrates the shares of the top 15 countries(out of 39 countries in the Scoreboard) each of which has 0.4% ormore of Global 1250 R&D; companies are assigned to the countrieswhere they have their registered offices, with all FTSE 100 constituentsassigned to the UK. It is clear that just 5 countries contribute 82% ofthe total, 12 contribute over 96% and all 15 nearly 98%.There have been significant changes over the last few years in theproportions of total R&D contributed by companies from certaincountries, particularly South Korea and Taiwan. This is illustrated byfigure 4.1.3 which shows changes in R&D for companies from the top15 countries together with concentration (% of R&D contributed bythe top two companies) and the numbers of larger companies (thosewith R&D over £100m) with either increasing or decreasing/staticR&D. The main points highlighted by figure 4.1.3 are:R&D from companies in nine of the 15 countries is dominated bythe two largest companies which contribute over 45-65% of R&Dand over 70% in two cases.The concentration of R&D in the top two companies is smaller forthe UK, Germany and France at 29-39% and much smaller for theUSA and Japan (9% & 13% respectively). Taiwan also has a lowconcentration (16%) which arises since its largest three companiesin a group of 44 only have R&D in the range £150-250m; there areno very large Taiwanese companies by R&D as is the case for allthe other countries in figure 4.1.3 except Belgium and Denmark(neither of which have a company with over £500m of R&D). As far as growth of R&D is concerned, three countries stand out –South Korea and Switzerland in the top seven and Taiwan in theother eight which all increased the R&D of their companies in theGlobal 1250 by more than 20% over the average of the fourprevious years and by about 10% or more over the previous year.In the case of Switzerland and Taiwan, this is reflected in the highratio of larger companies increasing rather than reducing R&D.For South Korea, the high R&D growth is determined by growth ofthe three largest companies (Samsung, Hyundai, LG).Amongst the largest R&D countries, the USA 10 stands out with a1 year R&D growth rate of 8.2% and a ratio of over 4 to 1 forlarger companies increasing as opposed to decreasing R&D.This ratio is 3:1 for Japan and just under 3:1 for Germany, the UKand France as a group.The sheer number of large US R&D companies is emphasised byfigure 4.1.3. There are approximately the same number of UScompanies with R&D over £100m as there are in the five nextlargest countries together.8 Asia Pacific is taken to include the Middle East and Africa which together account for only £0.4bn of R&D.10 The FASB (Financial Accounting Standards Board) required all US companies reporting after June 2005to expense employee stock options. This increases R&D for companies where significant numbers of R&Dstaff are given stock options (e.g. in the software sector) and may have an effect of significant size in a fewUS sectors. One example was the increase in Microsoft R&D from 2003 to 2004.46 The 2006 R&D Scoreboard

Figure 4.1.3 The top 15 countries by proportion of R&D in the Global 1250R&D Number of Larger*Concentration CompaniesR&D as % Decreasingas % Growth Growth for top 2 Increasing R&DCountry R&D Sales 1yr 4yr† Companies R&D (or Static)1. USA £103.0bn 4.40% 8.20% 15.40% 9% 127 302. Japan £48.7bn 3.80% 4.00% 5.90% 13% 58 193. Germany £25.7bn 4.10% 2.00% -2.20% 29% 23 64. France £14.2bn 2.60% 5.70% 11.00% 31% 16 55. UK £13.1bn 1.80% 8.20% 7.20% 39% 12 76. Switzerland £8.9bn 6.80% 9.20% 21.60% 60% 7 17. S. Korea £7.1bn 3.90% 11.90% 22.40% 64% 6 48. Netherlands £5.6bn 6.40% 0.20% -0.90% 58% 4 39. Sweden £4.2bn 4.60% 13.70% 1.90% 61% 6 110. Finland £3.2bn 5.00% 3.60% 5.70% 86% 1 011. Italy £2.9bn 2.20% 11.50% 27.40% 72% 2 212. Taiwan £2.6bn 2.50% 30.50% 44.60% 16% 7 013. Canada £2.3bn 4.00% 6.00% -0.50% 57% 2 214. Denmark £1.4bn 4.40% 15.60% 11.50% 47% 2 015. Belgium £1.1bn 4.20% 20.90% 21.80% 65% 3 0*Where R&D is > £100m.† 2005/06 compared to the average of the 4 previous years.The 2006 R&D Scoreboard 47

Analysis of the 2006 R&D Scoreboard4.2 R&D by SectorTechnologyhardware,pharmaceuticalsand automotiveare the largestR&D sectorsand aerospaceshows thehighest growthover theprevious yearamongst the top15 sectors.4.2.1 The Top 15 Sectors by R&DThe largest five sectors by R&D account for about 70% of the Global1250 total R&D and the top 15 sectors (each with over £2.4bn of R&D)for 94% of the total. The top 15 sectors 11 are listed in figure 4.2.1with their growth rates, concentrations and the largest contributorcountries. A comparison of figure 4.2.1 with the similar table in the2005 R&D Scoreboard (reference 7) shows that pharmaceuticals &biotechnology, has moved up from third to second place and is nowvery close to technology hardware in first place. Automotive hasdropped from first in 2005 to third place. The main conclusions froma comparison of figure 4.2.1 and its counterparts in earlierScoreboards are:The top 5 sectors have remained the same for several yearsalthough their relative positions have changed withpharmaceuticals and software showing growth and technologyhardware slipping in relative terms (it contributed 25% of the totalin 2002).The concentration of R&D (% of each sector’s R&D contributed bythe top 10% of companies in the sector) is 43-65% for all but twoof the top 15 sectors in figure 4.2.1; oil & gas producers have alower concentration of 31% and pharmaceuticals a higher one of70%. Four of the top five sectors have concentrations of at least64% and this emphasises the dominant size of the top 10% ofcompanies.The sectors showing the highest growth rates of R&D over theprevious year are software and pharmaceuticals amongst the fivelargest sectors and health, oil & gas, aerospace and generalindustrials amongst the smaller ones. In figure 4.2.1 aerospacehas the highest growth rate of all at 13.5%; BAE Systems andRolls-Royce have the highest R&D growth rate amongst the top10 aerospace companies.A degree of country specialisation can be seen in figure 4.2.1 withUS companies being the largest contributors to 10 of the 15sectors but behind Japanese and German companies inautomotive and electronics. Japan leads in 4 of the 15 sectors andthe UK in one. UK companies form the second largest group in3 sectors and companies from Germany and Switzerland appearin second place twice with South Korea & Sweden once.4.2.2 Sector Specialisations of the Major CountriesThe country specialisations for the top 7 countries and the top 8 sectorsare exhibited clearly in figure 4.2.2 which gives the proportions ofeach country’s Global 1250 R&D in the 8 sectors. From this it canbe seen that the US majors in technology hardware, software andpharmaceuticals, Japan in electronics/leisure, automotive andtechnology hardware, South Korea in electronics and automotive,Germany in Automotive and the UK in pharmaceuticals and aerospace.Switzerland has 66% of its Global 1250 R&D in pharmaceuticals.11 A list of all 36 ICB sectors with companies in the Global 1250 appears in figure 4.2.3 on page 51.48 The 2006 R&D Scoreboard

The full list of ICB sectors is given in figure 4.2.3 which also showsR&D, sales and average R&D intensity and profitability for each sector.There are 15 sectors with 1% or more of Global 1250 R&D (i.e. a sectortotal of at least £2.4bn R&D), 11 sectors with R&D of £0.7bn to £1.6bnand 10 sectors with R&D of £0.5bn or less. The smallest 10 sectorstogether account for only 1.2% of Global 1250 R&D.Figure 4.2.1 The top 15 sectors in the R&D Global 1250 (all with £2.4bn or more of R&D)Sector ConcentrationSector 1 year R&D as % total sector Top 3 countries*R&D growth % Global R&D in top contributingTop 15 Sectors £bn of R&D 1250 10% companies R&D to sector1. Technology Hardware (2) † 47.9 7.20% 19.20% 65% USA, Japan, Finland2. Pharmaceuticals (3) 46.7 8.30% 18.70% 70% USA, Switzerland, UK3.Automotive (1) 43.9 5.10% 17.60% 43% Japan, Germany, USA4. Electronics & Electrical (4) 24.2 4.20% 7.40% 64% Japan, S. Korea,Germany5. Software (5) 16.5 8.90% 6.60% 65% USA, Germany6. Chemicals (6) 11.6 -0.90% 4.60% 50% USA, Japan, Germany7. Leisure Goods ** 10.7 1.70% 4.30% 61% Japan, USA,Netherlands8. Aerospace & Defence (7) 10.1 13.50% 4.10% 43% USA, UK, Netherlands9. Gen. Industrials (11) ** 6.2 11.40% 2.50% 60% USA, Japan10. Industrial Engineering (8) 5.1 9.20% 2.40% 46% USA, Sweden, Japan11. Health (10) 4.5 12.50% 1.80% 43% USA*12. Fixed Line Telecoms ** 4.4 6.00% 1.80% 52% Japan, UK13. Oil & Gas Producers (12) 2.9 11.80% 1.10% 31% USA, UK14. Household Goods (16) ** 2.5 7.50% 1.00% 62% USA*15. Food Producers (14) 2.4 2.40% 1.00% 54% UK, Switzerland* Top 3 countries are listed but only provided their companies contribute at least £500m R&D to that sector.† The figure in brackets shows the 2005 rank.ICB sectors with ** did not have precise equivalents in 2005.The 2006 R&D Scoreboard 49

Analysis of the 2006 R&D ScoreboardFigure 4.2.3 The 36 ICB sectors with companies in the Global 1250Rank Sector Name Number R&D % of R&D Profit- Sales& Number Companies £bn Total Intensity % ability % £bn1 Technology Hardware (37) 225 47.9 19.2 8.2 8.4 5822 Pharmaceuticals & Biotech (33) 152 46.7 18.7 14.9 20.2 3143 Automotive (2) 78 43.9 17.6 4.2 4.2 10404 Electronic & Elec (8) 102 18.3 7.4 4.8 6.5 3815 Software & Comp Services (35) 111 16.4 6.6 10.4 19.6 1576 Chemicals (5) 93 11.4 4.6 3.2 9.2 3597 Leisure Goods (23) 29 10.7 4.3 7.0 4.6 1538 Aerospace & Defence (1) 34 10.1 4.1 4.6 7.8 2219 General Industrials (16) 37 6.2 2.5 2.4 14.6 26310 Industrial Engineering (22) 70 6.1 2.4 2.7 8.2 22411 Health Care (18) 53 4.5 1.8 6.4 15.7 7012 Fixed Line Telecoms (10) 16 4.4 1.8 1.7 16.5 25513 Oil & Gas Producers (30) 17 2.9 1.1 0.3 17 109114 Household Goods (19) 25 2.5 1.0 2.3 11 11115 Food Producers (12) 23 2.4 1.0 1.7 11.8 14116 Industrial Metals (21) 25 1.6 0.6 0.8 10.3 19017 Electricity (7) 15 1.6 0.6 1.0 12.6 15218 Personal Goods (32) 15 1.5 0.6 2.2 15 7119 Media (25) 10 1.3 0.5 1.8 11.5 7520 Construction (6) 20 1.2 0.5 0.9 5.2 12521 Banks (3) 9 1.0 0.4 0.9 34.7 10622 Support Services (36) 12 0.9 0.4 3.0 12.5 3023 Tobacco (38) 4 0.8 0.3 0.9 14.4 9424 Oil Equip & Services (31) 10 0.8 0.3 1.8 15.7 4325 General Retailers (17) 6 0.7 0.3 2.2 11.9 3226 Mobile Telecoms (27) 7 0.7 0.2 0.8 -16.2 7627 Food & Drug Retailers (11) 6 0.5 0.2 0.4 3.3 14228 Gas, Water, Multi-utilities (14) 8 0.5 0.2 0.4 15.5 13029 Travel & Leisure (39) 9 0.4 0.2 3.5 15.8 1230 Industrial Transport (22) 8 0.4 0.2 0.5 7.2 8531 Forestry & Paper (13) 9 0.4 0.1 0.5 4.4 7932 General Financial (15) 5 0.2 0.1 6.7 26.8 333 Mining (26) 2 0.2 0.1 0.8 26 2534 Beverages (4) 2 0.2 0.1 1.4 7.6 1335 Non Life Insurance (29) 1 0.1 0.05 1.9 11.4 636 Life Insurance (24) 2 0.1 0.03 0.3 10.5 20Note: There are 3 sectors which have no companies in the R&D Global 1250 – these are equity investment and non-equity investment instruments andreal estate.50 The 2006 R&D Scoreboard

Figure 4.2.2 The top 7 countries with their Global 1250 companies’ proportions of R&D in thetop 8 sectors100908070% of country R&D6050403020100USA Japan Germany France UK SwitzerlandS KoreaOther Aerospace AutomotiveChemicalsElectronicsLeisurePharmaceuticalsSoftwareTechnology Hardware4.2.3 R&D and Capex by SectorWhile R&D is a key investment for sectors such as pharmaceuticalsand software, there are other sectors where Capex is a much moreimportant investment than R&D – examples are mining, telecoms,utilities and oil & gas producers. The relative sizes of R&D and Capexinvestment for the ICB sectors are shown in figure 4.2.4 which showsthe average R&D and Capex intensities for all the ICB sectors andincludes a 45 degree line on which R&D and Capex intensities are equal.The chart in figure 4.2.4 is divided into two sections – R&D-intensivewhere R&D exceeds Capex and Capex-intensive where Capex exceedsR&D ;The R&D – intensive sectors consist of three with R&D intensityover 7.5% (pharmaceuticals, software and technology hardware),four with intensity of 2.5%-7.5% and three with lower intensity. The Capex-intensive sectors include nine with Capex intensityover 6% and R&D intensity under 2.5%, automotive andelectronics with R&D over 4% and Capex over 6% and others inpink and green in the lower part of figure 4.2.4.These two categories do not suit all companies in a particular sectorsince there may be sub-sectors requiring markedly different R&D /Capex ratios. An example is travel & leisure where a railway companywill require almost all Capex (e.g. West Japan Railway) but a gamingcompany may require more R&D than Capex (e.g. Alliance Gaming).Similar sub sector differences apply in many other sectors.The R&Dspecialisationsof the top 7countries areemphasised bytheir verydifferent sectormixes of thetop 8 sectors.The 2006 R&D Scoreboard 51

Analysis of the 2006 R&D ScoreboardFigure 4.2.4 R&D and Capex intensities for the ICB sectors.R&D as % Sales1812156R&D-Intensive35332318371821739Capex-Intensive520361916122932 25 31103386 217 27 262411 4133022 1400 6 12 18Capex as % Sales1. Aerospace2. Automotive3. Banks4. Beverages5. Chemicals6. Construction7. Electricity8. Electronics10. Fixed Line Telecoms11. Food Retail12. Food Producers13. Forestry & Paper14. Gas, Water, Multi15. General Financial16. General Industrials17. General Retail18. Health19. Household20. Industrial Engineering21. Industrial Metals22. Industrial Transport23. Leisure Goods24. Life Insurance25. Media26. Mining27. Mobile Telecoms29. Non Life Insurance30. Oil & Gas31. Oil Equipment32. Personal Goods33. Pharmaceuticals35. Software36. Support Services37. Technology Hardware38. Tobacco39. Travel & LeisureThe ‘top’ Globalcompanies canbe defined byvolume, growthor intensity ofR&D.4.3 The top global companies by R&D, growth and R&DintensityThe top R&D-active companies in the world account for a substantialproportion of the total R&D of the Global 1250 companies – the top20 by size of R&D investment account for 25% of the total R&D andthe top 100 for over 60%. The ‘top’ companies can be defined in threemain ways:The first is by size of R&D investment.The second is by growth over 1 year or over the average of theprevious 4 years. Since smaller companies tend to have higher% growth, growth is assessed for the 60 companies with R&Dover £1bn.The third method is by R&D intensity (R&D as % sales) in whichcase companies are selected only from those 214 larger Global1250 companies that also feature in the FT Global 500. If thiscondition were not applied, small biotechnology companies withvery small sales would head the rankings by R&D intensity.52 The 2006 R&D Scoreboard

4.3.1 The top global companies by R&DThe top 50 global companies by R&D are shown in figure 4.3.1together with their global rank in the 2003 and 2005 R&D Scoreboards(reference 7). There are 20 companies from Europe (including 3 fromthe UK), 18 from the USA and 12 from Asia-Pacific (10 from Japan).Many of the companies are in similar rank positions in 2003, 2005 and2006 but there are 7 companies that have moved position by 15places or more.Those rising 15 or more places in the rankings 2003 to 2006 are:Hyundai (69 to 43), Finmeccanica (74 to 50), Samsung (33 to 9)Amgen (68 to 45) and BAE Systems (58 to 41). Those falling 15 or more places in the rankings from 2003 to 2006are: NTT (22 to 38) and Bayer (31 to 46).The large increases in R&D by Samsung and Hyundai from 2003 to2006 have moved South Korea’s companies in the Global 1250 fromninth to seventh largest country group. Small changes in rankingfrom year to year between companies in different currency areas canoften be explained by changes in exchange rates. For example, theUS dollar strengthened compared to sterling and the euro from the2005 to 2006 Scoreboards and this was partly responsible for somesmall changes in ranking. However, the exchange rate effect is notstraightforward since it depends where in the world a company’s R&Dresources are located – many European pharmaceutical companies,for example, have large R&D establishments in the USA, so that partof their R&D is costed in US dollars.The top 50 companies are predominantly drawn from the threelargest sectors – automotive (13), pharmaceuticals (12) andtechnology hardware (10) but with significant contributions fromaerospace (4), electronics (3), leisure (3) and software (2) with threeother sectors 12 each represented by one company.The sector mix of the largest companies is very different in the threeworld regions and this is illustrated by figure 4.3.2 which lists the top15 companies by R&D in each region together with their positions inthe 2003 Scoreboard. The two most obvious changes since 2003 arethe rise of three South Korean companies in the Asia Pacific rankings(which also all show double digit growth of R&D over the previousyear) and the upward move of pharmaceutical companies – all 11have either risen in the rankings (7) or held the same position (4).The sector mix for the three regions is displayed in figure 4.3.3 whichshows that there are no large pharmaceutical companies in AsiaPacific but 9 of the 15 companies are in technology hardware andelectronics with another 5 in automotive. Europe also has 5 companiesin automotive but these are accompanied by 5 in pharmaceuticals.Note the large differences in growth between the top 15 companiesin each region shown in figure 4.3.2. These range from -4% to 21% inthe USA, -11% to 16% in Europe and -10% to 22% in Asia Pacific.These differences in growth rate of R&D between companies have insome cases been maintained in the same direction for some time andwill lead to significant changes in the top 15 lists in the next 2-3yrs ifthey continue; the rise of South Korean companies over the last 3years is one example of this.There are 20companies fromEurope, 18from the USAand 12 fromAsia in the top50 by R&D.The largeincreases in R&Dby Samsung andHyundai 2003-06have moved theS. Korean groupof companies upto 7th place inthe Scoreboard.12 General industrials, fixed line telecoms and chemicals.The 2006 R&D Scoreboard 53

Analysis of the 2006 R&D ScoreboardFigure 4.3.1 The global top 50 companies by R&DRank Company Sector † Country Rank 2005 Rank 2003 2005/06 R&D £bn1 3 51 Ford Motor A USA 3 14.662 Pfizer P USA 2 54.333 General Motors A USA 6 43.94 Daimler Chrysler A Germany 1 23.885 Microsoft S USA 7 113.846 Toyota Motor A Japan 4 63.737 Johnson & Johnson P USA 14 133.688 Siemens E Germany 5 33.549 Samsung Electronics E S.Korea 17 333.1710 GlaxoSmithKline P UK 11 83.1411 IBM S USA 9 73.1312 Intel TH USA 16 12313 Novartis P Switzerland 20 252.8214 Volkswagen A Germany 10 102.815 Matsushita Electric L Japan 8 92.7916 Sanofi-Aventis P France 12 17*2.7817 Nokia TH Finland 13 162.7318 Sony L Japan 15 152.6219 Roche P Switzerland 19 262.5220 Honda Motor A Japan 18 202.3121 Merck P USA 21 302.2422 Motorola TH USA 36 142.1423 BMW A Germany 23 362.1424 Hewlett Packard A USA 26 212.0325 Robert Bosch TH Germany 22 322.0126 Hitachi TH Japan 25 242.0027 General Electric GI USA 35 411.9928 AstraZeneca P UK 24 271.9729 Nissan Motor A Japan 27 421.9630 Cisco Systems TH USA 32 181.9431 Ericsson TH Sweden 29 191.8832 Eli Lilly P USA 38 441.7633 Toshiba TH Japan 30 291.7234 EADS Ae Netherlands 33 431.6335 Philips Electronics L Netherlands 28 231.6136 Wyeth P USA 44 451.6037 Bristol-Myers-Squibb P USA 42 401.6038 NTT T Japan 34 221.5739 Renault A France 41 481.56USA40 Peugeot A France 37 471.4841 BAE Systems Ae UK 46 581.45Europe42 Canon E Japan 40 461.4143 Hyundai Motor A S Korea 56 691.36Asia Pacific44 NEC TH Japan 39 341.3645 Amgen P USA 50 681.3546 Bayer C Germany 31 311.3047 Boeing Ae USA 55 531.2848 Delphi A USA 48 521.2849 Alcatel TH France 47 351.2350 Finmeccamica Ae Italy 52 741.20*Aventis in 2003 *A=Automotive, Ae=Aerospace, E=Electronics, GI=General Industrials, L=Leisure, P=Pharmaceuticals, S=Software,TH=Technology Hardware, T=Telecoms54 The 2006 R&D Scoreboard

Figure 4.3.2 The top 15 companies by R&D in the 3 world regionsR&D £bn & R&D £bn & R&D £bn &Americas Growth (%) Europe Growth (%) Asia Pacific Growth (%)1. Ford Motor (1)* 4.7 (8%) 1. DaimlerChrysler (1) 3.9 (0%) 1. Toyota Motor (1) 3.7 (11%) a2. Pfizer (3) 4.3 (-3%) 2. Siemens (2) 3.5 (2%) 2. Samsung 3.2 (12%)Electronics (8)3. General Motors (2) 3.9 (3%) 3. GlaxoSmithKline (3) 3.1 (10%) 3. Matsushita 2.8 (-8%)Electronics (2)4. Microsoft (5) 3.8 (6%) 4. Novartis (9) 2.8 (15%) 4. Sony (3) 2.6 (6%)5. Johnson 3.7 (21%) 5. Volkswagen (4) 2.8 (-2%) 5. Honda Motor (4) 2.3 (4%)& Johnson (7)6. IBM (4) 3.1 (4%) 6. Sanofi-Aventis (6)† 2.8 (2%) 6. Hitachi (6) 2.0 (4%)7. Intel (6) 3.0 (8%) 7. Nokia (5) 2.7 (4%) 7. Nissan 2.0 (12%)Motor (11)8. Merck (11) 2.2 (-4%) 8. Roche (10) 2.5 (12%) 8. Toshiba (8) 1.7 (3%)9. Motorola (8) 2.1 (20%) 9. BMW (15) 2.1 (11%) 9. NTT (5) 1.6 (-10%)10. Hewlett 2.0 (0%) 10. Robert Bosch (13) 2.0 (1%) 10. Canon (12) 1.4 (4%)Packard (10)11. General 2.0 (11%) 11. AstraZeneca (11) 2.0 (-11%) 11. Hyundai 1.4 (22%)Electric (16) Motor (16)12. Cisco Systems (9) 1.9 (4%) 12. Ericsson (7) 1.9 (16%) 12. NEC (10) 1.4 (7%)13. Eli Lilly (17) 1.8 (12%) 13. EADS (16) 1.6 (3%) 13. Fujitsu (7) 1.2 (-4%)14. Wyeth (18) 1.6 (12%) 14. Philips Electronics (8)1.6 (-8%) 14. Denso (14) 1.2 (11%)15. Bristol-Myers- 1.6 (10%) 15. Renault (18) 1.6 (15%) 15. LG Electronics** 1.0 (15%)Squibb (15)* Rank in 2003 R&D Scoreboard † Aventis in 2003 ** Not ranked in 2003 a Growth of R&D over prior year in bracketsFigure 4.3.3 Sector mix of the top 15 companies in each regionSector Americas Europe Asia PacificPharmaceuticals 6 5 0Technology hardware 4 2 4Electronics & Electrical 0 1 5Software 2 0 0Automotive 2 5 5Other 1 (general industrials) 2 (aerospace, leisure) 1 (telecoms)The 2006 R&D Scoreboard 55

Analysis of the 2006 R&D ScoreboardThere are manymore companieswith increasedrather thandecreased R&Din the top 60.The increasersare led byBAE Systems.4.3.2 The Top Global Companies by Growth of R&DThe top 12 companies by the percentage growth 13 of R&D are listed infigure 4.3.4 together with the top 12 showing the largest percentagedecreases. Both groups are selected only from the 60 largecompanies with R&D over £1bn – if this size restriction was not used,the table would be dominated by very small companies in the earlystages of growth. The 4 year growth factor (growth of R&D over theaverage of the previous 4 years) is also given in figure 4.3.4 since the1 year growth can be misleading for a company that has decreasedand then increased R&D in two successive years (or vice versa). Themain features of figure 4.3.4 are:The 1 – year and 4 – year growth figures trend in the samedirection for 9 of the 12 companies showing increases and 7 of the9 companies with decreases of 4% or more. The % increases areall numerically larger than all but one of the % decreases.Two of the companies with increases show even larger reductionsin R&D over the average of the previous 4 years (Ericsson &Alcatel). Two of the companies with small 1 year decreases showvery large increases in the 4-year measure (Merck & Pfizer).Nine of the 12 companies showing large decreases in R&D are inthe list of the top 15 companies by R&D in each World region(figure 4.3.2). This is true of five of the companies showing largeincreases. A similar asymmetry was reported in the 2005Scoreboard.The sectoral differences this year between the companies showingincreases and decreases are principally the three aerospacecompanies showing large increases and the larger number oftechnology hardware and electronics companies showingdecreases (6 decreases vs. 4 increases). However, the latter effectis much less marked than in 2005 when there were 7 decreasesbut only 1 increase for technology hardware and electronics in thetop tens.4.3.3 The Top Global Companies by R&D Intensity from the FTGlobal 500Figure 4.3.5 shows the top 20 companies by R&D intensity amongstthe 214 from the R&D Global 1250 that also appear in the FT Global500. The reason for restricting the list to companies from the FTGlobal 500 is that, if this were not done, the list would be dominatedby small biotechnology companies with very small sales but largeR&D in relation to those sales. The main features of figure 4.3.5 are:The companies included range from major players in their sectorswith over £2bn of R&D (Microsoft, Novartis, Roche, Merck) tocompanies that have been growing very fast such as Symantec orGenzyme. Fifteen of the 20 companies are from the USA with theother five from Europe.13 The reported growth of R&D can be influenced by exchange rate changes for companies with substantialR&D operations in different currency areas. Large acquisitions will also appear as growth but can bedetected by the associated large increase in the total number of employees. All the companies withincreases in figure 4.3.4 show R&D increasing more than employees – by a factor of at least two for all but2 of the firms where employee data is available.56 The 2006 R&D Scoreboard

Figure 4.3.4 The top 12 companies by % increase and % decrease of R&D amongst those withR&D over £1bnIncreases of R&DGrowth of R&DR&DRank Company Country 1 yr 4 yr £bn1 BAE Systems UK 31% 41% 1.452 Oracle USA 26% 49% 1.093 Hyundai Motor S. Korea 22% 110% 1.364 Johnson & Johnson USA 21% 45% 3.685 Motorola USA 20% -1% 2.146 Finmeccanica Italy 20% 54% 1.207 Boeing USA 17% 24% 1.288 Ericsson Sweden 16% -19% 1.889 Schering-Plough USA 16% 28% 1.0910 Novartis Switzerland 15% 34% 2.8211 Alcatel France 15% -17% 1.2312 LG Electronics S. Korea 15% 50% 1.02Decreases of R&DChange in R&DR&DRank Company Country 1 yr 4 yr £bn1 Bayer Germany -22% -23% 1.302 AstraZeneca UK -11% 3% 1.973 NTT Japan -10% -18% 1.574 Matsushita Electric Japan -8% -2% 2.795 Philips Electronics Netherlands -8% -19% 1.616 Sun Microsystems USA -7% -6% 1.047 Nortel Canada -5% -21% 1.088 Fujitsu Japan -4% -26% 1.199 Merck USA -4% 25% 2.2410 Pfizer USA -3% 20% 4.3311 Volkswagen Germany -2% 0% 2.8012 Hewlett-Packard USA -0.50% 6% 2.03The 2006 R&D Scoreboard 57

Analysis of the 2006 R&D ScoreboardThe sectoral mix is naturally biased towards pharmaceuticals &biotechnology, the sector with the highest R&D intensity. Nine ofthe 20 companies are from pharmaceuticals with seven fromtechnology hardware, three from software and one from leisure(leisure software).Fourteen of the 20 companies showed double digit growth of R&Dover the previous year with only two showing decreases in R&D.Despite the high R&D intensities, only six of the 20 increased salesfaster than R&D (which implies that 14 increased or maintainedtheir R&D intensity); only two of the six were in the top ten.Figure 4.3.5 The 20 companies with the highest R&D intensities in the FT Global 500R&D SalesR&D R&D Growth GrowthCompany Intensity £bn 1yr 1yr Sector*1. Biogen Idec, USA 30.90% 0.44 10% 10% P2. Electronic Arts, USA 25.70% 0.44 20% -6% L3. Broadcom, USA 24.40% 0.38 18% 11% TH4. Eli Lilly, USA 20.70% 1.76 12% 6% P5. Advanced Micro Devices, USA 19.60% 0.67 22% 17% TH6. Schering-Plough, USA 19.60% 1.09 16% 15% P7. Adobe Systems, USA 18.60% 0.21 17% 18% S8. Amgen, USA 18.60% 1.35 14% 18% P9. Qualcomm, USA 17.80% 0.59 40% 16% TH10. Genzyme, USA 17.60% 0.28 27% 24% P11. Merck, USA 17.50% 2.24 -4% -4% P12. ST Microelectronics, Netherlands 17.50% 0.91 7% 1% TH13. Ericsson, Sweden 16.90% 1.88 16% 15% TH14. Symantec, USA 16.50% 0.4 104% 60% S15. Roche, Switzerland 16.10% 2.52 12% 14% P16. Sun Microsystems, USA 16.10% 1.04 -7% -1% TH17. Novo Nordisk, Denmark 15.10% 0.47 17% 16% P18. Novartis, Switzerland 15.00% 2.82 2% 14% P19. Texas Instruments, USA 15.00% 1.17 2% 6% TH20. Microsoft, USA 14.90% 3.84 6% 11% S* L=Leisure, P=Pharmaceuticals, S=Software, TH= Technology Hardware.58 The 2006 R&D Scoreboard

5. The Interpretation of R&D IntensityDifferences Between Companies in theMajor CountriesSummaryThe average R&D intensity (R&D as % sales) for the group ofcompanies in the Global 1250 from a country depends onsector mix – in particular on the relative sizes of the R&D insectors with high R&D intensity compared to the sales ofsectors with low R&D intensity but large sales (such as oil &gas, banks and telecoms). These effects are particularly pronounced in the 2006Scoreboard for two reasons – sales of oil companies haveremained high or increased due to continuing high oil pricesand the introduction of IFRS has resulted in the disclosure ofR&D by a number of large companies in sectors such asbanks, insurance and retail where disclosure has been rare inthe past.The result is that UK firms have comparable or higher R&Dintensities than their US counterparts in the five sector groupsand the very different average R&D intensities for the UK andUSA are entirely due to sector mix effects. The two majoreffects are the large sales of UK firms in group 5 (very lowR&D intensity sectors) and the small relative amount of UKR&D in electronics & IT and also in engineering & chemicals.The US has a large proportion of its R&D in the 3 sectors withthe highest R&D intensity – pharmaceuticals, software andtechnology hardware. This shows up in the R&D intensitydistribution of US Global 1250 companies where the USA hasa much higher proportion of companies with high R&Dintensity (over 10%) than does the EUexUK while the EUexUKhas more than twice the US proportion of companies withvery low R&D intensity (2% or below). The UK occupies anintermediate position between the US and EU ex UK and hassignificantly increased its proportion of high R&D intensitycompanies over the last few years.5.1 OverviewThere are large differences in R&D intensity (R&D as % sales) for thesets of companies from different countries in the Global 1250. Theorigin of these differences was first explained in the 2004 R&DScoreboard where sector group analysis was used to show that theintensity differences arise from sector mix differences between thedifferent countries, rather than from companies in one countryinvesting at lower intensities than their sector competitors in another.The sizes of the intensity differences are illustrated by figure 5.1.1 forthe five major countries with intensity data from the 2003 R&DScoreboard shown in brackets. The 2003 data are not strictlycomparable since they are for a set of 700 global companies.The 2006 R&D Scoreboard 59

Analysis of the 2006 R&D ScoreboardFigure 5.1.1 Average R&D intensities for Global 1250 companies from 5 countriesUSA Japan Germany France UKR&D as % Sales 3.6% 4.4% 3.8% 4.1% 2.6% 1.8%2006 Scoreboard Global 1250R&D as % Sales (4.3%) (5.2%) (4.3%) (4.6%) (3.1%) (2.5%)2003 Scoreboard Global 700The R&Dintensitydifferencesbetweencountries arepersistent fromyear to year andare determinedby sector mix.Three things are apparent from figure 5.1.1:There are big differences in average intensity for the groups ofcompanies from different countries – the US intensity, forexample, is 244% of the UK intensity.The order of countries by average intensity is persistent with the2006 order being identical to that for 2003.All the intensities have decreased from 2003 to 2006 but thepercentage decrease is largest for the UK. The overall decrease ispartly associated with the larger number of companies recordedin 2006. The top 700 companies in 2006 have an overall intensityof just under 3.9% compared to 4.3% for the top 700 in 2003.The remaining difference has its origin in changes of sector mix,some of which are associated with IFRS, an effect which isstrongest for the UK. The changes in sector mix are of two types –changes in the “weight” of existing companies and the addition ofnew companies that change the mix. An example of the first effectis the increase in oil prices which has enhanced the (already large)sales of existing oil companies; an example of the second is theaddition of banks under IFRS that did not previously report R&D.To show just how dependent average R&D intensity is on sector mix,we can use an example in which a modified UK R&D intensity iscalculated using the actual total UK R&D and the actual UK R&Dintensities for each of the five sector groups (see section 5.2) but withthe US pattern for the distribution of this R&D between the five sectorgroups. The result is that the UK average intensity rises from 1.8% toabove the US intensity of 4.4%.60 The 2006 R&D Scoreboard

5.2 Sector Group AnalysisTo demonstrate exactly how sector mix determines average R&Dintensity, all the ICB sectors are assigned to one of five groups whichare chosen to contain sectors with different ranges of R&D intensity.The sectors are assigned to groups as shown in Appendix 1 but asummary is given below: Group 1: Pharmaceuticals and Health (6-15%)* Group 2: Electronics and IT (4.8-10.4%)Group 3: Engineering (with aerospace & automotive) & Chemicals(2.7-4.6%)Group 4: Low intensity sectors (food producers, telecoms etc.)(1.4-2.4%)*Group 5: Very Low intensity sectors (oil & gas, utilities etc.)(1% or less)*The figure in brackets is the R&D intensity range for sectors in the groupIn figure 5.2.1a & b, the R&D and sales for each of the five sectorgroups are shown for each of the five major countries. Thecharacteristics of each country’s group of companies are highlightedin the figure as follows:The US companies are well ahead by volume of R&D of thosefrom other countries in groups 1 and 2 (the strong US sectors ofpharmaceuticals and IT) but only just ahead of Japan andGermany in group 3. The R&D in groups 4 and 5 is smallcompared to that in the first three groups, particularly for the US(but also for Japan and Germany). As far as sales are concerned,groups 3 and 5 dominate for the US with sizeable contributionsfrom groups 2 and 4.The Japanese companies have most of their R&D and sales ingroups 2 and 3For Germany, group 3 (which includes the large automotive,chemicals and engineering companies) dominates both R&D andsales. In France also, group 3 is the largest by R&D and sales butsales are large in groups 4 & 5 (which contains a large oil & gascompany and utilities). The UK has the second largest R&D of the 5 nations in group 1(pharmaceuticals) but sales are dominated by group 5 (oil & gas,banks, retailers) which is close to that of the USA in size both insales and R&D.These characteristics determine the overall R&D intensity accordingto the equations given in appendix 2. At first sight it might seem thatthe R&D intensities of the five sector groups play a major role indetermining the overall country R&D intensity. This is not so as canbe seen by inspection of figure 5.2.2a which shows:The UK (with the lowest overall intensity) has the highest R&Dintensity of all 5 countries in two of the five groups (groups 1&3)and the second highest in group 2.The US R&Dintensity is highbecause of itsstrong R&D inpharmaceuticalsand IT and itsrelatively lowsales in lowintensity sectors.The 2006 R&D Scoreboard 61

Analysis of the 2006 R&D ScoreboardThe UK R&Dintensity is lowbecause of thevery high salesof successful UKcompanies inlow intensitysectors coupledwith a relativelylow volume ofR&D inelectronicsand technologyhardware.The UK has a higher intensity than Germany in four of the fivesector groups (and is only lower in group 5 which is smallest byR&D) but Germany has an average intensity (see figure 5.1.1)which is comfortably more than twice that of the UK.The correct answer is suggested by figure 5.2.2b which shows thecontribution of each sector group to the average intensities in figure5.1.1 (see appendix 2 for details of how the contributions arecalculated). The contributions naturally add up to 1.8% for the UK,4.4% for the USA and similarly for the other countries. Figure 5.2.2bshows both that the UK has very small contributions from sectorgroups 2 and 3 and that the UK contribution from group 1 (whichincludes pharmaceuticals) is less than expected given that this UKgroup has the second largest volume of R&D of any of the five countriesin group 1 and forms 41% of UK R&D. The two major reasons for thelow average UK R&D intensity in figure 5.1.1 are therefore:The UK has a small amount of R&D (both absolutely andrelatively) in groups 2 and 3. (see figure 5.2.1a).The UK has very large sales in the very low intensity group 5 (seefigure 5.2.1b) associated with the successful UK oil & gas,financial services and mobile telecoms companies which have theeffect of reducing the potential contributions from group 1 (andalso the other groups) despite their high R&D intensities andhence give the observed low overall average R&D intensity.The data in figures 5.2.1 and 5.2.2 can be used to understand whythe average R&D intensities of the sets of companies from certainpairs of countries are so different and why other pairs of countrieshave similar intensities but rather different industrial structures.Two examples are discussed below – the USA vs UK and Japan vsGermany.The US and UK The UK companies have higher R&D intensities (see figure 5.2.2)than those from the USA for three of the five groups (groups 1,3and 5) and comparable intensities for groups 2 and 4. The UK alsohas a higher percentage of its R&D in group 1 (pharmaceuticals& health) than the USA and this group has the highest intensityin both countries. These observations might suggest that the UKgroup of companies could have the higher overall intensity.However, the UK has very high sales in group 5 – comparable inabsolute terms to the US where total R&D is very much higher.In addition, UK R&D in groups 2 and 3 is much smaller bothabsolutely and relative to that in groups 1 and 4.The effects of these two factors combine to explain the largedifference in average R&D intensities between the UK (1.8%) andthe USA (4.4%).62 The 2006 R&D Scoreboard

Figure 5.2.1a The R&D in the 5 sector groups for the 5 major countries45403530R&D £bn2520151050USA Japan Germany France UKPharmaceuticals & Health (Group 1) Electronics & IT (Group 2) Engineering & Chemicals (Group 3)Low R&D Intensity Sectors (Group 4)Very Low R&D Intensity Sectors (Group 5)Figure 5.2.1b The sales in the 5 sector groups for the 5 major countries700600500Sales £bn4003002001000USA Japan Germany France UKPharmaceuticals & Health (Group 1) Electronics & IT (Group 2) Engineering & Chemicals (Group 3)Low R&D Intensity Sectors (Group 4) Very Low R&D Intensity Sectors (Group 5)The 2006 R&D Scoreboard 63

Analysis of the 2006 R&D ScoreboardFigure 5.2.2a R&D intensities for the 5 sector groups in the 5 major countries1510R&D Intensity50GROUP 1 GROUP 2 GROUP 3 GROUP 4 GROUP 5USA Japan Germany France UKFigure 5.2.2b Contributions from each sector group to the overall R&D intensity of the 5 major countriesContribution to Overall Country R&D Intensity210GROUP 1 GROUP 2 GROUP 3 GROUP 4 GROUP 5USA Japan Germany France UK64 The 2006 R&D Scoreboard

Japan and GermanyJapanese and German companies have relatively similar profilesfor most groups in figure 5.2.1 with the exception of group 2(electronics & IT) where Japan has much larger R&D and sales.The German profile is dominated by group 3 (automotive,engineering & chemicals) which is much larger than the othergroups in both R&D and sales but Germany has only about onequarter of the Japanese level of R&D in group 2 since Japan hasmore electronics, IT and leisure companies.Group 3 contributes 2.5% towards the overall German companyR&D intensity of 4.1%. For Japan, group 3 contributes only 1.35%towards the total of 3.8%. This arises not through any significantdifference in group 3 R&D intensity (Germany is larger by 10%)but through the difference in contribution driven by the differencein sales in groups 4 and 5 (Germany has much lower sales in thesetwo groups) which gives Germany a larger contribution than Japan.Group 2 contributes 1.74% towards the overall intensity for Japanbut only 0.9% for Germany which has much less R&D inelectronics and IT. However, this difference is not large enough tomake up for the difference in the contribution from group 3 so theoverall Japanese company R&D intensity is therefore a little lessthan that for Germany.5.3 R&D Intensity DistributionsThe sector group analysis of section 5.2 illustrates how the overallR&D intensity of a group of companies from a country is dominatedby large companies which have high R&D, high sales or both. Analternative method of analysis is to examine R&D intensitydistributions where every company over a threshold size is treated asone unit so that a country with few large companies of high R&Dintensity but a sizeable group of smaller companies in high R&Dintensity sectors would be highlighted whereas this feature might notbe obvious from the overall average R&D intensity.An intensity distribution analysis of this kind is shown in figure 5.3.1for three groups of companies: US-owned companies from the 2005US Scoreboard (reference 8), EU-owned companies (excluding UKcompanies) from the 2005 EU Scoreboard (reference 9) and UKownedcompanies also from the 2005 EU Scoreboard. The thresholdsfor company size are set by the EU Scoreboard for R&D (minimumR&D included is £3.5m) and by the US Scoreboard for sales(minimum sales included is £29m 14 ). There are substantial differencesbetween the R&D intensity distributions for the three groups ofcompanies:The US group of companies has more than twice the percentageof the EU ex UK group in the highest R&D intensity bands (R&Dintensity above 10%) but less than one half of the proportion inthe lowest intensity band (0 to 2%). The UK group lies betweenthe US and EU ex UK groups in both cases. There are only smalldifferences between the three groups for the three middleintensity bands.14 There are a small number of US companies in the US Scoreboard with lower R&D and severalcompanies in the EU Scoreboard with lower sales but both are excluded to ensure that size ranges arestrictly comparable.The US has amuch largerproportion of itsScoreboardcompanies withvery high R&Dintensity (>10%)than theEUexUK; the UKlies betweenthese two and itsproportion hasbeen increasing.The 2006 R&D Scoreboard 65

Analysis of the 2006 R&D ScoreboardThe differences are even more pronounced for the highest band ofR&D intensities (over 20%). Here, the US proportion is more thanthree times the EU ex UK proportion with the UK proportion beingmore than 60% larger than the EU ex UK one.The origin of these differences is sector mix with the USA havinga much higher proportion of its companies in high R&D intensitysectors such as pharmaceuticals, software and technologyhardware.The first conclusion from figure 5.3.1 is that the US not only has ahigher proportion of its R&D in high intensity sectors such aspharmaceuticals, software and technology hardware (see figure 4.2.2)but further that this is characteristic of its entire group of companiesand not just the very largest. Successive UK Scoreboards have shownthat the UK is improving in this respect with a much higher proportionof companies in the highest bands of R&D intensity. This is associatedwith the larger numbers of sizeable UK-owned companies (sales over£29m) that have developed over recent years in R&D-intense sectorssuch as software and technology hardware. Figure 5.3.1 shows thatthe UK is already ahead of the rest of the EU in this respect but is stillsome way behind the USA. Chapters 6 and 9 contain further analysisof high R&D intensity middle-sized (sales £50m to £500m) companiesfrom the Global 1250 and the UK 800 respectively and of rapidlygrowing profitable companies within the middle-sized range.Figure 5.3.1 R&D intensity distributions for US, EU ex UK and UK companies in the same size range%40Proportion of companies in band30201000-2% 2-4% 4-6% 6-10% 10-20% >20%R&D Intensity bandUSA UK EU ex UK66 The 2006 R&D Scoreboard

6. Middle-Sized CompaniesSummaryMiddle-sized companies (sales £50m to £500m) in theGlobal 1250 must have R&D intensity of at least 3.8% (andmany much higher) and nearly 80% of them are drawn frompharmaceuticals, software and technology hardware.The largest contingent comes from the USA which is stronglyrepresented in these 3 sectors. Amongst the 7 largestcountries, the UK has the second largest proportion of itsGlobal 1250 companies in the middle-sized category.The growth league of middle-sized companies inpharmaceuticals, software and technology hardware isdominated by the USA which has a higher proportion of itscompanies in the higher growth bands than do non-UScountries. This is also apparent in the list of profitable, fastgrowing companies that have at least tripled their sales overthe last 3 years. Most are from the USA although the largestsales increase in this group is by a UK company (CSR).Middle-sized companies are those with sales between £50m and£500m. Since the minimum R&D needed for entry to the R&D Global1250 is £19.2m, all middle-sized companies in the Global 1250 havean R&D intensity of at least 3.8% and most have much higherintensities.The size distribution of Global 1250 companies by sales band for 10sectors is shown in figure 6.0.1. The 10 sectors are the 8 largest byR&D plus two sectors – industrial engineering and health – whichcontain large numbers of companies. Note that mature sectors likeautomotive, chemicals and industrial engineering have very fewmiddle-sized companies in the Scoreboard. There are a substantialnumber of middle-sized companies in the Global 1250 – 343 or 27% ofthe total – and they are concentrated in just three sectors where 50%or more of companies are middle-sized: pharmaceuticals, softwareand technology hardware. In these three sectors the average R&Dintensities are very high and R&D is a significant competitive factor.It is the aim of this chapter to analyse middle-sized companies in theGlobal 1250 by country, sector, size and R&D intensity to see whetherthe sets of companies from different countries and hence businessenvironments show different sector mixes or intensity characteristics.There aresome 300middle-sizedcompanies(sales £50m to£500m) in theGlobal 1250and over 40with sales lessthan £50m.The 2006 R&D Scoreboard 67

Analysis of the 2006 R&D ScoreboardFigure 6.0.1 Size distribution of Global 1250 companies by salesNumber of Companies in Each Sales Band of the Global 1250Sales Sales Sales < £500mSectors* Over £5bn £500m to £5bn Number % Sector Total1. Technology Hardware 25 88 112 (50%)†2. Pharmaceuticals 17 48 87 (57%)3. Automotive 34 39 5 (6%)4. Electronics 15 62 25 (25%)5. Software 4 36 71 (64%)6. Chemicals 20 69 4 (4%)7. Leisure 6 17 6 (21%)8. Aerospace 14 15 5 (15%)9. Industrial Engineering 12 58 0 (0%)10. Health 3 35 15 (28%)11. All Other Sectors 143 147 13 (4%)Totals 293 614 343 (27%)*The 8 largest sectors plus the only 2 others with over 40 companies † Number of companies as % sector totalMost middlesizedcompaniesin the Global1250 are frompharmaceuticals,softwareand technologyhardware.6.1 Global 1250 middle-sized companies by sector and countryFigure 6.1.1 shows how the 343 middle-sized high R&D intensitycompanies divide between 8 contributing countries and the five mainsectors concerned (selected with the aid of figure 6.0.1).79% of the companies with sales under £500m and 77% of themiddle-sized companies are in three R&D intensive sectors –pharmaceuticals, software and technology hardware with another12% in electronics and health.The USA has two-thirds of the middle-sized companies (comparedto 43% of the Scoreboard companies) with only three othercountries – Japan (22), the UK (19) and Canada (10) – having atleast 10 such companies. The US and Canada have over 40% of their Global 1250companies in the middle-sized category with sales under £500m(and R&D intensity of at least 3.8%). The UK with 26% andSwitzerland with 24% have much larger proportions 15 than Japan,France and Germany.The sector mix of companies for different country groups oftenfollows the expected specialisations with, for example, all theTaiwanese middle-sized companies in technology hardware andelectronics. However, Japan has 8 companies in pharmaceuticals15 Percentages are not quoted for other countries with smaller numbers of companies. The proportion forSweden is 21% (5 of 24 companies), just lower than the UK and Switzerland.68 The 2006 R&D Scoreboard

Figure 6.1.1 Middle-sized companies from the Global 1250 by sector and countryNumber ofCompanies withCountry and Sales < £500m Number of Companies in SectorNumber of as % GlobalMiddle-sized 1250 Companies Technology Pharma-Companies for Country Hardware ceuticals Software Electronics Health OtherUSA 201 + (27)** 42% 84 + (1)** 26 + (25) 56 10 + (1) 11* 14Japan 22 10% 4 8 0 4 2 4UK 15 + (4) 26% 6 + (1) 2 + (3) 1 1 0 5Taiwan 8 + (1) 20% 6 0 0) 2 + (1) 0 0Canada 7 + (3) 42% 2 1 + (2) 4 0 0 -1Switzerland 7 + (1) 24% 2 2 + (1) 0 2 1 0France 4 + (2) 11% 0 -1 2 + (1) 1 0 1Germany 3 + (1) 6% 1 1 + (1) 0 0 0* 117 Others † 34 + (3) 21% 5 11 + (3) 7 3 1 7Totals 343 27% 110 + (2) 51 + (36) 70 + (1) 23 + (2) 1532 + (1)* One US health company is now owned by a German firm** The figure in brackets is the number of companies in the Scoreboard with sales under £50m† The other countries have 1-5 companieswhere it has a relatively small R&D presence in the Scoreboardand the UK likewise has 7 middle-sized companies in technologyhardware, more than the 5 in its strong sector of pharmaceuticals.6.2 Sector mix for middle-sized companies from differentcountriesThe low proportions of middle-sized companies in the groups ofcompanies from Japan, France & Germany in the Scoreboardcompared to the much higher proportions from countries like theUSA and UK could have two possible origins. The first is that manymiddle-sized companies may not be recorded in the Scoreboard forthe former group of countries, while the second is that thosecountries do indeed have different sector mixes with fewer middlesizedcompanies in high R&D intensity sectors.The first explanation seems unlikely since the 2005 EU R&D Scoreboard(reference 9) contains 400 EU companies with R&D below 25m eurosand hence much too small to enable them to gain entry to the Global1250. With this number of much smaller R&D-active companiesrecorded, it seems unlikely that many larger ones with R&D over£19m have been missed 16 , particularly in R&D-intensive sectors whereboth investors and customers expect companies to quote their R&Dinvestments which are seen as essential for competitiveness and survival.The USA hasthe largest andthe UK thesecond largestproportion ofits Global 1250companiesin the middlesizedrangeamongst thetop 7 countries.16 Private companies can be harder to identify in Germany, for example, because of the absence of aGerman equivalent to UK Companies House. However, based on the UK proportion of private companiesonly one extra company could be expected for Germany in figure 6.1.1 for this reason.The 2006 R&D Scoreboard 69

Analysis of the 2006 R&D ScoreboardThe USA hasthe highestproportion ofits smallerGlobal 1250companieswith R&Dintensityover 10%.The second explanation is examined in figure 6.2.1 which shows theR&D intensity distributions for companies in the last 250 companiesin the Scoreboard for three groups of countries. These are: The USA (the largest contributor to figure 6.1.1)Japan, Germany and France (which have low proportions ofmiddle-sized companies in the Scoreboard – all 11% or below)A group of Northern European countries and Canada, all of whichhave more than one middle-sized company in figure 6.1.1. Theselatter countries are UK, Switzerland, Denmark, Netherlands,Sweden, Finland and Canada. Together, they have 49 companiesfrom the last 250 compared to the 53 from Japan, Germany andFrance. The UK is the largest contributor with 39% of the companies.The message from figure 6.2.1 is clear – the USA has by far thehighest percentage of its smaller R&D companies having R&Dintensity over 10% (53% of the total) compared to only 6% forJapan/Germany/France and 25% for the third group of other Northerncountries. The US correspondingly has a much lower percentage ofcompanies in the lowest R&D intensity band of 0-2%. Thesedifferences mainly originate in differences in the proportions of eachgroup’s companies in the three high R&D intensity sectors ofpharmaceuticals, software and technology hardware. The USA has ahigh presence in these sectors in the Scoreboard overall, a highpresence in the last 250 companies and in the middle-sized group.The UK also has a higher proportion of companies in the last 250 andin the middle-sized category than most other competitor countries.Figure 6.2.1 R&D intensity distributions for the USA and two other groups of countries5040Proportion of companies in band30201000-2% 2-4% 4-6% 6-10% 10-20% >20%USA UK, Switzerland, Denmark, Netherlands, Sweden, Finland, Canada Japan, Germany, France70 The 2006 R&D Scoreboard

It is the lower presence of companies in high R&D intensity sectors inthe lower reaches of the Scoreboard that inevitably means there willbe higher proportions of companies with low intensity for Japan,Germany and France. In summary, the second explanation mentionedabove seems to be more likely – that some countries have a lowerproportion of middle-sized companies in R&D-intensive sectors.These comments are specific to the smaller companies in theScoreboard. The situation for larger companies is more balanced withEuropean pharmaceutical companies making up 8 of the top 20companies in that sector. European and Asian companies contribute9 of the top 20 in technology hardware while the USA takes only thirdor fourth place in sectors such as automotive and electronics. Softwareis an exception with only one non-US company in the top 10 and 4 inthe top 25. However, there are 3 UK companies in the top 30.6.3 Sales Growth of Middle-Sized CompaniesR&D – active middle – sized companies (sales £50m to £500m) areanalysed for two reasons. Firstly, some of them grow rapidly intocompanies with turnover of £1bn or more (see figure 6.4.1 forexamples) and thus have the potential to become importantcomponents of future R&D Scoreboards and, secondly, theirdistribution by intensity and growth rate can indicate which countriesare generating new companies in the R&D-intensive sectors. It is alsoof interest to see whether companies from particular countries orbusiness environments are more likely to grow fast than others.Sales growth is assigned to four categories as follows: Very high growth: Sales increased 17 over 50% between2003/04 and 2005/06 (and 2005/06 salesat least 20% up on 2004/05). High growth: Sales increased 30% to 50% between2003/04 and 2005/06 (and 2005/06 salesat least 15% up on 2004/05). Low growth: Sales increased 10% to 30% between2003/04 and 2005/06 (and 2005/06 salesat least 5% up on 2004/05). Small or negative growth: Sales increased less than 10% between2003/04 and 2005/06 and/or salesdecreased 2004/05 to 2005/06.Companies with sales of £50m to £500m in the 2006 Global 1250 andwith sales in the middle – sized range in at least one of the four previousyears have been analysed using these categories for the three key R&Dsectors – pharmaceuticals, software and technology hardware. Sincemost of the companies are from the USA, the analysis uses simply USand non-US companies since numbers in each category for the latterwould be too small if it were subdivided into separate countries. Figure6.3.1 shows the results of this analysis. The main conclusions are:The USA has a much larger number of 2006 Scoreboardcompanies in the middle-sized sales range in these three sectorscompared to all the other countries – 63% of the total compared toonly 43% of the Global 1250. This is most obvious in softwarewhere the USA has almost four times as many companies as allthe other countries together.The USA hasa higherproportion ofits middle-sizedcompanieshaving highsales growththan othergroups ofcountries.17 Sales growth can be enhanced by acquisitions. The tables in volume 2 where companies are arranged indecreasing order of R&D also give R&D for the preceding 4 years and one large change in this series for acompany may indicate an acquisition. The requirement for sales increases over the last year as well as thelast 2 years is also intended to reduce the effect of acquisitions on the top two categories.The 2006 R&D Scoreboard 71

Analysis of the 2006 R&D ScoreboardThe US also has, compared to non-US countries, a higherproportion of its companies in figure 6.3.1 in the highest growthcategory as opposed to the two lower growth ones. Theproportion of US high growth companies is particularly large forpharmaceuticals.The overall conclusion from figure 6.3.1 is that the sheer numberof US companies in the £50m to £500m sales range in these threesectors is so large that there will inevitably be a lot moresuccessful US companies that grow fast and gain places in thehigher ranks of the Scoreboard such as the sector top 20’s. Atpresent the USA accounts for 10 of the top 20 in pharmaceuticals,17 in software and 10 for technology hardware. Figure 6.3.1suggests that these high percentages are unlikely to reducesignificantly in the next few years.These comments refer only to three sectors – pharmaceuticals,software and technology hardware – and need to be seen in theperspective provided by the whole Scoreboard. Even in these sectors,there are excellent European companies in pharmaceuticals (8 of thetop 20) and both European and Asian companies in technologyhardware (9 of the top 20); in specific sub-sectors such as mobiletelephony, the majority of top companies come from outside the USA.In addition, we saw in chapter 4 that the USA ranks in third or fourthplace globally in sectors such as automotive, electronics.Figure 6.3.1 Growth of US and non-US middle-sized companies in three R&D-intensive sectors80Number of companies400Growth < 10% Growth 10-30% Growth > 30%Sales growth 2003/04 to 2005/06US CompaniesNon-US Companies72 The 2006 R&D Scoreboard

6.4 High growth companies in the Global 1250Amongst companies in the high and very high growth categories offigure 6.3.1 there are some which have shown large increases in salesfor four successive years and also have high R&D intensities and highprofitability. Profitability gives a company the flexibility to fundexpansion from its own resources. Examples of thirteen of these arelisted in figure 6.4.1 and demonstrate just how quickly a technologycompany can grow to exploit a world market riche; all have at leasttripled their sales in the three year period covered by figure 6.4.1.All the companies in this figure were middle-sized in at least one yearof the four quoted; three were middle-sized in only the first year, andthree for just the first two years. Whilst most of the companies arefrom the USA (reflecting the numbers in figure 6.3.1), two are fromFigure 6.4.1 Fast growing companies in 3 R&D-intensive sectorsIn the groupof high growthcompanies,CSR of theUK and Googleof the USAhave grownsales fastestover 3 years.R&D as % SalesCompany Country 2006 2002/03Profitability2005/06Sales £m2004/052003/042002/03Sales Increase2002/05Sector*Exports fromRegionBiogen Idec USA 30.9 22.5 8.70% 1411 1288 396 235 6x P n/aGilead Sciences USA 13.7 28.9 54.70% 1182 772 506 272 4x P 51%Celgene USA 27.8 56.6 14.30% 313 220 158 79 4x P n/aActelion Switzer- 25.8 46.1 23.00% 293 209 136 57 5x P 52%landKos USA 16.4 25.5 24.1 438 290 171 101 4x P n/aPharmaceuticalsGoogle USA 9.8 9.2† 32.90% 3576 1858 854 256 14x S 39%Red Hat USA 14.7 24.7 31.70% 162 114 73 53 3x S n/aUnited Online USA 7.6 14.8 16.50% 306 261 162 98 3x S n/aJuniper USA 17.2 29.6 21.70% 1202 778 409 318 4x TH n/aNetworksSanDisk USA 8.4 11.7 25.20% 1343 1035 629 315 4x TH 54%Research Canada 7.6 18.2 20.40% 1203 787 346 179 7x TH n/ain MotionSunplus Taiwan 10.4 12.2 8.50% 480 336 197 153 3x TH n/aTechnologyCSR UK 12.4 45.5 23.00% 283 147 39 16 18x TH 89%† R&D intensity 15.7% in 2003 *P = Pharmaceuticals S = Software TH = Technology HardwareThe 2006 R&D Scoreboard 73

Analysis of the 2006 R&D ScoreboardMany of thehigh growthcompaniesinvest largeproportionsof sales inR&D in theearly stagesof growth.Europe (UK and Switzerland) one from Canada and one from Taiwan.CSR from the UK has increased sales by more than seven times overthe past two years. Google shows that it is possible to groworganically from being a middle-sized company with sales of just£256m to become the seventh largest R&D investor in the softwaresector in just three years! Biogen Idec has reached the top 20 byR&D in the pharmaceuticals sector in three years and Broadcom fromjust outside the middle-sized category (sales £560m) to the top 25 in4 years in technology hardware, the largest sector. Note also fromfigure 6.4.1 that, where data are available, these companies also havea large proportion of their sales outside their home regions. There isalso a tendency for many of them to invest very high proportions ofsales in R&D in the early stages and this R&D intensity decreasestowards the sector average for large companies as they grow in size.These are all exceptional growth stories but figure 6.3.1 shows thatthere are many other companies achieving growth of over 30% in thelast two years and there were in fact 50 companies (three-quarters ofthem from the USA) with sales growth of over 50% in two years.Analysis of a number of UK fast growing companies appears inchapter 9.74 The 2006 R&D Scoreboard

7. R&D and Company PerformanceIntroductionA sizeable number of R&D-active companies with higher R&Dintensity than competitors in their sector show sustained outperformance.This would not be expected for all ‘heavy’ R&Dinvestors since a company might invest its R&D budget unwisely, failto balance the R&D with market development or make strategicerrors. However, it is also true that a company that consistently underinvestsin R&D in a sector where R&D is an important competitivefactor is likely to see its product range become less competitive andthis will then be reflected in its value added, efficiency of wealthcreation and performance both as a business and as an investment.The relationship between R&D and company performance cantherefore be complex but is important since it is relevant to thedecision that must be taken each year on the size and nature of R&Dinvestment compared to other competing demands on company funds.There are three general areas in which a business needs to excel if itis to be consistently successful (reference 1) and one of these involvesR&D. The three areas are:SummarySuccessful companies make good strategic choices, showoperational excellence and make wise and balancedinvestments which include R&D. In sectors where R&D is a keycompetitive factor, R&D will be related to business success ifthe right strategic choices are made and operations aremanaged well. Consequently, links are seen between R&Dgrowth and intensity and factors such as sales growth, wealthcreation efficiency and market value.For the larger software companies, the great majority withR&D growth over 20% also have sales growth over 20% (using4-year factors) while 2 of the 3 companies with R&D growthbelow 5 % have negative sales growth. Most of the technologyhardware companies with positive R&D growth 2001-04 showpositive sales growth 2001-05 and, similarly, those thatdecreased R&D also decreased sales.A number of companies suffered significant decreases in salesfrom 2001 to 2002 but some reacted to this by increasing R&D.This strategy of increasing R&D in a recession has paid off forthe examples quoted with substantial subsequent salesgrowth and good profitability in 2005/06. A portfolio of all the R&D intensive companies in the FTSE 100has shown value growth of 73% from 1997 (before the riseand fall in technology stocks) to 2006 while the FTSE 100index has grown only 16%. Since 2002 the portfolio has grownby only slightly more than the index.Good strategic choices of sub-sector(s) to lead in and of growthroute (usually a mix of organic growth and small related bolt-onCompanies thatunder-investin R&D inR&D-intensivesectors arelikely to seetheir productsbecome lesscompetitiveand this will bereflected inbusinessperformanceThe 2006 R&D Scoreboard 75

Analysis of the 2006 R&D ScoreboardSuccessfulcompaniesmake goodstrategicchoices, showoperationalexcellence andmake wiseand balancedinvestments(including R&D).The linksbetween R&Dand businessperformanceshow up inwealth creationefficiency,sales growthand market cap.acquisitions as opposed to the much riskier route of a majoracquisition – see references 2-5); Operational excellence – effective business processes andsystems and attention to customers (quality, on-time delivery andservice); and Wise and balanced investments to ensure a flow of newproducts, processes and services (many based on R&D and alsoCapex) and for the development of brands, skills, new customersand markets (including establishing a global presence).Innovation is an important component of all three and there are manyexamples of innovative business models (strategy), new businessprocesses and new product families that have been instrumental incompany success. Companies that do not innovate will neithersucceed in these ways nor create either the managers ormanagement systems needed to innovate successfully should thecompany later decide to adopt such an approach.This discussion shows that R&D is an important competitive factor inmany sectors but good R&D alone does not assure business success.A business also needs to make good strategic choices, demonstrateoperational excellence and balance its R&D investment withinvestment in areas such as market development and design forproduction. This means that good R&D is one key element ofbusiness success but not sufficient on its own. We would thereforeexpect a statistical rather than universal link between R&D andbusiness performance. There is also a sectoral difference in businessperformance although the Value Added Scoreboard (reference 1)shows that differences in performance between the companies withina sector are mostly much larger than the differences in averageperformance between most sectors.7.1 Links between R&D and business performancePrevious R&D and Value Added Scoreboards and other studies ofR&D – active companies have highlighted the links that have beenestablished between R&D and company performance. Several keylinks are listed below and apply to sectors where R&D is a significantcompetitive factor.Above average wealth creation efficiency 18 is associated withabove average investment intensity (R&D or Capex or both). Inboth the 2005 and 2006 Value Added Scoreboards, for the 12sectors where R&D and Capex investment is significant, over 75%of companies having above average wealth creation efficiencyalso had above average investment intensity.Higher R&D intensity has been positively linked to higher salesgrowth (references 10-13). One of these studies carefully excludedthe effects of acquisitions. It is of particular interest that manyleading companies in their sectors invested more heavily duringrecessions than their less successful peers (references 14 & 15).Intel was an example in the 1990-91 recession when their R&Dwas increased 114% from 1989 to 1992 with an increase in sales of87%. Similar behaviour was reported in 2001-03 when manytechnology stocks fell in value and then began to increase again.18 The wealth creation efficiency is value added output divided by the major input costs of employees anddepreciation. It is given for each company in the DTI VA Scoreboard (reference 1).76 The 2006 R&D Scoreboard

Three sectors where R&D is an important competitive factor –health, software and pharmaceuticals – have consistently shownvery high market cap to sales ratios (over 3.0 in 2006) as well ashigh average R&D intensity (6-15%) 19 . The group of higher R&Dintensity companies in the FTSE 100 show higher share pricegrowth than the index. The same is true of high R&D intensitycompanies in the FTSE 250 (reference 7).7.2 The growth of R&D and sales in R&D-intensive sectorsThe software sector is one in which R&D is a clear source ofcompetitive advantage and figure 7.2.1 shows 25 of the largestcompanies from this sector on a chart of 4-year R&D growth factor vs.4-year sales growth factor. Note that there are three other companiesnot shown which have very large (3 digit) increases in both R&D andsales which put them off scale beyond the top right hand corner –these are Symantec, Google and Yahoo! – and there is one companyoff scale to the left of the chart. As in previous years, there is a cleargeneral trend for increases in R&D and sales to move together – auseful guide for companies in this sector. Of the 16 companies withSales growth islinked to R&Dgrowth in thesoftware sector.Figure 7.2.1 Sales growth (4 year factor) vs R&D growth (4 year factor) for large global softwarecompanies10080Symantec, Google & Yahoo! all have both R&Dand sales growth in range 140-260%21Sales Growth %60402016541111424917258312131518623219 100207-10 0 10 20 30 40 50 60 70 8022R&D Growth %-201. Microsoft2. IBM3. Oracle4. SAP5. CA6. Cadence Design7. Unisys8.Adobe9. Inuit11. Dassault Systemes12. Autodesk13. Cerner14.Sungard16. Novell17. BEA Systems18. McAfee19. Nintendo10. Synopsys 15. Mentor Graphics 20. Sybas21. Business Objects22. Compuware23. Misys24. Amdocs25. Sage19 The only other sizeable sector with R&D intensity over 6% is technology hardware which has an averagemarket cap to sales ratio of 1.6.The 2006 R&D Scoreboard 77

Analysis of the 2006 R&D ScoreboardIn thetechnologyhardwaresector, salesgrowth ordecreasetends tofollow R&Dgrowth ordecrease.R&D growth over 20%, 13 (including the 3 mentioned above) havesales growth of 20% or more and only 3 have lower (but positive)sales growth. There are only 3 companies with R&D growth below 5%and 2 of these have negative sales growth and the other 3%.The global technology hardware sector is one where a number ofcompanies reduced R&D from 2001/02 to 2002/03 and some of thesereduced R&D again from 2002/03 to 2003/04. Indeed, 15 of the top 25 20companies reduced R&D in the first period mentioned above. Figure7.2.2 therefore shows R&D growth in the period 2001-2004 plottedagainst sales growth from 2001-2005 (sales growth would beexpected to lag R&D growth). For most of the companies shown inthis figure, there does appear to be a relationship between the twowith sales growth generally higher for higher R&D growth and lowerfor lower R&D growth. All but one of the 19 companies showing R&Dgrowth over 5% also show positive sales growth and 13 of the 17companies with R&D decreases greater than 10% show salesdecreases. In the global technology hardware sector, a number ofFigure 7.2.2 R&D growth 2001-04 vs sales growth 2001-2005 for companies in thetechnology hardware sector200Sales Growth %1502624363120100428371R&D 117.7%501218153417234025562211322739 021 8-80 -60 -40 23 -20 0 20 29383540 60 8019R&D Growth %30 33 97131410-5016-1001. Intel2. Nokia3. Motorola4. Hewlett-Packard5. Hitachi6. Cisco Systems7. Ericsson8. Toshiba9. NEC10. Alcatel11. Fujitsu12. Texas Instruments13. Nortel Networks14. Sun Microsystems15. ST Microelectronics16. Lucent17. EMC18. AMD19. Mitsubishi Electric20. Qualcomm21. Applied Materials22. Ricoh23. Xerox24. Broadcom25. Mircon Technology26. Apple Computer27. Analog Devices28. Dell29. Kyocera30. Corring31. Taiwan Semiconductor32. LSI Logic33. Avaya34. ASML35 Tokyo Electron36. Juniper Networks37. Nvidia38. Tellabs39. Kia Tencor40. Lexmark20 Two of the top 25 did not have data for the relevant years.78 The 2006 R&D Scoreboard

Figure 7.2.3a R&D and sales growth 2001 to 2005 for 6 companies150140SalesR&D% Change from 100% in 200113012011010090802001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005Intel (37%)† Nokia (13%) Altera (19%)2001 Sales £15.4bn £21.4bn £489m2001 R&D £2.2bn £2.3bn £96m250SalesR&D% Change from 100% in 2001200150100502001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005AMD (2%) Juniper Networks (22%) Adobe (37%)2001 Sales £2.3bn £517m £716m2001 R&D £379m £91m £131m† The number in brackets is the 2006 Scoreboard profitabilityThe 2006 R&D Scoreboard 79

Analysis of the 2006 R&D ScoreboardFigure 7.2.3b R&D and sales growth through a downturn for two UK companies350300RenishawAutonomy2502001501005002000/1 2001/2 2002/3 2003/4 2004/5 2005/6 2000 2001 2002 2003 2004 2005Sales 2000/01 = £125m Profitability = 20.2% Sales 2000/01 = £44m Profitability = 10%R&D 2000/01 = £12.1m 2005/06 R&D 2000/01 = £4.2m 2005/06ExportsExportsfrom region = 60% from region = 62%2005/06 2005/06SalesR&Dcompanies found their sales decreasing (or failing to increase) from2001/02 to 2002/03 as did others in software. Several of these,however, responded to the more difficult business conditions byincreasing R&D. This paid dividends in the form of increased sales inlater years. Six examples of this out of the larger number in theScoreboard are shown in figure 7.2.3a where sales and R&D are bothshown as 100% for 2001 so that relative changes can be followedfrom 2001 to 2005. In figure 7.2.3b similar data are shown for twoinnovation-led UK companies for the period 2000 to 2005 which showhow R&D was increased as sales decreased in the period after2000/01. One of these companies – Renishaw – provided acommentary for the 2002 R&D Scoreboard in which their Chairmanand CEO commented ‘Renishaw saw its sales fall by 17%in which…as demand in the metal cutting, electronics and semiconductorsectors contracted. However, it [innovation] offers the best prospect ofgrowth in turbulent markets. Recognising this we continue to expandour R&D investments – a 15% increase last year.’ This year’scommentary shows the results.80 The 2006 R&D Scoreboard

Five of the six companies in figure 7.2.3a have profitability of 13% to37% with one company (AMD) having a lower profitability but thiscompany is reported to be gaining market share and its current R&Drepresents an increase of 22% over the previous year. The two firmsin figure 7.2.3b show profitabilities of over 20% and 10%.Lastly, it should be stressed that a correlation between R&Dintensity/growth and sales growth would not be expected for manysectors in the Scoreboard for which R&D is not a key competitivefactor – mining, telecoms and utilities are just three extremeexamples. Any statistical search for correlations across the wholecompany population of this or other Scoreboards suffers from thisand other limitations.7.3 Share price performance of UK R&D-intensive companiesStarting in 2001 R&D Scoreboards have included a graph showingchanges in the value of an ‘R&D portfolio’ of shares in all the highR&D intensity companies from the FTSE 100 index. The performanceof this portfolio is then compared to that of the FTSE 100 index toprovide some perspective on major UK technology companiesfollowing the 2000/01 fall in technology stocks. Figure 7.3.1 shows thevalue of the R&D portfolio and the FTSE 100 from early August 1997(when both are normalised to 100%) to 2006. Over this period frombefore until well after the marked rise and fall in technology stocksin 1999-2001, the R&D portfolio has increased in value by 73% whilethe FTSE 100 has increased by 16%. The R&D portfolio consists of10 companies having R&D intensity over 4% 21 . The ten companies arefrom six different sectors which provides a degree of diversification.Note that if, for example, the portfolio was followed from 2002 or2003 onwards, the portfolio would show only a slightly largerincrease than the index (147% vs. 144% for the FTSE 100).A similar portfolio has been constructed from the 13 FTSE 250companies with R&D intensity of 5% or more. The value of theportfolio has increased 125% since 1997 compared to a rise of 99%for the FTSE 250 index.Examples aregiven ofcompaniesthat increasedR&D as salesdecreased inthe technologydownturn of2001-2 andthen benefitedfrom salesgrowth in 2004and 2005and alsoachieved highprofitability.21 Johnson Matthey is one of these since it has an R&D intensity over 4% if sales are calculated less thecost of precious metals. The information to make this calculation has been included in the annual reportsince 2002.The 2006 R&D Scoreboard 81

Analysis of the 2006 R&D ScoreboardThese two examples are used to illustrate the share price performanceof a set of R&D-intensive companies that are large enough by marketcapitalisation to be included in either the FTSE 100 or FTSE 250 indices.R&D intensity would not in practice be used as the sole criterion forselecting companies for a portfolio since good strategic choices,operational excellence and wise and well balanced investments(which include R&D) are all needed for success. However, figure 7.3.1does show that R&D-intensive companies with sufficient size andmarket cap to be included in a major index do, as a group, provideuseful candidates for a portfolio. This is worth emphasising since thedrop in value of technology stocks in 2000-2002 has discouragedsome investors from considering the addition of R&D-intensivecompanies to their portfolios.Figure 7.3.1 Change in value of R&D portfolio and FTSE 100 index from 1997 to 2006250200% change from 100% in 199715010050097 98 99 2000 2001 2002 2003 2004 2005 2006FTSE 100R&D Portfolio82 The 2006 R&D Scoreboard

Figure 7.3.2 Increases in market cap for R&D-intensive companies from 2005 to 2006Change inR&D Market Cap M C/S* M C/SSector Company Intensity 2005/06 Company SectorAerospace Rolls Royce, UK 5.30% 27% 1.2 1.0(11%) † SAAB, Sweden 4.40% 43% 1.1 1.0Automotive Toyota, Japan 4.10% 32% 1.2 0.5(11%) Honda, Japan 5.40% 25% 0.8 0.5Electronics Canon, Japan 7.60% 43% 2.0 1.1(14%) Olympus, Japan 5.90% 41% 1.1 1.1Health Terumo, Japan 6.00% 22% 3.9 3.1(0) Varian Medical 5.90% 26% 4.7 3.1Systems, USAPharmaceuticals Merck, USA 17.50% 35% 4.1 4.0(9%) Allergan, USA 16.90% 34% 7.2 4.0Shire, UK 18.00% 34% 4.5 4.0Software Google, USA 9.80% 41% 18.5 3.4(-) Adobe, USA 18.60% 43% 9.6 3.4Citrix Systems, USA 12.00% 38% 6.1 3.4Technology Micron 12.40% 68% 2.4 1.6HardwareTechnology, USA(-5%) Nvidia, USA 14.80% 69% 3.6 1.6CSR, UK 12.40% 137% 5.2 1.6* M C/S = Market cap to sales ratio for 2006.† The figure in brackets is the average change in market cap for the sector.The 2006 Scoreboard includes the change in market cap for listedcompanies over the previous year (August 2005 to August 2006) andfigure 7.3.2 collects some examples of companies (3 from the UK)showing substantial increases in market cap over the last year or so.The R&D-intensive companies are all selected to have Market cap tosales ratios of at least their sector average 22 (to reduce the likelihoodof choosing companies in a recovery situation) and all have anincrease in market cap during the past year of over 20%. Seventeencompanies from seven sectors are shown in figure 7.3.2 and 14 ofthese show increases in market cap of 22-43% with the other threeincreasing market cap by 68-137% (two of these companies alsoappear in figure 6.4.1). These figures can be compared against anoverall increase in market cap of 6.1% for the Global 1250 and some10% for the FTSE 100. These examples again show that there are arange of sizeable R&D-intensive companies that would be worthy ofconsideration for investment portfolios but that, as explained in thischapter, R&D is only one contributor to company success.The R&Dportfolioincreased invalue by 73%vs. a 16% risein the FTSE 100index from1997 to 2006.22 Companies with a large change in market cap which have a 2006 market cap to sales ratio close to thesector average can still be regarded as having recovered during the previous year.The 2006 R&D Scoreboard 83

Analysis of the 2006 R&D Scoreboard8. Patents & R&DSummaryThe patents–to–R&D ratio (US patents granted in 2005 per£10m R&D) shows large sectoral variations with the ratiobeing ten times as large for electronics & technologyhardware as for pharmaceuticals or telecoms. This explainsthe difference in patent totals seen for different countries:those countries specialising in electronics and technologyhardware (e.g. Japan) have much higher patent totals thancountries strong in pharmaceuticals (e.g. UK). Thesedifferences have been stable over the last few years.The table of companies with most US patents in 2005 isnaturally dominated by companies in electronics andtechnology hardware with Asian companies (Japan & S. Korea)taking over half the top 20 places.There are two sectors where the number of patents has beendecreasing from 2001 to 2005 – pharmaceuticals andchemicals. Only in aerospace and software are theresignificant increases for 2005 over the average for 2001-05.The patents–to–R&D ratio varies markedly between thecompanies in any one sector and this shows up clearly incharts of 2005 patent count vs. R&D for automotive(components), automotive (vehicles), pharmaceuticals andtechnology hardware.Volume 2contains detailsof the numberof patentsgranted to270 large R&Dcompaniesfrom the Global1250 for eachof the 5 years2001-2005.IntroductionThe valuable results of innovative R&D are, in most sectors, protectedby patents wherever possible. Any important patent will be taken outin the USA as well as in other jurisdictions since the USA is theworld’s leading and largest market for most R&D-based products.The number of US patents granted to a R&D-active company in anyyear is therefore of interest both compared to its R&D investment(as one indication of R&D effectiveness) and for comparison with itspatent count for earlier years to see whether the number of inventionsthought to be worth patenting is increasing or decreasing.Volume 2 contains details of the number of US patents granted tonearly 270 larger companies from the Global 1250 for the 5 years2001, 2002, 2003, 2004 and 2005 – together with changes in thenumber of patents for 2005 compared to 2004 and for 2005 comparedto the average of the four previous years. The data have beenprovided to the DTI by Innovaro using the US Patent Office database(reference 16). The 270 companies include all the large (by R&D)Global 1250 companies in the main R&D sectors down to an R&Dsize where the number of 2005 patents has become relatively small.84 The 2006 R&D Scoreboard

A number of caveats need to be listed before outlining thecomparison of patents and R&D investment by sector and company:Some patents are much more important than others and a patentcount does not provide any weighting of patents for importance 23 .A comparison of number of patents granted to R&D investmentwill underestimate the underlying ratio for a company with rapidlygrowing R&D whose 2005 patents will have been the result ofearlier, lower levels of R&D. Similarly, the ratio for a firm withdeclining R&D will be overstated. The length of the time delaybetween R&D and patent varies between sectors.Patents-to-R&D ratios should not be compared across sectors.The 2003 R&D Scoreboard showed, for the first time, that thisratio can vary by an order of magnitude between sectors. Somesectors, such as software, also make more use of other protectionmechanisms such as copyright and trademarks. There will also bedifferences within a sector where companies have very differentproduct ranges in different sub-sectors.Some companies have a stronger policy on patenting than othersand some may even link R&D employees’ rewards to patents filedor granted. The propensity to patent may thus be higher for suchcompanies (or sectors where such companies are prominent)although their patents may, on average, be of less importance.There may be some advantage for US companies in the use of USpatents since they are liable to file all patents, not just the mostimportant, in the USA. In practice, the differences between largeglobal technology companies (for which data is given in volume 2)from, say, the USA and Japan do not suggest this is a majoreffect.The tables in volume 2 of the Scoreboard contain patent data forlarger companies from each of 13 sectors 24 with a few smaller UKcompanies included in sectors where there would otherwise be fewUK entries.8.1 The patents-to-R&D ratio by sectorThis is the fourth R&D Scoreboard in which patent data has beenpresented and volume 2 now contains five years of patent data foralmost 270 global companies. Persistent differences are seen in thepatents-to-R&D ratio for different sectors – this ratio is calculated asthe number of US patents granted in a year for each £10m of R&Dinvestment. Since patent numbers can vary from one year to the next,figure 8.1.1 gives two ratios for each of 12 sectors – the averagenumber of patents per year over the five year period 2001-05 and thenumber of 2005 patents, both divided by the 2005 or 2005/06 R&Drecorded in the Scoreboard. To assist comparisons with patent data inprevious Scoreboards, some companies now in the leisure sectorhave been kept in electronics (e.g. Philips Electronics and Sony) orsoftware (e.g. Electronic Arts). Telecoms includes both fixed line andmobile in figure 8.1.1. Some care is needed in interpreting sector dataPersistentdifferences ofup to ten timesare seen in thepatents-to-R&Dratio for differentsectors.23 Patent citations do provide some indication of importance but add complexity and are most usefulseveral years after a patent has been published when there has been time for many other patents to cite theone of interest.24 The 13th sector contains just 6 companies from general industrials.The 2006 R&D Scoreboard 85

Analysis of the 2006 R&D ScoreboardFigure 8.1.1 The patents-to-R&D ratio for 12 sectorsPersonal Goods (9) 4.486.49Electronic &Electrical (24)6.46.54TechnologyHardware (50)5.996.38AutomotiveComponents (14)3.523.89Household (7)33.84Chemicals (29)2.733.31Aerospace &Defence (17)2.062.44US Patents per YearAveraged over 2001-2005Health (12)1.571.652005 US PatentsAutomotive(vehicles) (16)Software (21)Pharmaceuticals &Biotechnology (39)Telecoms (12)1.051.021.031.310.810.620.640.630 2 4 6 8US Patents per £10m R&D investment† Number of companies used in the calculationThe patents-to-R&D ratio forelectronics andtechnologyhardware isabout 6 whereasit is 0.6 forpharmaceuticalsand telecoms.since two sectors are dominated by one company which accounts forsome 60% of 2005 patents; Microsoft for software and Proctor &Gamble for household. Kimberly-Clark contributes 42% of patents inpersonal goods. There are three other sectors where one companycontributes one quarter of 2005 patents – Honda in automotive(vehicles), Robert Bosch in automotive components and Stryker inhealth.The key features of figure 8.1.1 are: The large differences in patents-to-R&D ratio between sectors –the 2005 ratio is over 6.5 for electronics and just over 0.6 forpharmaceuticals and telecoms. The low ratio for pharmaceuticalsreflects the substantial R&D investment needed to ensure apatented compound is effective and acceptable to regulatoryauthorities.The order of sectors is similar to previous years with electronics,technology hardware and personal care, in that order occupyingthe top 3 positions in both 2004 and 2006. Software, automotive(vehicles) and pharmaceuticals, in that order, occupy the threepositions with the lowest ratios, again both in 2004 and 2006(excluding telecoms for which data were not reported in 2004).In most sectors the number of 2005 patents is significantly belowthe annual average for 2001-2005. The exceptions are softwareand aerospace; electronics and health also have small increases.The software sector is one of the few sectors where mostcompanies increased their patent count from 2004 to 2005. The86 The 2006 R&D Scoreboard

aerospace sector benefits from a large increase in patents grantedto Boeing in 2004 and 2005 compared to the level for thepreceding three years.There are two large sectors with significant decreases in patentcount – chemicals and pharmaceuticals. For example, the patentcount for the same group of chemical companies decreased by30% from 2001 to 2005. For pharmaceuticals, the reduction was35% over the same period. Explanations for this reduction couldinclude a desire to patent only the most important inventions, theincreased difficulty of finding patentable discoveries in maturingsectors or changes in the direction or effectiveness of R&D.Whatever the explanation, the result is that only one in sixchemical companies increased patent count from 2004 to 2005and only one in four pharmaceutical companies did so.8.2 Patents from major companiesOver twenty companies listed in the patent tables of volume 2 weregranted more than 750 US patents in 2005. These companies arelisted in figure 8.2.1 with their 2005 US patent count, the change inpatent count from 2004 and their patent-to-R&D ratio (patents per£10m R&D). There are only 7 US companies in this list compared to 9from Japan. Technology hardware and electronics (including leisureelectronics) provide 15 of the 22 companies – not surprising given thehigh patents-to-R&D ratios for these sectors exhibited in figure 8.1.1.Most companies in figure 8.2.1 have patents-to-R&D ratios above theirsector averages and a few have ratios much larger than their sectoraverages recorded in figure 8.1.1. These include Micron Technology,National Semiconductor and Seiko Epson, all with ratios above 40and Honda with a ratio some three times that of the vehicle makers’average.The other noticeable trend in figure 8.2.1 is that 77% of the numberedcompanies have reduced their US patent count between 2004 and 2005.This is not something associated just with the these 20 companiessince the majority of companies in the patent tables of volume 2 haverecorded fewer patents in 2005 than in 2004. This is also true for 2005patents compared to the average of the four previous years. The onlysizeable sector (amongst those for which data is recorded in volume 2)where this is not true is software where a clear majority of companieshave more patents for 2005 than for 2004.There are some companies that have shown consistently rising orfalling patent counts by large amounts for the whole period 2001 to2005. These companies are listed in figure 8.2.2 and, to be included inthis list a company must meet the conditions:The patent count must rise from year to year for all foursuccessive years after 2001 (or fall in each for the decreasers).Risers must have more than 100 patents in 2005 and fallers musthave more than 100 in 2001 to avoid the large % fluctuationsinherent in small patent counts.The patent count must have at least doubled for risers between2001 and 2005 or more than halved for fallers between the sametwo years.The top 20companies bynumber of USpatents aremainly fromelectronics andtechnologyhardware andover one halfare from Asia.The 2006 R&D Scoreboard 87

Analysis of the 2006 R&D ScoreboardFigure 8.2.1 Companies with over 750 US patents granted in 2005% change2005 US 2005 Patents perCompany Country Patents from 2004 £10m R&D Sector†1. IBM USA 2962 -9% 9.5 S2. Samsung S Korea 2001 3% -* -3. Hitachi Japan 1968 -10% 9.8 TH4. Matsushita Electric Japan 1904 -12% 6.8 L5. Canon Japan 1868 1% 13.2 E6. Hewlett Packard USA 1833 1% 9 TH(Samsung Electronics) S Korea 1741 6% 5.5 E7. Micron Technology USA 1556 -11% 44.2 TH8. Intel USA 1553 -3% 5.7 TH9. Sony Group Japan 1445 -16% 5.5 L10. Toshiba Japan 1405 -8% 8.2 TH11. Fujitsu Japan 1343 -10% 11.3 TH12. Siemens Germany 1330 -6% 3.8 E13. General Electric USA 1152 -8% 5.8 GI14. Mitsubishi Japan 1127 -19% -* GI15. National Semiconductor USA 1105 -17% 57 TH16. Philips Netherlands 986 -31% -* -17. Seiko Epson Japan 894 2% 42.2 E18. Infineon Germany 841 -2% 9.8 TH19. Honda Japan 822 -5% 3.6 A20. LG S Korea 797 -4% -* -21. Robert Bosch Germany 794 -16% 3.9 A(Philips Electronics) Netherlands 793 -37% 4.9 L22. Microsoft USA 787 19% 2.1 S* No comparable R&D data available in these cases but see also Philips Electronics and Samsung Electronics. LG Electronics has 529 patents and aratio of 5.2 patents per £10m R&D.† S = Software TH = Technology Hardware L = Leisure E = Electronics GI = Gen. Industrials88 The 2006 R&D Scoreboard

The companies in figure 8.2.2 meet these conditions and are mainlyfrom technology hardware for risers and chemicals &pharmaceuticals for fallers. It can be seen from the penultimatecolumn that changes in R&D do not seem to be driving the largechanges in patent count since it is rare to find changes in R&D ofmore than 10%. However, what is interesting is that 3 of the 5consistent risers had still not reached their sector average patent-to-R&D ratio by 2005 so they can be seen as in ‘catch up’ mode: onehad just completed catch up and reached the average by 2005.The exception is Broadcom which is significantly above the sectoraverage. In the case of the fallers, two companies have ratios abovethe sector average in 2005 so they could be described as revertingto the mean but all the others are now below their sector averagesand still decreasing.8.3 The patents-to-R&D ratio for companies in 4 sectorsThere are big differences in the patents-to-R&D ratio for companieswithin each sector and these are best displayed in charts of 2005patent count vs. 2005 R&D investment. Examples are given in figures8.3.1 (automotive and automotive components), 8.3.2 (technologyhardware) and 8.3.3 (pharmaceuticals). All three figures contain theline representing the sector average patent-to-R&D ratio (see figure8.1.1) but, in each sector, there are some companies well above theline and some well below. In some cases, there are specialcircumstances which enable one to understand why a companyoccupies an extreme position; an example is Merck (Germany) inpharmaceuticals which has a chemical division for which ahigher ratio would be expected and which raises the overall ratio.In other cases there is no obvious reason for the larger differencesbetween companies in the same sector. The main features of figure8.3.1, 2 & 3 are:Automotive:There are two sub-sectors here – vehicles and components – andthe average patents-to-R&D ratio is more than three times largerfor the latter. This reflects the fact that much automotivetechnology is now developed by first line component makers.However, two vehicle makers have very high ratios which aremore typical of component companies and they appear amongstthe component makers on figure 8.3.1: Honda and Yamaha. Bothwere in similar positions in 2005. Amongst the other vehiclemakers, Fiat, Peugeot, Renault and Volkswagen have very lowratios. However, Robert Bosch retains both a high ratio and a highabsolute number of patents.The patents-to-R&D ratio ismuch higherfor automotivecomponentcompanies thanfor vehiclemakers althoughtwo vehiclemakers – Hondaand Yamaha –also have highratios.Technology Hardware:Figure 8.3.2 shows that there appears to be a sub-sector withinthis sector with a lower patent-to-R&D ratio. This contains themobile telephony and network companies such as Nokia, Ericsson,Cisco and Nortel on the lower right of figure 8.3.2 (edged in red).The companies in semiconductors and computers nearly all havemuch higher ratios. Particularly high ratios are evident for MicronTechnology and National Semiconductor.The 2006 R&D Scoreboard 89

Analysis of the 2006 R&D ScoreboardPharmaceuticals:Figure 8.3.3 shows the patent vs. R&D chart for majorpharmaceutical companies. Two companies have high patent-to-R&D ratios for very specific reasons – Merck (Germany) becauseit has a sizeable chemicals division (for which the ratio is higher)and Johnson & Johnson which has part of its sales in healthwhich also has a higher ratio than pharmaceuticals (see figure8.1.1). Of the remaining companies, Pfizer stands out with a higherthan average patents-to-R&D ratio but there is a group of fivelarge pharmaceutical companies significantly below the line infigure 8.3.3 and hence with a lower than average ratio.Figure 8.3.1 Number of 2005 patents vs R&D investment for companies in the automotive (vehicles)and automotive (components) sectors1000166Automotive(vehicles)Number of 2005 US patents50015181784231Automotive(components)2128 20 1922, 24231113792729 25526 14100120 1 2 3 4 5Company R&D Investment £bn1. Ford6. Honda11. Hyundai16. Robert Bosch21. Visteon26. Johnson Controls2. General Motors7. BMW12. Fiat17. Delphi22. Continental27. Autoliv3. DaimlerChrysler8. Nissan13. Mazda18. Denso23. Bridgestone28. Goodyear4. Toyota9. Renault14. Suzuki19. Valeo24. Michelin29. GKN5. Volkswagen10. Peugeot15. Yamaha20. Aisin Seiki21. ZF90 The 2006 R&D Scoreboard

Figure 8.2.2 Companies showing large increases/decreases in patents 2001 to 2005 and with aconsistent year to year trendPatent Patent/R&DCount 2005 Ratio vs. R&D TrendCompany Country 2001/03/05 Sector Average 2001/03/05 Sector†Large and Consistent Increases in Patent CountGeneral Motors USA 187/296/398 At average ± 10%** AutoCisco Systems USA 183/364/461 Below ± 10% TH*Broadcom USA 46/170/415 Above ± 15% 02/05 THASML Netherlands 1/51/142 Below ± 10% 02/05 THAnalog Devices USA 66/120/140 Below ± 10% THLarge and Consistent Decreases in Patent CountNorthrop Grumman USA 449/307/178 Above Increasing AeroDow Chemical USA 371/207/133 Below ± 5% ChemMitsubishi Chemical Japan 139/110/67 Below Stable 02/05 ChemICI UK 102/73/45 Above Stable ChemToray Industries Japan 120/83/38 Below Stable ChemLucent USA 1129/632/408 Below Decreasing TH01/04Avaya USA 169/98/47 Below ± 20% THConexant Systems USA 131/82/28 Below ± 30% 02/05 THGlaxoSmithKline UK 439/204/106 Below ± 10% P†Merck USA 204/172/68 Below Increasing but P4% drop 05Abbott Laboratories USA 129/113/54 Below ± 10% PTakeda Pharmaceuticals Japan 103/49/19 Below Increasing P*TH = Technology Hardware † P = Pharmaceuticals & Biotechnology** The figures in this column only indicate the trend – refer to volume 2 for precise details of R&D by yearThe 2006 R&D Scoreboard 91

Analysis of the 2006 R&D ScoreboardFigure 8.3.2 Number of 2005 US patents vs R&D investment for companies in the technologyhardware sectorNumber of 2004 2005 US Patents200020001000100073826679101189 1312151417 17 10 11161921 1820232221 27 24161213 14 15 2526293028181922242300 20112233Company R&D investment £bn £bn512341541. Hitachi 1. Matsushita Electric2. Hewlett-Packard2. Canon3. Sony3. Micron Technology4. Samsung Electronics4. Intel 5. Siemens5. Toshiba 6. Philips Electronics7. Seiko Epson6. Fujitsu 8. Sharp7. National 9. Agilent Semiconductor8.10.InfineonRicoh11. LG Electronics9. 12. Texas Sanyo Instruments Electric10. 13. Xerox Olympus14. Pioneer11. Sun Microsystems15. Sumitomo Electric12. 16. Nokia Alps Electric13. 17. Advanced Emerson Micro Electric Devices18. TDK14. Motorola19. ABB15. 20. Ricoh Thomson16. 21. Cisco LG Philips Systems22. Eaton1723. Taiwan Alstom Semiconductor18. 24. ST Omron Microelectronics19. Broadcom20. Ericsson21. Lucent22. Nortel Networks23. Applied Materials24. LSI Logic25. Freescale Semiconductor26. Alcatel27. Murata28. NEC29. Tokyo Electron30. QualcommFigure 8.3.3 Number of 2005 US patents vs R&D investment for companies in the pharmaceuticals sectorNumber of 2005 US Patents40035030025020015010050181916311151317510146127498211. Pfizer2. Johnson & Johnson3. E. Merck4. Sanofi - Aventis5. Bristol-Myers-Squibb6. AstraZeneca7. Roche8. GlaxoSmithKline9. Novartis10. Wyeth11. Schering12. Merck & Co13. Boehringer Ingelheim14. Eli Lilly15. Novo Nordisk16. Sankyo17. Abbott Laboratories18. Altana19. Chiron20. Genzyme21. Kyowa Hakko Kogyo22. Takeda Pharmaceuticals02122200 1 2 3 4 5Company R&D Investment £bn92 The 2006 R&D Scoreboard

9. R&D for the top 800 UK companiesSummaryThe UK 800 contains UK companies with R&D down to £0.37mand there are 245 foreign-owned UK companies amongstthe 800. The total R&D for the 800 is £19.2bn, an increase of£2.2bn over the 2005 Scoreboard total. The two main reasonsfor this increase are IFRS-led disclosure of R&D in financialand other sectors (where it has only rarely been disclosedbefore) and a higher ratio of large companies increasing asopposed to decreasing R&D.The business performance of the UK 800 has improved over2005 but listed UK companies are performing better thanforeign-owned ones with higher profitability and R&D up over8% compared to an R&D decrease of 9% for the foreignownedcompanies (mainly due to large decreases at a fewlarge companies).The sector mix for the UK 800 is very different from that for theGlobal 1250 with pharmaceuticals and aerospace accounting fornearly 50% of the total. Amongst the other sectors foodproducers, fixed line telecoms and banks are much larger thanin the Global 1250 with technology hardware, electronics andchemicals much smaller. Large increases in R&D over theprevious year are recorded for aerospace, banks and software.85% of UK R&D is accounted for by the top 100 companieswith the top 25 including 5 foreign-owned companies. Largeincreases in R&D (11) outnumber large decreases (7) but 5of the 7 decreases are by foreign-owned UK companies.There are 14 UK-owned companies in the FTSE 350 with R&Dintensity over 7%.The top 10 foreign-owned companies in the UK 800 contributejust over half the £4.4bn total of R&D for foreign-owned UKcompanies. Eight of these 10 have higher R&D intensity thantheir overseas parents and this emphasises the attractions ofthe UK as a location for R&D.There are 144 UK companies with sales in the range £25m to£500m and R&D intensity over 4 % and 104 of these are UKowned,57% being in pharmaceuticals, software andtechnology hardware. The increase in the number of high R&Dintensity middle–sized companies in these sectors has led toan increase in the proportion of UK middle-sized companieswith R&D intensity over 10% compared to that of the USA; theUK proportion is now over half the US one (which is 60%).The Scoreboard highlights two successful groups ofUK-owned middle-sized companies. The first containsR&D-intensive companies that were profitable (profitabilityover 10%) and growing in the 2001 Scoreboard and that alsomet these conditions in 2006. The second group are profitable,fast growing R&D-intensive companies that grew 70% to over600% over the previous two years.The 2006 R&D Scoreboard 93

Analysis of the 2006 R&D ScoreboardThe UK 800contains UKownedandforeign-ownedUK companieswith R&D downto £0.37m.Introduction to UK companiesTo provide a more comprehensive overview of the UK’s R&Dcompanies as a whole, a separate set of data for the top 800companies in the UK by R&D is collected and provided in volume 2.This is entirely separate from the Global 1250 which includes only the72 largest UK companies. There are three specific reasons forproducing and analysing the UK 800:The UK 800 (up from 750 in 2005) includes companies with R&Ddown to £0.37m, well below the £19m minimum for the Global1250. More than two thirds of UK sectors have all but the top 1 tothree companies with R&D below £19m.The UK 800 includes 245 foreign-owned companies and henceenables their R&D characteristics to be compared with UK-ownedcompanies in the same sectors; foreign-owned subsidiaries arenot included in the Global 1250 since this would lead to doublecounting of R&D. Note that UK-owned companies’ R&D in the UK800 is the global total since most do not give a separate figure forR&D carried out in the UK (and are not required to do so).Conclusions about R&D performed within the UK should not bedrawn from comparisons of UK-owned and foreign-owned UKcompanies. The two groups are discussed separately for somepurposes but together for overview purposes such as identifyingthe companies with the largest volumes of R&D and the largestincreases and decreases.The analysis of middle-sized companies in the UK 800 is muchmore comprehensive than for the Global 1250 (see chapter 6)since the smallest middle-sized company with £50m sales willhave an R&D intensity of 0.7% vs. 3.8% for the Global 1250. Thismeans that almost the full range of R&D intensities arerepresented in the UK list. A more comprehensive comparison ofUS and UK R&D companies can also be made since the US-onlyR&D Scoreboard (reference 8) includes US companies with R&Ddown to £2.9m.9.1 Overview and concentrationThe total R&D for the UK 800 has increased markedly over theprevious year. Figure 9.1.1 shows the totals for the UK 800 (and itslargest 700) for the last 3 years.Figure 9.1.1 Total R&D for UK 800Date Of Scoreboard2006 2005 2004UK 800 Top 700 UK 750 UK 700Total R&D £19.23bn £19.18bn £17.0bn £16.6bn94 The 2006 R&D Scoreboard

It can be seen that the last 50 or 100 companies add little to the totalR&D. There is a significant increase in total R&D between 2005 and2006 – some £2.2bn – and there are two reasons for this. Firstly, theintroduction of IFRS has led to the capitalisation of R&D with apredictable outcome and better disclosure 25 of R&D, particularlynoticeable in sectors where it has not normally been disclosed suchas banks, insurance and financial services. Secondly, more large UKownedcompanies than in 2005 have increased R&D over the previousyear and less have made large decreases.R&D in the UK 800 is concentrated in much the same way as in theGlobal 1250 but the dimensions of concentration are UK ownership,sectors and companies as shown in figure 9.1.2. The top 5 sectorsaccount for 65% of the total compared to 70% in the Global 1250, thedifference being largely due to the smaller technology hardwaresector in the UK 800. Note that aerospace in the UK top 5 sectors hasreplaced electronics in the Global 1250 top five. The top 100 companiesaccount for 85% of the total compared to 61% in the Global 1250, areflection of the much larger size of the global economy which leadsto a slower decrease of company size with number of companies.Figure 9.1.2 The concentration of R&D in the UK 800% of Total R&D DetailsUK-owned companies 69% 555 out of 800Largest 5 sectors from 39 65% Pharmaceuticals,aerospace,automotive,technologyhardware andsoftware.Top 100 companies 85% All companies withR&D over £23.5mTop 25 companies 66% All companies withR&D of £102m or overThe overall R&Dincrease for theUK 800 is 4%and this arisesfrom an 8.2%increase for UKlisted companiesand an 8.6%decrease forforeign-ownedUK companies.9.2 Business performance of UK 800 companiesIn figure 9.2.1, the business performance of the UK companies in theUK 800 is compared with that of the Global 1250 and the group of 72UK companies within the Global 1250. The most obvious differencebetween the UK 800 and the global 1250 or UK 72 is that the changeis R&D is only 3.9% for the UK 800 compared to 7% for the Global1250 and 8.2% for the UK 72. The fourth column of figure 9.2.1 showsthat this is due to a 8.6% reduction of R&D for the foreign-ownedgroup of UK companies. Just three foreign-owned companiesreduced their combined R&D by over £500m 26 or over 10% of theprevious year’s total. Further details of companies that make25 Disclosure of R&D is required under IFRS and the introduction of R&D tax credits has probably alsoimproved disclosure, particularly amongst smaller companies.26 Pfizer, Amersham and Ford. See notes in Volume 2 about Pfizer (UK) R&D.The 2006 R&D Scoreboard 95

Analysis of the 2006 R&D ScoreboardFigure 9.2.1 Business performance of the UK 800UK 800 Global 1250UKGroupListed UK-Owned Foreign- WithinFactor Total Companies Unlisted Owned Total 1250Number of Companies 800 408 147 245 1250 72Change in Sales 6.9% 7.2% 6.2% 5.7% 8.9% 5.5%Over Previous YearProfitability 11.3% 13.5% 1.4% 5.4% 11.0% 12.5%(Operating Profit as % Sales)Change in R&D 3.9% 8.3% 6.2% -8.6% 7.0% 8.2%Over Previous YearTotal R&D £19.2bn £13.94bn £0.93bn 4.36bn £249bn £13.1bnPharmaceuticalsis the largestsector in theUK 800 followedby aerospace,technologyhardware andautomotivewhich arerelatively muchsmaller in theUK 800 than inthe Global 1250.substantial increases or reductions in R&D are given in section 9.4.The 408 UK listed companies within the UK800 showed higherprofitability and a similar increase in R&D over the previous year asthe Global 1250. Note that these 408 listed UK companies had R&Djust £0.8bn larger than the 72 UK companies in the Global 1250.9.3 The top sectors in the UK 800The largest 15 sectors in the UK 800 are listed in figure 9.3.1 andtogether contribute over 92% of the total UK 800 R&D. The other 24sectors contribute nearly 8% with no sector having total R&D over£182m. Within the top 15 sectors there are two with R&D over £2.5bn,9 with R&D in the range £500m to £1.25bn and 4 with R&D less than£300m; all other sectors have less than 1% of UK 800 R&D. The mainfeatures of figure 9.3.1 are:The two largest UK sectors by R&D – pharmaceuticals andaerospace account for 48.5% of UK 800 R&D compared to under23% of the Global 1250. The other significant sectors ranked atleast 5 places higher in the UK 800 than in the Global 1250 arefood producers, fixed line telecoms and banks. On the other hand,technology hardware, electronic & electrical and chemicals are alllower ranked in the UK 800 than in the Global 1250.There are some very large (over 20%) increases in R&D over theprevious year in sectors such as aerospace, banks and fixed linetelecoms and large (over 10%) increases for software, and oil& gas. In all these sectors except software the rise is mainly dueto a big increase at one UK-owned company. In the case of thesoftware sector, most of the larger companies show double digitincreases in R&D.96 The 2006 R&D Scoreboard

Figure 9.3.1 The top 15 sectors by R&D in the UK 800Sectors withUK 800 over £200m Rank in R&D % of UK GrowthRank R&D Global 1250 £bn 800 R&D 1yr Concentration a1. Pharmaceuticals 2 6.82 35.4% -1.6% b 75%2. Aerospace & Defence 8 2.52 13.1% 21.3% 71%3. Automotive 3 1.25 6.5% -7.1% b 74%4. Technology Hardware 1 0.95 5.0% 5.7% 30%5. Software & 5 0.93 4.8% 12.6% 20%Computer Services6. Food Producers 15 0.86 4.5% -4.5% c 83%7. Fixed Line Telecoms 12 0.73 3.8% 39.0% 99.8%8. Banks 21 0.71 3.7% 20.3% 81%9. Oil & Gas Producers 13 0.68 3.5% 10.6% 94%10. Electronic & Electrical 4 0.61 3.2% -1.4% 28%11. Chemicals 6 0.58 3.0% -5.7% b 38%12. Media 19 0.27 1.4% -7.6% 81%13. Industrial Engineering 10 0.27 1.4% 6.0% 24%14. Health Care 11 0.26 1.3% -21.6% b 60%15. Mobile Telecoms 26 0.23 1.2% -5.0% 96%a Concentration is the % of sector R&D contributed by the top 2 companiesb These 4 sectors each have one foreign-owned company with a big reduction in R&Dc This sector has a large reduction in R&D by a UK-owned companyThere are also a number of large decreases in sector total R&D.These are mostly associated with big decreases at one foreignownedcompany in each sector but UK-owned companies areresponsible in cases such as food producers.The concentration of R&D is over 70% for most of the top 11 sectorsbut much smaller for software and technology hardware, electronics& electrical and industrial engineering. This reflects the absence of anyvery large (in Global terms) UK companies in these four sectors.In the softwaresector, mostof the largercompaniesshow doubledigit increasesin R&D.The 2006 R&D Scoreboard 97

Analysis of the 2006 R&D ScoreboardThere are largeone year %increases inR&D fromcompanies suchas Shire, BT,Tesco, HSBC,BAE Systemsand Rolls-Royce.These rangefrom 49%(Shire) to 25%(Rolls Royce).9.4 The top UK 800 companies by R&D, growth of R&D andintensityThe largest 25 UK 800 companies by R&D are shown in figure 9.4.1together with their rank in the 2003 Scoreboard. Eighteen of the 2006top 25 were ranked in the 2003 top 25, two companies first enteredthe Scoreboard in 2004 & 2005 and five are new this year. These latterfive are from financial services (3), retail and media, and havedisclosed R&D for the first time in their annual reports under IFRS.A total of 9 companies in the top 25 are from the UK’s strong sectorsof pharmaceuticals and aerospace but only 3 from the three sectorswhere the UK has a much lower presence than is found in the Global1250 (technology hardware, electronics and chemicals). There are 5foreign-owned companies in the top 25 compared to 7 in 2003.There are some very large percentage increases in R&D from Shire(49%), BT (39%), Tesco (35%), HSBC (34%), BAE Systems (31%) andRolls-Royce (25%). However, it is the large absolute increases anddecreases that have most effect on the percentage change in the UKtotal and these are listed in figure 9.4.2; all the changes are over£30m. There are 6 foreign-owned UK companies amongst the 17 infigure 9.4.2. Five of these 6 show decreases in R&D and the netchange for this group is a decrease of £455m, very significantcompared to the £4357m total R&D of the 245 foreign-ownedcompanies. The largest decrease has been made by Pfizer UK, whichwe understand has changed the basis on which R&D has previouslybeen recorded in their annual accounts. The reduction wouldreportedly have been smaller if the same basis had been used*.Ten of the 11 increases in figure 9.4.2 have been made by UK – ownedcompanies.The top UK-owned companies by R&D intensity are shown in figure9.4.3 and are selected from those R&D-active companies representedin the FTSE 350. This avoids the list being dominated by smallbiotechnology companies with substantial R&D and very small sales.The figure includes all 14 FTSE 350 companies with R&D intensityover 7%. Eleven of these are from the three sectors with highestaverage R&D intensity – pharmaceuticals, software and technologyhardware. Many of the eleven companies have increased R&D bylarge percentages over the previous year – four by over 50%, four by30-50% and two more by 10%.* Pfizer (UK) has indicated that, on the same basis as the previous year’s figure, the reduction in its R&Dwould have been around £43m, not the £247 reported here. Since these figures are not given in theaccounts they are not recorded in the Scoreboard – see Notes at the end of volume 2 for details of how theScoreboard is compiled.98 The 2006 R&D Scoreboard

Figure 9.4.1 The top 25 UK companies by R&D in the UK 800Rank Rank R&D R&D2006 Company 2003 £1bn Growth (1yr) Sector1. GlaxoSmithKline 1 £3.14bn 10% Pharmaceuticals2. AstraZeneca 2 £1.97bn -11% Pharmaceuticals3. BAE Systems 4 £1.45bn 31% Aerospace4. BT 7 £0.73bn 39% Fixed Line Telecoms5. Ford** 3 £0.69bn -10% Automotive6. Unilever 5 £0.65bn -8% Food Producers7. Rolls Royce 9 £0.35bn 25% Aerospace8. Pfizer** 6 £0.35bn -41% c Pharmaceuticals9. Airbus** _ a £0.34bn -1% Aerospace10. Royal Dutch Shell 10 £0.34bn 6% Oil & gas11. Royal Bank of Scotland _ b £0.33bn 9% Banks12. BP 11 £0.29bn 14% Oil & gas13. HSBC _ b £0.24bn 34% Banks14. Land Rover** _ a £0.23bn 2% Automotive15. Vodafone 15 £0.21bn -6% Mobile Telecoms16. Marconi (now Telent) 8 £0.19bn -6% Technology hardware17. Shire 18 £0.17bn 49% Pharmaceuticals18. ICI 16 £0.15bn 0% Chemicals19. Smiths 19 £0.14bn 5% Aerospace20. Eli Lilly** 21 £0.14bn -5% Pharmaceuticals21. Royal & Sun Alliance _ b £0.12bn 4% Non life insurance22. Reuters 13 £0.12bn -5% Media23. Tesco _ b £0.12bn 35% Food & drug retail24. Invensys 12 £0.11bn -11% Electronics25. Reed Elsevier _ b £0.1bn -7% Mediaa Not in 2003 Scoreboard: Airbus was 7th in 2004 and Land Rover 12th in 2005b This is the first time that R&D has been disclosed in these companies’ accounts** – Foreign owned UK companyc A substantial part of the reduction in Pfizer (UK) R&D is due to a change in the way R&D is reported in their latest accounts compared to previousyears; see notes in Volume 2 for further details.The 2006 R&D Scoreboard 99

Analysis of the 2006 R&D ScoreboardFigure 9.4.2 The largest increases and decreases in R&D in the UKIncreases in R&D over £30m Decreases in R&D by more than £30mChangeChangeCompany Sector in R&D Company Sector in R&D1. BAE Systems Aerospace +£339m 1. Pfizer** Pharmaceuticals -£247m†2. GlaxoSmithKline Pharmaceuticals +£297m 2. Astra Zeneca Pharmaceuticals -£247m3. BT Fixed line telecoms +£205m 3. Amersham** Health -£96m4. Rolls-Royce Aerospace +£70m 4. Ford** Automotive -£74m5. HSBC Banks +£62m 5. Unilever Food producers -£60m6. Shire Pharmaceuticals +£55m 6. Agilent** Electronics -£36m7. BP Oil & gas +£37m 7. Syngenta** Chemicals -£33m8. Old Mutual Life insurance +£35m Total -£793m9. Fujitsu Software & +£31mServices** computer services10. Tesco Food & drug retail +£30m11. ARM Technology +£30mhardwareTotal £1161m** – Foreign-owned UK company† – See notes in volume 2 for further details. The latest Pfizer (UK) accounts are prepared on a different basis to previous years and, Pfizer (UK) informus that, if they had been prepared on the same basis, the reduction would be some £43m rather than £247m (which is the figure taken from the twosets of accounts).100 The 2006 R&D Scoreboard

Figure 9.4.3 The top UK-owned companies by R&D intensity selected from the FTSE 350Change inCompany R&D Intensity R&D R&D (1yr) Sector1. SCI Entertainment 49.4% £10.1m 4% Software2. ARM 34.5% £80.3m 47% Technology Hardware3. Autonomy 22.8% £12.8m 54% Software4. Shire 18.0% £167.3m 49% Pharmaceuticals5. Renishaw 16.7% £29.3m 71% Electronics6. GlaxoSmithKline 14.5% £3,136m 10% Pharmaceuticals7. AstraZeneca 14.1% £1,968m -11% Pharmaceuticals8. Spirent 13.5% £62.8m -7% Technology Hardware9. BAE Systems 13.2% £1,449m 31% Aerospace10. Wolfson Microelectronics 12.9% £12.5m 31% Technology Hardware11. CSR 12.4% £35.2m 119% Technology Hardware12. Sage 10.5% £81.6m 10% Software13. Misys 9.1% £89.7m -1% Software14. Gyrus 7.9% £11.8m 78% HealthThe 2006 R&D Scoreboard 101

Analysis of the 2006 R&D ScoreboardFigure 9.5.1 The top 21 foreign-owned UK companies (all those with R&D over £40m)Change in R&D R&D Intensity UK/ParentUK Company R&D R&D (1yr) Intensity of Parent Intensity Ratio1. Ford £689m -10% 6.9% 4.5% 1.52 Pfizer £350m -41%* 35.8% 14.5% 2.53. Airbus £343m -1% 16.6% 6.9% (EADS) 2.44. Land Rover £232m +2% 6.8% 4.5% (Ford) 1.55. Eli Lilly £140m -5% 7.0% 20.7% 0.36. Nokia £102m -12% 7.6% 11.6% 0.77. Roche £101m +1% 17.2% 16.1% 1.18. NDS £97m +18% 29.9% † >19. Merck Sharp & Dohme £91m +45% 23.5% 12.1% 1.910. Amersham £86m -53% 5.9% 2.3% (GE) 2.611. Motorola £78m +13% 4.1% 10.0% 0.412. Syngenta £72m -31% 15.2% 10.1% 1.513. Automotive Holdings £70m +10% 2.6% 1.6% 1.614. Siemens £64m +2% 2.1% 6.8% 0.315. Novartis Pharmaceuticals £59m +4% 20% 15.0% 1.316. Nortel Networks £55m -7% 8.2% 17.6% 0.517. Philips Electronics £54m -14% 7,4% 7.7% 0.9618. Visteon £53m -8% 13.9% 4.7% 3.019. Goodrich Controls £52m +18% 14.6% 4.9% 3.020. Sony Computer £46m +20% 3.4% 7.7% 0.4Entertainment Europe21. Fujitsu Services £41m +59% 1.8% 5.0% 0.4† Parent (News Corp.) not in Scoreboard (no disclosure)* See notes in Volume 2 which explain that much of the decrease is due to a change in the way in which Pfizer (UK) report R&D compared to previousyears. According to information provided by Pfizer (but not in the accounts), the reduction would be of order 7% if the same basis was used for bothyears102 The 2006 R&D Scoreboard

9.5 Foreign-owned companies in the UK 800There are 245 foreign-owned UK companies in the UK 800 with£4.36bn of R&D in total but the top 21 companies account for 66% ofthis (£2.9bn) and the top 10 alone for 50%. The top 21 are listed infigure 9.5.1 together with their R&D intensity and that of theiroverseas parent. This shows that 13 of the 21 companies have ahigher R&D intensity than their overseas parents which means thatthe UK operation has been asked to carry out a larger proportion ofthe worldwide company R&D than would be indicated by UK sales asa proportion of worldwide sales. An even higher proportion – 8 out of10 – of the key top 10 companies have intensities higher than theiroverseas parents. An area of concern, however, is that 10 of the21 companies have reduced R&D over the previous year, five of themwhen UK sales have increased; of the others, three reduced R&D bymuch more than sales had decreased. On the positive side, of the11 companies that increased R&D, 7 increased it by 10% or more and5 of these by 18% or more.The two-thirds of foreign-owned UK company R&D carried out by thetop 20 companies in figure 9.5.1 means that their average R&Dintensity is higher than that of the whole group of 245 foreign-ownedcompanies. The average R&D intensity of the 245 is 2.4%. However,the intensity of the top 20 companies in figure 9.5.1 is 8% while thatof the 225 companies below the top 20 is only 1%.8 out of 10 ofthe largestforeign-ownedR&D investorshave UK R&Dintensitieslarger thantheir overseasparents.9.6 Middle-sized UK companiesThe analysis of middle-sized companies (sales £50m to £500m) for theGlobal 1250 in chapter 6 was biased towards companies with veryhigh R&D intensities at £50-100m sales. While companies with salesof £500m included all those with R&D intensity down to 3.8%, thosewith sales of £100m had intensity of at least 19% because of the £19mminimum R&D need to enter the Global 1250. The UK-ownedcompanies in the UK 800 have no such restriction since the minimumR&D for entry is £0.37m so all middle-sized companies with an R&Dintensity of at least 4% are included.The sectoral distribution of these middle-sized companies with R&Dintensity of 4% or more is shown in figure 9.6.1 for UK-ownedcompanies with foreign-owned ones given for comparison. The twodistributions are different with a much higher proportion of theforeign-owned companies in pharmaceuticals but a much lowerproportion in software, technology hardware, electronics and health(29% compared to 59% for the UK companies). The foreign-ownedcompanies also have a larger presence in automotive and chemicals.If the lower sales limit for the middle-sized category is lowered to£25m, then the numbers of companies increase as shown in the righthand columns of figure 9.6.1. The major change is the increase in thenumber of UK-owned companies in software, technology hardwareand health implying that there are significant numbers of R&Dintensivecompanies in these sectors in the sales range £25m to £50m.The 2006 R&D Scoreboard 103

Analysis of the 2006 R&D ScoreboardFigure 9.6.1 The sectoral distribution of middle-sized companies in the UK 800 with R&D intensity ofat least 4%Sales £50m-£500mSales £25m-££500mSector UK-Owned Foreign-Owned UK-Owned Foreign-OwnedSoftware 20 3 31 3Technology Hardware 11 4 17 5Pharmaceuticals 9 11 12 13Electronics 8 2 9 4Health 3 1 7 1Industrial Engineering 4 0 4 0Chemicals 3 4 5 5Food Producers 1 1 2 1Aerospace 2 2 2 2Automotive 0 3 0 3Others 9* 3† 15* 3†Totals 70 34 104 40* 9 sectors †3 sectorsMany moreUK-ownedcompanies with250-500employees haveR&D intensitiesabove 4%than do theirforeign-ownedcounterparts.The EU definition of an SME includes companies with up to 250employees. It is worth recording the number of companies with 251-500 employees and up to £500m sales in the two main R&D intensitycategories. These are shown in figure 9.6.2 where it can be seen thatthere are more than twice as many UK-owned companies in thiscategory. The most striking difference is the much larger percentageof the UK-owned companies with R&D intensity of 4% or more – 68%versus only 19% for the foreign-owned companies. This is consistentwith the larger percentage of UK-owned companies in figure 9.6.1 inhigh R&D intensity sectors.Figure 9.6.2 UK companies with sales

9.7 Successful UK-owned middle-sized companiesThe success of middle-sized companies can be studied in two ways;either companies that met the criteria for success in an earlierScoreboard can be followed forward or company performance historycan be examined for companies meeting success criteria in the 2006Scoreboard. A simple set of success criteria are:Middle-sized and R&D-intensiveSales £50m to £500m and R&D > 4% of sales Profitable and growingProfitability (operating profit as % sales) > 10%Sales growth at least 5% over previous yearFigure 9.7.1 shows examples of companies that met these criteria inthe 2001 Scoreboard (typically reporting the 2000/2001 financial year)and again in the 2006 Scoreboard. The increase in sales from the 2001to 2006 Scoreboards should be seen in the light of the generalworsening of business conditions that occurred from 2000 to 2003,particularly for technology companies. Success is not a destinationbut a journey and the seven companies listed in figure 9.7.1 weresuccessful in 2001, survived the period of more difficult conditionsand are showing characteristics of success in 2006 as significantlylarger companies, two of them having moved beyond the upper saleslimit of the middle-sized category. A number of other companiesmeeting the criteria in 2001 were the subject of takeovers in theintervening years and are no longer in the Scoreboard.It was mentioned in chapter 7 that several UK companies (includingsome listed in figure 9.7.1) as well as major US firms had increasedR&D as sales decreased during the more difficult business conditionsthat obtained after 2000 since innovation offers the best prospect ofgrowth in such circumstances. These UK companies include Royal Blue,Renishaw (who have provided a commentary for the 2006 Scoreboard)and Autonomy, (the latter two are both illustrated in figure 7.2.3b).A number ofUK companiesshowingsuccess in the2001 Scoreboardalso showstrong salesgrowth andhigh profitabilityin the 2006Scoreboard.Figure 9.7.1 Current characteristics of firms meeting success criteria in 2001 and 2006 R&D scoreboards2006 R&D Scoreboard 2001 Scoreboard2yrSales† R&DSector Company Sales Growth Intensity Profitability Sales ProfitabilityAerospace Meggitt £616m 53% 5.00% 16.60% £386m 18.80%& Defence Ultra £342m 20% 5.10% 14.00% £227m 12.20%ElectronicsElectronics Renishaw £176m 38% 16.70% 20.20% £106m 26.60%& Electrical Domino £192m 17% 4.30% 13.30% £150m 13.00%Printing SciencesSoftware Royal Blue £74m 32% 14.20% 13.00% £57m 12.20%& Computer Sage £777m 39% 10.50% 27.20% £412m 27.90%ServicesTechnology ARM £232m 81% 34.50% 15.10% £101m 35.10%Hardware† In some cases there is a contribution to sales growth from acquisitionsThe 2006 R&D Scoreboard 105

Analysis of the 2006 R&D ScoreboardFigure 9.7.2 Examples of fast growing, profitable R&D-intensive UK-owned companies2006 ScoreboardR&D Sales Sales SalesExportsfrom MarketSector Company Profitability Intensity £m 2004/05 2003/04 Region CapTechnology ARM 15.10% 34.50% 232 153 128 86% £1586mHardware CSR 23.00% 12.40% 283 147 39 89% £1462mWolfson 22.80% 12.90% 97 69 44 n/a £534mMicroelectronicsSoftware & Autonomy 10.00% 22.80% 56 38 33 62% £759mComputer AVEVA* 17.10% 21.20% 66 58 38 53% £231mServicesOil Equipment Sondex 18.80% 8.30% 51 32 18 85% £174m& ServicesHousehold Dyson 17.50% 4.60% 426 277 235 48% n/lJames† In some cases there is a contribution to sales growth from acquisitions*AVEVA provided a commentary for the 2005 Scoreboard.Several middlesizedUKcompanies inthe 2006Scoreboardshow high R&Dintensity fortheir sector,profitability of10% to 23%and salesgrowth of 70%or more over2 years.Turning now to the 2006 Scoreboard, over 20 companies meet theabove criteria with more than half in the three R&D-intensive sectors.Two of these companies have written commentaries for thisScoreboard exploring what they do and the key factors behind theirR&D-led profitable growth. Just as several high growth companieswere identified in the Global 1250, so there are a number in the UK800 and examples are listed in figure 9.7.2. The seven companies infigure 9.7.2 meet the following criteria:Sales in most recent year in middle-sized range (£50m to £500m).Profitability (operating profit as % sales) of 10% or more for mostrecent year.R&D intensity (R&D as % sales) of 4% or more for most recent year. Sales growth of 70% to over 600% over the last 2 years (threeof the companies have growth over 100%). Some are above the2-year growth for the Global 1250 high growth companies.Five of the seven companies are in the software and technologyhardware sectors and one of the latter (CSR) appeared in the Global1250 table (figure 6.2.2). Given the wider range of company sizes inthe UK 800, companies have been included with sales in their mostrecent financial year down to £50m whereas the global list wasrestricted to companies with sales of nearly £200m. Figure 9.7.2shows the high percentage of sales outside Europe achieved by theUK high growth companies; in three cases over 80% of sales aremade outside Europe and all seven have almost 50% or more of salesoutside Europe. This supports the contention that fast growingtechnology companies are likely to be more successful if they makesales to demanding overseas markets at an early stage in theirdevelopment. Success with overseas sales in fast movingtechnologies will also help to establish the company as a major playerin its global niche and make it more difficult for competitors toestablish a commanding market position. This is particularly106 The 2006 R&D Scoreboard

important in an area such as technology hardware where the UK andeven European markets are small in world terms.9.8 The intensity distribution of UK-owned companiesThe last seven years have seen a significant increase in the numbersof UK-owned middle-sized companies in high R&D intensity sectorssuch as software and technology hardware. It is therefore of interestto compare the intensity distributions of US and UK middle-sizedcompanies since the US has by far the most R&D-intensive group ofmiddle-sized companies of any major country (see figure 6.1.1).Figure 9.8.1 shows a comparison of the US and UK distributions of R&Dintensity for companies with sales of £29m to £500m and R&D of over£2.9m; the lower limits are set by the minimum sales and R&D limits(in dollars) required for US companies to enter the US R&D Scoreboard(reference 8). The proportion of companies in each case that are inelectronics & electrical, health, pharmaceuticals, software & technologyhardware is 54% for the UK group and 79% for the US group ofcompanies. The difference is partly due to the higher US presence inareas such as scientific & medical instruments and technology hardware.Comparing figure 9.8.1 with figure 5.3.1, it can be seen that thesmaller proportion of UK companies in the three high R&D intensitysectors is reflected in the intensity distribution above 10% althoughthe difference is much smaller in figure 9.8.1 and that UK companiesare level pegging with the USA in the 6-10% band.The proportionof UK companieswith sales of£29m to £500mand high R&Dintensity (over10%) has beenincreasingover the lastfew years.Figure 9.8.1 Intensity distributions for US and UK companies with sales £29m to £500mand R&D over £2.9m%40Proportion of Companies in Intensity Band30201000-2% 2-4% 4-6% 6-10% 10-20% >20%R&D Intensity BandUSAUKThe 2006 R&D Scoreboard 107

Analysis of the 2006 R&D ScoreboardConclusionThe UK 800 shows a substantial increase in R&D over that recordedin 2005 (£19.2m vs £17m) and this is due both to IFRS leading to thedisclosure of R&D in sectors where disclosure has been rare in thepast and to the many UK companies that have grown their R&D overthe past year. Pharmecuticals and aerospace remain the UK’s twolargest R&D sectors and software has the largest number ofcompanies of any sector in the UK 800. Aerospace shows a 21%increase in R&D over the previous year and 8 of the top 10 softwarecompanies show double digit increases. There are 88 more UKcompanies with R&D over £0.5m than in 2005 and an increasingproportion of UK middle-sized companies are in high R&D intensitysectors. Eight out of the top ten foreign-owned UK companies showhigher R&D intensity than their overseas parents, confirming the UK’sattractions as a location for R&D. As a group, the foreign-ownedcompanies show a reduction in R&D but this mainly reflectsreductions at a small number of larger companies. The foreign-ownedR&D within the UK 800 totals £4.4bn, a little under one quarter of thetotal.108 The 2006 R&D Scoreboard

References1. Value Added Scoreboard 2006†, DTI & Company Reporting Ltd,July 2006 (Top 700 European and top 800 UK companies by VA)2. D.Henry & M.L.Sirower, Business Week, October 2003 pp 60-703. M.L.Sirower “The Synergy Trap”, The Free Press, 19974. B.Harding in the 2002 DTI R&D Scoreboard, October 20025. C.D.Ellis “Capital”, John Wiley, 2004 pp 123-46. R&D Scoreboard 1992† , DTI & Company Reporting Ltd, July 1992(Top 200 International and top 331 UK companies by R&D).7. R&D Scoreboard 2005†, DTI & Company Reporting Ltd (The top1000 International and top 750 UK companies by R&D) and the2003 Scoreboard (Top 700 International & top 700 UK companies).8. The US Industrial R&D Scoreboard 2005, Industrial ResearchInstitute, November 2005 (Top 1000 US companies by R&D).9. The EU Industrial R&D Investment Scoreboard 2005, EuropeanCommission, December 2005 (Top 700 EU and top 700 non – EUcompanies by R&D.10. W.N.Leonard, J. of Political Economy 139, 1971 pp 232-56.11. G.K.Morbey, J. Prod. Innov. Mngt. 5, 1988 pp 191-200.12. B.Branch, J. Economics & Business 252, 1973, pp 107-111.13. M.S.Brenner & B.M.Rushton, Research Technology Mngt,March/April 1989 pp 8-15.14. R.F.C.Dobbs, R.D.Jesudason & F.H.Malige, McKinsey on Finance.Winter 2002 pp 9-14.15. R.N.Foster, Research Technology Mngt. Nov/Dec 2003, pp 36-43.16. T.Jones of Innovaro Ltd kindly provided the data on numbers ofUS patents by company that appears in Volume 2 of theScoreboard.† Copies of past DTI R&D and VA Scoreboards are available free ofcharge from the DTI publications orderline on:Tel: 0845 015 0010Fax: 0845 015 0020Email: publications@dti.gsi.gov.ukThe 2006 R&D Scoreboard 109

Analysis of the 2006 R&D ScoreboardAppendix 1Assignment of Global 1250 sectors to the five sector groupsGroup 1: Pharmaceuticals & Health(R&D intensity 6.4% to 14.9%)Pharmaceuticals & Biotechnology (14.9%)* – 152 companiesHealth Care Equipment & Services (6.4%) – 53 companiesGroup 2: Electronics & IT (R&D intensity 4.8% to 10.4%)Electronics & Electrical (4.8%) – 102 companiesGeneral Financial (6.7%) – 5 companiesLeisure Goods (7.0%) – 29 companiesSoftware & Computer Services (10.4%) – 111 companiesTechnology Hardware (8.2%) – 225 companiesGroup 3: Engineering & Chemicals(R&D intensity 2.7% to 4.6%)Aerospace & Defence (4.6%) – 34 companiesAutomobiles & Parts (4.2%) – 78 companiesChemicals (3.2%) – 93 companiesIndustrial Engineering (2.7%) – 70 companiesSupport Services (3.0%) – 12 companiesTravel & Leisure (3.5%) – 9 companiesGroup 4: Low intensity sectors(R&D intensity 1.4% to 2.4%)Beverages (1.4%) – 2 companiesFixed Line Telecoms (1.7%) – 16 companiesFood Producers (1.7%) – 23 companiesGeneral Industrials (2.4%) – 37 companiesGeneral Retail (2.2%) – 6 companiesHousehold Goods (2.3%) – 25 companiesMedia (1.8%) – 10 companiesNon-Life Insurance (1.9%) – 1 companyOil Equipment, Services & Distribution (1.8%) – 10 companiesPersonal Goods (2.2%) – 15 companies110 The 2006 R&D Scoreboard

Group 5: Very low intensity sectors(R&D intensity of 1% or below)Banks (0.9%) – 9 companiesConstruction & Materials (0.9%) – 20 companiesElectricity (1.0%) – 15 companiesFood & Drug Retailers (0.4%) – 6 companiesForestry & Paper (0.5%) – 9 companiesGas, Water & Multi-Utilities (0.4%) – 8 companiesIndustrial Metals (0.8%) – 25 companiesIndustrial Transport (0.5%) – 8 companiesLife Insurance (0.3%) – 2 companiesMining (0.8%) – 2 companiesMobile Telecoms (0.8%) – 7 companiesOil & Gas Producers (0.3%) – 17 companiesTobacco (0.9%) – 4 companies*The figure in brackets is the average R&D intensity for the sector.The 2006 R&D Scoreboard 111

Analysis of the 2006 R&D ScoreboardAppendix 2 – Sector Group Analysis ofR&D IntensityChapter 5 introduced the five sector groups (see appendix 1 forcomponent sectors) and the way in which the relative intensities andsizes of these groups of sectors determine the average R&D intensityfor a large group of companies from any one country. This appendixshows how the overall average R&D intensity is calculated from theR&D and sales of the 5 groups.The overall average R&D intensity is I AV and can be expressed as:where R 1 is the R&D of group 1 (and R 2 for group 2 etc) and S 1 is thesales for group 1 (and S 2 for group 2 etc).Thuswhere S T is the total sales S T = S 1 + S 2 + S 3 + S 4 + S 5and henceWhere I 1 = R&D intensity for group 1 etc.This shows how the contribution of each group to the overall R&Dintensity is determined by two different factors – the group intensityand the ratio of group sales to total sales.A country whose group of companies has a high average R&Dintensity is therefore likely to be one which satisfies the conditions:I 1 , I 2 and I 3 are large (since these groups have the higherintensities) S 1 , S 2 and S 3 are of reasonable size compared to S T (i.e. S 4 and S 5are not too large). Germany is an example where S 3 is large and S Trelatively small.On the other hand, a country is likely to have a low average intensity if:I 1 , I 2 and I 3 are small (or two of them are small).S 1 , S 2 and S 3 are small (or two of them are small).S T is large because S 4 and S 5 are large . The UK is an examplewhere S 2 and S 3 are small and S T large (because S 5 is large).There is a mix of two or three of these reasons. The UK is againan example where both the second and third apply (but not the first).112 The 2006 R&D Scoreboard

Figure A.2.1 Sector group R&D intensities and sales weightings for companies from the 5 major countriesUSA Japan Germany France UKGroup 1 13.72% 10.75% 10.88% 14.02% 14.14%0.086 0.026 0.045 0.042 0.054Group 2 9.29% 5.60% 7.97% 6.89% 8.80%0.2 0.31 0.11 0.07 0.016Group 3 3.19% 3.96% 4.44% 4.58% 5.53%0.29 0.34 0.56 0.21 0.063Group 4 2.29% 2.20% 1.55% 1.78% 2.17%0.15 0.14 0.11 0.18 0.13Group 5 0.32% 0.87% 0.47% 0.59% 0.37%0.27 0.19 0.18 0.5 0.74Figure A.2.2 Sector group contributions to the R&D intensity for 5 countriesContributions to Overall R&D Intensity from the 5 Sector Groups Total R&DCountry Group 1 Group 2 Group 3 Group 4 Group 5 IntensityUSA 1.18 + 1.86 + 0.93 + 0.34 + 0.09 = 4.40%Japan 0.22 + 1.74 + 1.35 + 0.31 + 0.17 = 3.80%Germany 0.49 + 0.88 + 2.49 + 0.17 + 0.08 = 4.10%France 0.59 + 0.48 + 0.96 + 0.32 + 0.29 = 2.60%UK 0.76 + 0.14 + 0.35 + 0.28 + 0.27 = 1.80%The 2006 R&D Scoreboard 113

Analysis of the 2006 R&D ScoreboardTo understand how the average R&D intensity for a country isdetermined by the characteristics of its sector groups we firstcalculate the individual group R&D intensities and the salesweightings which are given in figures A.2.1 for each country (figuresare rounded for clarity) and these are combined in figure A.2.2 toshow the contributions of the five groups to the overall intensity forthe subset of Global 1250 companies from each country.These figures can be used to explain the differences between pairs ofcountries and also to examine the consequences of ‘what ifs’. Forexample, to demonstrate how dependent average R&D intensity canbe on sector mix, a ‘what if’ UK average R&D intensity was calculatedusing the actual total UK R&D and the actual UK R&D intensitiesobserved for each sector group (see figure A.2.1) but with the USpattern for the distribution of the UK total R&D between the fivesector groups. The result is that the average UK intensity rises from1.8% to 5.0%, above the US value of 4.4%. This occurs since therecalculation effectively increases the proportion of UK R&D inelectronics & IT and reduces the sales of group 5 (oil & gas, banks etc.).This comparison illustrates that it is sector mix that determines theUK companies’ average R&D intensity, not their R&D investmentrelative to competitors in their sector group.114 The 2006 R&D Scoreboard

Ranking of the top 800 UK companies by R&Dinvestment within industry sectorsRanking of the top 1250 global companies byR&D investment within industry sectors1 Aerospace & defence 1162 Automobiles & parts 1163 Banks 1164 Beverages 1165 Chemicals 1166 Construction & building materials 1177 Electricity 1178 Electronic & electrical equipment 1179 Equity investment instruments 11810 Fixed line telecommunications 11811 Food and drug retailers 11812 Food producers 11813 Forestry & paper 11814 Gas, water & multiutilities 11815 General financial 11816 General industrials 11817 General retailers 11918 Health care equipment & services 11919 Household goods 12020 Industrial engineering 12021 Industrial metals 12022 Industrial transportation 12023 Leisure goods 12024 Life insurance 12025 Media 12026 Mining 12027 Mobile telecommunications 12128 Nonequity investment instruments 12129 Nonlife insurance 12130 Oil & gas producers 12131 Oil equipment, services & distribution 12132 Personal goods 12133 Pharmaceuticals & biotechnology 12134 Real estate 12235 Software & computer services 12236 Support services 12437 Technology hardware & equipment 12438 Tobacco 12539 Transport 1251 Aerospace & defence 1262 Automobiles & parts 1263 Banks 1264 Beverages 1265 Chemicals 1276 Construction & building materials 1287 Electricity 1288 Electronic & electrical equipment 1289 Equity investment instruments 12910 Fixed line telecommunications 12911 Food and drug retailers 13012 Food producers 13013 Forestry & paper 13014 Gas, water & multiutilities 13015 General financial 13016 General industrials 13017 General retailers 13018 Health care equipment & services 13019 Household goods 13120 Industrial engineering 13221 Industrial metals 13222 Industrial transportation 13223 Leisure goods 13224 Life insurance 13325 Media 13326 Mining 13327 Mobile telecommunications 13328 Nonequity investment instruments 13329 Nonlife insurance 13330 Oil & gas producers 13331 Oil equipment, services & distribution 13432 Personal goods 13433 Pharmaceuticals & biotechnology 13434 Real estate 13635 Software & computer services 13636 Support services 13637 Technology hardware & equipment 13738 Tobacco 13939 Transport 139Accessing the full data using the website 140The seven items of data givenhere for each company areextracted from the full data set inVolume 2 of this Scoreboardwhere 30 or more items of dataare given for each company and upto 9 more for some companies.The 2006 R&D Scoreboard 115

Ranking of the top 800 UK companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %All companies composite 19228.66 3.9 1.7 11.3 1124076 n/a n/a1 Aerospace & defence 2521.95 21.3 8.4 8.9 29945 n/a n/aBAE Systems 1449.00 31 13.2 8.1 11019 11586 8Rolls-Royce 352.00 25 5.3 13.3 6603 7728 27Airbus ** 343.00 -1 16.6 -0.1 2068 n/l n/lSmiths 143.60 5 4.8 10.3 3017 5094 1Goodrich Controls ** 52.20 18 14.6 0.3 357 n/l n/lCobham 42.90 -12 3.9 13.1 1090 1818 18Meggitt 30.77 11 5.0 16.6 616 1254 -7Messier-Dowty ** 21.68 32 11.5 7.9 188 n/l n/lUltra Electronics 17.29 12 5.1 14.0 342 678 19Short Brothers ** 15.52 104 3.3 6.7 472 n/l n/lAMS(now BAE Systems Integrated System) ** 14.49 54 3.0 5.2 475 n/l n/lWestland Helicopters ** 12.57 4 1.4 5.7 890 n/l n/lMBDA ** 7.20 10 0.8 2.4 917 n/l n/lHampson Industries 4.83 135 4.6 3.5 104 135 105Martin-Baker (Engineering) 4.43 23 3.8 14.2 115 n/l n/lChemring 3.75 -38 2.8 13.0 132 427 167Thales Optronics ** 1.51 43 1.4 11.1 111 n/l n/lTRL Electronics 1.47 96 6.6 -5.2 22 n/l n/lMcKechnie Aerospace * 1.10 10 0.6 4.3 196 n/l n/lVT 1.06 27 0.1 8.7 711 859 42General Dynamics ** 0.93 28 0.2 8.2 469 n/l n/lCastledon 0.65 14 2.1 5.9 30 n/l n/l2 Automobiles & parts 1248.97 -7.1 4.6 -0.7 27400 n/l n/lFord ** 689.00 -10 6.9 -4.2 9940 n/l n/lLand Rover ** 231.80 2 6.8 -3.1 3404 n/l n/lGKN 88.00 -1 2.4 2.9 3648 1982 -8Automotive Holdings ** 70.10 10 2.6 4.5 2654 n/l n/lVisteon ** 53.00 -8 13.9 -15.6 381 n/l n/lTI Automotive ** 18.50 -11 1.2 3.5 1533 n/l n/lDelphi Diesel Systems ** 17.12 -48 5.8 1.6 296 n/l n/lLEAR ** 11.64 -34 8.0 1.0 145 n/l n/lDana Investments ** 10.57 -10 3.9 2.3 269 n/l n/lAvon Rubber 9.14 31 3.8 -0.8 240 54 -10Wagon 8.80 -19 2.1 5.1 417 250 117Calsonic Kansei Europe ** 7.19 -37 3.4 -12.9 214 n/l n/lTorotrak 5.21 2 253.7 -253.0 2 34 -49Pirelli ** 5.01 11 0.5 0.8 919 n/l n/lLotus ** 3.92 49 2.4 -2.3 162 n/l n/lSumitomo Electric Wiring Systems ** 3.38 30 1.4 5.6 235 n/l n/lZytek * 3.28 14 40.3 0.1 8 n/l n/lBMW Manufacturing ** 3.21 -15 0.2 3.6 1744 n/l n/lCooper Tyre & Rubber ** 2.91 -9 1.2 6.4 236 n/l n/lDenso Manufacturing ** 2.61 -26 1.3 3.4 202 n/l n/lAntonov 2.20 76 n/a n/a 0 17 -43Michelin Tyre ** 1.34 -9 0.2 1.7 663 n/l n/lAlbion Automotive ** 0.55 -34 0.8 3.5 71 n/l n/lDunlop Aircraft Tyres ** 0.50 -12 3.3 0.9 15 n/l n/l3 Banks 705.10 20.3 0.9 33.1 82191 229366 9.1Royal Bank of Scotland 329.00 9 1.3 31.0 25902 55422 12HSBC 244.64 34 0.7 35.2 33572 109973 7Barclays 68.00 45 0.4 30.5 17333 41362 11Standard Chartered 51.26 6 1.3 39.1 3996 18039 12Alliance & Leicester 12.20 144 0.9 39.4 1387 4570 n/a4 Beverages 29.01 40.6 0.1 16.9 25090 n/a n/aDiageo 16.00 45 0.2 21.2 9036 25802 12**, †, * The meaning of these indicators and of the use of italics together with definitionsof terms can be found in the notes at the back of Volume 2 of the Scoreboard.SABMiller 4.66 14 0.1 17.9 8916 15639 n/aGolden Acquisition ** 3.86 150 0.2 3.5 1632 n/l n/lTATA TEA ** 1.30 17 0.7 18.7 193 n/l n/lBritannia Soft Drinks * 1.15 -17 0.2 9.5 698 n/l n/lInbev ** 1.05 99 0.1 -1.6 1385 n/l n/lAllied Domecq (now part of Pernod Ricard, France) 1.00 0 -999.9 0 76 -38Trelleborg Sealing Solutions ** 0.52 -13 0.5 0.2 98 n/l n/lBrunner Mond 0.50 25 0.3 2.4 160 n/l n/lDynea Aycliffe ** 0.48 19 3.3 -0.1 15 n/l n/lAkcros Chemicals ** 0.44 -29 1.5 -999.9 0 n/l n/lScottish and Southern Energy 1.40 133

Ranking of the top 800 UK companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %Xaar 5.48 43 12.8 21.0 43 103 -40Dialight 5.34 -22 5.6 8.7 95 77 -35e2v Technologies 5.28 -3 5.3 9.2 101 184 53MTL Instruments 4.73 17 6.4 10.0 74 81 16Chloride 4.53 -12 2.5 9.4 182 281 41ABB ** 4.26 24 1.0 0.1 432 n/l n/lAVX ** 3.49 -7 1.1 0.3 327 n/l n/lDigital Appliance Controls ** 3.35 0 0.8 5.4 404 n/l n/lLinx Printing Technologies(now part of Danaher, USA) ** 3.24 4 6.2 10.7 52 n/l n/lVideojet Technologies ** 3.22 791 11.4 43.2 28 n/l n/lSPI Lasers 2.96 1 85.4 -257.8 3 41 n/aXP Power 2.60 13 3.7 12.2 70 80 -6Cooper Industries ** 2.58 -4 1.7 4.1 153 n/l n/lCA-MC Acquisition ** 2.48 12 7.5 6.4 33 n/l n/lCeres Power 2.32 46 >999.9 >-999.9 0 156 n/aAlstom Controls ** 1.89 -33 3.1 9.2 61 n/l n/lHoneywell Analytics ** 1.88 19 9.7 7.8 19 n/l n/lVolex 1.79 -2 0.7 -1.3 250 57 -7Tritrax 1.75 19 3.3 6.8 53 n/l n/lBlock Shield † 1.52 770 130.2 -253.6 1 45 n/aChalkfree † 1.52 n/a 1.9 1.7 80 n/l n/lSchneider Electric ** 1.36 -6 0.5 5.0 253 n/l n/lMinorplanet Systems 1.30 -48 5.9 80.9 22 11 175NGC ** 1.10 -11 1.0 0.1 111 n/l n/lCoherent ** 1.09 -25 7.1 -7.8 15 n/l n/lPolaron 1.02 >999 5.4 1.9 19 10 n/aSmart Holograms 0.96 372 559.9 -655.2 0 n/l n/lMicroEmissive Displays 0.94 -36 >999.9 >-999.9 0 6 -63ITM Power 0.93 61 n/a n/a 0 169 99COE 0.90 -5 16.8 -24.1 5 1 -50Technolog 0.87 16 9.6 6.3 9 n/l n/lID Data 0.86 n/a 4.4 -20.5 19 7 n/aDatong Electronics 0.84 31 13.0 23.9 6 12 n/aFeedback 0.78 -48 8.5 -7.1 9 1 0Dewhurst 0.73 -6 2.4 11.0 30 12 20ASTEC ** 0.68 126 0.2 5.5 281 n/l n/lDeutsch ** 0.67 27 2.7 17.4 25 n/l n/lInnovision Research & Technology 0.63 63 38.1 -200.1 2 20 -67Servocell 0.59 -26 281.8 -701.4 0 24 n/aGet 0.49 35 0.6 5.6 81 23 -8Pelikon 0.48 14 47.5 -348.2 1 n/l n/lElektron 0.40 1 1.8 7.9 22 11 -8PipeHawk 0.40 0 28.9 -24.7 1 5 67Appian Technology 0.39 13 13.5 -34.4 3 14 1809 Equity investment instruments n/a n/a n/a n/a n/a n/a n/aNo companies with sufficient R&Dfor inclusion n/a n/a n/a n/a n/a n/a n/a10 Fixed line telecommunications 730.60 39 3.5 12.0 20897 22520 8BT 727.00 39 3.7 12.9 19514 20490 10Jazztel 2.09 34 1.3 -66.1 164 393 -46Patientline 0.82 -33 1.5 -31.6 55 10 -77Eircom 0.69 0 0.1 11.0 1163 1627 n/a11 Food & drug retailers 160.64 44.2 0.3 5.3 48895 n/a n/aTesco 115.00 35 0.3 5.7 39588 27595 n/aEisai ** 34.32 124 50.7 0.2 68 n/l n/lAlliance UniChem(now part of Alliance Boots) 10.00 0 0.1 3.3 9171 n/l n/lYamanouchi Pharma(now Astellas Pharma) ** 0.73 16 2.1 5.9 35 n/l n/lFujisawa ** 0.60 27 1.8 -9.6 34 n/l n/l12 Food producers 858.19 -4.5 1.3 9.9 65416 n/a n/aUnilever 654.80 -8 2.4 13.2 27258 37171 -3Cadbury Schweppes 58.00 -8 0.8 15.4 7157 11177 0Effem (aka Mars) ** 26.32 31 1.3 9.0 2080 n/l n/lTate & Lyle 21.00 11 0.6 2.0 3720 3339 48Heinz ** 11.00 -8 0.6 13.5 1717 n/l n/lWittington Investments 11.00 38 0.2 7.5 5689 n/l n/lAviagen ** 10.87 -7 6.3 17.7 173 n/l n/lUnited Biscuits ** 10.80 74 0.9 7.3 1267 n/l n/lSygen International (now part of Genus) 6.80 -6 5.1 4.8 134 n/l n/lMcCormick ** 5.76 28 1.3 3.6 449 n/l n/lKerry Ingredients ** 5.28 4 2.3 7.4 230 n/l n/lBunge ** 4.82 144 0.1 -0.7 5572 n/l n/lDevro 4.15 3 2.7 18.1 153 187 -7Kraft Foods ** 3.48 -14 0.5 4.6 669 n/l n/lRHM 3.30 -3 0.2 10.0 1642 973 n/aBernard Matthews 2.60 18 0.6 8.8 459 n/l n/lInter Link Foods 2.53 163 2.6 5.9 98 52 -35Cargill ** 2.45 130 0.2 4.5 1571 n/l n/lKerry Foods ** 2.23 51 0.5 7.2 439 n/l n/lDairy Crest 2.20 5 0.2 3.5 1355 671 12McCain Foods ** 1.77 15 0.6 12.0 303 n/l n/lPremier Foods 1.50 67 0.2 11.4 867 783 0Latimer (aka Weetabix) ** † 1.13 -18 0.4 10.5 291 n/l n/lHazlewood Grocery ** 1.10 19 0.7 6.0 161 n/l n/lKellogg ** 1.10 >999 0.1 10.7 772 n/l n/lGeest (now part of Bakkavor, Iceland) 1.00 67 0.1 4.4 831 n/l n/lMarine Harvest ** 0.82 29 1.1 -11.3 72 n/l n/lUnited Dairy Farmers 0.39 155 0.1 0.7 288 n/l n/l13 Forestry & paper 1.47 13.8 1.1 -17.7 137 n/a n/aJames Cropper 0.97 22 1.5 0.3 64 13 -13Arjo Wiggins ** 0.50 0 0.7 -33.6 73 n/l n/l14 Gas, water & multiutilities 31.88 -6.9 0.1 24.1 24931 n/a n/aNational Grid 7.00 -22 0.1 26.4 9361 1660 -88RWE Thames Water ** 5.80 35 0.4 28.4 1549 n/l n/lRWE Npower ** 4.00 -20 0.9 1.6 426 n/l n/lSevern Trent 3.90 5 0.2 20.5 2353 4459 34EDF Energy ** 3.80 23 0.1 14.3 4575 n/l n/lNorthumbrian Water 2.30 -54 0.4 38.1 620 1347 13United Utilities 1.90 138 0.1 27.6 2562 5735 4AWG 1.10 -15 0.1 19.9 1889 1812 36Kelda 0.90 0 0.1 38.0 884 2886 11Veolia Water ** 0.68 5 0.3 28.4 212 n/l n/lCE Electric ** 0.50 0 0.1 48.9 501 n/l n/l15 General financial 25.43 30.8 0.9 23.1 2948 n/l n/lNationwide 9.50 6 0.6 33.8 1656 n/l n/lITI Scotland 4.34 >999 >999.9 0.0 0 n/l n/lCarmelite Capital 2.50 -19 0.8 -23.5 329 n/l n/lKensington 2.20 -19 1.4 34.7 156 454 38Certegy ** 2.08 53 3.2 14.0 65 n/l n/lBayer Agriculture ** 1.69 64 20.8 79.2 8 n/l n/lADVFN 1.54 38 46.6 -36.4 3 16 0Cattles 1.20 194 0.2 17.1 672 1099 n/aMoneysupermarket.com Financial 0.38 0 0.6 26.7 60 n/l n/l16 General industrials 175.89 6.8 1.1 6.9 16433 n/a n/aTomkins 46.70 -9 1.5 9.0 3182 2345 8Seton House 26.70 38 5.8 6.1 459 n/l n/lCookson 22.30 -8 1.4 7.0 1635 1016 57Rexam 21.00 62 0.6 13.0 3237 2944 2Crown ** 17.20 -9 2.6 2.6 669 n/l n/lKidde ** 17.00 -9 1.7 10.8 987 n/l n/lLinde Material Handling ** 4.10 -2 1.6 1.6 252 n/l n/lBarloworld ** 3.64 113 0.2 4.6 1526 n/l n/lTextron ** 3.24 559 0.8 -1.5 418 n/l n/lDomnick Hunter(now part of Parker Hannifin, USA) 3.12 6 2.0 8.7 158 n/l n/lTrelleborg Automotive ** 2.15 -3 3.5 -2.8 61 n/l n/lNIC ** 1.87 119 1.8 -19.5 105 n/l n/lHarsco Investment ** 1.28 -21 0.2 7.4 643 n/l n/lDS Smith 1.10 38 0.1 1.3 1653 572 -8Chesapeake ** 1.05 12 0.2 2.0 549 n/l n/l600 Group 1.02 3 1.5 1.6 67 29 -17BWI ** 0.86 -5 2.7 -1.4 31 n/l n/lGartland Whalley and Barker 0.78 n/a 0.5 5.9 149 n/l n/lAlcan ** 0.40 33 0.1 0.0 509 n/l n/lUGG ** 0.38 -21 0.3 4.5 144 n/l n/l17 General retailers 94.35 8.8 0.4 5.3 25116 n/l n/llastminute.com(now part of Sabre, USA) ** 23.62 8 5.4 -16.9 440 n/l n/lGUS 22.00 47 0.3 10.3 7915 8745 -6Boots (now Alliance Boots) 16.10 -29 0.3 5.6 5471 7528 70Photo-Me 9.44 33 4.1 13.2 230 382 -15John Lewis 5.40 -7 0.1 3.2 5149 n/l n/lDaimlerChrysler ** 5.04 >999 0.1 1.5 3387 n/l n/lBody Shop International(now part of L'Oreal) 4.60 -13 1.1 8.9 419 n/l n/lBeesail (aka Chubb) ** 4.50 -11 0.3 -0.7 1564 n/l n/lQXL ricardo 0.84 35 7.5 14.5 11 176 129Abcam 0.74 83 6.1 24.1 12 92 n/aAdeptra 0.68 -54 26.0 -120.5 3 n/l n/lFreeplay Energy 0.53 12 29.4 -143.3 2 16 60Naiglan 0.46 -9 0.2 0.3 277 n/l n/lRedbridge 0.40 27 0.2 0.9 236 n/l n/l18 Health care equipment & services 256.55 -21.6 5.1 7.3 5052 6170 n/lAmersham (now GE Healthcare) ** † 85.71 -53 5.9 -0.4 1462 n/l n/lSmith & Nephew 67.00 1 4.8 18.6 1407 4209 -15Lifescan Scotland ** 23.49 29 17.0 27.1 138 n/l n/lGyrus 11.84 78 7.9 6.9 150 491 8Biocompatibles International 7.68 42 225.9 -331.4 3 65 -31Huntleigh Technology 6.33 16 3.2 11.5 200 195 3Abbott ** 5.61 16 0.8 8.4 704 n/l n/lCardinal Health ** 4.89 30 1.4 0.9 343 n/l n/lSolexa 3.97 15 >999.9 >-999.9 0 n/l n/lMicrosulis 3.94 184 106.1 -371.4 4 n/l n/lWhatman 3.20 100 2.7 19.8 117 398 18Bespak 3.18 -10 4.0 6.1 79 175 21Lombard Medical Technologies 3.16 76 >999.9 >-999.9 0 56 n/aMedisys 2.54 -9 8.4 -47.8 30 16 -33Ferraris 2.43 13 4.4 -9.0 55 20 -56Corin 2.05 37 7.9 13.7 26 93 -43Optos 1.59 11 5.6 2.9 28 127 n/aZimmer ** 1.58 -4 1.3 13.8 124 n/l n/lSunrise Medical ** † 1.53 -21 3.3 1.3 47 n/l n/lBiotrace International 1.36 18 4.6 8.9 29 35 3Zi Medical 1.31 137 >999.9 >-999.9 0 9 n/aTissue Science Laboratories 1.30 -8 12.8 -26.0 10 37 -16Genetix 1.29 20 10.7 10.1 12 34 0Bioquell 1.21 30 7.0 -2.4 17 42 5Advanced Medical Solutions 1.15 -6 8.9 -0.3 13 15 15IDMos 0.99 >999 n/a n/a 0 24 n/aSphere Medical 0.98 612 n/a n/a 0 n/l n/lCustomVis 0.88 -13 585.4 >-999.9 0 2 0118 The 2005 R&D Scoreboard The 2006 R&D Scoreboard 119

Ranking of the top 800 UK companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %Cozart 0.72 50 15.2 -12.7 5 29 n/aImmunodiagnostic Systems 0.70 46 12.8 5.3 5 21 n/aGenosis 0.58 51 264.4 >-999.9 0 4 n/aMediwatch 0.55 67 31.2 -60.0 2 9 -25Celsis International 0.50 18 2.6 20.0 19 36 -8Respironics ** 0.47 -17 2.7 7.9 18 n/l n/lNMT 0.44 -12 n/a n/a 0 4 -38LiDCO 0.39 -4 11.3 -61.2 3 24 419 Household goods 130.40 5.7 1.1 12.5 12230 n/a n/aReckitt Benckiser 63.00 5 1.5 20.1 4179 15378 23Dyson James 19.42 31 4.6 17.5 426 n/l n/lGlen Electric 13.76 6 2.0 6.0 682 n/l n/lKohler ** 5.68 -2 5.1 10.0 112 n/l n/lWaterford Wedgwood ** 4.60 31 1.1 -21.9 409 n/l n/lMcBride 4.50 -4 0.8 5.8 537 286 n/aAga Foodservice 4.20 11 0.8 8.3 502 481 24Avery Weigh-Tronix 3.37 8 2.2 1.4 156 n/l n/lJeyes 2.19 -1 1.3 1.9 174 n/l n/lGeorge Wimpey 2.00 -51 0.1 14.6 3003 1896 n/aHerman Miller ** 1.82 16 2.7 2.4 67 n/l n/lFW Thorpe 1.03 -9 2.5 12.9 42 58 53Hoover ** 0.83 -32 0.5 -3.4 177 n/l n/lBrintons 0.80 -12 0.9 3.6 91 n/l n/lKenwood ** 0.73 -13 0.5 -1.2 144 n/l n/lFamco 0.71 -23 0.3 -7.5 227 n/l n/lElectrolux ** 0.50 0 0.1 -1.3 384 n/l n/lAmtico 0.49 -24 0.6 0.9 80 n/l n/lRedrow 0.40 33 0.1 19.3 780 778 25Steinhoff UK Beds ** 0.38 4 0.7 3.0 57 n/l n/l20 Industrial engineering 273.77 6 1.4 4.8 18922 n/l n/lCaterpillar ** 35.43 20 1.8 -1.1 2025 n/l n/lIMI 29.40 11 1.9 10.9 1578 1690 7JCB Service ** 26.79 18 2.4 5.0 1100 n/l n/lAGCO International ** 22.79 5 1.0 6.5 2222 n/l n/lCNH ** 17.39 8 2.0 -6.0 855 n/l n/lHalma 14.21 21 4.2 17.8 337 710 31Enodis 12.50 -13 1.9 4.5 665 877 72LDV 10.07 151 8.4 -20.0 120 n/l n/lBombardier Transportation ** 8.37 -7 0.8 4.0 1046 n/l n/lVitec 7.80 -1 4.0 9.2 195 196 28Senior 7.70 -3 2.3 6.1 339 205 30FKI 7.50 -10 0.6 8.1 1339 560 -7JCB Compact Products 6.66 3 4.3 -0.2 157 n/l n/lSpirax-Sarco Engineering 5.37 6 1.5 16.1 349 670 15Charter 5.30 -22 0.5 9.9 1066 1248 143Weir 5.25 -5 0.6 4.9 824 886 19Foseco 4.90 0 1.3 9.6 377 268 n/aLuxfer 4.10 3 1.8 6.9 233 n/l n/lStanelco 3.44 129 236.5 -227.1 1 48 -75Eaton ** 3.41 -54 1.1 1.3 310 n/l n/lDoncasters 3.34 11 0.9 5.9 392 n/l n/lRotork 2.96 22 1.7 20.9 175 625 38NSK ** 2.72 8 0.5 5.0 527 n/l n/lMesco ** 2.69 15 0.7 1.5 396 n/l n/lITW ** 2.50 6 0.6 -2.8 434 n/l n/lFenner 2.09 -9 0.7 5.0 313 316 82Renold 1.90 -5 1.0 -2.1 197 43 8Crane ** 1.61 27 1.3 3.5 126 n/l n/lB Elliott 1.60 -14 2.9 -21.3 56 n/l n/lMcCormick Tractors International ** 1.45 -7 0.9 -6.0 161 n/l n/lEndress + Hauser ** 1.21 1 2.7 -6.8 44 n/l n/lMolins 1.20 -57 1.0 -2.3 121 22 -29GD First ** 1.08 -45 1.2 5.5 90 n/l n/lMoog Controls ** 1.04 -9 3.1 7.1 33 n/l n/lLTG Technologies 1.03 56 2.0 -1.3 52 19 -37Corac 0.97 -3 116.5 -270.0 1 28 17Lincat 0.94 3 2.7 13.8 34 42 11Gooch & Housego 0.87 -11 3.9 21.3 22 63 58Melrose 0.80 n/a 0.3 3.0 270 368 n/aSKF ** 0.70 8 0.6 10.8 114 n/l n/lDennis Eagle ** 0.49 57 0.4 5.6 110 n/l n/lManganese Bronze 0.47 -73 0.5 1.0 88 50 43Pursuit Dynamics 0.47 26 522.2 >-999.9 0 61 -34Surface Transforms 0.47 285 183.3 -314.0 0 2 n/aSira 0.44 -31 4.3 -3.8 10 n/l n/lHydro International 0.37 22 2.0 7.0 19 16 2321 Industrial metals 70.82 4.4 0.6 5.5 12650 n/a n/aCorus 66.00 5 0.7 6.4 10140 3587 67British Alcan Aluminium ** 1.80 6 0.4 -3.3 442 n/l n/lAlcoa ** 1.51 8 0.3 -0.7 474 n/l n/lOutokumpu Stainless ** 1.10 -8 0.1 0.1 1001 n/l n/lEco-Bat Technologies ** 0.42 -20 0.1 11.1 592 n/l n/l22 Industrial transportation 49.35 1.3 0.3 -10.5 17961 n/l n/lBAA (now part of Airport Development and Investment) 27.00 n/a 1.2 38.6 2275 n/l n/lBBA 10.80 -9 0.7 5.7 1511 1246 -17Arval PHH ** 6.48 0 0.2 1.0 3004 n/l n/lStrategic Rail Authority 3.00 50 0.1 -144.1 2105 n/l n/lITIS 1.06 52 10.5 -15.0 10 45 -34Royal Mail 1.00 0 999 n/a n/a 0 1 n/a24 Life insurance 40.00 700 0.3 12.2 12709 8809 n/aOld Mutual 40.00 700 0.3 12.2 12709 8809 n/a25 Media 274.85 -7.6 1.9 7.2 14304 13546 n/aReuters 121.00 -5 5.0 12.3 2409 5120 -1Reed Elsevier 102.00 -7 2.0 16.3 5166 6752 n/aBBC 16.20 -14 0.4 -4.4 4005 n/l n/lChannel Four Television 12.10 33 1.4 6.4 894 n/l n/lPunch Graphix 7.93 -3 7.5 13.8 105 105 n/aOFCOM 3.41 0 2.3 -42.8 145 n/l n/lAegis 3.00 275 0.3 12.4 870 1371 2Thomson ** 2.30 -79 0.4 -5.6 523 n/l n/lTrafficmaster 1.52 -15 3.6 2.5 42 64 16Ingenta 1.21 -34 18.4 -9.3 7 3 -25Character 1.14 -42 1.2 0.9 99 33 50Thomson Intermedia 0.83 9 7.4 15.8 11 65 -4YooMedia 0.79 n/a 3.7 -113.1 21 13 -73Knowledge Technology Solutions 0.75 63 60.1 -84.7 1 2 -60Independent Media Distribution 0.67 44 17.9 -9.1 4 18 n/a26 Mining 59.92 4.7 0.1 28.0 45772 103683 n/aAnglo American 23.30 -11 0.1 18.9 17145 35366 26BHP Billiton 19.22 74 0.1 30.6 17234 25228 19Rio Tinto 11.65 -13 0.1 38.8 11086 42988 36IMERYS Minerals ** 3.84 -19 1.3 3.6 307 n/l n/lZincox Resources 1.91 n/a n/a n/a 0 101 n/a27 Mobile telecommunications 225.23 -5 0.5 -41.3 43608 63188 n/aVodafone 206.00 -6 0.6 -50.4 36616 61607 -35Inmarsat 10.78 48 3.8 42.9 286 1518 n/aO2 (now part of Telefonica, Spain) 8.00 -20 0.1 4.8 6683 n/l n/l2 ergo 0.46 -38 2.0 5.2 23 63 4028 Nonequity investment instruments n/a n/a n/a n/a n/a n/a n/aNo companies with sufficient R&Dfor inclusion n/a n/a n/a n/a n/a n/a n/a29 Nonlife insurance 129.37 6.6 1.8 10.3 7339 4650 n/aRoyal & Sun Alliance 122.00 4 1.9 11.4 6420 4012 n/aKiln 3.77 301 1.0 2.3 361 265 32Beazley 3.60 n/a 0.6 2.9 558 373 n/a30 Oil & gas producers 675.77 10.6 0.2 13.8 359848 n/a n/aRoyal Dutch Shell 342.50 6 0.2 14.5 178664 124031 -5BP 292.40 14 0.2 12.4 145308 126066 -8Esso ** 28.80 40 0.3 18.6 8691 n/l n/lBG 7.00 0 0.1 36.7 5612 25121 38Total ** 2.92 -13

Ranking of the top 800 UK companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %Vernalis 26.49 24 187.5 -232.3 14 211 56SkyePharma 26.00 -7 42.4 -63.0 61 181 -51ProStrakan 22.43 119 70.9 -117.0 32 197 n/aAlizyme 15.75 151 n/a n/a 0 180 9Warner Chilcott(now Chilcott)(now part of Warner Acquisition) 15.72 -6 5.2 1.6 305 n/l n/lOSI Pharmaceticals ** 15.64 -24 100.0 -31.5 16 n/l n/lBoehringer Ingelheim ** 15.59 -37 8.7 8.9 178 n/l n/lJohnson & Johnson ** 15.00 1 1.6 7.2 923 n/l n/lGenerics UK ** 14.34 38 14.7 -26.4 97 n/l n/lXenova(now part of Celtic Pharma Development) 14.28 -5 312.8 -324.8 5 n/l n/lArk Therapeutics 13.94 52 594.0 -794.8 2 123 -2Astex Therapeutics 12.59 11 312.3 -290.9 4 n/l n/lInnovata 10.37 -20 66.0 -58.4 16 111 -13GW Pharmaceuticals 10.28 -26 330.4 -317.7 3 92 15Vectura 10.21 17 227.7 -210.4 4 162 93Hikma Pharmaceuticals 9.62 71 6.3 26.1 153 569 n/aMicroscience(now Microscience Investments) 9.60 -6 >999.9 >-999.9 0 n/l n/lOxford Biomedica 9.33 1 >999.9 >-999.9 1 119 -13Arakis 9.00 n/a n/a n/a 0 n/l n/lAxis-Shield 8.97 -11 15.4 3.2 58 167 4IVAX(now part of Teva PharmaceuticalIndustries, Israel) ** 8.65 -25 6.0 -5.2 145 n/l n/lGenus 8.54 -5 4.7 5.3 183 248 94Sanofi-Synthelabo ** 8.51 10 3.6 13.2 237 n/l n/lYamanouchi(now Astellas Pharma Europe) ** 8.33 -66 2.8 14.0 302 n/l n/lBTG 8.10 -49 16.1 -23.5 50 187 -31Servier ** 7.81 27 89.9 -0.3 9 n/l n/lRenovo 7.72 26 n/a n/a 0 n/l n/lRandox Laboratories 7.65 -23 23.7 -11.6 32 n/l n/lNovo Nordisk ** 6.97 15 10.9 10.8 64 n/l n/lPhytopharm 6.86 8 92.9 -44.6 7 28 -32Protherics 6.75 47 38.1 -53.7 18 203 57Genzyme ** 6.56 46 6.5 7.5 101 n/l n/lDaiichi Pharmaceuticals ** 5.70 51 100.0 -36.7 6 n/l n/lAllergy Therapeutics 5.62 >999 27.3 -11.7 21 88 17Intercytex 5.61 32 n/a n/a 0 49 n/aNapp Pharmaceutical 5.49 2 4.5 13.7 123 n/l n/lEvolutec 5.35 708 >999.9 >-999.9 0 28 22NeuTec Pharma 5.14 56 n/a n/a 0 n/l n/lCeNeS Pharmaceuticals 4.89 41 >999.9 >-999.9 0 20 -39Amarin 4.84 139 >999.9 >-999.9 0 264 >999Plethora Solutions 4.55 152 >999.9 >-999.9 0 43 79Lorantis 4.53 17 n/a n/a 0 n/l n/lChroma Therapeutics † 4.44 432 n/a n/a 0 n/l n/lArdana 4.01 -68 >999.9 >-999.9 0 73 16Norbrook Laboratories 3.97 9 4.8 13.2 83 n/l n/lFerring Laboratories ** 3.82 -15 8.0 8.9 48 n/l n/lForum Bioscience ** 3.35 -8 2.8 2.2 120 n/l n/lDainippon Sumitomo Pharma Europe ** 3.16 25 100.0 4.7 3 n/l n/lPharmagene (now Asterand) 3.14 -62 116.2 -281.4 3 6 -50Proteome Sciences 3.13 -10 >999.9 >-999.9 0 49 -57Otsuka Pharmaceutical ** 3.10 -31 4.9 -18.8 64 n/l n/lCambridge Biotechnology(now part of Biovitrum, Sweden) ** 2.88 21 n/a n/a 0 n/l n/lPhoqus 2.50 -3 912.8 >-999.9 0 45 n/aReNeuron Holdings * 2.40 13 >999.9 >-999.9 0 n/l n/lMerck ** 2.37 -6 5.2 2.9 45 n/l n/lGeneMedix 2.33 5 n/a n/a 0 14 -39BioFocus † 2.23 8 18.0 -19.1 12 n/l n/lAlliance Pharma † 2.22 159 15.1 15.3 15 22 -21Osmetech 2.13 22 36.5 -50.8 6 37 42Sequenom-Gemini ** 1.95 -42 834.6 >-999.9 0 n/l n/lBioProgress 1.90 582 43.0 -214.2 4 51 n/aTepnel Life Sciences 1.74 12 12.8 -13.6 14 18 0Biotica Technology 1.71 37 n/a n/a 0 n/l n/lSR Pharma 1.66 -2 325.9 -821.6 1 12 -20Provalis 1.60 -6 15.4 -53.8 10 3 -88Futura Medical 1.54 60 >999.9 >-999.9 0 37 35Dechra Pharmaceuticals 1.33 19 0.6 5.0 208 124 4Respironics Respiratory ** 1.29 -32 56.1 -81.7 2 n/l n/lALTANA Pharma ** 1.22 48 6.1 3.4 20 n/l n/lEvotec ** 1.13 -38 3.3 -5.4 34 n/l n/lUCB Pharma ** 1.09 n/a 2.4 6.7 46 n/l n/lCephalon ** 1.05 160 9.0 -2.0 12 n/l n/lVastox 1.03 283 193.2 -326.4 1 61 n/aAcacia Biopharma ** 0.96 72 5.1 18.8 19 n/l n/lMicap 0.95 -10 295.3 -816.3 0 2 -60Serono ** 0.93 22 2.4 4.1 39 n/l n/lSenetek 0.88 -4 19.9 -1.4 4 9 -6NextGen 0.86 -14 85.0 -263.1 1 8 n/aStem Cell Sciences 0.84 76 98.7 -335.8 1 13 n/aEirx Therapeutics 0.82 -5 >999.9 >-999.9 0 5 n/aReGen Therapeutics 0.75 63 642.2 >-999.9 0 8 14Drew Scientific (now part of Escalon Medical, USA) 0.73 -38 8.3 -37.7 9 n/l n/lCyprotex 0.72 -8 26.7 -39.2 3 10 -29Sareum 0.70 n/a 212.0 -415.4 0 4 n/aAorTech International 0.65 17 477.4 >-999.9 0 15 275Medical Marketing International 0.59 173 292.5 >-999.9 0 82 n/aSynairgen 0.56 389 275.7 -449.5 0 23 n/aSinclair Pharma 0.54 105 7.8 -40.9 7 111 n/aOrchid Biosciences Europe (now Orchid Cellmark) ** 0.47 11 3.3 15.7 14 n/l n/lCytomyx 0.44 88 7.7 -19.1 6 1 -83Cambridge Laboratories * 0.43 -37 2.5 12.5 17 n/l n/l34 Real estate n/a n/a n/a n/a n/a n/a n/aNo companies with sufficient R&D for inclusion n/a n/a n/a n/a n/a n/a n/a35 Software & computer services 932.86 12.6 7.3 8.4 12715 16770 n/aNDS ** 96.99 18 29.9 16.0 324 213 36Misys 89.70 -1 9.1 5.5 985 1320 13Amdocs 84.14 14 7.1 16.6 1187 4178 19Sage 81.61 10 10.5 27.2 777 2965 -2Symbian 54.48 19 47.5 6.2 115 n/l n/lSony Computer Entertainment Europe ** 45.66 20 3.4 12.2 1357 n/l n/lFujitsu Services ** 40.60 59 1.8 7.4 2294 n/l n/lLogicaCMG 25.50 -32 1.4 5.9 1836 1932 43iSOFT 18.28 44 7.0 18.5 262 140 -86RM 16.81 16 6.4 1.5 263 159 3Intec Telecom Systems 16.51 44 14.2 -4.2 116 132 -30Systems Union 14.17 -5 12.5 7.4 113 n/l n/lAVEVA 13.95 24 21.2 17.1 66 231 28Micro Focus International 13.63 n/a 15.5 23.8 88 216 n/aAutonomy 12.77 54 22.8 10.0 56 759 105Northgate Information Solutions 12.76 67 6.2 4.7 206 380 -10NSB 12.69 10 26.2 20.3 48 104 -3Torex Retail 12.62 6 7.5 -4.6 167 228 -22Royalblue 10.53 42 14.2 13.0 74 270 21Anite 10.16 -14 5.4 0.3 189 251 9SCI Entertainment † 10.13 4 49.4 -92.2 21 342 23DICOM 9.89 24 5.5 5.7 180 196 -6Fair Isaac ** † 9.42 -25 17.2 -16.7 55 n/l n/lCODASciSys 8.80 0 12.1 10.2 73 128 25Empire Interactive 8.43 -13 28.6 1.6 29 3 -50SurfControl 7.55 34 13.3 5.3 57 132 -6GEAC ** 7.45 12 9.5 18.0 78 n/l n/lDelcam 6.51 12 27.7 9.6 23 19 6Cramer Systems 6.38 11 16.3 10.3 39 n/l n/lUbiquity Software 6.30 98 84.5 -123.7 7 38 -42Microgen 6.16 46 15.1 13.1 41 54 -33Marlborough Stirling(now Vertex Financial Services) 5.97 30 6.4 -14.0 94 n/l n/lSuperscape 5.92 71 147.2 -251.2 4 23 -53Macro 4 5.17 3 15.6 2.5 33 51 -19MessageLabs 5.15 41 6.9 -3.9 75 n/l n/lClearswift Systems 4.41 -1 18.2 -30.1 24 n/l n/lRedac * 4.21 84 6.5 -6.4 65 n/l n/lWitness Systems ** 4.07 71 16.9 11.9 24 n/l n/lMeridio 3.93 80 61.0 -62.8 6 n/l n/lSDL 3.88 53 4.9 7.3 78 139 60StatPro 3.71 34 34.4 15.4 11 33 74Detica 3.65 25 3.6 10.6 102 326 61AIT (now Portrait Software) 3.61 -17 25.3 12.8 14 18 38TTP 3.36 -18 15.0 -3.9 22 n/l n/lTransitive 3.34 19 275.6 -285.3 1 n/l n/lAlphameric 2.88 -15 3.9 10.2 73 83 -25Comino (now part of Civica) 2.84 -4 11.1 6.6 26 n/l n/lnCipher 2.84 0 16.3 10.7 17 63 0Innovation 2.72 -30 4.5 -18.7 61 140 7Pilat Media Global 2.66 625 20.4 17.9 13 28 22Kewill Systems 2.46 16 9.2 4.6 27 50 -21PlusNet 2.45 156 7.0 12.1 35 37 -54XKO 2.42 72 8.7 13.0 28 33 43Searchspace 2.30 8 14.4 -20.8 16 n/l n/lWorkplace Systems International 2.26 -12 29.5 -0.1 8 7 -70Flomerics 2.21 -3 19.4 8.0 11 21 75Alterian 2.18 -10 20.5 4.2 11 45 -4Tertio Telecoms(now Evolving Systems) ** 2.13 22 15.8 14.5 13 n/l n/lRecognition Systems(now Protagona) ** 2.08 -5 178.3 -198.0 1 n/l n/lNewchurch 2.07 42 36.8 -55.4 6 n/l n/lBond International Software 2.01 22 14.4 19.1 14 39 50Tadpole Technology 1.98 17 21.7 -100.0 9 7 -63Ant 1.96 40 78.1 -86.2 3 13 n/aPlanit 1.95 13 6.9 8.8 28 24 n/aClinPhone 1.94 20 5.7 3.1 34 120 n/aDRS Data & Research Services 1.72 11 13.8 0.6 12 11 -27Vebnet 1.66 126 51.1 0.0 3 14 -22Insignia Solutions 1.64 -17 519.0 >-999.9 0 0 -100Gresham Computing 1.61 9 11.5 -9.7 14 52 -15IBS OPENSystems † 1.61 n/a 7.7 20.5 21 69 n/aOMG 1.61 15 11.3 4.3 14 22 144Clarity Commerce Solutions 1.60 60 9.8 4.1 16 11 -8Electronic Data Processing 1.60 -7 22.9 2.2 7 15 -25World Gaming 1.60 -37 16.9 107.3 9 92 -32ASITE 1.56 57 102.2 -86.1 2 2 -33Pro-Bel ** 1.55 363 9.2 5.9 17 n/l n/lIndigoVision 1.45 -4 40.1 -55.6 4 36 260VI 1.45 8 14.2 1.1 10 3 0EasyScreen (now Refco Screens) 1.38 -8 62.3 -138.7 2 n/l n/lCorpora 1.36 68 70.2 -241.7 2 11 120Empower Interactive 1.35 -4 22.9 -72.3 6 n/l n/lMediasurface 1.25 10 18.4 -12.6 7 10 0Argo Interactive 1.19 16 30.8 -6.2 4 n/l n/lSystem C Healthcare 1.19 -24 6.5 13.8 18 26 n/aAppSense 1.17 49 13.8 2.8 9 n/l n/lFFastFill 1.12 6 25.9 -68.6 4 10 -29IDOX 1.11 -6 7.8 5.2 14 13 -32Financial Objects 1.10 -20 7.9 -1.8 14 18 38Rolfe & Nolan 1.10 9 4.6 15.1 24 n/l n/lZ Group 1.05 n/a 21.1 20.6 5 21 n/aCivica 1.04 n/a 1.0 4.5 106 143 n/a122 The 2005 R&D Scoreboard The 2006 R&D Scoreboard 123

Ranking of the top 800 UK companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %Prologic 1.03 39 10.6 7.1 10 9 29ServicePower Technologies 1.02 -28 12.8 -21.0 8 18 -33Sopheon 1.01 13 21.6 -26.2 5 26 -7Ascribe 0.99 16 18.4 14.0 5 36 -5Manpower Software 0.96 -6 16.2 5.6 6 8 -20Business Control Solutions 0.90 62 10.9 -22.2 8 21 n/aFocus Solutions 0.89 -2 16.4 999Zoo Digital † 0.84 1 8.3 -20.5 10 5 -84DCS 0.80 -76 2.3 -2.3 35 n/l n/lIntercede 0.78 5 43.1 -21.4 2 10 43Computer Software 0.75 -39 5.3 6.9 14 57 111Consilium 0.75 80 10.9 13.1 7 n/l n/lOneClickHR 0.75 55 15.7 -36.2 5 6 20Total Systems 0.64 -10 18.2 4.1 3 4 -20Mirago 0.61 28 11.3 -5.4 5 n/l n/lRaft International(now part of Financial Objects) 0.59 84 7.3 -17.5 8 n/l n/lPatsystems 0.54 -81 3.5 -5.1 15 25 9Chelford 0.53 -14 3.6 9.0 14 13 -19Birchfield Interactive 0.52 -5 23.5 6.5 2 n/l n/lTranseda Technology ** 0.49 -6 31.6 -2.8 2 n/l n/lTelephonetics 0.44 2 10.0 -32.6 4 21 n/aIntelligent Environments 0.42 -24 13.5 -7.0 3 8 60Retail Decisions 0.42 10 0.8 15.3 55 141 55Pole Star Space Applications 0.41 2 8.8 8.6 5 n/l n/lGB 0.40 -8 3.1 -4.4 13 30 -3Boltblue 0.38 -15 14.0 -27.9 3 n/l n/l36 Support services 152.61 9 1.1 7.5 14055 9727 n/aSerco 45.30 18 2.0 4.3 2260 1697 45Voca 29.25 257 32.8 4.2 89 n/l n/lDe La Rue 13.70 -18 2.2 12.1 611 892 32Urenco 10.66 -16 2.1 41.5 502 n/l n/lArup 5.34 -29 1.2 2.6 430 n/l n/lGenerics Group ** 4.41 -30 28.2 -11.7 16 n/l n/lRicardo 3.86 -13 2.4 5.1 160 142 7SGL † 3.80 118 3.6 10.1 105 n/l n/lRentokil Initial 3.70 28 0.2 10.7 2403 2983 n/aAEA Technology 3.40 -51 1.8 0.4 191 120 11SHL 3.00 3 4.4 11.6 68 73 -1Christie 2.92 39 3.8 5.7 78 39 50WSP 2.67 7 0.8 6.4 349 262 23Eckoh Technologies 2.17 63 2.7 -12.3 80 31 24Robotic Technology Systems 1.97 -63 4.7 5.5 42 10 -67Clarityblue 1.64 -17 7.3 1.1 22 n/l n/lUniverse 1.48 -18 8.2 5.3 18 9 -31PA 1.46 n/m 0.5 7.1 324 n/l n/lGroup 4 Securicor 1.40 -66 -999.9 1 10 -82Trikon (now Aviza Europe) ** 4.71 -18 26.3 -42.3 18 n/l n/lClearSpeed Technology 4.65 86 >999.9 >-999.9 0 82 -1National Semiconductor ** 4.22 -13 1.6 4.6 263 n/l n/lSurface Technology Systems 2.88 0 15.0 6.5 19 7 17Amino Technologies 2.81 66 12.0 -1.4 23 44 -62Telit Communications 2.69 -7 4.5 -1.2 59 14 n/abede 2.49 117 36.3 -85.1 7 6 -63Intelek 1.87 -19 5.3 7.8 35 11 -8STMicroelectronics ** 1.61 4 10.6 49.4 15 n/l n/lRemec Europe ** † 1.49 -3 4.6 1.6 33 n/l n/lCeloxica 1.28 -15 29.9 -57.3 4 14 n/aTelspec 1.28 -49 15.6 -36.1 8 2 -78Concurrent Technologies 1.18 11 11.0 12.7 11 24 71i-mate 1.03 223 0.9 10.4 120 0 n/aCadence Design Systems ** 0.83 4 3.4 22.8 24 n/l n/lScotty 0.69 -44 16.9 -127.1 4 12 -20Axeon 0.57 -30 235.0 -419.3 0 16 45Azzurri Communications 0.55 106 0.7 9.0 82 n/l n/lCyan 0.50 362 >999.9 >-999.9 0 13 n/aIQE 0.50 -40 2.4 -21.2 21 48 71Synchronica 0.42 n/a 13.7 -94.1 3 5 n/aTower 0.38 n/a 6.7 -40.6 6 2 n/a38 Tobacco 66.00 -1.5 0.7 29.4 9325 29666 27.1BAT 66.00 -1.5 0.7 29.4 9325 29666 27.139 Travel & leisure 31.61 16.7 1.4 10.6 2296 n/l n/lJordan Grand Prix (now Midland F1) 12.40 14 37.8 -41.4 33 n/l n/l888 6.59 65 4.2 18.2 158 549 n/aSporting Exchange 3.78 37 3.5 17.1 107 n/l n/lBETonSports 2.56 221 0.3 1.2 736 104 n/aFun Technologies (now part of Liberty) 1.66 75 12.1 -53.8 14 n/l n/lPartyGaming 1.28 -41 0.2 33.9 569 4800 n/aLeisure Link 1.24 -39 0.8 5.2 163 n/l n/lebookers (now part of Cendant) 0.79 -20 1.1 -29.4 75 n/l n/lVanguard Car Rental EMEA ** 0.79 -61 0.3 7.1 270 n/l n/lCivil Aviation Authority 0.53 -1 0.3 6.0 172 n/l n/l124 The 2005 R&D Scoreboard The 2006 R&D Scoreboard 125

Ranking of the top 1250 global companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %All companies composite 249354.87 7.0 3.6 11.0 6868241 8512210 6.11 Aerospace & defence 10130.01 13.5 4.6 7.8 221218 210246 11.3EADS, The Netherlands 1626.36 3 6.9 7.8 23503 13135 -13BAE Systems, UK 1449.00 31 13.2 8.1 11019 11586 8Boeing, USA 1284.37 17 4.0 4.7 31946 24333 11Finmeccanica, Italy 1199.67 20 15.6 6.2 7672 4968 15United Technologies, USA 796.25 9 3.2 11.9 24886 37015 20Lockheed Martin, USA 606.94 8 2.8 7.5 21676 20137 23Rolls-Royce, UK 352.00 25 5.3 13.3 6603 7728 27Thales, France 346.02 16 4.9 3.6 7052 3729 -10SAFRAN, France 322.94 n/a 5.4 -3.6 5972 4327 18Northrop Grumman, USA 313.37 7 1.8 7.7 17894 13038 14Raytheon, USA 292.99 2 2.3 7.4 12753 11740 12General Dynamics, USA 200.37 5 1.6 10.4 12374 15835 18Dassault Aviation, France 195.52 1 8.3 12.0 2355 4119 n/aGoodrich, USA 155.46 7 4.9 9.3 3148 3239 -7Smiths, UK 143.60 5 4.8 10.3 3017 5094 1Rockwell Collins, USA 141.54 11 7.1 16.1 2007 5296 5Bombardier, Canada 101.93 38 1.2 2.7 8681 2841 0SAAB, Sweden 61.77 5 4.4 7.2 1414 1496 43EMBRAER, Brazil 54.27 109 2.4 12.8 2231 3700 13Cobham, UK 42.90 -12 3.9 13.1 1090 1818 18Elbit Systems, Israel 41.88 8 6.7 5.8 623 636 15Japan Aviation Electronics Industry, Japan 39.09 5 6.8 5.9 572 747 n/aL-3 Communications, USA 38.27 -8 0.7 10.5 5501 5079 -4BE Aerospace, USA 38.21 19 7.8 11.1 492 1069 90Industria de Turbo Propulsores, Spain 34.84 -38 13.5 4.3 259 n/l n/lPatria, Finland 32.71 21 15.0 4.1 218 n/l n/lMeggitt, UK 30.77 11 5.0 16.6 616 1254 -7FLIR Systems, USA 30.01 12 10.1 25.1 296 965 -26Alliant Techsystems, USA 30.00 36 1.6 10.2 1874 1611 n/aDRS Technologies, USA 27.73 22 2.7 10.3 1011 895 n/aTeledyne Technologies, USA 26.15 38 3.7 8.8 703 754 n/aMoog, USA 25.37 47 4.1 10.3 612 835 n/aEsterline Technologies, USA 24.60 52 5.0 9.7 489 473 n/aCurtiss-Wright, USA 23.11 17 3.5 12.0 659 754 n/a2 Automobiles & parts 43883.39 5.4 4.2 4.2 1039615 443240 11.2Ford Motor, USA 4659.83 8 4.5 4.1 103221 7496 -30General Motors, USA 3902.61 3 3.5 -1.1 112188 10173 -12DaimlerChrysler, Germany 3881.41 0 3.8 1.9 102911 27772 -13Toyota Motor, Japan 3726.77 11 4.1 9.8 91555 111189 32Volkswagen, Germany 2799.92 -2 4.3 2.9 65458 14655 -6Honda Motor, Japan 2308.44 4 5.4 8.7 42690 35507 25BMW, Germany 2140.31 11 6.7 7.8 32057 17746 6Robert Bosch, Germany 2013.88 1 7.0 5.9 28869 n/l n/lNissan Motor, Japan 1964.92 12 4.6 9.2 42325 28146 0Renault, France 1555.59 15 5.6 9.5 27767 16866 14Peugeot (PSA), France 1477.94 2 3.8 2.7 38661 6408 -27Hyundai Motor, South Korea 1362.30 22 4.0 5.9 33901 12032 10Delphi, USA 1281.45 5 8.2 -8.1 15696 n/l n/lDenso, Japan 1175.76 11 8.5 7.6 13818 17422 28Fiat, Italy 905.59 n/a 2.9 2.4 31481 9468 n/aValeo, France 535.25 11 7.8 3.2 6825 1479 -20Aisin Seiki, Japan 471.53 7 5.2 5.1 9027 4986 16Visteon, USA 468.31 -10 4.7 -11.0 9888 652 -13Mazda Motor, Japan 448.31 3 3.4 3.9 13303 5194 84Suzuki Motor, Japan 428.65 15 3.7 4.3 11674 7587 41Continental, Germany 405.66 11 4.3 11.2 9507 7836 19Bridgestone, Japan 391.93 9 3.0 9.4 13282 8650 -10Michelin, France 388.21 -16 3.6 10.1 10712 4636 -9ZF, Germany 384.09 7 5.2 4.6 7443 n/l n/lYamaha Motor, Japan 353.44 5 5.2 7.2 6787 4478 37Mitsubishi Motors, Japan 339.42 0 3.2 -20.2 10475 5564 77Fuji Heavy Industries, Japan 256.84 -10 3.6 1.7 7139 2760 39Johnson Controls, USA 241.73 -19 1.5 4.6 16006 8701 33Autoliv, Sweden 224.72 5 6.2 8.4 3614 2690 11Goodyear, USA 212.61 -3 1.9 5.1 11488 1143 -37Hella, Germany 181.46 54 8.6 3.5 2110 n/l n/lDana, USA 160.18 2 2.8 -5.2 5736 217 -84Toyota Industries, Japan 148.31 2 2.4 4.7 6127 7544 36Behr, Germany 147.73 10 7.0 4.1 2097 n/l n/lCalsonic Kansei, Japan 128.29 2 3.7 1.4 3430 959 2Toyoda Gosei, Japan 120.92 8 5.6 4.3 2149 1676 27Pirelli, Italy 119.56 -12 2.7 9.8 4354 2559 -16TRW Automotive, USA 118.24 17 1.6 4.6 7364 1634 -3Harley-Davidson, USA 113.88 5 3.5 26.5 3223 8735 5Rheinmetall, Germany 107.19 3 4.5 6.3 2373 1758 7ArvinMeritor, USA 101.93 12 1.8 1.4 5718 680 -17Lear, USA 101.35 -12 1.0 -5.8 9954 923 -41Koito Manufacturing, Japan 94.76 n/a 5.3 4.9 1784 1323 n/aBorgWarner, USA 93.78 31 3.8 8.0 2501 1994 4GKN, UK 88.00 -1 2.4 2.9 3648 1982 -8Sumitomo Rubber Industries, Japan 80.24 3 3.2 9.4 2531 1389 -14Federal-Mogul, USA 77.30 -3 2.1 -1.3 3661 19 -25Burelle, France 72.47 152 4.6 3.3 1574 183 31NGK Spark Plug, Japan 70.87 3 6.0 11.2 1190 2785 53Yokohama Rubber, Japan 70.40 3 3.4 4.1 2072 863 1Tata Motors, India 61.62 29 2.0 10.8 3101 3646 n/aProton Holdings Berhad, Malaysia 53.51 -36 4.1 8.8 1307 426 -45Toyo Tire, Japan 48.32 2 3.6 4.1 1332 483 -5Trelleborg, Sweden 48.23 7 2.7 6.8 1769 854 -4Akebono Brake Industry, Japan 47.15 8 7.2 7.4 656 582 46ZF Lenksysteme, Germany 47.14 5 3.1 2.7 1531 n/l n/lEberspaecher, Germany 45.62 1 4.1 1.6 1126 n/l n/lBallard Power Systems, Canada 43.97 -18 140.5 -167.7 31 392 10American Axle & Manufacturing, USA 42.87 7 2.2 3.2 1973 503 -39Hankook Tire, South Korea 41.54 20 3.6 14.2 1162 1010 n/aChina Motor, Taiwan 41.27 -15 4.4 6.1 931 679 -14Polaris Industries, USA 39.69 12 3.6 11.3 1089 922 -31Tenneco, USA 33.78 23 1.3 10.7 2587 619 25Showa, Japan 32.58 -16 2.8 7.0 1153 737 16Hyundai Mobis, South Korea 32.17 48 0.8 13.9 4209 4034 n/aGrammer, Germany 31.01 38 5.3 3.6 590 139 n/aNissin Kogyo, Japan 30.05 10 4.3 9.7 696 782 65Modine Manufacturing, USA 28.28 52 2.8 5.6 997 455 n/aHaldex, Sweden 27.59 14 5.0 5.2 548 260 10Ichikoh Industries, Japan 26.83 8 4.6 -1.0 583 158 2Beru, Germany † 24.79 15 8.8 11.7 280 533 11Sanden, Japan 24.39 12 2.1 2.9 1150 n/l n/lPorsche, Germany 23.12 -29 0.5 18.5 4517 4689 n/aStoneridge, USA 22.83 8 5.8 4.2 391 123 n/aIMMSI, Italy 21.18 -20 2.0 2.7 1063 412 24Gentex, USA 20.42 14 6.5 26.0 312 1143 n/aBrembo, Italy 19.74 n/a 4.0 9.9 489 361 23Exedy, Japan 19.47 -1 2.9 6.8 673 835 n/a3 Banks 990.85 25.2 0.9 34.7 106294 292704 12.5Royal Bank of Scotland, UK 329.00 9 1.3 31.0 25902 55422 12HSBC, UK 244.64 34 0.7 35.2 33572 109973 7Banca Intesa, Italy 96.88 n/a 1.5 45.2 6356 23267 42Sanpaolo IMI, Italy 71.46 n/a 1.4 39.2 5295 15454 27Barclays, UK 68.00 45 0.4 30.5 17333 41362 11Rabobank, The Netherlands 58.40 27 0.9 28.6 6433 n/l n/lStandard Chartered, UK 51.26 6 1.3 39.1 3996 18039 12Danske Bank, Denmark 38.23 53 1.2 48.1 3300 14694 25Dexia, Belgium 32.98 586 0.8 45.1 4106 14493 44 Beverages 182.69 1.4 1.4 7.6 13151 12575 39.1Kirin Brewery, Japan 141.77 2 2.3 9.4 6094 8329 49Asahi Breweries, Japan 40.92 0 0.6 6.1 7057 4246 245 Chemicals 11383.11 -0.9 3.2 9.2 358624 337208 9.6Bayer, Germany 1295.86 -22 6.9 10.3 18815 20037 35EI du Pont de Nemours, USA 778.19 0 5.0 12.5 15517 21349 -12BASF, Germany 746.39 -7 2.5 14.3 29370 22136 -3Dow Chemical, USA 625.00 5 2.3 13.3 26973 20010 -28AKZO Nobel, The Netherlands 575.10 1 6.4 11.1 8932 8525 2Syngenta, Switzerland 478.80 2 10.1 10.6 4720 8670 26Mitsubishi Chemical, Japan 440.29 1 4.1 5.1 10805 6634 69Sumitomo Chemical, Japan 385.97 4 6.0 9.1 6398 7690 44Monsanto, USA 342.50 15 9.3 5.7 3666 14335 41Solvay, Belgium 327.74 12 5.3 6.1 6220 5471 5Asahi Kasei, Japan 250.29 5 3.7 7.0 6799 5279 32DSM, The Netherlands 199.26 1 3.5 8.7 5631 4171 -3Toray Industries, Japan 181.53 3 2.8 4.7 6409 6695 76PPG Industries, USA 179.99 2 3.0 10.0 5942 6022 -7Mitsui Chemicals, Japan 172.14 6 2.8 5.0 6058 3029 4Rohm & Haas, USA 159.02 3 3.4 12.3 4656 5880 -3Shin-Etsu Chemical, Japan 157.94 15 2.8 16.7 5566 14819 49Linde, Germany 155.97 21 2.4 9.6 6528 6970 3Teijin, Japan 148.17 -9 3.3 4.6 4483 2991 5ICI, UK 147.00 0 2.5 10.0 5812 4365 25Ciba Specialty Chemicals, Switzerland 133.03 5 4.1 -1.8 3279 2138 -18LG Chem, South Korea 109.69 11 2.6 7.3 4292 1534 -5Wacker-Chemie, Germany 100.93 -3 5.3 8.7 1893 3277 n/aL'Air Liquide, France 96.95 -5 1.4 14.0 7170 13069 19Clariant, Switzerland 96.35 -20 2.7 4.0 3616 1584 -22Eastman Chemical, USA 94.36 -4 2.3 13.1 4112 2436 -5Rhodia, France 92.07 -22 2.5 5.1 3710 1390 85Showa Denko, Japan 85.79 -1 2.1 2.3 4007 2774 46Kaneka, Japan 83.22 7 3.6 9.7 2291 1976 -17JSR, Japan 79.11 6 5.2 14.4 1507 3461 14Dainippon Ink & Chemicals, Japan 78.55 6 1.6 3.9 4949 1631 14Lubrizol, USA 77.94 24 3.3 9.1 2388 1746 4Air Products and Chemicals, USA 77.30 5 1.6 13.3 4743 8332 5Lanxess, Germany 69.40 n/a 1.4 -0.1 4913 1729 n/aKuraray, Japan 68.47 1 3.9 7.2 1751 2513 28SNPE, France 65.00 -17 12.1 -11.2 535 n/l n/lCognis Deutschland, Germany 63.21 39 2.9 1.7 2182 n/l n/lEngelhard, USA(now part of BASF, Germany) 63.02 8 2.4 7.0 2678 n/l n/lUBE Industries, Japan 61.63 9 2.1 5.5 2938 1544 16Johnson Matthey, UK 58.80 9 1.2 4.8 4756 2806 14Huntsman, USA 55.63 15 0.7 6.3 7564 2265 -20Daicel Chemical Industries, Japan 55.37 1 3.7 -0.1 1512 1555 27FMC, USA 54.99 1 4.4 15.4 1252 1341 -17Sumitomo Bakelite, Japan 54.50 9 4.9 7.4 1103 1184 30Celanese, USA 53.01 -14 1.5 12.0 3536 1635 -19Lyondell Chemical, USA 53.01 122 0.5 7.3 10838 3280 n/aMitsubishi Gas Chemical, Japan 52.93 2 2.8 8.6 1918 2876 75Mitsubishi Rayon, Japan 51.28 -6 3.1 7.7 1629 2675 83Tosoh, Japan 50.34 -1 1.7 9.2 2904 1282 -12Avery Dennison, USA 49.74 4 1.6 6.4 3188 3793 5Nippon Shokubai, Japan 47.03 1 4.8 11.5 973 1375 29Nippon Kayaku, Japan 46.87 11 7.1 7.8 662 916 18Praxair, USA 46.60 4 1.0 17.0 4459 10361 7Valspar, USA 46.18 4 2.9 10.0 1581 1489 2Toyobo, Japan 45.41 2 2.3 4.9 1943 1080 10Avecia, UK 45.40 -21 11.1 -15.0 407 n/l n/lBasell AF SCA, Luxembourg † 44.89 n/a 1.3 4.7 3419 n/l n/lZeon, Japan 44.23 6 3.9 6.2 1142 1492 24Tokuyama, Japan 43.76 1 3.7 6.5 1172 2148 69BOC, UK 43.20 4 1.2 13.7 3755 8253 56Nissan Chemical Industries, Japan 42.61 -1 5.3 10.9 797 1352 3Denki Kagaku Kogyo KK, Japan 41.66 0 3.0 8.4 1382 1167 9JohnsonDiversey, USA 41.36 -6 2.1 3.5 1928 n/l n/lCytec Industries, USA 39.90 71 2.3 4.2 1704 1477 n/a126 The 2006 R&D ScoreboardThe 2006 R&D Scoreboard 127

Ranking of the top 1250 global companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %Ecolab, USA 39.83 11 1.5 12.0 2641 6371 27Newmarket, USA 38.09 0 6.1 6.7 626 533 234Hexion Specialty Chemicals, USA 36.11 214 1.4 4.1 2604 n/l n/lNippon Paint, Japan 34.68 -5 3.5 5.0 1001 705 21WR Grace, USA 34.48 16 2.3 6.4 1497 352 -1Cabot, USA 34.37 11 2.8 -2.6 1238 1151 -6Tokai Rubber Industries, Japan 33.17 1 3.1 8.5 1087 893 n/aKureha Chemical Industry(now Kureha), Japan 31.87 1 5.0 6.7 644 490 3Ishihara Sangyo Kaisha, Japan 30.48 4 6.4 8.2 476 322 -29Chemtura, USA 30.19 5 1.7 1.5 1819 1115 -55Kemira, Finland 29.61 -5 2.2 5.8 1370 1099 11NOVA Chemicals, Canada 29.12 4 0.9 0.1 3271 1456 -15Sigma-Aldrich, USA 29.01 17 3.0 21.7 971 2773 n/aTokyo Ohka Kogyo, Japan 28.62 -14 6.5 9.3 439 677 9Borealis, Denmark 28.17 0 0.9 6.6 3308 n/l n/lLonza, Switzerland 27.84 -11 2.5 11.9 1114 1963 17NOF, Japan 27.64 -3 4.2 6.8 660 698 53Kansai Paint, Japan 27.31 -7 2.8 8.8 971 1218 15Nippon Soda, Japan 26.34 6 3.7 2.7 712 398 56Ashland, USA 26.21 5 0.5 19.1 5743 2753 2Toagosei, Japan 24.83 -4 3.5 7.3 712 583 -27Ferro, USA 24.70 16 2.3 3.8 1074 405 n/aAlbemarle, USA 24.28 33 2.0 9.2 1228 1453 n/aSolutia, USA 23.88 3 1.5 3.8 1646 26 n/aHercules, USA 23.82 -5 2.0 2.7 1205 927 7Sud-Chemie, Germany 23.64 11 3.5 7.4 670 407 13Sumco, Japan 22.46 7 2.1 36.7 1088 4184 n/aEMS-Chemie, Switzerland 20.38 4 3.6 17.2 569 1754 n/aSanyo Chemical Industries, Japan 20.12 5 4.4 6.8 461 489 n/a6 Construction & materials 1177.94 -1.9 0.9 5.0 124661 80781 14.1Saint-Gobain, France 209.56 0 0.9 7.1 24124 13730 16Asahi Glass, Japan 156.47 -2 2.1 4.4 7534 8874 34Bouygues, France 94.13 1 0.6 7.0 16791 9060 7Hilti, Liechtenstein 86.05 6 5.4 8.9 1608 n/l n/lJS, Japan 68.74 -4 1.4 5.3 4867 4134 29American Standard Companies, USA 66.40 -19 1.1 8.1 5979 4645 -16Toto, Japan 58.17 4 2.4 5.6 2390 2128 27Kajima, Japan 49.48 -10 0.6 1.7 8327 2732 11Taisei, Japan 44.39 -5 0.5 2.6 8429 2104 -8Nippon Sheet Glass, Japan 39.21 3 3.0 4.5 1308 1210 11Fortune Brands, USA 38.39 -4 0.8 14.3 4674 6212 -20Lafarge, France 37.79 2 0.3 14.0 10972 11874 26Shimizu, Japan 35.90 -6 0.5 2.6 7325 2492 2Owens Corning, USA 33.78 23 0.9 -59.2 3683 35 -75HeidelbergCement, Germany 29.55 -2 0.6 12.9 5361 7767 73Central Glass, Japan 29.23 9 3.0 10.1 958 698 -12Taiheiyo Cement, Japan 29.03 -2 0.7 4.3 4307 2123 19Novar, UK(now part of Honeywell Acquisitions) 26.20 -12 1.8 2.9 1479 n/l n/lLennox International, USA 23.47 7 1.2 7.4 1961 963 n/aPilkington, UK(now part of NSG UK Enterprises) 22.00 -24 0.9 8.7 2582 n/l n/l7 Electricity 1536.55 -0.3 1.0 12.6 151604 142239 n/aAREVA, France 280.34 1 4.0 7.0 6957 459 -5Electricite de France, France 276.21 -5 0.8 15.6 35077 55389 n/aKorea Electric Power, South Korea 225.20 8 1.5 16.1 14662 14168 6Tokyo Electric Power, Japan 173.62 -5 0.7 10.6 24909 21177 11Kansai Electric Power, Japan 113.61 -1 0.9 11.0 12898 12875 8Chubu Electric Power, Japan 79.07 -9 0.8 13.5 10528 11075 5Vattenfall, Sweden 78.83 33 0.8 22.0 9453 n/l n/lBritish Nuclear Fuels(now British Nuclear Group Sellafield), UK 55.00 -7 2.3 -17.3 2364 n/l n/lTohoku Electric Power, Japan 51.04 8 0.6 8.9 7953 6267 2Kyushu Electric Power, Japan 48.64 -8 0.7 13.9 6952 6462 7Chugoku Electric Power, Japan 41.01 -5 0.8 10.8 4993 4464 4Taiwan Power, Taiwan 35.42 -3 0.5 3.3 6502 n/l n/lElectric Power Development, Japan 31.49 -5 1.1 18.0 2933 3578 n/aShikoku Electric Power, Japan 27.57 -6 1.0 10.3 2844 3327 8Hokkaido Electric Power, Japan 19.51 -4 0.8 16.0 2578 2999 n/a8 Electronic & electrical equipment 18343.50 6.1 4.8 6.5 381111 419393 13.6Siemens, Germany 3541.98 2 6.8 4.1 51838 38818 -4Samsung Electronics, South Korea 3169.30 12 6.8 9.9 46462 61021 12Canon, Japan 1413.80 4 7.6 16.0 18528 37065 43LG Electronics, South Korea 1021.93 15 4.0 2.6 25611 5651 0Sharp, Japan 731.03 7 5.8 5.1 12535 11118 12Sanyo Electric, Japan 650.59 5 5.3 -1.2 12262 2106 -24Agilent Technologies, USA 429.87 -21 10.6 6.1 4039 6994 -6ABB, Switzerland 427.54 6 3.2 6.8 13188 16469 89Schneider, France 372.48 1 4.6 13.3 8024 12908 28Pioneer, Japan 313.10 13 8.1 -8.5 3875 1866 10Sumitomo Electric, Japan 278.74 2 3.2 4.6 8588 5708 10Omron, Japan 244.00 6 8.1 8.6 3003 3515 10Olympus, Japan 235.51 23 5.9 1.6 4015 4480 41Danaher, USA 220.76 29 4.7 15.8 4651 11544 14Seiko Epson, Japan 211.73 4 2.9 5.7 7303 n/l n/lLG Philips LCD, South Korea 210.58 -12 3.6 4.8 5806 7434 -29ALSTOM, France 180.02 -22 1.9 2.8 9518 6507 116TDK, Japan 179.38 5 5.5 8.7 3247 5789 2Emerson Electric, USA 176.49 -38 1.8 13.5 10080 19173 15Legrand, France 163.94 2 7.3 12.5 2232 3947 n/aSamsung Electro-Mechanics, South Korea 159.63 23 12.4 -4.8 1286 1627 n/aHon Hai Precision Industry, Taiwan 154.90 24 1.0 5.6 16171 14249 39Yokogawa Electric, Japan 143.11 7 7.5 3.2 1910 2021 11Agfa-Gevaert, Belgium 138.79 6 6.1 3.7 2273 1585 -21Fuji Electric, Japan 134.36 -5 3.2 1.6 4166 2167 37Brother Industries, Japan 124.60 15 4.4 7.3 2858 1583 20Daikin Industries, Japan 121.32 3 3.4 9.2 3597 5065 30Invensys, UK 110.00 -11 4.1 6.0 2713 1024 31Tatung, Taiwan 95.94 267 2.6 -3.9 3635 840 -4Quanta Computer, Taiwan 94.19 81 1.1 1.3 8499 2681 -25Japan Radio, Japan 92.61 -6 8.2 1.8 1131 206 -35AU Optronics, Taiwan 86.59 -3 2.2 7.6 3856 5149 -7Rockwell Automation, USA 80.73 14 2.8 16.0 2914 6410 16Molex, USA 77.82 12 5.2 7.5 1485 3372 19Chi Mei Optoelectronic, Taiwan 76.25 56 2.7 5.9 2867 3936 -3Fanuc, Japan 74.70 6 4.6 36.7 1630 11187 10Kudelski, Switzerland 73.17 17 24.1 18.0 304 605 n/aDelta Electronics, Taiwan 68.19 19 4.8 9.7 1434 3087 61Chunghwa Picture Tubes, Taiwan 62.73 11 3.4 -5.5 1833 1025 -44Symbol Technologies, USA 61.34 -16 6.0 2.3 1028 1549 23Fujikura, Japan 59.85 10 3.4 2.5 1780 2584 100Funai Electric, Japan 59.66 4 3.2 8.6 1890 1933 -5Vestas Wind Systems, Denmark 59.30 48 2.4 -3.2 2462 2849 56National Instruments, USA 58.97 13 17.7 13.7 333 1279 1Hoya, Japan 54.07 11 3.6 27.2 1521 8947 2Compal Electronics, Taiwan 52.25 12 1.3 4.1 4076 1962 -12Endress & Hauser, Switzerland 51.00 6 8.4 11.1 608 n/l n/lPerkinElmer, USA 50.89 0 5.1 9.6 989 1354 -12Barco, Belgium 50.38 6 10.3 6.3 489 574 9Minebea, Japan 49.41 4 3.4 4.3 1453 1215 23Trimble Navigation, USA 49.09 9 10.9 16.2 451 1544 36EPCOS, Germany 48.30 -1 5.7 -7.3 850 474 -26Leica Geosystems, Switzerland 47.63 -1 13.9 9.3 342 757 35Spectris, UK 44.90 3 6.8 9.9 656 729 3Hamamatsu Photonics, Japan 43.66 1 12.0 16.1 365 1392 64Cooper Industries, USA 41.65 1 1.5 11.8 2755 4660 34Energizer, USA 40.72 -6 2.3 15.0 1741 2138 -17Yamatake, Japan 40.32 1 4.5 3.3 892 1025 34Axalto (now Gemalto), The Netherlands 40.21 5 7.0 8.2 578 789 -7Gemplus International, Luxembourg(now part of Gemalto, The Netherlands) 38.38 -23 6.0 6.5 645 581 -39Yaskawa Electric, Japan 38.19 2 2.5 2.5 1528 1546 61TCL Multimedia Technology, Cayman Islands 38.04 92 1.5 2.2 2596 190 n/aTechtronic Industries, Hong Kong 36.98 45 2.2 6.7 1680 999 -50Analogic, USA 36.75 8 17.3 10.4 212 377 -4Nexans, France 35.73 11 0.9 2.8 3844 1077 88Powerwave Technologies, USA 35.55 29 7.4 6.5 481 434 -32High Tech Computer, Taiwan 35.37 0 2.8 5.3 1280 5455 n/aVeeco Instruments, USA 35.17 4 14.7 2.7 239 400 20SPX, USA 34.25 1 1.2 7.6 2788 1916 0MiTAC International, Taiwan 34.07 44 2.3 5.9 1487 653 n/aIngenico, France 33.42 50 11.1 -8.9 300 357 66Orbotech, Israel 33.04 18 14.9 11.5 221 416 -10Ulvac, Japan 31.50 32 3.2 6.6 971 722 21Roper Industries, USA 31.16 38 3.7 18.4 847 2344 n/aLeoni, Germany 30.64 1 2.9 6.6 1064 579 14Ibiden, Japan 29.51 21 2.4 7.5 1222 4395 n/aRenishaw, UK 29.30 71 16.7 20.2 176 530 -12Woodward Governor, USA 29.12 25 6.0 10.0 482 598 n/aQuanta Display, Taiwan 28.73 n/a 2.6 -12.5 1094 1218 n/aArtesyn Technologies, USA(now part of Emerson Electric) 28.48 19 11.5 3.1 247 n/l n/lVishay Intertechnology, USA 28.33 -5 2.1 3.8 1338 1435 5Horiba, Japan 27.82 10 6.1 8.2 456 746 33Itron, USA 27.10 5 8.4 8.4 322 724 -1NKT, Denmark 26.88 -4 3.3 4.8 806 911 58GS Yuasa, Japan 24.70 n/a 2.1 -1.1 1183 521 n/aKeyence, Japan 23.68 13 3.4 52.8 688 6405 -1Plug Power, USA 23.18 5 295.0 -398.7 8 206 n/aMosel Vitelic, Taiwan 22.30 383 5.3 2.6 422 261 n/aAmphenol, USA 21.85 16 2.1 18.5 1053 2969 n/aZumtobel, Austria 21.65 -2 2.7 6.8 814 523 n/aHirose Electric, Japan 21.60 23 4.9 34.0 442 2915 n/aNovatek Microelectronics, Taiwan 21.27 n/a 4.6 20.9 460 1480 n/aOptimax Technology, Taiwan 21.20 18 67.4 -116.8 31 269 n/aPhoton Dynamics, USA 21.13 22 28.8 -16.9 73 114 n/aAO Smith, USA 20.97 0 2.1 4.8 984 959 n/aNewport, USA 20.94 38 8.7 7.5 240 423 n/aMabuchi Motor, Japan 20.71 4 4.5 7.9 464 1765 n/aUshio, Japan 20.60 24 3.5 17.5 588 1782 n/aAmetek, USA 20.27 36 2.4 16.5 836 1749 n/aAustriamicrosystems, Austria 19.38 0 15.8 12.6 123 356 n/aUniversal Scientific Industrial, Taiwan 19.31 10 2.1 2.1 927 146 n/aGigabyte Technology, Taiwan 19.27 22 2.3 3.5 822 259 n/a9 Equity investment instruments n/a n/a n/a n/a n/a n/a n/aNo companies with sufficient R&Dfor inclusion, n/a n/a n/a n/a n/a n/a n/a10 Fixed line telecommunications 4390.21 6.0 1.7 16.5 254764 319485 -8.6NTT, Japan 1569.74 -10 2.9 11.5 53329 69600 -9BT, UK 727.00 39 3.7 12.9 19514 20490 10France Telecom, France 491.96 27 1.5 20.0 33694 29547 -31Telefonica, Spain 373.78 18 1.4 21.5 26029 45276 -3Deutsche Telekom, Germany 297.51 0 0.7 13.2 40954 36391 -28Telstra, Australia 235.87 20 2.4 30.5 9681 10462 -18TeliaSonera, Sweden 210.42 3 3.3 20.1 6416 15387 15Telecom Italia, Italy 123.68 29 0.6 23.3 21510 27592 8KT, South Korea 73.36 24 0.7 13.7 9886 6671 2FastWeb, Italy 64.87 n/a 9.8 -12.1 665 1724 -8KDDI, Japan 54.10 -18 0.4 10.4 14411 16664 23Chunghwa Telecom, Taiwan 45.78 4 1.4 24.7 3276 10059 -4TDC, Denmark(now part of Nordic Telephone) 37.58 -15 0.9 12.1 4392 4307 n/a128 The 2006 R&D ScoreboardThe 2006 R&D Scoreboard 129

Ranking of the top 1250 global companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %Belgacom, Belgium 30.23 -17 0.8 20.6 3699 6696 n/aTelekom Austria, Austria 29.57 2 1.0 14.4 3008 6534 8Swisscom, Switzerland 24.75 -15 0.6 28.6 4301 12084 -111 Food & drug retailers 504.10 27.9 0.4 3.3 142464 40166 n/aMcKesson, USA 165.42 23 0.3 1.3 51287 8952 6Tesco, UK 115.00 35 0.3 5.7 39588 27595 n/aTchibo, Germany 74.89 8 1.2 9.9 6038 n/l n/lCardinal Health, USA 68.27 107 0.2 2.3 43636 1294 -91Orion, Finland 54.62 13 4.2 9.2 1307 1300 2Andrx, USA 25.90 10 4.3 1.1 607 1025 n/a12 Food producers 2432.04 2.4 1.7 11.8 140740 212611 9.7Nestle, Switzerland 662.51 6 1.6 12.8 40252 77382 15Unilever, UK 654.80 -8 2.4 13.2 27258 37171 -3Ajinomoto, Japan 140.32 1 2.7 6.6 5295 4056 4Kellogg, USA 105.43 22 1.8 17.0 5928 11061 1General Mills, USA 100.77 3 1.5 16.9 6780 10762 6Danisco, Denmark 86.87 69 4.5 6.4 1926 2159 12Danone, France 85.89 -5 0.9 13.4 9099 19418 26Kerry, Ireland 85.71 12 2.8 7.9 3044 2017 -25Meiji Seika Kaisha, Japan 83.17 1 4.6 -3.7 1796 1135 -3Cadbury Schweppes, UK 58.00 -8 0.8 15.4 7157 11177 0Campbell Soup, USA 55.34 2 1.3 16.0 4397 8806 21Meiji Dairies, Japan 37.30 2 1.0 2.5 3578 1159 19Yakult Honsha, Japan 33.44 5 2.7 9.6 1221 2700 30Numico, The Netherlands 30.92 36 2.3 18.1 1366 4892 15Effem (aka Mars), UK 26.32 31 1.3 9.0 2080 n/l n/lArla Foods, Denmark 25.42 -20 0.6 3.1 4270 n/l n/lWm Wrigley Jr, USA 24.80 23 1.0 18.9 2423 8646 n/aMcCormick, USA 24.52 7 1.6 14.1 1510 2431 n/aVilmorin Clause, France 24.46 3 7.1 9.0 342 570 64CSM, The Netherlands 23.84 -13 1.3 4.4 1882 1227 -14Tate & Lyle, UK 21.00 11 0.6 2.0 3720 3339 48Barilla GeR Fratelli, Italy 20.61 n/a 1.2 7.2 1741 n/l n/lSudzucker, Germany 20.61 9 0.6 7.6 3674 2502 1213 Forestry & paper 367.44 0.6 0.5 4.4 79030 42278 3.7Stora Enso, Finland 60.46 7 0.7 -0.2 9061 6152 -1Oji Paper, Japan 56.75 -4 1.0 6.9 5849 3677 15SCA, Sweden 45.16 -6 0.6 1.8 7055 5748 20Nippon Paper, Japan 37.33 6 0.6 3.9 5822 2497 7International Paper, USA 36.70 -7 0.3 5.3 14036 9659 8Georgia-Pacific, USA 35.53 -5 0.3 7.8 11449 n/l n/lWeyerhaeuser, USA 35.53 11 0.3 5.9 13397 8228 -14UPM-Kymmene, Finland 34.36 6 0.5 4.0 6423 6317 10Metsaliitto, Finland 25.63 1 0.4 0.3 5939 n/l n/l14 Gas, water & multiutilities 503.08 -3.0 0.4 15.5 129739 111897 -11.6Gazprom, Russia 132.63 12 0.5 33.7 28040 11940 -75RWE, Germany 87.26 -1 0.3 12.4 27840 26955 27Suez, France 58.27 0 0.2 9.0 28507 28536 65Osaka Gas, Japan 56.28 -8 1.2 8.4 4813 4406 5Gaz De France, France 50.16 -19 0.3 13.3 15387 18712 -3Veolia Environnement, France 43.22 0 0.2 7.3 17346 11582 28Tokyo Gas, Japan 41.13 -25 0.7 11.8 5877 8314 36Nalco, USA 34.13 4 1.8 10.5 1929 1453 -415 General financial 189.51 14.5 6.7 26.8 2810 13020 n/aSEI Investments, USA 73.80 33 16.4 38.2 450 2860 30Deutsche Borse, Germany 49.68 -14 4.0 37.5 1253 7823 39WCM, Germany 25.05 -1 3.9 -2.3 640 49 n/aInvestment Technology, USA 21.73 18 9.1 26.7 238 1190 n/aOMX, Sweden 19.25 119 8.4 27.0 230 1097 2516 General industrials 6216.61 11.4 2.4 14.6 262676 373159 -2.2General Electric, USA 1994.99 11 2.3 25.0 87198 196808 -8Honeywell, USA 624.42 17 3.9 9.6 16107 18375 -5Mitsubishi Heavy, Japan 612.07 25 4.8 0.0 12786 8050 51Tyco International, Bermuda 486.95 7 2.0 14.4 24336 30784 -93M, USA 464.82 5 3.8 23.5 12329 30424 -6Textron, USA 189.89 6 3.2 6.3 5850 6820 18Eaton, USA 167.17 10 2.6 9.8 6474 5705 -2JM Voith, Germany 122.99 20 5.0 6.1 2440 n/a n/aFreudenberg, Germany 113.71 12 3.4 6.8 3323 n/l n/lKubota, Japan 112.18 3 2.2 12.8 5187 6802 39Dover, USA 111.95 2 3.2 12.4 3541 5632 16Diehl Stiftung, Germany 109.94 -1 9.7 2.7 1132 n/l n/lITT Industries, USA 103.45 14 2.4 6.5 4326 5456 -6SMC, Japan 73.78 3 5.3 26.1 1383 5112 3Trumpf, Germany 73.52 9 7.7 10.1 959 n/l n/lOnex, Canada 73.30 220 0.8 7.2 8699 1368 n/aUnaxis, Switzerland 65.41 -18 9.2 1.8 709 2344 94Dainippon Screen Mfg, Japan 62.32 13 4.7 6.9 1329 1103 7NGK Insulators, Japan 52.58 -15 4.0 7.7 1313 2663 24Clorox, USA 51.26 5 2.0 18.5 2607 5195 1Tomkins, UK 46.70 -9 1.5 9.0 3182 2345 8Orkla, Norway 46.54 n/m 1.0 12.3 4631 5863 n/aSealed Air, USA 44.15 4 1.9 12.7 2379 2361 -8Koc, Turkey 43.41 4 0.4 5.0 10496 2603 n/aAbengoa, Spain 38.33 139 2.8 8.1 1390 1156 62SIG, Switzerland 35.04 -26 3.5 5.6 997 832 -7NACCO Industries, USA 33.14 -2 1.8 4.0 1839 640 47Meidensha, Japan 30.53 -9 3.3 0.1 915 462 28MeadWestvaco, USA 29.12 -32 0.7 2.9 4009 2673 -14Mitsui, Japan 27.87 -6 0.2 5.5 17400 14900 53York International, USA(now part of Johnson Controls) 27.78 13 1.1 3.0 2627 n/l n/lCrown, USA 27.38 0 0.7 6.2 4053 1662 5Seton House, UK 26.70 38 5.8 6.1 459 n/l n/lAptarGroup, USA 26.64 9 3.3 11.0 804 1060 n/aNichias, Japan 23.26 2 3.9 7.7 594 n/l n/lCookson, UK 22.30 -8 1.4 7.0 1635 1016 57Rexam, UK 21.00 62 0.6 13.0 3237 2944 217 General retailers 704.38 39.4 2.2 11.9 31573 54271 -18.1Amazon.com, USA 315.12 65 6.4 5.9 4945 6503 -39eBay, USA 212.77 30 9.8 38.6 2175 19844 -39Nitto Denko, Japan 82.61 6 3.3 13.8 2541 7148 24Federated Department Stores, USA 51.26 9 0.4 10.6 13599 11304 52GUS, UK 22.00 47 0.3 10.3 7915 8745 -6Netflix, USA 20.61 101 5.2 0.4 397 726 n/a18 Health care equipment & services 4508.21 12.5 6.4 15.7 69955 189823 0Medtronic, USA 648.24 17 9.9 27.2 6577 29811 -23Boston Scientific, USA 396.09 20 10.8 15.6 3660 13873 3Guidant, USA(now part of Boston Scientific) 348.32 16 16.8 12.5 2068 n/l n/lBaxter International, USA 310.46 3 5.4 15.8 5737 15972 9St Jude Medical, USA 215.07 31 12.7 21.0 1698 7085 -26Stryker, USA 162.98 33 5.7 20.5 2838 10955 -11Becton Dickinson, USA 158.22 15 5.0 19.2 3154 9471 20Carl Zeiss, Germany 158.03 10 10.4 9.5 1527 n/l n/lBeckman Coulter, USA 121.68 4 8.5 7.8 1423 1869 -4Fresenius, Germany 102.38 12 1.9 12.3 5421 10824 366Zimmer, USA 102.23 5 5.3 32.1 1914 9299 -20Bausch & Lomb, USA 94.65 8 7.3 12.5 1300 1465 -42BioMerieux, France 89.80 3 13.2 13.7 683 1295 17Thermo Electron, USA 88.99 13 5.8 10.1 1534 3461 26Essilor International, France 77.98 6 4.7 16.3 1666 5497 31Dragerwerk, Germany 74.45 4 6.6 8.0 1121 221 4Terumo, Japan 67.80 -7 6.0 18.9 1135 4391 22Bio-Rad Laboratories, USA 67.05 6 9.7 8.5 688 1053 22Smith & Nephew, UK 67.00 1 4.8 18.6 1407 4209 -15Synthes, Switzerland 66.89 5 5.5 31.8 1210 7833 -6B Braun Melsungen, Germany 66.87 3 3.2 8.2 2079 n/l n/lCR Bard, USA 66.75 3 6.5 25.1 1032 4289 7Edwards Lifesciences, USA 57.67 14 9.9 11.0 581 1535 0Gambro, Sweden (now part of Investor) 54.24 21 2.9 11.7 1860 n/l n/lVarian Medical Systems, USA 47.80 14 5.9 22.1 805 3790 26Biomet, USA 46.42 23 4.2 29.3 1095 4813 -13Affymetrix, USA 45.38 5 21.2 15.5 214 787 -54Waters, USA 38.97 3 5.8 24.2 675 2451 -18Millipore, USA 38.47 6 6.7 14.2 577 1998 9Advanced Medical Optics, USA 35.91 35 6.7 -44.4 536 1964 29William Demant, Denmark 35.24 18 8.1 23.2 434 2842 51Sorin, Italy 34.12 -8 6.6 2.2 517 488 -18Varian, USA 31.42 11 6.3 8.2 497 799 17Diagnostic Products, USA(now part of Siemens, Germany) 30.35 15 10.8 19.8 280 n/l n/lGetinge, Sweden 30.18 4 3.5 15.2 870 1998 31Hillenbrand Industries, USA 29.42 -10 2.6 -6.3 1129 1770 -3Phonak, Switzerland 27.86 29 7.3 24.4 383 2416 60Dentsply International, USA 27.38 5 2.7 4.3 999 2840 14Respironics, USA 26.58 55 5.0 14.9 531 1618 n/aFisher Scientific International, USA 25.75 20 0.8 11.8 3256 5503 n/aCooper Companies, USA 24.98 560 5.3 16.9 470 1117 n/aMDS, Canada 24.93 -12 2.7 4.1 916 1564 n/aBiosite, USA 24.59 18 14.7 28.8 168 423 n/aIDEXX Laboratories, USA 23.85 16 6.4 18.0 372 1609 n/aNihon Kohden, Japan 23.65 2 5.7 8.9 414 460 4ev3, USA 22.88 1 29.4 -77.8 78 511 n/aBruker Biosciences, USA 22.87 -9 13.2 3.0 173 334 57Aloka, Japan 22.66 -14 9.9 62.7 228 205 n/aInamed, USA (now part of Allergan) 22.60 35 8.9 -0.6 255 n/l n/lDatascope, USA 21.09 12 10.3 5.3 205 270 n/aNDChealth, USA(now part of Per-Se Technologies) 19.79 -3 7.2 7.4 276 n/l n/lColoplast, Denmark 19.71 5 3.3 15.4 601 1973 25Steris, USA 19.57 -5 2.8 9.4 688 873 n/a19 Household goods 2512.27 7.5 2.3 11.0 110928 186170 n/aProcter & Gamble, USA 1130.01 8 3.4 19.9 33050 113630 46Henkel, Germany 222.62 19 2.7 10.2 8227 9068 22Whirlpool, USA 197.46 8 2.4 5.1 8339 3606 10Electrolux, Sweden 160.07 7 1.7 3.2 9476 2614 -38Sekisui Chemical, Japan 113.38 -3 2.7 4.5 4229 2851 48Black & Decker, USA 77.94 13 2.1 13.3 3800 3117 -24Swatch, Switzerland 65.85 -6 3.5 17.1 1897 6280 16Reckitt Benckiser, UK 63.00 5 1.5 20.1 4179 15378 23Newell Rubbermaid, USA 60.00 -3 1.6 7.0 3694 4297 8Maytag, USA (now part of Whirlpool) 53.00 -7 1.9 -1.1 2855 n/l n/lSekisui House, Japan 30.55 7 0.4 4.8 7412 6214 41Snap-On, USA 29.12 -18 2.1 7.2 1376 1420 18Groupe SEB, France 28.51 -2 1.7 7.4 1692 1008 -2Armstrong, USA 28.25 4 1.4 3.2 2073 12 -80Daiwa House Industry, Japan 28.20 1 0.4 4.7 6741 5656 45Steelcase, USA 27.61 15 1.7 2.8 1671 1222 n/aPentair, USA 26.82 46 1.6 11.1 1716 1740 n/aNoritz, Japan 25.30 21 2.9 4.5 869 525 n/aJuki, Japan 23.94 4 3.8 6.9 631 402 32Church & Dwight, USA 22.54 17 2.2 12.5 1011 1405 n/aMakita, Japan 20.16 0 2.1 17.1 961 2633 n/a130 The 2006 R&D ScoreboardThe 2006 R&D Scoreboard 131

Ranking of the top 1250 global companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %Indesit, Italy 19.58 60 0.9 3.8 2105 673 n/aBriggs & Stratton, USA 19.51 29 1.3 8.7 1546 782 n/aBIC, France 19.44 14 2.0 16.9 949 1639 -4Dyson James, UK 19.42 31 4.6 17.5 426 n/l n/l20 Industrial engineering 6079.57 9.2 2.7 8.2 223748 206359 21.9Volvo, Sweden 772.97 18 4.4 7.2 17607 13202 21Caterpillar, USA 631.41 17 3.0 11.2 20719 28205 28Deere, USA 394.51 11 3.2 9.6 12394 10019 -3MAN, Germany 375.84 37 3.7 5.0 10080 5816 44Komatsu, Japan 247.80 8 3.0 9.6 8399 11283 74Scania, Sweden 203.10 20 4.3 10.6 4704 5243 5Heidelberger Druckmaschinen, Germany 169.57 1 6.9 6.7 2464 1820 -2Cummins, USA 161.93 15 2.8 8.9 5777 3226 37Liebherr, Switzerland 158.03 15 5.0 6.5 3154 n/l n/lNavistar International, USA 120.57 -4 2.2 4.6 5515 942 -31Sandvik, Sweden 116.59 -5 2.5 15.0 4638 7283 15IHI, Japan 104.66 -6 1.9 -0.7 5375 2118 72Ingersoll-Rand, Bermuda 94.60 9 1.5 12.8 6143 7277 -8Atlas Copco, Sweden 92.29 -1 2.4 18.1 3860 8876 40Knorr-Bremse, Germany 91.11 7 4.8 9.2 1885 n/l n/lFurukawa Electric, Japan 84.85 -10 2.2 -0.2 3829 2618 58Nissan Diesel Motor, Japan 79.78 5 3.5 7.9 2276 700 17Parker Hannifin, USA 76.06 38 1.6 10.1 4817 5221 13Illinois Tool Works, USA 74.48 4 1.0 17.5 7527 15388 7NTN, Japan 73.80 10 3.9 7.4 1917 1971 22AGCO, USA 70.89 17 2.2 4.8 3174 1345 22Paccar, USA 68.62 14 0.9 12.7 7935 8035 13Kawasaki Heavy Industries, Japan 65.06 -11 1.1 1.4 6127 2636 47Glory, Japan 64.39 10 6.9 17.1 932 733 -1Rieter, Switzerland 63.95 7 4.6 5.8 1397 996 22SKF, Sweden 62.14 7 1.7 10.8 3607 3750 10Metso, Finland 60.47 -15 2.1 7.3 2918 2834 52Danfoss, Denmark 59.51 14 3.9 5.6 1512 n/l n/lKrones, Germany 56.75 n/a 4.9 5.3 1165 774 n/aGeorg Fischer, Switzerland 54.80 9 3.4 6.7 1632 1080 56Grundfos, Denmark 54.32 3 4.4 9.7 1236 n/l n/lCitizen Watch, Japan 50.42 8 2.9 10.8 1763 1929 24Ebara, Japan 49.32 -9 2.1 -4.3 2361 990 29Saurer, Switzerland 49.16 -5 4.6 5.6 1079 637 0Schindler, Switzerland 48.62 -4 1.2 7.1 3920 3813 25Wartsila, Finland 48.17 18 2.7 8.0 1813 1966 27Mettler-Toledo International, Switzerland 47.70 -2 5.5 11.8 864 1422 15Deutz, Germany 43.29 -9 4.8 3.8 909 425 11Assa Abloy, Sweden 43.04 18 2.1 14.6 2035 3367 18Claas, Germany 41.18 -17 2.8 4.9 1495 n/l n/lGEA, Germany 40.51 1 1.1 4.6 3745 1701 27Bobst, Switzerland 40.26 3 5.7 4.7 703 502 n/aShimadzu, Japan 39.05 10 3.4 7.4 1153 1287 26Koenig & Bauer, Germany 38.07 -5 3.4 1.8 1114 267 36IWKA, Germany 35.10 -14 2.5 -3.9 1422 315 -9Sauer-Danfoss, USA 34.18 13 3.8 5.5 902 679 22Alfa Laval, Sweden 32.78 11 2.7 8.1 1195 2155 89Pall, USA 32.73 -2 3.0 10.9 1108 1898 -12Amada, Japan 31.49 -11 3.2 8.2 992 2464 40Sumitomo Heavy Industries, Japan 31.18 1 1.2 8.2 2573 3010 52Timken, USA 30.81 6 1.0 8.4 3011 1808 19IMI, UK 29.40 11 1.9 10.9 1578 1690 7Kone, Finland † 29.09 -37 1.2 9.3 2475 2656 28Bucher Industries, Switzerland 28.02 17 3.3 6.0 861 548 34Gildemeister, Germany 27.89 6 3.6 4.9 774 237 29Jungheinrich, Germany 27.64 6 2.4 6.4 1130 239 12Hexagon, Sweden 27.15 116 3.9 4.0 705 1623 140Terex, USA 26.97 20 0.9 4.8 2924 2663 n/aCrane, USA 26.85 -12 2.2 10.5 1201 1392 n/aJCB Service, UK 26.79 18 2.4 5.0 1100 n/l n/lStork, The Netherlands 24.59 19 2.0 6.5 1249 857 -5Gamesa, Spain 24.55 -28 1.6 10.5 1559 2817 44Daifuku, Japan 24.53 17 3.0 5.8 820 926 n/aJenoptik, Germany 23.67 8 1.8 -1.5 1315 240 -15Kurita Water Industries, Japan 20.87 -1 2.6 9.9 794 1470 n/aCargotec, Finland † 20.85 n/a 1.2 8.1 1671 1199 n/aHitachi Zosen, Japan 20.26 0 1.2 2.2 1667 393 n/aKomori, Japan 19.68 2 3.6 9.0 552 896 n/aOshkosh Truck, USA 19.45 21 1.1 9.1 1724 2118 n/aISEKI, Japan 19.44 3 2.5 3.5 777 372 n/a21 Industrial metals 1579.45 3.3 0.8 10.3 189646 145418 39.3JFE, Japan 183.55 2 1.3 11.8 13837 13625 42Alcan, Canada 132.22 -5 1.1 3.2 11836 10435 33POSCO, South Korea 130.01 -19 0.9 20.8 15156 12494 13ThyssenKrupp, Germany 127.80 -3 0.4 4.7 28902 9877 77AlCoA, USA 113.00 7 0.7 8.5 15237 14774 -2Kobe Steel, Japan 97.22 16 1.4 8.0 7125 5318 38Arcelor, Luxembourg 94.82 2 0.4 14.1 22407 18133 128Umicore, Belgium 76.96 26 1.6 3.8 4954 1791 40Sumitomo Metal Industries, Japan 72.71 8 1.2 14.1 6104 7690 38Corus, UK 66.00 5 0.7 6.4 10140 3587 67USEC, USA 55.04 62 6.1 4.3 908 510 -33Mitsubishi Materials, Japan 51.57 -7 1.1 3.7 4860 2774 44Voest-Alpine, Austria 42.26 2 0.9 11.3 4475 3108 78Salzgitter, Germany 39.51 1 0.8 12.2 4914 2715 111Heraeus, Germany 37.10 n/a 0.6 1.9 6398 n/l n/lNovelis, Canada 33.78 -6 0.7 3.5 4517 847 -15Bekaert, Belgium 30.90 -17 2.3 9.6 1315 1110 10Mitsui Mining & Smelting, Japan 29.02 99 1.3 9.6 2162 1872 9Phelps Dodge, USA 28.31 50 0.5 26.5 5260 10262 n/aNippon Light Metal, Japan 27.33 15 1.0 4.3 2765 807 1Sumitomo Metal Mining, Japan 23.75 12 1.0 12.0 2392 4741 n/aOutokumpu, Finland 22.67 -20 0.5 1.0 4448 2466 61Eramet, France 21.99 -9 1.2 24.2 1863 2185 42China Steel, Taiwan 21.55 14 0.4 23.8 5039 5125 n/aInco, Canada 20.39 21 0.8 29.1 2632 9173 n/a22 Industrial transportation 401.43 -13.8 0.5 7.2 84800 n/a n/aDeutsche Post, Germany 120.24 -40 0.4 7.9 30640 15668 -1East Japan Railway, Japan 76.89 -2 0.6 12.0 12523 17285 39Hyundai Heavy Industries, South Korea 76.04 13 0.9 2.3 8013 5273 88SNCF, France 37.79 n/a 0.3 3.1 14425 1186 n/aBAA, UK(now part of Airport Development and Investment) 27.00 n/a 1.2 38.6 2275 n/l n/lDaewoo Shipbuilding & Marine, South Korea 23.97 43 0.9 -0.4 2717 3603 n/aFinland Post, Finland 20.27 51 2.2 9.7 926 n/l n/lLa Poste, France 19.24 22 0.1 4.4 13281 n/l n/l23 Leisure goods 10671.95 1.7 7.0 4.6 153218 135249 10.6Matsushita Electric, Japan 2787.28 -8 6.4 4.2 43895 29328 18Sony, Japan 2624.49 6 7.7 5.2 34268 26192 32Philips Electronics, The Netherlands 1605.74 -8 7.7 5.2 20884 22087 14Fuji Photo Film, Japan 898.96 8 6.8 2.5 13164 10063 1Eastman Kodak, USA 519.57 4 6.3 -4.4 8311 3335 -23Electronic Arts, USA 441.52 20 25.7 11.0 1719 8841 -16Konica Minolta, Japan 325.69 34 6.2 3.8 5268 3973 29Harman International Industries, USA 129.66 3 7.3 11.4 1765 3168 -2Take-Two Interactive Software, USA 128.29 50 18.3 3.3 700 455 -56Yamaha, Japan 113.28 2 4.3 5.3 2636 2480 23Namco, Japan (now part of Namco Bandai) 108.11 11 12.3 8.4 881 n/l n/lMattel, USA 106.01 6 3.5 13.4 3017 3961 -5Bandai, Japan (now part of Namco Bandai) 96.28 6 7.2 8.3 1332 n/l n/lCasio Computer, Japan 89.84 10 3.1 6.7 2864 3000 33Hasbro, USA 87.71 -4 4.9 11.1 1798 1886 -13Brunswick, USA 84.29 10 2.4 8.4 3450 1629 -36Activision, USA 76.76 52 9.0 1.2 855 2072 -11Midway Games, USA 63.34 46 72.5 -72.2 87 492 n/aThq, USA 49.07 15 10.4 4.2 470 917 8Pentax, Japan 48.34 9 7.3 4.3 659 391 38Bang & Olufsen, Denmark 46.22 10 13.4 10.2 345 689 40Garmin, Cayman Islands 43.62 22 7.3 32.9 599 5609 59Shimano, Japan 41.69 39 5.0 14.3 828 1760 -11Leapfrog Enterprises, USA 30.49 -14 8.1 3.2 378 297 15Hannstar Display, Taiwan 28.34 n/a 2.6 -12.0 1106 490 n/aAmer Sports, Finland 27.07 26 2.9 5.5 937 811 6Pace Micro Technology, UK 23.98 12 9.5 2.8 253 93 -46TiVo, USA 23.93 9 21.0 -19.1 114 339 n/aHeiwa, Japan 22.39 0 3.5 11.2 632 892 -924 Life insurance 62.54 n/a 0.3 10.5 20112 n/a n/aOld Mutual, UK 40.00 700 0.3 12.2 12709 8809 n/aEureko, The Netherlands 22.54 n/a 0.3 7.7 7403 n/l n/l25 Media 1331.49 10.0 1.8 11.5 75496 91912 -9.4Lagardere, France 260.41 18 2.9 6.9 8941 5485 -5Vivendi Universal (now Vivendi), France 233.61 75 1.7 20.9 13387 21053 11Thomson, France 172.46 -9 3.5 -3.1 4864 2337 -33Dai Nippon Printing, Japan 130.22 1 1.9 8.0 7032 6677 -3Reuters, UK 121.00 -5 5.0 12.3 2409 5120 -1Toppan Printing, Japan 109.84 4 1.6 5.7 6976 4638 14Scientific-Atlanta, USA(now part of Cisco Systems) 107.84 11 9.7 15.4 1113 n/l n/lReed Elsevier, UK 102.00 -7 2.0 16.3 5166 6752 n/aTime Warner, USA 71.65 -8 0.3 12.2 25426 39229 -20Arbitron, USA 22.46 16 12.4 32.7 181 620 n/a26 Mining 184.65 35.8 0.8 26.0 24596 67678 34.2Vale Do Rio Doce, Brazil 161.35 47 2.2 42.5 7451 32312 45Anglo American, UK 23.30 -11 0.1 18.9 17145 35366 2627 Mobile telecommunications 612.47 10.3 0.8 -16.2 76074 126241 n/aVodafone, UK 206.00 -6 0.6 -50.4 36616 61607 -35SK Telecom, South Korea 146.09 -7 2.4 23.6 6178 9267 3Pantech & Curitel, South Korea 81.34 19 8.3 -10.6 981 93 n/aPantech, South Korea 63.18 73 16.7 -6.9 377 215 n/aTelenor, Norway 60.99 68 1.0 19.0 5929 13145 51Alltel, USA 27.49 46 0.5 22.9 5791 12354 n/aSprint Nextel, USA 27.38 47 0.1 11.5 20200 29560 n/a28 Nonequity investment instruments n/a n/a n/a n/a n/a n/a n/aNo companies with sufficient R&Dfor inclusion n/a n/a n/a n/a n/a n/a n/a29 Nonlife insurance 122.00 4.3 1.9 11.4 6420 4012 n/aRoyal & Sun Alliance, UK 122.00 4.3 1.9 11.4 6420 4012 n/a30 Oil & gas producers 2864.49 11.8 0.3 17.0 1091222 1132886 8.2TOTAL, France 464.48 6 0.6 20.0 84250 87302 -4Exxon Mobil, USA 414.73 10 0.2 18.3 184879 240948 7Royal Dutch Shell, UK 342.50 6 0.2 14.5 178664 124031 -5BP, UK 292.40 14 0.2 12.4 145308 126066 -8Petroleo Brasiliero, Brazil 232.41 61 0.7 26.3 32808 57659 61PetroChina, China 230.61 9 0.6 35.8 39859 116717 24Chevron, USA 184.06 31 0.2 14.9 100687 83860 11China Petroleum & Chemical, China 161.90 48 0.3 8.5 59412 35666 48ENI, Italy 138.79 -21 0.3 23.7 50658 66050 -1Statoil, Norway 91.70 4 0.3 24.0 33596 37271 23ConocoPhillips, USA 72.81 -1 0.1 14.9 94037 65768 22Norsk Hydro, Norway 61.59 -6 0.4 27.0 14986 20333 30Nippon Oil, Japan 56.46 18 0.2 4.4 24301 6944 3Repsol YPF, Spain 43.29 11 0.1 12.3 33921 18664 -8132 The 2006 R&D ScoreboardThe 2006 R&D Scoreboard 133

Ranking of the top 1250 global companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %CNOOC, China 28.99 50 0.6 52.9 5013 21592 n/aNexen, Canada 26.93 54 1.1 20.9 2484 9353 n/aSasol, South Africa 20.85 -43 0.3 21.1 6359 14660 831 Oil equipment, services & distribution 778.84 7.2 1.8 15.7 42519 124128 53.9Schlumberger, USA 294.45 8 3.5 22.2 8335 46367 57Halliburton, USA 140.38 -4 1.1 11.7 12229 20247 16Baker Hughes, USA 109.62 7 2.6 18.7 4185 14911 28Weatherford International, USA 62.54 28 2.5 13.3 2536 9543 79Smith International, USA 42.87 10 1.3 12.0 3250 5520 31BJ Services, USA 31.57 15 1.7 20.1 1889 6852 16FMC Technologies, USA 30.00 2 1.6 5.3 1879 2585 61Compagnie Generale de Geophysique,France 27.00 17 4.5 7.1 598 1634 144Tenaris, Luxembourg 20.21 32 0.5 30.7 3924 13311 917Technip, France 20.20 -11 0.5 4.0 3695 3157 232 Personal goods 1536.03 2.3 2.2 15.0 70575 119803 9.9L'Oreal, France 340.94 -2 3.4 15.6 9985 34892 21Kao, Japan 196.24 3 4.2 13.0 4624 8406 10Kimberly-Clark, USA 186.10 14 2.0 14.2 9263 16330 -7Colgate-Palmolive, USA 143.47 7 2.2 18.1 6638 17513 10Gillette, USA(now part of Procter & Gamble) 121.74 3 2.0 23.1 6103 n/l n/lInternational Flavors & Fragrances, USA 104.74 3 9.0 13.6 1161 1980 -3Givaudan, Switzerland 97.23 6 7.9 18.5 1228 3367 19Shiseido, Japan 81.19 -2 2.5 4.2 3311 4613 29Yue Yuen Industrial, Hong Kong 54.79 5 3.0 10.0 1838 2676 -9Adidas-Salomon, Germany 43.29 -28 0.9 10.1 4559 5038 -3Estee Lauder, USA 42.11 8 1.1 11.4 3691 4647 59Avon Products, USA 37.40 1 0.8 14.2 4747 7174 -19Reebok International, USA(now part of Adidas-Salomon, Germany) 31.83 8 1.4 7.6 2205 n/l n/lPUMA, Germany 28.86 14 2.4 22.4 1221 3271 32Christian Dior, France 26.11 -7 0.3 17.7 10001 9896 2033 Pharmaceuticals & biotechnology 46733.85 8.2 14.9 20.2 313721 1174336 9.3Pfizer, USA 4334.81 -3 14.5 21.8 29912 108877 -3Johnson & Johnson, USA 3676.61 21 12.5 26.2 29423 108795 -1GlaxoSmithKline, UK 3136.00 10 14.5 32.0 21660 83331 9Novartis, Switzerland 2822.69 15 15.0 22.0 18763 89341 12Sanofi-Aventis, France 2778.62 2 14.8 11.8 18765 66208 -2Roche, Switzerland 2521.44 12 16.1 24.4 15695 89009 21Merck, USA 2241.38 -4 17.5 32.9 12821 52872 35AstraZeneca, UK 1968.20 -11 14.1 27.1 13950 50344 20Eli Lilly, USA 1762.29 12 20.7 19.2 8531 37285 7Wyeth, USA 1601.46 12 14.7 25.9 10925 38055 7Bristol-Myers Squibb, USA 1599.49 10 14.3 21.9 11188 27248 -4Amgen, USA 1347.86 14 18.6 39.0 7240 48713 -16Schering-Plough, USA 1086.32 16 19.6 5.2 5538 17817 -5Abbott Laboratories, USA 1060.80 7 8.2 21.5 13011 41978 0Boehringer Ingelheim, Germany 934.45 10 14.3 20.2 6551 n/l n/lTakeda Pharmaceutical, Japan 698.09 9 12.6 37.6 5542 34373 27Schering, Germany (now part of Bayer) 679.54 6 18.6 17.6 3647 12046 70Merck, Germany 489.90 19 12.1 13.6 4033 9342 266Novo Nordisk, Denmark 468.41 17 15.1 24.9 3110 11332 20Biogen Idec, USA 435.50 10 30.9 8.7 1411 8534 4Sankyo, Japan(now part of Daiichi Sankyo) 427.14 0 14.7 11.0 2901 n/l n/lEisai, Japan 386.55 14 14.7 16.2 2630 8053 29Serono, Switzerland 354.09 -1 23.5 -4.9 1506 4245 -8UCB, Belgium 351.11 42 20.2 13.6 1740 4492 -1ALTANA, Germany 319.47 4 14.2 20.5 2248 4340 -1Yamanouchi Pharmaceutical(now Astellas Pharma), Japan 290.39 -16 13.2 13.6 2206 12856 11Daiichi Pharmaceutical, Japan(now part of Daiichi Sankyo) 283.36 -3 17.5 19.0 1621 n/l n/lGenzyme, USA 281.04 27 17.6 22.6 1593 10553 0Mitsubishi Pharma, Japan(now part of Mitsubishi Chemical) 249.14 0 21.6 9.6 1156 n/l n/lChiron, USA(now part of Novartis, Switzerland) 245.11 2 21.9 8.0 1118 n/l n/lForest Laboratories, USA 239.07 40 14.7 29.4 1627 8741 10Allergan, USA 227.75 13 16.9 24.8 1351 9676 34MedImmune, USA 224.02 18 30.9 -3.6 725 3642 -9Teva Pharmaceutical Industries, Israel 214.88 9 7.0 25.0 3058 15750 37Cephalon, USA 206.68 30 29.3 -18.2 706 2319 73Applera, USA 192.65 -12 17.9 7.8 1075 3416 43Millennium Pharmaceuticals, USA 185.64 20 57.1 -38.8 325 1880 4Schwarz Pharma, Germany 177.91 31 26.1 -1.6 681 2309 52Shire, UK 167.26 49 18.0 -10.3 932 4226 34Kyowa Hakko Kogyo, Japan 162.25 14 9.3 6.2 1744 1848 2Gilead Sciences, USA 161.77 24 13.7 54.7 1182 16451 46Lundbeck, Denmark 159.72 35 19.1 23.5 835 3245 -6Ono Pharmaceutical, Japan 151.19 -1 21.1 41.7 717 3531 2Shionogi, Japan 145.14 -1 14.8 15.7 984 3825 44Tanabe Seiyaku, Japan 137.14 13 16.2 14.9 849 1983 28Elan, Ireland 136.18 26 54.7 -113.5 249 4401 120Human Genome Sciences, USA 122.09 -3 >999.9 >-999.9 11 721 -29Taisho Pharmaceutical, Japan 114.60 -4 8.3 19.6 1379 3636 1Pierre Fabre, France 106.02 6 10.5 5.1 1010 n/l n/lProtein Design Labs(now PDL Biopharma), USA 100.21 40 61.5 -59.1 163 1163 -28Ipsen, France 99.23 17 18.3 20.6 542 1651 n/aMerial, UK 88.30 7 7.7 13.1 1152 n/l n/lCelgene, USA 87.08 6 27.8 14.3 313 9296 103Dainippon Pharmaceutical(now Dainippon Sumitomo Pharmaceutical), Japan 86.09 10 10.0 4.9 858 2971 166Sepracor, USA 84.17 -10 17.6 0.1 478 3148 -6Dade Behring, USA 82.42 6 8.5 12.2 966 2063 8Exelixis, USA 82.21 2 185.8 -123.7 44 438 22Hospira, USA 80.87 16 5.6 13.6 1431 3977 11Ivax, USA(now part of Teva Pharmaceutical Industries, Israel) 79.33 -4 6.0 11.8 1317 n/l n/lMedarex, USA 79.13 11 264.0 -312.1 30 677 4Actelion, Switzerland 75.78 26 25.8 23.0 293 1644 13Barr Pharmaceuticals, USA 74.78 -24 12.3 30.5 610 3207 12Theravance, USA 73.54 53 >999.9 >-999.9 7 832 31OSI Pharmaceuticals, USA 73.37 14 72.3 -94.9 101 1137 -3Novozymes, Denmark 73.05 -2 12.6 19.1 579 2673 n/aWatson Pharmaceuticals, USA 72.96 -2 7.6 13.0 959 1466 -31Kos Pharmaceuticals, USA 71.78 11 16.4 24.1 438 1144 -41Pliva, Croatia 70.40 -7 10.4 1.7 675 1550 n/aAbgenix, USA (now part of Amgen) 69.12 11 646.9 >-999.9 11 n/l n/lValeant Pharmaceuticals, USA 66.26 23 13.7 -13.0 484 1001 -6CV Therapeutics, USA 63.78 5 577.8 >-999.9 11 302 -55Ranbaxy Laboratories, India 63.74 21 9.2 3.1 691 1854 -31Vertex Pharmaceuticals, USA 63.05 1 67.3 -123.1 94 2071 119Kyorin Pharmaceutical (now Kyorin), Japan 62.67 54 19.2 5.0 327 531 n/aSanten Pharmaceutical, Japan 62.28 6 13.6 19.4 457 1215 0CSL, Australia 62.27 44 5.3 14.1 1175 4128 n/aNPS Pharmaceuticals, USA 60.94 -19 815.8 >-999.9 7 100 -56Regeneron Pharmaceuticals, USA 60.07 n/m 155.8 -141.7 39 446 n/aMylan Laboratories, USA 59.45 16 8.1 24.3 732 2826 24Invitrogen, USA 57.84 36 8.3 11.3 698 1757 -34Neurocrine Biosciences, USA 56.76 11 78.7 -20.2 72 196 n/aIncyte, USA 55.70 8 >999.9 >-999.9 5 213 -39Cell Genesys, USA 53.82 0 >999.9 >-999.9 3 122 -21Alexion Pharmaceuticals, USA 52.61 64 >999.9 >-999.9 0 629 42Endo Pharmaceuticals, USA 51.44 75 10.8 38.2 478 2555 19Idenix Pharmaceuticals, USA 50.26 8 133.3 -86.3 38 292 n/aKissei Pharmaceutical, Japan 48.82 1 16.2 12.2 301 591 -8InterMune, USA 48.19 2 56.3 -27.8 86 302 6Amylin Pharmaceuticals, USA 45.65 -8 55.8 -149.0 82 3425 183King Pharmaceuticals, USA 43.11 9 4.2 9.8 1034 2411 25Biovitrum, Sweden 42.16 8 61.5 -12.3 69 n/l n/lImClone Systems, USA 41.88 24 18.7 17.4 223 1648 7Nippon Shinyaku, Japan 41.85 3 15.6 15.0 268 359 8MGI PHARMA, USA 41.29 13 25.4 -47.8 163 656 -40Nektar Therapeutics, USA 40.81 58 55.5 -145.6 74 578 -1Chr Hansen (now ALK-Abello), Denmark 40.72 -2 10.1 7.5 404 708 -16Genmab, Denmark 40.69 18 448.4 -434.4 9 795 188Cell Therapeutics, USA 40.06 -32 427.3 -841.3 9 76 -24Cambridge Antibody, UK(now part of AstraZeneca) 39.17 -11 20.2 -4.8 194 n/l n/lNabi Biopharmaceuticals, USA 38.93 10 61.9 -120.6 63 180 -63Medicis Pharmaceutical, USA 38.26 298 17.4 26.1 220 615 n/aICOS, USA 37.92 17 91.2 -104.0 42 896 0Medicines, USA 37.51 31 42.9 -8.0 87 615 -3Encysive Pharmaceuticals, USA 36.99 12 453.4 -555.4 8 146 -64Par Pharmaceutical Companies, USA 36.67 25 14.5 3.1 252 316 n/aVasogen, Canada 35.61 38 n/a n/a 0 20 n/aBiovail, Canada 35.23 21 6.5 32.1 545 1493 -11CuraGen, USA 35.13 -9 256.3 -326.2 14 102 -29Acambis, UK 34.50 19 84.4 -74.8 41 142 -49Gedeon Richter, Hungary 34.35 19 7.4 23.5 467 2210 30Nuvelo, USA 33.65 45 >999.9 >-999.9 0 489 n/adeCODE genetics, Iceland 33.33 22 156.0 -188.0 21 164 n/aSysmex, Japan 32.12 17 8.5 11.4 380 1256 37Basilea Pharmaceuticals, Switzerland 32.00 5 237.4 -166.7 13 602 78GPC Biotech, Germany 31.84 68 496.1 -696.9 6 245 12QLT, Canada 31.57 39 26.2 -143.7 121 366 n/aZeltia, Spain 31.39 24 63.4 -56.0 50 877 7Isis Pharmaceuticals, USA 31.37 -37 134.2 -142.5 23 281 50Kaken Pharmaceutical, Japan 30.95 -1 8.4 8.6 370 465 16Recordati, Italy 30.89 20 7.7 18.8 401 796 -9Dr Reddy's Laboratories, India 29.73 26 12.5 2.6 238 1373 n/aCubist Pharmaceuticals, USA 28.52 -12 40.6 -21.0 70 705 33Toyama Chemical, Japan 28.44 12 36.1 10.2 79 762 77Myriad Genetics, USA 28.05 29 58.4 -51.9 48 580 n/aTanox, USA 27.90 76 107.2 -54.1 26 362 n/aKrka, Slovenia 27.57 15 7.2 21.3 381 1683 92Flamel Technologies, France 27.55 34 200.5 -156.3 14 233 10Antigenics, USA 27.42 15 >999.9 >-999.9 0 47 n/aGen-Probe, USA 26.80 11 15.0 30.0 178 1602 n/aAriad Pharmaceuticals, USA 26.75 66 >999.9 >-999.9 1 144 n/aTsumura, Japan 26.51 -1 6.3 12.1 419 1111 36Vernalis, UK 26.49 24 187.5 -232.3 14 211 56SkyePharma, UK 26.00 -7 42.4 -63.0 61 181 -51Biomarin Pharmaceutical, USA 25.49 -12 170.5 -250.2 15 778 126Suzuken, Japan 25.44 12 0.4 1.7 6569 2119 47Parexel International, USA 25.28 15 6.5 -0.2 391 457 n/aAlkermes, USA 25.15 -34 25.9 7.7 97 914 10Pharmion, USA 25.01 51 19.4 2.1 129 308 n/aSartorius, Germany 24.58 21 7.4 8.3 333 393 40Stada Arzneimittel, Germany 23.69 32 3.4 12.5 702 1369 27Neurochem, Canada 22.99 57 >999.9 >-999.9 2 244 n/aQiagen, The Netherlands 22.78 14 9.8 23.7 232 1306 21ProStrakan, UK 22.43 119 70.9 -117.0 32 197 n/aPerrigo, USA 22.38 39 3.8 -32.3 597 879 n/aBerna Biotech, Switzerland 22.23 -4 29.5 -9.0 75 187 4Zambon, Italy 21.30 -3 7.2 6.3 298 n/l n/lNyco, Denmark 21.12 20 6.1 -7.2 349 n/l n/lUnited Therapeutics, USA 21.00 18 31.1 36.4 68 741 n/aGeron, USA 20.43 17 569.6 -612.5 4 231 n/a134 The 2006 R&D ScoreboardThe 2006 R&D Scoreboard 135

Ranking of the top 1250 global companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %Neurogen, USA 20.13 56 457.3 -536.7 4 104 n/aSalix Pharmaceuticals, USA 20.12 70 22.3 -39.4 90 281 n/aXoma, Bermuda 20.01 -32 184.1 -191.7 11 101 2634 Real estate n/a n/a n/a n/a n/a n/a n/aNo companies with sufficient R&Dfor inclusion n/a n/a n/a n/a n/a n/a n/a35 Software & computer services 16370.69 9.3 10.4 19.6 157072 523459 n/aMicrosoft, USA 3835.04 6 14.9 37.2 25793 144035 -15IBM, USA 3132.57 4 5.9 14.2 53084 67661 -11Oracle, USA 1090.40 26 13.0 33.0 8376 45066 13SAP, Germany 748.00 7 12.8 27.5 5849 31037 -1CA, USA 454.92 3 20.5 4.3 2216 7244 -21Symantec, USA 397.32 104 16.5 6.6 2413 10370 -32Google, USA 349.20 52 9.8 32.9 3576 66292 41Yahoo!, USA 342.22 52 11.2 42.0 3062 22091 -22Cadence Design Systems, USA 246.59 9 31.8 7.7 774 2631 4Unisys, USA 226.93 -6 6.8 -1.8 3354 1011 -20Adobe Systems, USA 212.80 17 18.6 37.0 1145 10974 43Sega Sammy, Japan 205.25 n/a 8.1 17.5 2545 5610 n/aIntuit, USA 196.06 -3 16.5 26.0 1187 6106 24Synopsys, USA 186.39 11 32.3 -1.6 578 1504 4Dassault Systemes, France 177.93 17 27.7 24.6 642 3161 1Autodesk, USA 175.68 26 19.8 24.3 887 4554 -7Cerner, USA 159.59 19 23.6 12.2 676 1899 11BMC Software, USA 156.86 -5 18.0 8.6 873 2826 9SunGard Data Systems, USA † 142.59 -4 6.3 11.0 2280 n/l n/lMentor Graphics, USA 123.88 5 30.2 2.9 411 655 77Novell, USA 116.86 1 16.8 35.7 698 1236 -6BEA Systems, USA 106.16 24 15.2 17.5 699 2523 19McAfee, USA 102.72 2 17.9 16.0 575 1931 -31Nintendo, Japan 101.24 30 4.0 21.4 2542 15574 75Sybase, USA 100.72 11 21.1 14.9 477 1114 0Business Objects, France 94.68 8 15.1 12.3 627 1218 -34Compuware, USA 92.51 -8 13.2 12.9 702 1510 -19Misys, UK 89.70 -1 9.1 5.5 985 1320 13Amdocs, UK 84.14 14 7.1 16.6 1187 4178 19Sage, UK 81.61 10 10.5 27.2 777 2965 -2DST Systems, USA 76.19 -44 5.2 18.6 1465 2301 -6UBIsoft Entertainment, France 70.83 28 19.2 3.1 370 531 0Parametric Technology, USA 68.89 10 16.4 11.7 420 955 -5Citrix Systems, USA 63.31 26 12.0 22.5 529 3218 38Cognos, Canada 61.71 16 12.8 19.2 481 1620 -15Hyperion Solutions, USA 60.64 8 14.8 13.5 409 1075 4SSA Global Technologies, USA(now part of Infor Global Solutions) 59.88 8 14.4 9.7 415 n/l n/lIndra Sistemas, Spain 59.02 9 7.1 11.6 826 1589 n/aInfogrames Entertainment, France 58.88 -22 14.2 -1.1 414 56 -70Macromedia, USA(now part of Adobe Systems) 57.32 8 22.6 13.0 254 n/l n/lReynolds and Reynolds, USA 55.92 3 9.9 3.9 564 1578 50Verisign, USA 55.53 42 5.7 14.6 968 2510 -30Openwave Systems, USA 55.33 2 24.8 -14.0 223 369 -45Symbian, UK 54.48 19 47.5 6.2 115 n/l n/lWincor Nixdorf, Germany 53.60 7 4.5 6.3 1198 1263 49Quest Software, USA 51.19 12 18.4 13.8 277 763 0CheckFree, USA 48.08 25 10.9 8.5 441 1965 -4Fair Isaac, USA 47.35 14 10.2 24.3 465 1319 -11FileNET, USA 44.36 -3 18.1 11.2 246 850 23Mercury Interactive, USA(now part of Hewlett-Packard) 42.94 32 10.8 13.0 399 n/l n/lTibco Software, USA 42.60 20 16.4 13.1 260 1234 38Eclipsys, USA 41.90 -2 18.8 -0.7 223 433 -8Realnetworks, USA 41.20 36 21.8 127.7 189 965 86Intergraph, USA 40.81 1 12.1 30.1 336 606 -9TietoEnator, Finland 40.06 33 3.5 10.1 1155 980 n/aCGI, Canada 39.00 2 2.1 9.5 1838 1080 n/aIDX Systems, USA(now part of General Electric) 38.88 20 12.8 8.4 303 n/l n/lWind River Systems, USA 38.18 8 24.6 8.6 155 420 -46Open Text, Canada 37.94 49 15.7 6.9 242 394 16Progress Software, USA 36.74 4 15.6 15.7 236 545 -20RSA Security, USA 36.42 1 20.2 11.4 181 1220 132Lawson Software, USA 36.21 -4 18.5 1.1 195 405 22Cae, Canada 35.41 -14 6.4 9.2 552 1147 16Borland Software, USA 33.60 -15 20.8 -12.5 161 252 -7Intentia International, Sweden 32.86 -3 15.1 2.8 218 279 23Aspen Technology, USA 32.49 -16 20.7 -25.3 157 355 160SPSS, USA 31.71 -4 23.1 11.9 138 255 13Kronos, USA 29.91 29 9.9 14.5 302 546 n/aSoftware, Germany 29.68 -12 9.9 22.0 301 855 15NetIQ, USA (now part of Attachmate) 29.45 -26 23.7 -10.1 124 n/l n/lCheck Point Software Technologies, Israel 29.44 26 8.7 55.3 337 2379 n/aNihon Unisys, Japan 29.04 -15 1.9 2.8 1524 1048 71Msc Software, USA 27.53 12 15.5 10.1 178 410 n/aAriba, USA 27.50 -13 14.6 -107.9 188 336 45DoubleClick, USA 27.06 19 15.4 10.3 176 n/l n/lMagma Design Automation, USA 26.76 10 28.0 -12.4 96 141 n/aWebex Communications, USA 26.63 33 14.8 25.9 180 909 n/aS1, USA 26.60 -8 19.2 -12.2 139 174 -5Internet Security Systems, USA 26.32 5 13.7 16.7 192 615 5Retalix, Israel 26.03 31 23.8 10.8 109 224 n/aAspect Communications(now Aspect Software), USA 25.90 -10 12.0 18.4 216 n/l n/lJDA Software, USA 25.83 -16 20.6 2.1 126 266 13LogicaCMG, UK 25.50 -32 1.4 5.9 1836 1932 43IBS, Sweden 24.81 8 14.3 3.2 174 151 18Informatica, USA 24.81 -17 15.9 11.0 156 666 18Macdonald Dettwiler & Associates, Canada 24.45 13 5.9 13.1 415 898 n/aAltiris, USA 23.90 30 21.9 2.9 109 345 n/aRed Hat, USA 23.81 26 14.7 31.7 162 2530 n/aSonic Solutions, USA 23.63 28 27.3 16.6 87 211 n/aPortal Software, USA (now part of Oracle) 23.45 33 43.0 -92.7 55 n/l n/lTrizetto, USA 23.45 3 13.8 7.7 170 315 n/awebMethods, USA 23.41 -10 19.3 5.9 122 229 16Formula Systems (1985), Israel 23.37 60 7.9 4.0 295 83 n/aUnited Online, USA 23.30 46 7.6 16.5 306 409 n/aHummingbird, Canada 23.13 5 19.7 -4.7 118 288 n/aTransaction Systems Architects, USA 23.12 4 12.7 20.5 182 785 n/aScansoft (now Nuance Communications), USA 22.83 48 16.9 0.8 135 892 n/aSeeBeyond Technology, USA(now part of Sun Microsystems) 22.79 -4 23.9 0.0 95 n/l n/lIndustrial and Financial Systems, Sweden 22.54 20 14.3 4.2 157 164 15I2 Technologies, USA 21.75 -47 10.5 15.2 206 173 -37Verint Systems, USA 21.06 30 14.5 7.1 146 521 n/aD-Link, Taiwan 20.75 -7 3.2 6.1 645 372 n/aJack Henry & Associates, USA 20.68 26 6.6 22.2 312 984 n/aMicromuse, USA (now part of IBM) 20.45 12 21.8 -4.5 94 n/l n/lMacrovision, USA 20.02 20 16.9 18.0 118 601 n/aSeaChange International, USA 20.02 17 27.2 -13.7 74 114 n/aManhattan Associates, USA 19.89 18 13.9 11.8 144 337 n/aCSG Systems International, USA 19.77 -43 6.2 10.9 320 735 34Gameloft, France 19.58 n/a 60.8 -2.2 32 198 -19Advent Software, USA 19.44 3 19.8 5.9 98 568 n/aVignette, USA 19.35 -36 17.4 1.2 111 225 -1336 Support services 892.73 9.1 3.0 12.5 29771 49026 n/aAutomatic Data Processing, USA 363.53 7 7.3 19.0 4951 15329 1Accenture, Bermuda 141.80 -10 1.4 12.4 9957 9765 17Certegy(now Fidelity National Information), USA 66.11 53 9.7 16.5 684 4018 n/aNSK, Japan 48.39 12 1.7 6.5 2867 2502 48Giesecke & Devrient, Germany 46.46 8 5.5 6.6 848 n/l n/lSerco, UK 45.30 18 2.0 4.3 2260 1697 45Convergys, USA 44.79 -1 3.0 9.1 1504 1556 35Emdeon, USA 34.07 8 4.6 5.8 744 1921 -9Voca, UK 29.25 257 32.8 4.2 89 n/l n/lFiserv, USA 29.12 5 1.2 18.5 2365 4411 -14Secom, Japan 22.06 9 0.8 14.0 2726 6571 n/aAcxiom, USA 21.85 5 2.8 9.8 776 1256 n/a37 Technology hardware & equipment 47888.19 7.2 8.2 8.4 581659 907303 -4.8Intel, USA 2996.86 8 13.3 31.0 22615 58324 -38Nokia, Finland 2733.27 4 11.6 13.2 23493 43545 9Motorola, USA 2143.52 20 10.0 12.9 21460 33308 9Hewlett-Packard, USA 2032.85 0 4.0 3.9 50499 52954 31Hitachi, Japan 1999.13 4 4.3 2.5 46710 12012 -3Cisco Systems, USA 1935.00 4 13.4 30.2 14446 62477 -6Ericsson, Sweden 1875.74 16 16.9 21.8 11112 29102 -15Toshiba, Japan 1717.48 3 6.0 2.1 28802 11855 59NEC, Japan 1358.88 7 5.7 2.7 23961 6436 5Alcatel, France 1231.28 15 13.6 7.4 9025 8608 -2Fujitsu, Japan 1185.53 -4 5.0 5.0 23505 9197 30Texas Instruments, USA 1173.70 2 15.0 21.1 7801 27013 -10Nortel Networks, Canada 1081.08 -5 17.6 -23.4 6129 5007 -40Sun Microsystems, USA 1039.73 -7 16.1 -2.9 6448 8862 17STMicroelectronics, The Netherlands 905.17 7 17.5 1.3 5170 8071 -9Infineon Technologies, Germany 854.06 9 18.4 -5.8 4644 4397 10Lucent Technologies, USA 820.71 11 14.9 13.3 5499 5429 -29Freescale Semiconductor, USA 696.06 24 20.5 9.9 3403 11155 18EMC, USA 682.62 16 12.1 15.4 5629 13429 -28Advanced Micro Devices, USA 666.37 22 19.6 1.7 3406 5767 20Mitsubishi Electric, Japan 644.24 4 3.8 3.1 16832 9877 52Qualcomm, USA 588.89 40 17.8 41.6 3304 33542 -13Applied Materials, USA 547.83 -5 13.5 20.7 4073 14292 -14Ricoh, Japan 544.77 0 5.8 8.1 9451 8604 30Xerox, USA 439.77 -1 4.9 6.3 8956 7692 -1Broadcom, USA 378.98 18 24.4 12.7 1556 7639 11Micron Technology, USA 351.64 -20 12.4 4.1 2843 6717 68Apple Computer, USA 311.04 9 3.8 11.7 8115 30004 35Analog Devices, USA 289.55 -3 20.8 21.6 1391 6799 -15Dell, USA 269.69 0 0.8 7.7 32565 29242 -43Agere Systems, USA 269.11 -7 27.6 -7.4 976 1457 22Kyocera, Japan 268.46 17 4.6 8.5 5827 9081 13Corning, USA 258.04 25 9.7 27.1 2667 16781 1Taiwan Semiconductor Manufacturing,Taiwan 248.59 12 5.2 34.4 4821 25137 4LSI Logic, USA 231.43 -6 20.7 0.6 1118 1911 -7Avaya, USA 229.50 13 8.0 5.9 2855 2499 -7ASML, The Netherlands 226.06 -1 13.0 20.2 1738 5137 11Tokyo Electron, Japan 216.60 -1 6.9 8.8 3137 6707 11Juniper Networks, USA 207.02 49 17.2 21.7 1202 4350 -44Nvidia, USA 205.09 5 14.8 14.3 1384 4994 69Tellabs, USA 200.37 37 18.3 9.8 1097 2406 -1Kla-Tencor, USA 198.20 21 16.3 27.9 1215 4926 -11Lexmark, USA 195.95 8 6.4 10.1 3041 3281 -23National Semiconductor, USA 193.97 -6 17.4 20.6 1114 4711 -1Maxim Integrated Products, USA 191.15 7 19.6 46.7 974 5507 -32Hynix Semiconductor, South Korea 190.92 -16 5.6 24.1 3433 9320 64ATI Technologies, Canada 190.48 21 14.7 1.1 1295 3007 73Xilinx, USA 189.96 6 18.9 23.8 1006 4060 -26Marconi (now Telent), UK 186.00 -6 13.9 -7.4 1337 302 -50NCR, USA 185.81 -2 5.3 6.4 3511 3444 -11Marvell Technology, Bermuda 182.24 18 18.7 21.5 973 6252 -14Maxtor, USA(now part of Seagate Technology,Cayman Islands) 170.99 -9 7.5 -0.5 2266 n/l n/l136 The 2006 R&D ScoreboardThe 2006 R&D Scoreboard 137

Ranking of the top 1250 global companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %United Microelectronics, Taiwan 170.86 31 9.6 -5.8 1779 13111 61Nikon, Japan 165.63 11 5.3 4.8 3151 3802 45Murata Manufacturing, Japan 162.10 -4 7.7 16.6 2095 8639 31Atmel, USA 161.12 12 16.5 -3.7 976 1389 128Rohm, Japan 159.62 3 8.8 18.2 1821 5988 -5Conexant Systems, USA 156.10 12 37.1 -20.3 421 479 1UTStarcom, USA 147.45 13 8.6 -13.2 1706 491 -13Novellus Systems, USA 144.06 -2 18.5 10.1 781 1883 -14Network Appliance, USA 141.54 42 11.8 15.0 1204 6558 32ZTE, China 141.44 -13 9.1 7.6 1557 1704 -86Comverse Technology, USA 140.29 7 25.1 4.7 559 2280 -24Western Digital, USA 138.92 19 6.6 5.4 2120 2205 22Benq, Taiwan 136.66 70 4.4 -3.9 3135 831 -47Oce, The Netherlands 132.41 -7 7.2 4.1 1840 759 3Cypress Semiconductor, USA 132.08 -13 25.6 -10.6 516 1249 7Teradyne, USA 129.90 -15 20.7 9.5 626 1520 -11Advantest, Japan 129.70 21 11.0 0.4 1182 5510 18MediaTek, Taiwan 128.21 98 13.7 34.4 936 4602 n/aNidec, Japan 127.91 196 5.3 11.3 2398 5761 19Altera, USA 122.18 16 18.7 28.7 655 3648 -23Storage Technology, USA(now part of Sun Microsystems) 114.58 -4 8.8 10.0 1295 n/l n/lSanDisk, USA 113.47 56 8.4 25.2 1343 5421 41Lam Research, USA 113.07 14 12.9 25.6 875 3236 40Lenovo, Hong Kong 111.94 293 1.4 0.7 7779 1632 -18Asustek Computer, Taiwan 107.98 83 1.7 5.9 6347 3994 -14Winbond Electronic, Taiwan 103.65 23 20.4 -4.9 507 638 -32Pitney Bowes, USA 100.07 6 3.1 19.6 3199 5438 -9RF Micro Devices, USA 98.36 8 21.9 2.6 449 671 6OKI Electric, Japan 96.80 -11 2.9 1.8 3358 748 -35Tektronix, USA 95.22 25 15.8 10.3 603 1318 14Research In Motion, Canada 91.82 56 7.6 20.4 1203 7039 -8Skyworks Solutions, USA 88.66 0 19.2 7.0 462 415 -33ARM, UK 80.27 47 34.5 15.1 232 1586 -5Harris, USA 79.97 23 4.6 10.6 1748 3474 22Ciena, USA 79.94 -33 32.1 -103.3 249 1246 77Palm, USA 79.19 51 8.6 6.7 919 865 -3Linear Technology, USA 76.56 26 12.5 56.2 611 5644 -16Nanya Technology, Taiwan 76.43 0 8.6 1.2 889 1499 -10Brocade Communications, USA 76.27 -12 22.8 7.0 334 992 54Integrated Device Technology, USA 74.32 23 24.2 -18.3 307 1807 166Pou Chen, Taiwan 73.36 250 2.7 6.8 2675 1120 n/aTekelec, USA 73.20 28 23.4 -8.2 313 401 -45Applied Micro Circuits, USA 71.10 -5 48.1 -56.4 148 432 -10ASM International, The Netherlands 69.17 19 13.9 4.0 499 456 -4PMC-Sierra, USA 69.15 -1 40.7 7.4 170 593 -35Intersil, USA 68.88 5 19.7 16.5 350 1885 11Micronas Semiconductor, Switzerland 67.49 19 18.1 8.9 373 428 -46McData, USA 65.84 24 18.4 -5.0 358 281 -35Lite-On Technology, Taiwan 65.33 27 1.6 4.6 4032 2141 n/aAvid Technology, USA 64.85 17 14.4 4.8 452 899 9Electronics For Imaging, USA 63.80 -1 23.4 -2.8 273 718 10Andrew, USA 62.82 -2 5.5 3.8 1142 733 -30Spirent (now Spirent Communications), UK 62.80 -7 13.5 1.5 465 352 -32Quantum, USA 62.56 11 12.9 -5.0 486 221 -27International Rectifier, USA 61.09 14 8.9 15.8 684 1454 -10Vitesse Semiconductor, USA 59.09 -7 53.2 -65.3 111 94 -65Silicon Laboratories, USA 58.96 35 23.8 13.5 248 1140 28Lattice Semiconductor, USA 55.58 5 45.2 -27.2 123 380 30ECI Telecom, Israel 55.51 25 15.1 5.1 367 423 -20Microchip Technology, USA 55.29 2 10.2 35.4 540 3996 73Com, USA 55.09 -1 14.5 -32.8 379 1074 40JDS Uniphase, USA 54.58 -6 13.2 -35.1 415 2120 62ON Semiconductor, USA 54.58 -1 7.4 12.9 734 1173 48Silicon Graphics, USA 54.00 -15 12.7 -9.9 425 5 -96Credence Systems, USA 53.90 15 21.6 -25.2 250 160 -69Polycom, USA 53.29 -1 15.8 14.0 338 1099 22Sanken Electric, Japan 52.97 10 6.9 6.3 771 932 11American Power Conversion, USA 52.73 6 4.6 10.6 1153 1866 -38Qlogic, USA 52.28 -6 15.2 36.7 343 1587 -11Anritsu, Japan 51.89 6 12.5 3.5 415 395 -4Zoran, USA 51.86 12 22.5 -7.0 231 449 23Macronix International, Taiwan 51.56 15 15.7 -37.4 329 525 21Logitech International, Switzerland 51.23 19 4.9 11.1 1047 2258 3AMIS, USA 50.91 13 17.4 6.4 293 467 -18Sunplus Technology, Taiwan 50.18 38 10.4 8.5 480 537 n/aAdvanced Semiconductor Engineering, Taiwan 49.40 8 3.2 -5.1 1528 2321 28ProMOS Technologies, Taiwan 48.95 16 9.3 3.5 529 1365 n/aCreative Technology, Singapore 47.95 18 6.7 -5.9 713 267 -25Emulex, USA 46.58 9 21.3 27.4 219 740 -21Italtel, Italy 46.40 8 12.4 9.8 375 n/l n/lSemiconductor Manufacturing, China 45.94 1 6.7 -7.5 682 1361 n/aVarian Semiconductor Equipment, USA 45.24 15 12.9 14.7 350 1052 13Fairchild Semiconductor, USA 45.20 -5 5.4 -0.3 830 1151 1Sigmatel, USA 44.24 126 23.4 17.4 189 91 n/aEnterasys Networks, USA 42.99 -12 20.7 -24.4 208 n/l n/lADC Telecommunications, USA 41.71 21 6.1 6.1 686 835 -48Mindspeed Technologies, USA 41.56 -10 63.8 -54.1 65 96 7Axcelis Technologies, USA 41.30 12 19.0 -0.2 217 327 -10Wistron, Taiwan 40.03 0 1.4 2.2 2922 758 n/aUnova (now Intermec), USA 38.74 7 6.1 4.0 640 1083 10LTX, USA 38.62 -2 49.3 -97.5 78 192 -6Cymer, USA 37.29 10 16.7 10.6 223 892 31Inventec Appliances, Taiwan 36.95 21 10.3 17.4 358 740 n/aInterdigital Communications, USA 36.75 23 38.7 10.5 95 884 54Plantronics, USA 36.58 85 8.4 14.7 437 440 n/aBrooks Automation, USA 36.56 -6 13.5 -0.2 270 578 46ADTRAN, USA 36.50 -7 12.2 28.4 299 909 -19Aeroflex, USA 35.76 23 12.8 6.5 279 469 19Extreme Networks, USA 35.69 5 16.0 3.3 223 251 -18Adaptec, USA 35.47 -46 15.4 -43.0 230 280 30Diebold, USA 35.19 1 2.3 5.5 1507 1621 -18CSR, UK 35.15 119 12.4 23.0 283 1462 137Bull, France 35.04 -6 4.3 0.4 806 300 -33Arris, USA 35.03 -5 8.8 7.8 396 647 5FEI, USA 34.87 7 14.0 -12.7 249 401 -2Realtek Semiconductor, Taiwan 34.78 44 17.9 15.7 194 520 n/aRedback Networks, USA 33.98 3 38.1 -13.0 89 515 75Standard Microsystems, USA 33.94 36 18.3 4.2 186 341 22Neopost, France 33.60 25 5.9 24.9 568 1860 11Coherent, USA 33.52 -8 11.1 7.2 301 591 4Avocent, USA 33.13 25 15.4 15.6 215 725 -22MKS Instruments, USA 32.57 -2 11.0 8.0 297 654 16Disco, Japan 31.35 2 9.2 19.2 340 1097 40Tokyo Seimitsu, Japan 31.09 14 7.4 8.5 418 1062 9Filtronic, UK 31.08 11 11.8 2.2 263 139 -30Powerchip Semiconductor, Taiwan 30.52 64 3.2 9.6 956 2248 n/aFinisar, USA 30.23 -17 14.2 -2.8 212 515 207Pixelworks, USA 30.18 70 30.2 -13.5 100 62 n/aFoundry Networks, USA 29.88 17 12.7 16.4 235 876 3Imation, USA 29.88 -10 4.1 7.7 733 822 -1TTP Communications, UK 29.50 31 47.6 -1.7 62 101 25Mercury Computer Systems, USA 29.17 30 20.0 16.9 146 162 n/aSilicon Storage Technology, USA 28.56 5 11.4 -6.7 251 228 -9Komag, USA 28.47 20 7.1 16.9 400 683 n/aInventec, Taiwan 28.39 13 1.0 1.8 2883 779 36Actel, USA 28.06 6 26.9 3.3 104 211 4Micro-Star International, Taiwan 27.98 -2 2.1 1.5 1317 255 -26Atheros Communications, USA 27.84 12 26.0 3.0 107 499 n/aTriQuint Semiconductor, USA 27.21 -23 15.3 1.2 178 353 21Sonus Networks, USA 27.02 27 23.8 -0.2 113 602 n/aZebra Technologies, USA 26.79 24 6.6 21.9 409 1362 n/aGenesis Microchip, USA 26.73 38 17.0 7.1 157 286 n/aKinpo Electronics, Taiwan 26.28 13 2.3 3.3 1145 280 n/aCirrus Logic, USA 26.27 -33 23.3 20.3 113 320 -12Micrel, USA 26.25 8 18.0 13.2 146 477 n/aSilicon Image, USA 26.13 -43 21.1 24.3 124 499 16Bookham, USA 26.11 -11 22.4 -121.5 117 84 -3TCL Communication Technology, Hong Kong 26.05 61 6.1 -33.2 425 111 n/aAastra Technologies, Canada 25.40 116 9.7 6.9 261 248 n/aSycamore Networks, USA 25.33 -10 66.5 -67.8 38 594 5Cabot Microelectronics, USA 25.05 -2 15.9 16.2 158 408 0Cree, USA 24.91 16 11.0 30.8 227 844 n/aVerifone, USA 24.87 18 8.8 14.0 283 949 n/aAdvanced Digital Information, USA 24.75 12 9.4 0.8 265 437 n/aCray, USA 24.30 -8 20.7 -30.3 117 179 n/aGN Store Nord, Denmark 24.04 -24 3.9 12.4 612 1828 23Kulicke & Soffa, USA 23.90 19 7.3 -17.9 327 239 n/aRambus, USA 23.87 26 26.1 13.8 92 678 n/aOmniVision Technologies, USA 23.63 59 8.2 21.7 287 579 n/aDSP, USA 23.47 25 21.5 13.5 109 424 n/aAdvanced Energy Industries, USA 23.14 -23 11.8 5.4 196 323 57M-Systems Flash Disk Pioneers(now M-Systems), Israel(now part of SanDisk, USA) 22.38 55 6.2 11.2 358 n/l n/lHarmonic, USA 22.23 7 14.8 -3.1 150 224 n/aMEMC Electronic Matrials, USA 22.12 n/a 3.7 26.1 599 3869 n/aC-Cor, USA 22.02 76 15.9 -11.6 138 192 n/aSemtech, USA 21.86 12 15.7 19.7 139 521 n/aZarlink Semiconductor, Canada 21.84 -42 21.0 -7.2 104 171 72Amkor Technology, USA 21.75 2 1.8 1.4 1223 624 n/aHutchinson Technology, USA 21.45 30 5.8 9.1 368 273 n/aSEZ, Switzerland 20.96 7 15.2 2.4 138 230 n/aShindengen Electric Manufacturing, Japan 20.81 -15 4.7 4.1 439 263 n/aImagination Technologies, UK 20.65 7 58.5 -20.3 35 136 14Accton Technology, Taiwan 20.45 -14 6.3 0.4 325 168 n/aELMOS Semiconductor, Germany 20.41 15 20.2 -118.5 101 107 -39Asyst Technologies, USA 20.32 -4 5.7 -2.1 357 188 n/aSilicon Integrated Systems, Taiwan 20.26 3 10.1 5.4 201 371 n/aIntracom, Greece 19.98 -46 4.7 9.4 426 455 10Ess Technology, USA 19.79 -9 18.7 -55.0 106 34 n/aTerayon Communication Systems, USA 19.78 -21 22.6 -24.5 88 38 n/aInter-Tel, USA 19.37 15 7.5 5.1 258 338 n/aDialog Semiconductor, UK 19.31 -3 21.5 5.7 90 39 -55Micros Systems, USA 19.31 22 5.5 13.3 348 857 n/aAvanex, USA 19.29 -21 20.6 -65.6 94 157 n/a38 Tobacco 846.23 9.3 0.9 14.4 94152 148998 24.8Altria, USA 549.28 17 1.0 17.0 56998 97513 21Japan Tobacco, Japan 200.08 -4 0.9 1.0 23020 11069 36BAT, UK 66.00 -1 0.7 29.4 9325 29666 27Reynolds American, USA 30.87 10 0.6 18.4 4809 10751 5239 Travel & leisure 442.40 12.8 3.5 15.8 12484 22311 n/lAmadeus Global Travel, Spain ! 125.18 19 7.6 17.2 1656 n/l n/lInternational Game Technology, USA 80.62 7 5.8 27.8 1386 7468 39Expedia, USA 65.40 32 5.3 17.2 1235 2983 n/aWest Japan Railway, Japan 30.45 2 0.5 12.1 6025 5056 27WMS Industries, USA 29.30 12 13.0 7.9 226 475 -14GTECH, USA 29.13 -18 3.8 26.0 760 2534 28Aruze, Japan 28.96 20 8.1 -1.9 358 853 n/aAristocrat Leisure, Australia 28.11 11 5.1 27.4 554 2427 -14Alliance Gaming(now Bally Technologies), USA 25.26 18 8.9 -1.1 285 514 n/a138 The 2006 R&D ScoreboardThe 2006 R&D Scoreboard 139

Accessing the full data using the websiteThis section describes how you can access the full 2006 Scoreboarddata set including UK and global companies, as well as the text partsof the Scoreboard.The Scoreboard websiteThe Scoreboard website is on www.innovation.gov.uk/rd_scoreboard.From this page, the main text parts of the Scoreboard can be viewedon screen or printed off.Downloading the data for remote analysisThe data can also be accessed from the above page by choosing theoption to download the data as a CSV file. These files can usually beopened in a spreadsheet program (e.g. Lotus 123 or Microsoft Excel)and converted into a spreadsheet from where the data can be studied.Printed copies of the ScoreboardPrinted copies of the Scoreboard are available from the DTI publicationsorderline via e-mail from publications@dti.gsi.gov.uk or by calling0845 015 0010 or fax: 0845 015 0020.Company DataThe company data contained in this Scoreboard is provided by:Company Reporting Ltd11 John’s PlaceEdinburghEH6 7ELTel: 0131 561 8000Fax: 0131 561 8001Email: research@comrep.co.uk140 The 2005 R&D Scoreboard

Ranking of the top 800 UK companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %All companies composite 19228.66 3.9 1.7 11.3 1124076 n/a n/a1 Aerospace & defence 2521.95 21.3 8.4 8.9 29945 n/a n/aBAE Systems 1449.00 31 13.2 8.1 11019 11586 8Rolls-Royce 352.00 25 5.3 13.3 6603 7728 27Airbus ** 343.00 -1 16.6 -0.1 2068 n/l n/lSmiths 143.60 5 4.8 10.3 3017 5094 1Goodrich Controls ** 52.20 18 14.6 0.3 357 n/l n/lCobham 42.90 -12 3.9 13.1 1090 1818 18Meggitt 30.77 11 5.0 16.6 616 1254 -7Messier-Dowty ** 21.68 32 11.5 7.9 188 n/l n/lUltra Electronics 17.29 12 5.1 14.0 342 678 19Short Brothers ** 15.52 104 3.3 6.7 472 n/l n/lAMS(now BAE Systems Integrated System) ** 14.49 54 3.0 5.2 475 n/l n/lWestland Helicopters ** 12.57 4 1.4 5.7 890 n/l n/lMBDA ** 7.20 10 0.8 2.4 917 n/l n/lHampson Industries 4.83 135 4.6 3.5 104 135 105Martin-Baker (Engineering) 4.43 23 3.8 14.2 115 n/l n/lChemring 3.75 -38 2.8 13.0 132 427 167Thales Optronics ** 1.51 43 1.4 11.1 111 n/l n/lTRL Electronics 1.47 96 6.6 -5.2 22 n/l n/lMcKechnie Aerospace * 1.10 10 0.6 4.3 196 n/l n/lVT 1.06 27 0.1 8.7 711 859 42General Dynamics ** 0.93 28 0.2 8.2 469 n/l n/lCastledon 0.65 14 2.1 5.9 30 n/l n/l2 Automobiles & parts 1248.97 -7.1 4.6 -0.7 27400 n/l n/lFord ** 689.00 -10 6.9 -4.2 9940 n/l n/lLand Rover ** 231.80 2 6.8 -3.1 3404 n/l n/lGKN 88.00 -1 2.4 2.9 3648 1982 -8Automotive Holdings ** 70.10 10 2.6 4.5 2654 n/l n/lVisteon ** 53.00 -8 13.9 -15.6 381 n/l n/lTI Automotive ** 18.50 -11 1.2 3.5 1533 n/l n/lDelphi Diesel Systems ** 17.12 -48 5.8 1.6 296 n/l n/lLEAR ** 11.64 -34 8.0 1.0 145 n/l n/lDana Investments ** 10.57 -10 3.9 2.3 269 n/l n/lAvon Rubber 9.14 31 3.8 -0.8 240 54 -10Wagon 8.80 -19 2.1 5.1 417 250 117Calsonic Kansei Europe ** 7.19 -37 3.4 -12.9 214 n/l n/lTorotrak 5.21 2 253.7 -253.0 2 34 -49Pirelli ** 5.01 11 0.5 0.8 919 n/l n/lLotus ** 3.92 49 2.4 -2.3 162 n/l n/lSumitomo Electric Wiring Systems ** 3.38 30 1.4 5.6 235 n/l n/lZytek * 3.28 14 40.3 0.1 8 n/l n/lBMW Manufacturing ** 3.21 -15 0.2 3.6 1744 n/l n/lCooper Tyre & Rubber ** 2.91 -9 1.2 6.4 236 n/l n/lDenso Manufacturing ** 2.61 -26 1.3 3.4 202 n/l n/lAntonov 2.20 76 n/a n/a 0 17 -43Michelin Tyre ** 1.34 -9 0.2 1.7 663 n/l n/lAlbion Automotive ** 0.55 -34 0.8 3.5 71 n/l n/lDunlop Aircraft Tyres ** 0.50 -12 3.3 0.9 15 n/l n/l3 Banks 705.10 20.3 0.9 33.1 82191 229366 9.1Royal Bank of Scotland 329.00 9 1.3 31.0 25902 55422 12HSBC 244.64 34 0.7 35.2 33572 109973 7Barclays 68.00 45 0.4 30.5 17333 41362 11Standard Chartered 51.26 6 1.3 39.1 3996 18039 12Alliance & Leicester 12.20 144 0.9 39.4 1387 4570 n/a4 Beverages 29.01 40.6 0.1 16.9 25090 n/a n/aDiageo 16.00 45 0.2 21.2 9036 25802 12**, †, * The meaning of these indicators and of the use of italics together with definitionsof terms can be found in the notes at the back of Volume 2 of the Scoreboard.SABMiller 4.66 14 0.1 17.9 8916 15639 n/aGolden Acquisition ** 3.86 150 0.2 3.5 1632 n/l n/lTATA TEA ** 1.30 17 0.7 18.7 193 n/l n/lBritannia Soft Drinks * 1.15 -17 0.2 9.5 698 n/l n/lInbev ** 1.05 99 0.1 -1.6 1385 n/l n/lAllied Domecq (now part of Pernod Ricard, France) 1.00 0 -999.9 0 76 -38Trelleborg Sealing Solutions ** 0.52 -13 0.5 0.2 98 n/l n/lBrunner Mond 0.50 25 0.3 2.4 160 n/l n/lDynea Aycliffe ** 0.48 19 3.3 -0.1 15 n/l n/lAkcros Chemicals ** 0.44 -29 1.5 -999.9 0 n/l n/lScottish and Southern Energy 1.40 133

Ranking of the top 800 UK companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %Xaar 5.48 43 12.8 21.0 43 103 -40Dialight 5.34 -22 5.6 8.7 95 77 -35e2v Technologies 5.28 -3 5.3 9.2 101 184 53MTL Instruments 4.73 17 6.4 10.0 74 81 16Chloride 4.53 -12 2.5 9.4 182 281 41ABB ** 4.26 24 1.0 0.1 432 n/l n/lAVX ** 3.49 -7 1.1 0.3 327 n/l n/lDigital Appliance Controls ** 3.35 0 0.8 5.4 404 n/l n/lLinx Printing Technologies(now part of Danaher, USA) ** 3.24 4 6.2 10.7 52 n/l n/lVideojet Technologies ** 3.22 791 11.4 43.2 28 n/l n/lSPI Lasers 2.96 1 85.4 -257.8 3 41 n/aXP Power 2.60 13 3.7 12.2 70 80 -6Cooper Industries ** 2.58 -4 1.7 4.1 153 n/l n/lCA-MC Acquisition ** 2.48 12 7.5 6.4 33 n/l n/lCeres Power 2.32 46 >999.9 >-999.9 0 156 n/aAlstom Controls ** 1.89 -33 3.1 9.2 61 n/l n/lHoneywell Analytics ** 1.88 19 9.7 7.8 19 n/l n/lVolex 1.79 -2 0.7 -1.3 250 57 -7Tritrax 1.75 19 3.3 6.8 53 n/l n/lBlock Shield † 1.52 770 130.2 -253.6 1 45 n/aChalkfree † 1.52 n/a 1.9 1.7 80 n/l n/lSchneider Electric ** 1.36 -6 0.5 5.0 253 n/l n/lMinorplanet Systems 1.30 -48 5.9 80.9 22 11 175NGC ** 1.10 -11 1.0 0.1 111 n/l n/lCoherent ** 1.09 -25 7.1 -7.8 15 n/l n/lPolaron 1.02 >999 5.4 1.9 19 10 n/aSmart Holograms 0.96 372 559.9 -655.2 0 n/l n/lMicroEmissive Displays 0.94 -36 >999.9 >-999.9 0 6 -63ITM Power 0.93 61 n/a n/a 0 169 99COE 0.90 -5 16.8 -24.1 5 1 -50Technolog 0.87 16 9.6 6.3 9 n/l n/lID Data 0.86 n/a 4.4 -20.5 19 7 n/aDatong Electronics 0.84 31 13.0 23.9 6 12 n/aFeedback 0.78 -48 8.5 -7.1 9 1 0Dewhurst 0.73 -6 2.4 11.0 30 12 20ASTEC ** 0.68 126 0.2 5.5 281 n/l n/lDeutsch ** 0.67 27 2.7 17.4 25 n/l n/lInnovision Research & Technology 0.63 63 38.1 -200.1 2 20 -67Servocell 0.59 -26 281.8 -701.4 0 24 n/aGet 0.49 35 0.6 5.6 81 23 -8Pelikon 0.48 14 47.5 -348.2 1 n/l n/lElektron 0.40 1 1.8 7.9 22 11 -8PipeHawk 0.40 0 28.9 -24.7 1 5 67Appian Technology 0.39 13 13.5 -34.4 3 14 1809 Equity investment instruments n/a n/a n/a n/a n/a n/a n/aNo companies with sufficient R&Dfor inclusion n/a n/a n/a n/a n/a n/a n/a10 Fixed line telecommunications 730.60 39 3.5 12.0 20897 22520 8BT 727.00 39 3.7 12.9 19514 20490 10Jazztel 2.09 34 1.3 -66.1 164 393 -46Patientline 0.82 -33 1.5 -31.6 55 10 -77Eircom 0.69 0 0.1 11.0 1163 1627 n/a11 Food & drug retailers 160.64 44.2 0.3 5.3 48895 n/a n/aTesco 115.00 35 0.3 5.7 39588 27595 n/aEisai ** 34.32 124 50.7 0.2 68 n/l n/lAlliance UniChem(now part of Alliance Boots) 10.00 0 0.1 3.3 9171 n/l n/lYamanouchi Pharma(now Astellas Pharma) ** 0.73 16 2.1 5.9 35 n/l n/lFujisawa ** 0.60 27 1.8 -9.6 34 n/l n/l12 Food producers 858.19 -4.5 1.3 9.9 65416 n/a n/aUnilever 654.80 -8 2.4 13.2 27258 37171 -3Cadbury Schweppes 58.00 -8 0.8 15.4 7157 11177 0Effem (aka Mars) ** 26.32 31 1.3 9.0 2080 n/l n/lTate & Lyle 21.00 11 0.6 2.0 3720 3339 48Heinz ** 11.00 -8 0.6 13.5 1717 n/l n/lWittington Investments 11.00 38 0.2 7.5 5689 n/l n/lAviagen ** 10.87 -7 6.3 17.7 173 n/l n/lUnited Biscuits ** 10.80 74 0.9 7.3 1267 n/l n/lSygen International (now part of Genus) 6.80 -6 5.1 4.8 134 n/l n/lMcCormick ** 5.76 28 1.3 3.6 449 n/l n/lKerry Ingredients ** 5.28 4 2.3 7.4 230 n/l n/lBunge ** 4.82 144 0.1 -0.7 5572 n/l n/lDevro 4.15 3 2.7 18.1 153 187 -7Kraft Foods ** 3.48 -14 0.5 4.6 669 n/l n/lRHM 3.30 -3 0.2 10.0 1642 973 n/aBernard Matthews 2.60 18 0.6 8.8 459 n/l n/lInter Link Foods 2.53 163 2.6 5.9 98 52 -35Cargill ** 2.45 130 0.2 4.5 1571 n/l n/lKerry Foods ** 2.23 51 0.5 7.2 439 n/l n/lDairy Crest 2.20 5 0.2 3.5 1355 671 12McCain Foods ** 1.77 15 0.6 12.0 303 n/l n/lPremier Foods 1.50 67 0.2 11.4 867 783 0Latimer (aka Weetabix) ** † 1.13 -18 0.4 10.5 291 n/l n/lHazlewood Grocery ** 1.10 19 0.7 6.0 161 n/l n/lKellogg ** 1.10 >999 0.1 10.7 772 n/l n/lGeest (now part of Bakkavor, Iceland) 1.00 67 0.1 4.4 831 n/l n/lMarine Harvest ** 0.82 29 1.1 -11.3 72 n/l n/lUnited Dairy Farmers 0.39 155 0.1 0.7 288 n/l n/l13 Forestry & paper 1.47 13.8 1.1 -17.7 137 n/a n/aJames Cropper 0.97 22 1.5 0.3 64 13 -13Arjo Wiggins ** 0.50 0 0.7 -33.6 73 n/l n/l14 Gas, water & multiutilities 31.88 -6.9 0.1 24.1 24931 n/a n/aNational Grid 7.00 -22 0.1 26.4 9361 1660 -88RWE Thames Water ** 5.80 35 0.4 28.4 1549 n/l n/lRWE Npower ** 4.00 -20 0.9 1.6 426 n/l n/lSevern Trent 3.90 5 0.2 20.5 2353 4459 34EDF Energy ** 3.80 23 0.1 14.3 4575 n/l n/lNorthumbrian Water 2.30 -54 0.4 38.1 620 1347 13United Utilities 1.90 138 0.1 27.6 2562 5735 4AWG 1.10 -15 0.1 19.9 1889 1812 36Kelda 0.90 0 0.1 38.0 884 2886 11Veolia Water ** 0.68 5 0.3 28.4 212 n/l n/lCE Electric ** 0.50 0 0.1 48.9 501 n/l n/l15 General financial 25.43 30.8 0.9 23.1 2948 n/l n/lNationwide 9.50 6 0.6 33.8 1656 n/l n/lITI Scotland 4.34 >999 >999.9 0.0 0 n/l n/lCarmelite Capital 2.50 -19 0.8 -23.5 329 n/l n/lKensington 2.20 -19 1.4 34.7 156 454 38Certegy ** 2.08 53 3.2 14.0 65 n/l n/lBayer Agriculture ** 1.69 64 20.8 79.2 8 n/l n/lADVFN 1.54 38 46.6 -36.4 3 16 0Cattles 1.20 194 0.2 17.1 672 1099 n/aMoneysupermarket.com Financial 0.38 0 0.6 26.7 60 n/l n/l16 General industrials 175.89 6.8 1.1 6.9 16433 n/a n/aTomkins 46.70 -9 1.5 9.0 3182 2345 8Seton House 26.70 38 5.8 6.1 459 n/l n/lCookson 22.30 -8 1.4 7.0 1635 1016 57Rexam 21.00 62 0.6 13.0 3237 2944 2Crown ** 17.20 -9 2.6 2.6 669 n/l n/lKidde ** 17.00 -9 1.7 10.8 987 n/l n/lLinde Material Handling ** 4.10 -2 1.6 1.6 252 n/l n/lBarloworld ** 3.64 113 0.2 4.6 1526 n/l n/lTextron ** 3.24 559 0.8 -1.5 418 n/l n/lDomnick Hunter(now part of Parker Hannifin, USA) 3.12 6 2.0 8.7 158 n/l n/lTrelleborg Automotive ** 2.15 -3 3.5 -2.8 61 n/l n/lNIC ** 1.87 119 1.8 -19.5 105 n/l n/lHarsco Investment ** 1.28 -21 0.2 7.4 643 n/l n/lDS Smith 1.10 38 0.1 1.3 1653 572 -8Chesapeake ** 1.05 12 0.2 2.0 549 n/l n/l600 Group 1.02 3 1.5 1.6 67 29 -17BWI ** 0.86 -5 2.7 -1.4 31 n/l n/lGartland Whalley and Barker 0.78 n/a 0.5 5.9 149 n/l n/lAlcan ** 0.40 33 0.1 0.0 509 n/l n/lUGG ** 0.38 -21 0.3 4.5 144 n/l n/l17 General retailers 94.35 8.8 0.4 5.3 25116 n/l n/llastminute.com(now part of Sabre, USA) ** 23.62 8 5.4 -16.9 440 n/l n/lGUS 22.00 47 0.3 10.3 7915 8745 -6Boots (now Alliance Boots) 16.10 -29 0.3 5.6 5471 7528 70Photo-Me 9.44 33 4.1 13.2 230 382 -15John Lewis 5.40 -7 0.1 3.2 5149 n/l n/lDaimlerChrysler ** 5.04 >999 0.1 1.5 3387 n/l n/lBody Shop International(now part of L'Oreal) 4.60 -13 1.1 8.9 419 n/l n/lBeesail (aka Chubb) ** 4.50 -11 0.3 -0.7 1564 n/l n/lQXL ricardo 0.84 35 7.5 14.5 11 176 129Abcam 0.74 83 6.1 24.1 12 92 n/aAdeptra 0.68 -54 26.0 -120.5 3 n/l n/lFreeplay Energy 0.53 12 29.4 -143.3 2 16 60Naiglan 0.46 -9 0.2 0.3 277 n/l n/lRedbridge 0.40 27 0.2 0.9 236 n/l n/l18 Health care equipment & services 256.55 -21.6 5.1 7.3 5052 6170 n/lAmersham (now GE Healthcare) ** † 85.71 -53 5.9 -0.4 1462 n/l n/lSmith & Nephew 67.00 1 4.8 18.6 1407 4209 -15Lifescan Scotland ** 23.49 29 17.0 27.1 138 n/l n/lGyrus 11.84 78 7.9 6.9 150 491 8Biocompatibles International 7.68 42 225.9 -331.4 3 65 -31Huntleigh Technology 6.33 16 3.2 11.5 200 195 3Abbott ** 5.61 16 0.8 8.4 704 n/l n/lCardinal Health ** 4.89 30 1.4 0.9 343 n/l n/lSolexa 3.97 15 >999.9 >-999.9 0 n/l n/lMicrosulis 3.94 184 106.1 -371.4 4 n/l n/lWhatman 3.20 100 2.7 19.8 117 398 18Bespak 3.18 -10 4.0 6.1 79 175 21Lombard Medical Technologies 3.16 76 >999.9 >-999.9 0 56 n/aMedisys 2.54 -9 8.4 -47.8 30 16 -33Ferraris 2.43 13 4.4 -9.0 55 20 -56Corin 2.05 37 7.9 13.7 26 93 -43Optos 1.59 11 5.6 2.9 28 127 n/aZimmer ** 1.58 -4 1.3 13.8 124 n/l n/lSunrise Medical ** † 1.53 -21 3.3 1.3 47 n/l n/lBiotrace International 1.36 18 4.6 8.9 29 35 3Zi Medical 1.31 137 >999.9 >-999.9 0 9 n/aTissue Science Laboratories 1.30 -8 12.8 -26.0 10 37 -16Genetix 1.29 20 10.7 10.1 12 34 0Bioquell 1.21 30 7.0 -2.4 17 42 5Advanced Medical Solutions 1.15 -6 8.9 -0.3 13 15 15IDMos 0.99 >999 n/a n/a 0 24 n/aSphere Medical 0.98 612 n/a n/a 0 n/l n/lCustomVis 0.88 -13 585.4 >-999.9 0 2 0118 The 2005 R&D Scoreboard The 2006 R&D Scoreboard 119

Ranking of the top 800 UK companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %Cozart 0.72 50 15.2 -12.7 5 29 n/aImmunodiagnostic Systems 0.70 46 12.8 5.3 5 21 n/aGenosis 0.58 51 264.4 >-999.9 0 4 n/aMediwatch 0.55 67 31.2 -60.0 2 9 -25Celsis International 0.50 18 2.6 20.0 19 36 -8Respironics ** 0.47 -17 2.7 7.9 18 n/l n/lNMT 0.44 -12 n/a n/a 0 4 -38LiDCO 0.39 -4 11.3 -61.2 3 24 419 Household goods 130.40 5.7 1.1 12.5 12230 n/a n/aReckitt Benckiser 63.00 5 1.5 20.1 4179 15378 23Dyson James 19.42 31 4.6 17.5 426 n/l n/lGlen Electric 13.76 6 2.0 6.0 682 n/l n/lKohler ** 5.68 -2 5.1 10.0 112 n/l n/lWaterford Wedgwood ** 4.60 31 1.1 -21.9 409 n/l n/lMcBride 4.50 -4 0.8 5.8 537 286 n/aAga Foodservice 4.20 11 0.8 8.3 502 481 24Avery Weigh-Tronix 3.37 8 2.2 1.4 156 n/l n/lJeyes 2.19 -1 1.3 1.9 174 n/l n/lGeorge Wimpey 2.00 -51 0.1 14.6 3003 1896 n/aHerman Miller ** 1.82 16 2.7 2.4 67 n/l n/lFW Thorpe 1.03 -9 2.5 12.9 42 58 53Hoover ** 0.83 -32 0.5 -3.4 177 n/l n/lBrintons 0.80 -12 0.9 3.6 91 n/l n/lKenwood ** 0.73 -13 0.5 -1.2 144 n/l n/lFamco 0.71 -23 0.3 -7.5 227 n/l n/lElectrolux ** 0.50 0 0.1 -1.3 384 n/l n/lAmtico 0.49 -24 0.6 0.9 80 n/l n/lRedrow 0.40 33 0.1 19.3 780 778 25Steinhoff UK Beds ** 0.38 4 0.7 3.0 57 n/l n/l20 Industrial engineering 273.77 6 1.4 4.8 18922 n/l n/lCaterpillar ** 35.43 20 1.8 -1.1 2025 n/l n/lIMI 29.40 11 1.9 10.9 1578 1690 7JCB Service ** 26.79 18 2.4 5.0 1100 n/l n/lAGCO International ** 22.79 5 1.0 6.5 2222 n/l n/lCNH ** 17.39 8 2.0 -6.0 855 n/l n/lHalma 14.21 21 4.2 17.8 337 710 31Enodis 12.50 -13 1.9 4.5 665 877 72LDV 10.07 151 8.4 -20.0 120 n/l n/lBombardier Transportation ** 8.37 -7 0.8 4.0 1046 n/l n/lVitec 7.80 -1 4.0 9.2 195 196 28Senior 7.70 -3 2.3 6.1 339 205 30FKI 7.50 -10 0.6 8.1 1339 560 -7JCB Compact Products 6.66 3 4.3 -0.2 157 n/l n/lSpirax-Sarco Engineering 5.37 6 1.5 16.1 349 670 15Charter 5.30 -22 0.5 9.9 1066 1248 143Weir 5.25 -5 0.6 4.9 824 886 19Foseco 4.90 0 1.3 9.6 377 268 n/aLuxfer 4.10 3 1.8 6.9 233 n/l n/lStanelco 3.44 129 236.5 -227.1 1 48 -75Eaton ** 3.41 -54 1.1 1.3 310 n/l n/lDoncasters 3.34 11 0.9 5.9 392 n/l n/lRotork 2.96 22 1.7 20.9 175 625 38NSK ** 2.72 8 0.5 5.0 527 n/l n/lMesco ** 2.69 15 0.7 1.5 396 n/l n/lITW ** 2.50 6 0.6 -2.8 434 n/l n/lFenner 2.09 -9 0.7 5.0 313 316 82Renold 1.90 -5 1.0 -2.1 197 43 8Crane ** 1.61 27 1.3 3.5 126 n/l n/lB Elliott 1.60 -14 2.9 -21.3 56 n/l n/lMcCormick Tractors International ** 1.45 -7 0.9 -6.0 161 n/l n/lEndress + Hauser ** 1.21 1 2.7 -6.8 44 n/l n/lMolins 1.20 -57 1.0 -2.3 121 22 -29GD First ** 1.08 -45 1.2 5.5 90 n/l n/lMoog Controls ** 1.04 -9 3.1 7.1 33 n/l n/lLTG Technologies 1.03 56 2.0 -1.3 52 19 -37Corac 0.97 -3 116.5 -270.0 1 28 17Lincat 0.94 3 2.7 13.8 34 42 11Gooch & Housego 0.87 -11 3.9 21.3 22 63 58Melrose 0.80 n/a 0.3 3.0 270 368 n/aSKF ** 0.70 8 0.6 10.8 114 n/l n/lDennis Eagle ** 0.49 57 0.4 5.6 110 n/l n/lManganese Bronze 0.47 -73 0.5 1.0 88 50 43Pursuit Dynamics 0.47 26 522.2 >-999.9 0 61 -34Surface Transforms 0.47 285 183.3 -314.0 0 2 n/aSira 0.44 -31 4.3 -3.8 10 n/l n/lHydro International 0.37 22 2.0 7.0 19 16 2321 Industrial metals 70.82 4.4 0.6 5.5 12650 n/a n/aCorus 66.00 5 0.7 6.4 10140 3587 67British Alcan Aluminium ** 1.80 6 0.4 -3.3 442 n/l n/lAlcoa ** 1.51 8 0.3 -0.7 474 n/l n/lOutokumpu Stainless ** 1.10 -8 0.1 0.1 1001 n/l n/lEco-Bat Technologies ** 0.42 -20 0.1 11.1 592 n/l n/l22 Industrial transportation 49.35 1.3 0.3 -10.5 17961 n/l n/lBAA (now part of Airport Development and Investment) 27.00 n/a 1.2 38.6 2275 n/l n/lBBA 10.80 -9 0.7 5.7 1511 1246 -17Arval PHH ** 6.48 0 0.2 1.0 3004 n/l n/lStrategic Rail Authority 3.00 50 0.1 -144.1 2105 n/l n/lITIS 1.06 52 10.5 -15.0 10 45 -34Royal Mail 1.00 0 999 n/a n/a 0 1 n/a24 Life insurance 40.00 700 0.3 12.2 12709 8809 n/aOld Mutual 40.00 700 0.3 12.2 12709 8809 n/a25 Media 274.85 -7.6 1.9 7.2 14304 13546 n/aReuters 121.00 -5 5.0 12.3 2409 5120 -1Reed Elsevier 102.00 -7 2.0 16.3 5166 6752 n/aBBC 16.20 -14 0.4 -4.4 4005 n/l n/lChannel Four Television 12.10 33 1.4 6.4 894 n/l n/lPunch Graphix 7.93 -3 7.5 13.8 105 105 n/aOFCOM 3.41 0 2.3 -42.8 145 n/l n/lAegis 3.00 275 0.3 12.4 870 1371 2Thomson ** 2.30 -79 0.4 -5.6 523 n/l n/lTrafficmaster 1.52 -15 3.6 2.5 42 64 16Ingenta 1.21 -34 18.4 -9.3 7 3 -25Character 1.14 -42 1.2 0.9 99 33 50Thomson Intermedia 0.83 9 7.4 15.8 11 65 -4YooMedia 0.79 n/a 3.7 -113.1 21 13 -73Knowledge Technology Solutions 0.75 63 60.1 -84.7 1 2 -60Independent Media Distribution 0.67 44 17.9 -9.1 4 18 n/a26 Mining 59.92 4.7 0.1 28.0 45772 103683 n/aAnglo American 23.30 -11 0.1 18.9 17145 35366 26BHP Billiton 19.22 74 0.1 30.6 17234 25228 19Rio Tinto 11.65 -13 0.1 38.8 11086 42988 36IMERYS Minerals ** 3.84 -19 1.3 3.6 307 n/l n/lZincox Resources 1.91 n/a n/a n/a 0 101 n/a27 Mobile telecommunications 225.23 -5 0.5 -41.3 43608 63188 n/aVodafone 206.00 -6 0.6 -50.4 36616 61607 -35Inmarsat 10.78 48 3.8 42.9 286 1518 n/aO2 (now part of Telefonica, Spain) 8.00 -20 0.1 4.8 6683 n/l n/l2 ergo 0.46 -38 2.0 5.2 23 63 4028 Nonequity investment instruments n/a n/a n/a n/a n/a n/a n/aNo companies with sufficient R&Dfor inclusion n/a n/a n/a n/a n/a n/a n/a29 Nonlife insurance 129.37 6.6 1.8 10.3 7339 4650 n/aRoyal & Sun Alliance 122.00 4 1.9 11.4 6420 4012 n/aKiln 3.77 301 1.0 2.3 361 265 32Beazley 3.60 n/a 0.6 2.9 558 373 n/a30 Oil & gas producers 675.77 10.6 0.2 13.8 359848 n/a n/aRoyal Dutch Shell 342.50 6 0.2 14.5 178664 124031 -5BP 292.40 14 0.2 12.4 145308 126066 -8Esso ** 28.80 40 0.3 18.6 8691 n/l n/lBG 7.00 0 0.1 36.7 5612 25121 38Total ** 2.92 -13

Ranking of the top 800 UK companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %Vernalis 26.49 24 187.5 -232.3 14 211 56SkyePharma 26.00 -7 42.4 -63.0 61 181 -51ProStrakan 22.43 119 70.9 -117.0 32 197 n/aAlizyme 15.75 151 n/a n/a 0 180 9Warner Chilcott(now Chilcott)(now part of Warner Acquisition) 15.72 -6 5.2 1.6 305 n/l n/lOSI Pharmaceticals ** 15.64 -24 100.0 -31.5 16 n/l n/lBoehringer Ingelheim ** 15.59 -37 8.7 8.9 178 n/l n/lJohnson & Johnson ** 15.00 1 1.6 7.2 923 n/l n/lGenerics UK ** 14.34 38 14.7 -26.4 97 n/l n/lXenova(now part of Celtic Pharma Development) 14.28 -5 312.8 -324.8 5 n/l n/lArk Therapeutics 13.94 52 594.0 -794.8 2 123 -2Astex Therapeutics 12.59 11 312.3 -290.9 4 n/l n/lInnovata 10.37 -20 66.0 -58.4 16 111 -13GW Pharmaceuticals 10.28 -26 330.4 -317.7 3 92 15Vectura 10.21 17 227.7 -210.4 4 162 93Hikma Pharmaceuticals 9.62 71 6.3 26.1 153 569 n/aMicroscience(now Microscience Investments) 9.60 -6 >999.9 >-999.9 0 n/l n/lOxford Biomedica 9.33 1 >999.9 >-999.9 1 119 -13Arakis 9.00 n/a n/a n/a 0 n/l n/lAxis-Shield 8.97 -11 15.4 3.2 58 167 4IVAX(now part of Teva PharmaceuticalIndustries, Israel) ** 8.65 -25 6.0 -5.2 145 n/l n/lGenus 8.54 -5 4.7 5.3 183 248 94Sanofi-Synthelabo ** 8.51 10 3.6 13.2 237 n/l n/lYamanouchi(now Astellas Pharma Europe) ** 8.33 -66 2.8 14.0 302 n/l n/lBTG 8.10 -49 16.1 -23.5 50 187 -31Servier ** 7.81 27 89.9 -0.3 9 n/l n/lRenovo 7.72 26 n/a n/a 0 n/l n/lRandox Laboratories 7.65 -23 23.7 -11.6 32 n/l n/lNovo Nordisk ** 6.97 15 10.9 10.8 64 n/l n/lPhytopharm 6.86 8 92.9 -44.6 7 28 -32Protherics 6.75 47 38.1 -53.7 18 203 57Genzyme ** 6.56 46 6.5 7.5 101 n/l n/lDaiichi Pharmaceuticals ** 5.70 51 100.0 -36.7 6 n/l n/lAllergy Therapeutics 5.62 >999 27.3 -11.7 21 88 17Intercytex 5.61 32 n/a n/a 0 49 n/aNapp Pharmaceutical 5.49 2 4.5 13.7 123 n/l n/lEvolutec 5.35 708 >999.9 >-999.9 0 28 22NeuTec Pharma 5.14 56 n/a n/a 0 n/l n/lCeNeS Pharmaceuticals 4.89 41 >999.9 >-999.9 0 20 -39Amarin 4.84 139 >999.9 >-999.9 0 264 >999Plethora Solutions 4.55 152 >999.9 >-999.9 0 43 79Lorantis 4.53 17 n/a n/a 0 n/l n/lChroma Therapeutics † 4.44 432 n/a n/a 0 n/l n/lArdana 4.01 -68 >999.9 >-999.9 0 73 16Norbrook Laboratories 3.97 9 4.8 13.2 83 n/l n/lFerring Laboratories ** 3.82 -15 8.0 8.9 48 n/l n/lForum Bioscience ** 3.35 -8 2.8 2.2 120 n/l n/lDainippon Sumitomo Pharma Europe ** 3.16 25 100.0 4.7 3 n/l n/lPharmagene (now Asterand) 3.14 -62 116.2 -281.4 3 6 -50Proteome Sciences 3.13 -10 >999.9 >-999.9 0 49 -57Otsuka Pharmaceutical ** 3.10 -31 4.9 -18.8 64 n/l n/lCambridge Biotechnology(now part of Biovitrum, Sweden) ** 2.88 21 n/a n/a 0 n/l n/lPhoqus 2.50 -3 912.8 >-999.9 0 45 n/aReNeuron Holdings * 2.40 13 >999.9 >-999.9 0 n/l n/lMerck ** 2.37 -6 5.2 2.9 45 n/l n/lGeneMedix 2.33 5 n/a n/a 0 14 -39BioFocus † 2.23 8 18.0 -19.1 12 n/l n/lAlliance Pharma † 2.22 159 15.1 15.3 15 22 -21Osmetech 2.13 22 36.5 -50.8 6 37 42Sequenom-Gemini ** 1.95 -42 834.6 >-999.9 0 n/l n/lBioProgress 1.90 582 43.0 -214.2 4 51 n/aTepnel Life Sciences 1.74 12 12.8 -13.6 14 18 0Biotica Technology 1.71 37 n/a n/a 0 n/l n/lSR Pharma 1.66 -2 325.9 -821.6 1 12 -20Provalis 1.60 -6 15.4 -53.8 10 3 -88Futura Medical 1.54 60 >999.9 >-999.9 0 37 35Dechra Pharmaceuticals 1.33 19 0.6 5.0 208 124 4Respironics Respiratory ** 1.29 -32 56.1 -81.7 2 n/l n/lALTANA Pharma ** 1.22 48 6.1 3.4 20 n/l n/lEvotec ** 1.13 -38 3.3 -5.4 34 n/l n/lUCB Pharma ** 1.09 n/a 2.4 6.7 46 n/l n/lCephalon ** 1.05 160 9.0 -2.0 12 n/l n/lVastox 1.03 283 193.2 -326.4 1 61 n/aAcacia Biopharma ** 0.96 72 5.1 18.8 19 n/l n/lMicap 0.95 -10 295.3 -816.3 0 2 -60Serono ** 0.93 22 2.4 4.1 39 n/l n/lSenetek 0.88 -4 19.9 -1.4 4 9 -6NextGen 0.86 -14 85.0 -263.1 1 8 n/aStem Cell Sciences 0.84 76 98.7 -335.8 1 13 n/aEirx Therapeutics 0.82 -5 >999.9 >-999.9 0 5 n/aReGen Therapeutics 0.75 63 642.2 >-999.9 0 8 14Drew Scientific (now part of Escalon Medical, USA) 0.73 -38 8.3 -37.7 9 n/l n/lCyprotex 0.72 -8 26.7 -39.2 3 10 -29Sareum 0.70 n/a 212.0 -415.4 0 4 n/aAorTech International 0.65 17 477.4 >-999.9 0 15 275Medical Marketing International 0.59 173 292.5 >-999.9 0 82 n/aSynairgen 0.56 389 275.7 -449.5 0 23 n/aSinclair Pharma 0.54 105 7.8 -40.9 7 111 n/aOrchid Biosciences Europe (now Orchid Cellmark) ** 0.47 11 3.3 15.7 14 n/l n/lCytomyx 0.44 88 7.7 -19.1 6 1 -83Cambridge Laboratories * 0.43 -37 2.5 12.5 17 n/l n/l34 Real estate n/a n/a n/a n/a n/a n/a n/aNo companies with sufficient R&D for inclusion n/a n/a n/a n/a n/a n/a n/a35 Software & computer services 932.86 12.6 7.3 8.4 12715 16770 n/aNDS ** 96.99 18 29.9 16.0 324 213 36Misys 89.70 -1 9.1 5.5 985 1320 13Amdocs 84.14 14 7.1 16.6 1187 4178 19Sage 81.61 10 10.5 27.2 777 2965 -2Symbian 54.48 19 47.5 6.2 115 n/l n/lSony Computer Entertainment Europe ** 45.66 20 3.4 12.2 1357 n/l n/lFujitsu Services ** 40.60 59 1.8 7.4 2294 n/l n/lLogicaCMG 25.50 -32 1.4 5.9 1836 1932 43iSOFT 18.28 44 7.0 18.5 262 140 -86RM 16.81 16 6.4 1.5 263 159 3Intec Telecom Systems 16.51 44 14.2 -4.2 116 132 -30Systems Union 14.17 -5 12.5 7.4 113 n/l n/lAVEVA 13.95 24 21.2 17.1 66 231 28Micro Focus International 13.63 n/a 15.5 23.8 88 216 n/aAutonomy 12.77 54 22.8 10.0 56 759 105Northgate Information Solutions 12.76 67 6.2 4.7 206 380 -10NSB 12.69 10 26.2 20.3 48 104 -3Torex Retail 12.62 6 7.5 -4.6 167 228 -22Royalblue 10.53 42 14.2 13.0 74 270 21Anite 10.16 -14 5.4 0.3 189 251 9SCI Entertainment † 10.13 4 49.4 -92.2 21 342 23DICOM 9.89 24 5.5 5.7 180 196 -6Fair Isaac ** † 9.42 -25 17.2 -16.7 55 n/l n/lCODASciSys 8.80 0 12.1 10.2 73 128 25Empire Interactive 8.43 -13 28.6 1.6 29 3 -50SurfControl 7.55 34 13.3 5.3 57 132 -6GEAC ** 7.45 12 9.5 18.0 78 n/l n/lDelcam 6.51 12 27.7 9.6 23 19 6Cramer Systems 6.38 11 16.3 10.3 39 n/l n/lUbiquity Software 6.30 98 84.5 -123.7 7 38 -42Microgen 6.16 46 15.1 13.1 41 54 -33Marlborough Stirling(now Vertex Financial Services) 5.97 30 6.4 -14.0 94 n/l n/lSuperscape 5.92 71 147.2 -251.2 4 23 -53Macro 4 5.17 3 15.6 2.5 33 51 -19MessageLabs 5.15 41 6.9 -3.9 75 n/l n/lClearswift Systems 4.41 -1 18.2 -30.1 24 n/l n/lRedac * 4.21 84 6.5 -6.4 65 n/l n/lWitness Systems ** 4.07 71 16.9 11.9 24 n/l n/lMeridio 3.93 80 61.0 -62.8 6 n/l n/lSDL 3.88 53 4.9 7.3 78 139 60StatPro 3.71 34 34.4 15.4 11 33 74Detica 3.65 25 3.6 10.6 102 326 61AIT (now Portrait Software) 3.61 -17 25.3 12.8 14 18 38TTP 3.36 -18 15.0 -3.9 22 n/l n/lTransitive 3.34 19 275.6 -285.3 1 n/l n/lAlphameric 2.88 -15 3.9 10.2 73 83 -25Comino (now part of Civica) 2.84 -4 11.1 6.6 26 n/l n/lnCipher 2.84 0 16.3 10.7 17 63 0Innovation 2.72 -30 4.5 -18.7 61 140 7Pilat Media Global 2.66 625 20.4 17.9 13 28 22Kewill Systems 2.46 16 9.2 4.6 27 50 -21PlusNet 2.45 156 7.0 12.1 35 37 -54XKO 2.42 72 8.7 13.0 28 33 43Searchspace 2.30 8 14.4 -20.8 16 n/l n/lWorkplace Systems International 2.26 -12 29.5 -0.1 8 7 -70Flomerics 2.21 -3 19.4 8.0 11 21 75Alterian 2.18 -10 20.5 4.2 11 45 -4Tertio Telecoms(now Evolving Systems) ** 2.13 22 15.8 14.5 13 n/l n/lRecognition Systems(now Protagona) ** 2.08 -5 178.3 -198.0 1 n/l n/lNewchurch 2.07 42 36.8 -55.4 6 n/l n/lBond International Software 2.01 22 14.4 19.1 14 39 50Tadpole Technology 1.98 17 21.7 -100.0 9 7 -63Ant 1.96 40 78.1 -86.2 3 13 n/aPlanit 1.95 13 6.9 8.8 28 24 n/aClinPhone 1.94 20 5.7 3.1 34 120 n/aDRS Data & Research Services 1.72 11 13.8 0.6 12 11 -27Vebnet 1.66 126 51.1 0.0 3 14 -22Insignia Solutions 1.64 -17 519.0 >-999.9 0 0 -100Gresham Computing 1.61 9 11.5 -9.7 14 52 -15IBS OPENSystems † 1.61 n/a 7.7 20.5 21 69 n/aOMG 1.61 15 11.3 4.3 14 22 144Clarity Commerce Solutions 1.60 60 9.8 4.1 16 11 -8Electronic Data Processing 1.60 -7 22.9 2.2 7 15 -25World Gaming 1.60 -37 16.9 107.3 9 92 -32ASITE 1.56 57 102.2 -86.1 2 2 -33Pro-Bel ** 1.55 363 9.2 5.9 17 n/l n/lIndigoVision 1.45 -4 40.1 -55.6 4 36 260VI 1.45 8 14.2 1.1 10 3 0EasyScreen (now Refco Screens) 1.38 -8 62.3 -138.7 2 n/l n/lCorpora 1.36 68 70.2 -241.7 2 11 120Empower Interactive 1.35 -4 22.9 -72.3 6 n/l n/lMediasurface 1.25 10 18.4 -12.6 7 10 0Argo Interactive 1.19 16 30.8 -6.2 4 n/l n/lSystem C Healthcare 1.19 -24 6.5 13.8 18 26 n/aAppSense 1.17 49 13.8 2.8 9 n/l n/lFFastFill 1.12 6 25.9 -68.6 4 10 -29IDOX 1.11 -6 7.8 5.2 14 13 -32Financial Objects 1.10 -20 7.9 -1.8 14 18 38Rolfe & Nolan 1.10 9 4.6 15.1 24 n/l n/lZ Group 1.05 n/a 21.1 20.6 5 21 n/aCivica 1.04 n/a 1.0 4.5 106 143 n/a122 The 2005 R&D Scoreboard The 2006 R&D Scoreboard 123

Ranking of the top 800 UK companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %Prologic 1.03 39 10.6 7.1 10 9 29ServicePower Technologies 1.02 -28 12.8 -21.0 8 18 -33Sopheon 1.01 13 21.6 -26.2 5 26 -7Ascribe 0.99 16 18.4 14.0 5 36 -5Manpower Software 0.96 -6 16.2 5.6 6 8 -20Business Control Solutions 0.90 62 10.9 -22.2 8 21 n/aFocus Solutions 0.89 -2 16.4 999Zoo Digital † 0.84 1 8.3 -20.5 10 5 -84DCS 0.80 -76 2.3 -2.3 35 n/l n/lIntercede 0.78 5 43.1 -21.4 2 10 43Computer Software 0.75 -39 5.3 6.9 14 57 111Consilium 0.75 80 10.9 13.1 7 n/l n/lOneClickHR 0.75 55 15.7 -36.2 5 6 20Total Systems 0.64 -10 18.2 4.1 3 4 -20Mirago 0.61 28 11.3 -5.4 5 n/l n/lRaft International(now part of Financial Objects) 0.59 84 7.3 -17.5 8 n/l n/lPatsystems 0.54 -81 3.5 -5.1 15 25 9Chelford 0.53 -14 3.6 9.0 14 13 -19Birchfield Interactive 0.52 -5 23.5 6.5 2 n/l n/lTranseda Technology ** 0.49 -6 31.6 -2.8 2 n/l n/lTelephonetics 0.44 2 10.0 -32.6 4 21 n/aIntelligent Environments 0.42 -24 13.5 -7.0 3 8 60Retail Decisions 0.42 10 0.8 15.3 55 141 55Pole Star Space Applications 0.41 2 8.8 8.6 5 n/l n/lGB 0.40 -8 3.1 -4.4 13 30 -3Boltblue 0.38 -15 14.0 -27.9 3 n/l n/l36 Support services 152.61 9 1.1 7.5 14055 9727 n/aSerco 45.30 18 2.0 4.3 2260 1697 45Voca 29.25 257 32.8 4.2 89 n/l n/lDe La Rue 13.70 -18 2.2 12.1 611 892 32Urenco 10.66 -16 2.1 41.5 502 n/l n/lArup 5.34 -29 1.2 2.6 430 n/l n/lGenerics Group ** 4.41 -30 28.2 -11.7 16 n/l n/lRicardo 3.86 -13 2.4 5.1 160 142 7SGL † 3.80 118 3.6 10.1 105 n/l n/lRentokil Initial 3.70 28 0.2 10.7 2403 2983 n/aAEA Technology 3.40 -51 1.8 0.4 191 120 11SHL 3.00 3 4.4 11.6 68 73 -1Christie 2.92 39 3.8 5.7 78 39 50WSP 2.67 7 0.8 6.4 349 262 23Eckoh Technologies 2.17 63 2.7 -12.3 80 31 24Robotic Technology Systems 1.97 -63 4.7 5.5 42 10 -67Clarityblue 1.64 -17 7.3 1.1 22 n/l n/lUniverse 1.48 -18 8.2 5.3 18 9 -31PA 1.46 n/m 0.5 7.1 324 n/l n/lGroup 4 Securicor 1.40 -66 -999.9 1 10 -82Trikon (now Aviza Europe) ** 4.71 -18 26.3 -42.3 18 n/l n/lClearSpeed Technology 4.65 86 >999.9 >-999.9 0 82 -1National Semiconductor ** 4.22 -13 1.6 4.6 263 n/l n/lSurface Technology Systems 2.88 0 15.0 6.5 19 7 17Amino Technologies 2.81 66 12.0 -1.4 23 44 -62Telit Communications 2.69 -7 4.5 -1.2 59 14 n/abede 2.49 117 36.3 -85.1 7 6 -63Intelek 1.87 -19 5.3 7.8 35 11 -8STMicroelectronics ** 1.61 4 10.6 49.4 15 n/l n/lRemec Europe ** † 1.49 -3 4.6 1.6 33 n/l n/lCeloxica 1.28 -15 29.9 -57.3 4 14 n/aTelspec 1.28 -49 15.6 -36.1 8 2 -78Concurrent Technologies 1.18 11 11.0 12.7 11 24 71i-mate 1.03 223 0.9 10.4 120 0 n/aCadence Design Systems ** 0.83 4 3.4 22.8 24 n/l n/lScotty 0.69 -44 16.9 -127.1 4 12 -20Axeon 0.57 -30 235.0 -419.3 0 16 45Azzurri Communications 0.55 106 0.7 9.0 82 n/l n/lCyan 0.50 362 >999.9 >-999.9 0 13 n/aIQE 0.50 -40 2.4 -21.2 21 48 71Synchronica 0.42 n/a 13.7 -94.1 3 5 n/aTower 0.38 n/a 6.7 -40.6 6 2 n/a38 Tobacco 66.00 -1.5 0.7 29.4 9325 29666 27.1BAT 66.00 -1.5 0.7 29.4 9325 29666 27.139 Travel & leisure 31.61 16.7 1.4 10.6 2296 n/l n/lJordan Grand Prix (now Midland F1) 12.40 14 37.8 -41.4 33 n/l n/l888 6.59 65 4.2 18.2 158 549 n/aSporting Exchange 3.78 37 3.5 17.1 107 n/l n/lBETonSports 2.56 221 0.3 1.2 736 104 n/aFun Technologies (now part of Liberty) 1.66 75 12.1 -53.8 14 n/l n/lPartyGaming 1.28 -41 0.2 33.9 569 4800 n/aLeisure Link 1.24 -39 0.8 5.2 163 n/l n/lebookers (now part of Cendant) 0.79 -20 1.1 -29.4 75 n/l n/lVanguard Car Rental EMEA ** 0.79 -61 0.3 7.1 270 n/l n/lCivil Aviation Authority 0.53 -1 0.3 6.0 172 n/l n/l124 The 2005 R&D Scoreboard The 2006 R&D Scoreboard 125

Ranking of the top 1250 global companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %All companies composite 249354.87 7.0 3.6 11.0 6868241 8512210 6.11 Aerospace & defence 10130.01 13.5 4.6 7.8 221218 210246 11.3EADS, The Netherlands 1626.36 3 6.9 7.8 23503 13135 -13BAE Systems, UK 1449.00 31 13.2 8.1 11019 11586 8Boeing, USA 1284.37 17 4.0 4.7 31946 24333 11Finmeccanica, Italy 1199.67 20 15.6 6.2 7672 4968 15United Technologies, USA 796.25 9 3.2 11.9 24886 37015 20Lockheed Martin, USA 606.94 8 2.8 7.5 21676 20137 23Rolls-Royce, UK 352.00 25 5.3 13.3 6603 7728 27Thales, France 346.02 16 4.9 3.6 7052 3729 -10SAFRAN, France 322.94 n/a 5.4 -3.6 5972 4327 18Northrop Grumman, USA 313.37 7 1.8 7.7 17894 13038 14Raytheon, USA 292.99 2 2.3 7.4 12753 11740 12General Dynamics, USA 200.37 5 1.6 10.4 12374 15835 18Dassault Aviation, France 195.52 1 8.3 12.0 2355 4119 n/aGoodrich, USA 155.46 7 4.9 9.3 3148 3239 -7Smiths, UK 143.60 5 4.8 10.3 3017 5094 1Rockwell Collins, USA 141.54 11 7.1 16.1 2007 5296 5Bombardier, Canada 101.93 38 1.2 2.7 8681 2841 0SAAB, Sweden 61.77 5 4.4 7.2 1414 1496 43EMBRAER, Brazil 54.27 109 2.4 12.8 2231 3700 13Cobham, UK 42.90 -12 3.9 13.1 1090 1818 18Elbit Systems, Israel 41.88 8 6.7 5.8 623 636 15Japan Aviation Electronics Industry, Japan 39.09 5 6.8 5.9 572 747 n/aL-3 Communications, USA 38.27 -8 0.7 10.5 5501 5079 -4BE Aerospace, USA 38.21 19 7.8 11.1 492 1069 90Industria de Turbo Propulsores, Spain 34.84 -38 13.5 4.3 259 n/l n/lPatria, Finland 32.71 21 15.0 4.1 218 n/l n/lMeggitt, UK 30.77 11 5.0 16.6 616 1254 -7FLIR Systems, USA 30.01 12 10.1 25.1 296 965 -26Alliant Techsystems, USA 30.00 36 1.6 10.2 1874 1611 n/aDRS Technologies, USA 27.73 22 2.7 10.3 1011 895 n/aTeledyne Technologies, USA 26.15 38 3.7 8.8 703 754 n/aMoog, USA 25.37 47 4.1 10.3 612 835 n/aEsterline Technologies, USA 24.60 52 5.0 9.7 489 473 n/aCurtiss-Wright, USA 23.11 17 3.5 12.0 659 754 n/a2 Automobiles & parts 43883.39 5.4 4.2 4.2 1039615 443240 11.2Ford Motor, USA 4659.83 8 4.5 4.1 103221 7496 -30General Motors, USA 3902.61 3 3.5 -1.1 112188 10173 -12DaimlerChrysler, Germany 3881.41 0 3.8 1.9 102911 27772 -13Toyota Motor, Japan 3726.77 11 4.1 9.8 91555 111189 32Volkswagen, Germany 2799.92 -2 4.3 2.9 65458 14655 -6Honda Motor, Japan 2308.44 4 5.4 8.7 42690 35507 25BMW, Germany 2140.31 11 6.7 7.8 32057 17746 6Robert Bosch, Germany 2013.88 1 7.0 5.9 28869 n/l n/lNissan Motor, Japan 1964.92 12 4.6 9.2 42325 28146 0Renault, France 1555.59 15 5.6 9.5 27767 16866 14Peugeot (PSA), France 1477.94 2 3.8 2.7 38661 6408 -27Hyundai Motor, South Korea 1362.30 22 4.0 5.9 33901 12032 10Delphi, USA 1281.45 5 8.2 -8.1 15696 n/l n/lDenso, Japan 1175.76 11 8.5 7.6 13818 17422 28Fiat, Italy 905.59 n/a 2.9 2.4 31481 9468 n/aValeo, France 535.25 11 7.8 3.2 6825 1479 -20Aisin Seiki, Japan 471.53 7 5.2 5.1 9027 4986 16Visteon, USA 468.31 -10 4.7 -11.0 9888 652 -13Mazda Motor, Japan 448.31 3 3.4 3.9 13303 5194 84Suzuki Motor, Japan 428.65 15 3.7 4.3 11674 7587 41Continental, Germany 405.66 11 4.3 11.2 9507 7836 19Bridgestone, Japan 391.93 9 3.0 9.4 13282 8650 -10Michelin, France 388.21 -16 3.6 10.1 10712 4636 -9ZF, Germany 384.09 7 5.2 4.6 7443 n/l n/lYamaha Motor, Japan 353.44 5 5.2 7.2 6787 4478 37Mitsubishi Motors, Japan 339.42 0 3.2 -20.2 10475 5564 77Fuji Heavy Industries, Japan 256.84 -10 3.6 1.7 7139 2760 39Johnson Controls, USA 241.73 -19 1.5 4.6 16006 8701 33Autoliv, Sweden 224.72 5 6.2 8.4 3614 2690 11Goodyear, USA 212.61 -3 1.9 5.1 11488 1143 -37Hella, Germany 181.46 54 8.6 3.5 2110 n/l n/lDana, USA 160.18 2 2.8 -5.2 5736 217 -84Toyota Industries, Japan 148.31 2 2.4 4.7 6127 7544 36Behr, Germany 147.73 10 7.0 4.1 2097 n/l n/lCalsonic Kansei, Japan 128.29 2 3.7 1.4 3430 959 2Toyoda Gosei, Japan 120.92 8 5.6 4.3 2149 1676 27Pirelli, Italy 119.56 -12 2.7 9.8 4354 2559 -16TRW Automotive, USA 118.24 17 1.6 4.6 7364 1634 -3Harley-Davidson, USA 113.88 5 3.5 26.5 3223 8735 5Rheinmetall, Germany 107.19 3 4.5 6.3 2373 1758 7ArvinMeritor, USA 101.93 12 1.8 1.4 5718 680 -17Lear, USA 101.35 -12 1.0 -5.8 9954 923 -41Koito Manufacturing, Japan 94.76 n/a 5.3 4.9 1784 1323 n/aBorgWarner, USA 93.78 31 3.8 8.0 2501 1994 4GKN, UK 88.00 -1 2.4 2.9 3648 1982 -8Sumitomo Rubber Industries, Japan 80.24 3 3.2 9.4 2531 1389 -14Federal-Mogul, USA 77.30 -3 2.1 -1.3 3661 19 -25Burelle, France 72.47 152 4.6 3.3 1574 183 31NGK Spark Plug, Japan 70.87 3 6.0 11.2 1190 2785 53Yokohama Rubber, Japan 70.40 3 3.4 4.1 2072 863 1Tata Motors, India 61.62 29 2.0 10.8 3101 3646 n/aProton Holdings Berhad, Malaysia 53.51 -36 4.1 8.8 1307 426 -45Toyo Tire, Japan 48.32 2 3.6 4.1 1332 483 -5Trelleborg, Sweden 48.23 7 2.7 6.8 1769 854 -4Akebono Brake Industry, Japan 47.15 8 7.2 7.4 656 582 46ZF Lenksysteme, Germany 47.14 5 3.1 2.7 1531 n/l n/lEberspaecher, Germany 45.62 1 4.1 1.6 1126 n/l n/lBallard Power Systems, Canada 43.97 -18 140.5 -167.7 31 392 10American Axle & Manufacturing, USA 42.87 7 2.2 3.2 1973 503 -39Hankook Tire, South Korea 41.54 20 3.6 14.2 1162 1010 n/aChina Motor, Taiwan 41.27 -15 4.4 6.1 931 679 -14Polaris Industries, USA 39.69 12 3.6 11.3 1089 922 -31Tenneco, USA 33.78 23 1.3 10.7 2587 619 25Showa, Japan 32.58 -16 2.8 7.0 1153 737 16Hyundai Mobis, South Korea 32.17 48 0.8 13.9 4209 4034 n/aGrammer, Germany 31.01 38 5.3 3.6 590 139 n/aNissin Kogyo, Japan 30.05 10 4.3 9.7 696 782 65Modine Manufacturing, USA 28.28 52 2.8 5.6 997 455 n/aHaldex, Sweden 27.59 14 5.0 5.2 548 260 10Ichikoh Industries, Japan 26.83 8 4.6 -1.0 583 158 2Beru, Germany † 24.79 15 8.8 11.7 280 533 11Sanden, Japan 24.39 12 2.1 2.9 1150 n/l n/lPorsche, Germany 23.12 -29 0.5 18.5 4517 4689 n/aStoneridge, USA 22.83 8 5.8 4.2 391 123 n/aIMMSI, Italy 21.18 -20 2.0 2.7 1063 412 24Gentex, USA 20.42 14 6.5 26.0 312 1143 n/aBrembo, Italy 19.74 n/a 4.0 9.9 489 361 23Exedy, Japan 19.47 -1 2.9 6.8 673 835 n/a3 Banks 990.85 25.2 0.9 34.7 106294 292704 12.5Royal Bank of Scotland, UK 329.00 9 1.3 31.0 25902 55422 12HSBC, UK 244.64 34 0.7 35.2 33572 109973 7Banca Intesa, Italy 96.88 n/a 1.5 45.2 6356 23267 42Sanpaolo IMI, Italy 71.46 n/a 1.4 39.2 5295 15454 27Barclays, UK 68.00 45 0.4 30.5 17333 41362 11Rabobank, The Netherlands 58.40 27 0.9 28.6 6433 n/l n/lStandard Chartered, UK 51.26 6 1.3 39.1 3996 18039 12Danske Bank, Denmark 38.23 53 1.2 48.1 3300 14694 25Dexia, Belgium 32.98 586 0.8 45.1 4106 14493 44 Beverages 182.69 1.4 1.4 7.6 13151 12575 39.1Kirin Brewery, Japan 141.77 2 2.3 9.4 6094 8329 49Asahi Breweries, Japan 40.92 0 0.6 6.1 7057 4246 245 Chemicals 11383.11 -0.9 3.2 9.2 358624 337208 9.6Bayer, Germany 1295.86 -22 6.9 10.3 18815 20037 35EI du Pont de Nemours, USA 778.19 0 5.0 12.5 15517 21349 -12BASF, Germany 746.39 -7 2.5 14.3 29370 22136 -3Dow Chemical, USA 625.00 5 2.3 13.3 26973 20010 -28AKZO Nobel, The Netherlands 575.10 1 6.4 11.1 8932 8525 2Syngenta, Switzerland 478.80 2 10.1 10.6 4720 8670 26Mitsubishi Chemical, Japan 440.29 1 4.1 5.1 10805 6634 69Sumitomo Chemical, Japan 385.97 4 6.0 9.1 6398 7690 44Monsanto, USA 342.50 15 9.3 5.7 3666 14335 41Solvay, Belgium 327.74 12 5.3 6.1 6220 5471 5Asahi Kasei, Japan 250.29 5 3.7 7.0 6799 5279 32DSM, The Netherlands 199.26 1 3.5 8.7 5631 4171 -3Toray Industries, Japan 181.53 3 2.8 4.7 6409 6695 76PPG Industries, USA 179.99 2 3.0 10.0 5942 6022 -7Mitsui Chemicals, Japan 172.14 6 2.8 5.0 6058 3029 4Rohm & Haas, USA 159.02 3 3.4 12.3 4656 5880 -3Shin-Etsu Chemical, Japan 157.94 15 2.8 16.7 5566 14819 49Linde, Germany 155.97 21 2.4 9.6 6528 6970 3Teijin, Japan 148.17 -9 3.3 4.6 4483 2991 5ICI, UK 147.00 0 2.5 10.0 5812 4365 25Ciba Specialty Chemicals, Switzerland 133.03 5 4.1 -1.8 3279 2138 -18LG Chem, South Korea 109.69 11 2.6 7.3 4292 1534 -5Wacker-Chemie, Germany 100.93 -3 5.3 8.7 1893 3277 n/aL'Air Liquide, France 96.95 -5 1.4 14.0 7170 13069 19Clariant, Switzerland 96.35 -20 2.7 4.0 3616 1584 -22Eastman Chemical, USA 94.36 -4 2.3 13.1 4112 2436 -5Rhodia, France 92.07 -22 2.5 5.1 3710 1390 85Showa Denko, Japan 85.79 -1 2.1 2.3 4007 2774 46Kaneka, Japan 83.22 7 3.6 9.7 2291 1976 -17JSR, Japan 79.11 6 5.2 14.4 1507 3461 14Dainippon Ink & Chemicals, Japan 78.55 6 1.6 3.9 4949 1631 14Lubrizol, USA 77.94 24 3.3 9.1 2388 1746 4Air Products and Chemicals, USA 77.30 5 1.6 13.3 4743 8332 5Lanxess, Germany 69.40 n/a 1.4 -0.1 4913 1729 n/aKuraray, Japan 68.47 1 3.9 7.2 1751 2513 28SNPE, France 65.00 -17 12.1 -11.2 535 n/l n/lCognis Deutschland, Germany 63.21 39 2.9 1.7 2182 n/l n/lEngelhard, USA(now part of BASF, Germany) 63.02 8 2.4 7.0 2678 n/l n/lUBE Industries, Japan 61.63 9 2.1 5.5 2938 1544 16Johnson Matthey, UK 58.80 9 1.2 4.8 4756 2806 14Huntsman, USA 55.63 15 0.7 6.3 7564 2265 -20Daicel Chemical Industries, Japan 55.37 1 3.7 -0.1 1512 1555 27FMC, USA 54.99 1 4.4 15.4 1252 1341 -17Sumitomo Bakelite, Japan 54.50 9 4.9 7.4 1103 1184 30Celanese, USA 53.01 -14 1.5 12.0 3536 1635 -19Lyondell Chemical, USA 53.01 122 0.5 7.3 10838 3280 n/aMitsubishi Gas Chemical, Japan 52.93 2 2.8 8.6 1918 2876 75Mitsubishi Rayon, Japan 51.28 -6 3.1 7.7 1629 2675 83Tosoh, Japan 50.34 -1 1.7 9.2 2904 1282 -12Avery Dennison, USA 49.74 4 1.6 6.4 3188 3793 5Nippon Shokubai, Japan 47.03 1 4.8 11.5 973 1375 29Nippon Kayaku, Japan 46.87 11 7.1 7.8 662 916 18Praxair, USA 46.60 4 1.0 17.0 4459 10361 7Valspar, USA 46.18 4 2.9 10.0 1581 1489 2Toyobo, Japan 45.41 2 2.3 4.9 1943 1080 10Avecia, UK 45.40 -21 11.1 -15.0 407 n/l n/lBasell AF SCA, Luxembourg † 44.89 n/a 1.3 4.7 3419 n/l n/lZeon, Japan 44.23 6 3.9 6.2 1142 1492 24Tokuyama, Japan 43.76 1 3.7 6.5 1172 2148 69BOC, UK 43.20 4 1.2 13.7 3755 8253 56Nissan Chemical Industries, Japan 42.61 -1 5.3 10.9 797 1352 3Denki Kagaku Kogyo KK, Japan 41.66 0 3.0 8.4 1382 1167 9JohnsonDiversey, USA 41.36 -6 2.1 3.5 1928 n/l n/lCytec Industries, USA 39.90 71 2.3 4.2 1704 1477 n/a126 The 2006 R&D ScoreboardThe 2006 R&D Scoreboard 127

Ranking of the top 1250 global companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %Ecolab, USA 39.83 11 1.5 12.0 2641 6371 27Newmarket, USA 38.09 0 6.1 6.7 626 533 234Hexion Specialty Chemicals, USA 36.11 214 1.4 4.1 2604 n/l n/lNippon Paint, Japan 34.68 -5 3.5 5.0 1001 705 21WR Grace, USA 34.48 16 2.3 6.4 1497 352 -1Cabot, USA 34.37 11 2.8 -2.6 1238 1151 -6Tokai Rubber Industries, Japan 33.17 1 3.1 8.5 1087 893 n/aKureha Chemical Industry(now Kureha), Japan 31.87 1 5.0 6.7 644 490 3Ishihara Sangyo Kaisha, Japan 30.48 4 6.4 8.2 476 322 -29Chemtura, USA 30.19 5 1.7 1.5 1819 1115 -55Kemira, Finland 29.61 -5 2.2 5.8 1370 1099 11NOVA Chemicals, Canada 29.12 4 0.9 0.1 3271 1456 -15Sigma-Aldrich, USA 29.01 17 3.0 21.7 971 2773 n/aTokyo Ohka Kogyo, Japan 28.62 -14 6.5 9.3 439 677 9Borealis, Denmark 28.17 0 0.9 6.6 3308 n/l n/lLonza, Switzerland 27.84 -11 2.5 11.9 1114 1963 17NOF, Japan 27.64 -3 4.2 6.8 660 698 53Kansai Paint, Japan 27.31 -7 2.8 8.8 971 1218 15Nippon Soda, Japan 26.34 6 3.7 2.7 712 398 56Ashland, USA 26.21 5 0.5 19.1 5743 2753 2Toagosei, Japan 24.83 -4 3.5 7.3 712 583 -27Ferro, USA 24.70 16 2.3 3.8 1074 405 n/aAlbemarle, USA 24.28 33 2.0 9.2 1228 1453 n/aSolutia, USA 23.88 3 1.5 3.8 1646 26 n/aHercules, USA 23.82 -5 2.0 2.7 1205 927 7Sud-Chemie, Germany 23.64 11 3.5 7.4 670 407 13Sumco, Japan 22.46 7 2.1 36.7 1088 4184 n/aEMS-Chemie, Switzerland 20.38 4 3.6 17.2 569 1754 n/aSanyo Chemical Industries, Japan 20.12 5 4.4 6.8 461 489 n/a6 Construction & materials 1177.94 -1.9 0.9 5.0 124661 80781 14.1Saint-Gobain, France 209.56 0 0.9 7.1 24124 13730 16Asahi Glass, Japan 156.47 -2 2.1 4.4 7534 8874 34Bouygues, France 94.13 1 0.6 7.0 16791 9060 7Hilti, Liechtenstein 86.05 6 5.4 8.9 1608 n/l n/lJS, Japan 68.74 -4 1.4 5.3 4867 4134 29American Standard Companies, USA 66.40 -19 1.1 8.1 5979 4645 -16Toto, Japan 58.17 4 2.4 5.6 2390 2128 27Kajima, Japan 49.48 -10 0.6 1.7 8327 2732 11Taisei, Japan 44.39 -5 0.5 2.6 8429 2104 -8Nippon Sheet Glass, Japan 39.21 3 3.0 4.5 1308 1210 11Fortune Brands, USA 38.39 -4 0.8 14.3 4674 6212 -20Lafarge, France 37.79 2 0.3 14.0 10972 11874 26Shimizu, Japan 35.90 -6 0.5 2.6 7325 2492 2Owens Corning, USA 33.78 23 0.9 -59.2 3683 35 -75HeidelbergCement, Germany 29.55 -2 0.6 12.9 5361 7767 73Central Glass, Japan 29.23 9 3.0 10.1 958 698 -12Taiheiyo Cement, Japan 29.03 -2 0.7 4.3 4307 2123 19Novar, UK(now part of Honeywell Acquisitions) 26.20 -12 1.8 2.9 1479 n/l n/lLennox International, USA 23.47 7 1.2 7.4 1961 963 n/aPilkington, UK(now part of NSG UK Enterprises) 22.00 -24 0.9 8.7 2582 n/l n/l7 Electricity 1536.55 -0.3 1.0 12.6 151604 142239 n/aAREVA, France 280.34 1 4.0 7.0 6957 459 -5Electricite de France, France 276.21 -5 0.8 15.6 35077 55389 n/aKorea Electric Power, South Korea 225.20 8 1.5 16.1 14662 14168 6Tokyo Electric Power, Japan 173.62 -5 0.7 10.6 24909 21177 11Kansai Electric Power, Japan 113.61 -1 0.9 11.0 12898 12875 8Chubu Electric Power, Japan 79.07 -9 0.8 13.5 10528 11075 5Vattenfall, Sweden 78.83 33 0.8 22.0 9453 n/l n/lBritish Nuclear Fuels(now British Nuclear Group Sellafield), UK 55.00 -7 2.3 -17.3 2364 n/l n/lTohoku Electric Power, Japan 51.04 8 0.6 8.9 7953 6267 2Kyushu Electric Power, Japan 48.64 -8 0.7 13.9 6952 6462 7Chugoku Electric Power, Japan 41.01 -5 0.8 10.8 4993 4464 4Taiwan Power, Taiwan 35.42 -3 0.5 3.3 6502 n/l n/lElectric Power Development, Japan 31.49 -5 1.1 18.0 2933 3578 n/aShikoku Electric Power, Japan 27.57 -6 1.0 10.3 2844 3327 8Hokkaido Electric Power, Japan 19.51 -4 0.8 16.0 2578 2999 n/a8 Electronic & electrical equipment 18343.50 6.1 4.8 6.5 381111 419393 13.6Siemens, Germany 3541.98 2 6.8 4.1 51838 38818 -4Samsung Electronics, South Korea 3169.30 12 6.8 9.9 46462 61021 12Canon, Japan 1413.80 4 7.6 16.0 18528 37065 43LG Electronics, South Korea 1021.93 15 4.0 2.6 25611 5651 0Sharp, Japan 731.03 7 5.8 5.1 12535 11118 12Sanyo Electric, Japan 650.59 5 5.3 -1.2 12262 2106 -24Agilent Technologies, USA 429.87 -21 10.6 6.1 4039 6994 -6ABB, Switzerland 427.54 6 3.2 6.8 13188 16469 89Schneider, France 372.48 1 4.6 13.3 8024 12908 28Pioneer, Japan 313.10 13 8.1 -8.5 3875 1866 10Sumitomo Electric, Japan 278.74 2 3.2 4.6 8588 5708 10Omron, Japan 244.00 6 8.1 8.6 3003 3515 10Olympus, Japan 235.51 23 5.9 1.6 4015 4480 41Danaher, USA 220.76 29 4.7 15.8 4651 11544 14Seiko Epson, Japan 211.73 4 2.9 5.7 7303 n/l n/lLG Philips LCD, South Korea 210.58 -12 3.6 4.8 5806 7434 -29ALSTOM, France 180.02 -22 1.9 2.8 9518 6507 116TDK, Japan 179.38 5 5.5 8.7 3247 5789 2Emerson Electric, USA 176.49 -38 1.8 13.5 10080 19173 15Legrand, France 163.94 2 7.3 12.5 2232 3947 n/aSamsung Electro-Mechanics, South Korea 159.63 23 12.4 -4.8 1286 1627 n/aHon Hai Precision Industry, Taiwan 154.90 24 1.0 5.6 16171 14249 39Yokogawa Electric, Japan 143.11 7 7.5 3.2 1910 2021 11Agfa-Gevaert, Belgium 138.79 6 6.1 3.7 2273 1585 -21Fuji Electric, Japan 134.36 -5 3.2 1.6 4166 2167 37Brother Industries, Japan 124.60 15 4.4 7.3 2858 1583 20Daikin Industries, Japan 121.32 3 3.4 9.2 3597 5065 30Invensys, UK 110.00 -11 4.1 6.0 2713 1024 31Tatung, Taiwan 95.94 267 2.6 -3.9 3635 840 -4Quanta Computer, Taiwan 94.19 81 1.1 1.3 8499 2681 -25Japan Radio, Japan 92.61 -6 8.2 1.8 1131 206 -35AU Optronics, Taiwan 86.59 -3 2.2 7.6 3856 5149 -7Rockwell Automation, USA 80.73 14 2.8 16.0 2914 6410 16Molex, USA 77.82 12 5.2 7.5 1485 3372 19Chi Mei Optoelectronic, Taiwan 76.25 56 2.7 5.9 2867 3936 -3Fanuc, Japan 74.70 6 4.6 36.7 1630 11187 10Kudelski, Switzerland 73.17 17 24.1 18.0 304 605 n/aDelta Electronics, Taiwan 68.19 19 4.8 9.7 1434 3087 61Chunghwa Picture Tubes, Taiwan 62.73 11 3.4 -5.5 1833 1025 -44Symbol Technologies, USA 61.34 -16 6.0 2.3 1028 1549 23Fujikura, Japan 59.85 10 3.4 2.5 1780 2584 100Funai Electric, Japan 59.66 4 3.2 8.6 1890 1933 -5Vestas Wind Systems, Denmark 59.30 48 2.4 -3.2 2462 2849 56National Instruments, USA 58.97 13 17.7 13.7 333 1279 1Hoya, Japan 54.07 11 3.6 27.2 1521 8947 2Compal Electronics, Taiwan 52.25 12 1.3 4.1 4076 1962 -12Endress & Hauser, Switzerland 51.00 6 8.4 11.1 608 n/l n/lPerkinElmer, USA 50.89 0 5.1 9.6 989 1354 -12Barco, Belgium 50.38 6 10.3 6.3 489 574 9Minebea, Japan 49.41 4 3.4 4.3 1453 1215 23Trimble Navigation, USA 49.09 9 10.9 16.2 451 1544 36EPCOS, Germany 48.30 -1 5.7 -7.3 850 474 -26Leica Geosystems, Switzerland 47.63 -1 13.9 9.3 342 757 35Spectris, UK 44.90 3 6.8 9.9 656 729 3Hamamatsu Photonics, Japan 43.66 1 12.0 16.1 365 1392 64Cooper Industries, USA 41.65 1 1.5 11.8 2755 4660 34Energizer, USA 40.72 -6 2.3 15.0 1741 2138 -17Yamatake, Japan 40.32 1 4.5 3.3 892 1025 34Axalto (now Gemalto), The Netherlands 40.21 5 7.0 8.2 578 789 -7Gemplus International, Luxembourg(now part of Gemalto, The Netherlands) 38.38 -23 6.0 6.5 645 581 -39Yaskawa Electric, Japan 38.19 2 2.5 2.5 1528 1546 61TCL Multimedia Technology, Cayman Islands 38.04 92 1.5 2.2 2596 190 n/aTechtronic Industries, Hong Kong 36.98 45 2.2 6.7 1680 999 -50Analogic, USA 36.75 8 17.3 10.4 212 377 -4Nexans, France 35.73 11 0.9 2.8 3844 1077 88Powerwave Technologies, USA 35.55 29 7.4 6.5 481 434 -32High Tech Computer, Taiwan 35.37 0 2.8 5.3 1280 5455 n/aVeeco Instruments, USA 35.17 4 14.7 2.7 239 400 20SPX, USA 34.25 1 1.2 7.6 2788 1916 0MiTAC International, Taiwan 34.07 44 2.3 5.9 1487 653 n/aIngenico, France 33.42 50 11.1 -8.9 300 357 66Orbotech, Israel 33.04 18 14.9 11.5 221 416 -10Ulvac, Japan 31.50 32 3.2 6.6 971 722 21Roper Industries, USA 31.16 38 3.7 18.4 847 2344 n/aLeoni, Germany 30.64 1 2.9 6.6 1064 579 14Ibiden, Japan 29.51 21 2.4 7.5 1222 4395 n/aRenishaw, UK 29.30 71 16.7 20.2 176 530 -12Woodward Governor, USA 29.12 25 6.0 10.0 482 598 n/aQuanta Display, Taiwan 28.73 n/a 2.6 -12.5 1094 1218 n/aArtesyn Technologies, USA(now part of Emerson Electric) 28.48 19 11.5 3.1 247 n/l n/lVishay Intertechnology, USA 28.33 -5 2.1 3.8 1338 1435 5Horiba, Japan 27.82 10 6.1 8.2 456 746 33Itron, USA 27.10 5 8.4 8.4 322 724 -1NKT, Denmark 26.88 -4 3.3 4.8 806 911 58GS Yuasa, Japan 24.70 n/a 2.1 -1.1 1183 521 n/aKeyence, Japan 23.68 13 3.4 52.8 688 6405 -1Plug Power, USA 23.18 5 295.0 -398.7 8 206 n/aMosel Vitelic, Taiwan 22.30 383 5.3 2.6 422 261 n/aAmphenol, USA 21.85 16 2.1 18.5 1053 2969 n/aZumtobel, Austria 21.65 -2 2.7 6.8 814 523 n/aHirose Electric, Japan 21.60 23 4.9 34.0 442 2915 n/aNovatek Microelectronics, Taiwan 21.27 n/a 4.6 20.9 460 1480 n/aOptimax Technology, Taiwan 21.20 18 67.4 -116.8 31 269 n/aPhoton Dynamics, USA 21.13 22 28.8 -16.9 73 114 n/aAO Smith, USA 20.97 0 2.1 4.8 984 959 n/aNewport, USA 20.94 38 8.7 7.5 240 423 n/aMabuchi Motor, Japan 20.71 4 4.5 7.9 464 1765 n/aUshio, Japan 20.60 24 3.5 17.5 588 1782 n/aAmetek, USA 20.27 36 2.4 16.5 836 1749 n/aAustriamicrosystems, Austria 19.38 0 15.8 12.6 123 356 n/aUniversal Scientific Industrial, Taiwan 19.31 10 2.1 2.1 927 146 n/aGigabyte Technology, Taiwan 19.27 22 2.3 3.5 822 259 n/a9 Equity investment instruments n/a n/a n/a n/a n/a n/a n/aNo companies with sufficient R&Dfor inclusion, n/a n/a n/a n/a n/a n/a n/a10 Fixed line telecommunications 4390.21 6.0 1.7 16.5 254764 319485 -8.6NTT, Japan 1569.74 -10 2.9 11.5 53329 69600 -9BT, UK 727.00 39 3.7 12.9 19514 20490 10France Telecom, France 491.96 27 1.5 20.0 33694 29547 -31Telefonica, Spain 373.78 18 1.4 21.5 26029 45276 -3Deutsche Telekom, Germany 297.51 0 0.7 13.2 40954 36391 -28Telstra, Australia 235.87 20 2.4 30.5 9681 10462 -18TeliaSonera, Sweden 210.42 3 3.3 20.1 6416 15387 15Telecom Italia, Italy 123.68 29 0.6 23.3 21510 27592 8KT, South Korea 73.36 24 0.7 13.7 9886 6671 2FastWeb, Italy 64.87 n/a 9.8 -12.1 665 1724 -8KDDI, Japan 54.10 -18 0.4 10.4 14411 16664 23Chunghwa Telecom, Taiwan 45.78 4 1.4 24.7 3276 10059 -4TDC, Denmark(now part of Nordic Telephone) 37.58 -15 0.9 12.1 4392 4307 n/a128 The 2006 R&D ScoreboardThe 2006 R&D Scoreboard 129

Ranking of the top 1250 global companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %Belgacom, Belgium 30.23 -17 0.8 20.6 3699 6696 n/aTelekom Austria, Austria 29.57 2 1.0 14.4 3008 6534 8Swisscom, Switzerland 24.75 -15 0.6 28.6 4301 12084 -111 Food & drug retailers 504.10 27.9 0.4 3.3 142464 40166 n/aMcKesson, USA 165.42 23 0.3 1.3 51287 8952 6Tesco, UK 115.00 35 0.3 5.7 39588 27595 n/aTchibo, Germany 74.89 8 1.2 9.9 6038 n/l n/lCardinal Health, USA 68.27 107 0.2 2.3 43636 1294 -91Orion, Finland 54.62 13 4.2 9.2 1307 1300 2Andrx, USA 25.90 10 4.3 1.1 607 1025 n/a12 Food producers 2432.04 2.4 1.7 11.8 140740 212611 9.7Nestle, Switzerland 662.51 6 1.6 12.8 40252 77382 15Unilever, UK 654.80 -8 2.4 13.2 27258 37171 -3Ajinomoto, Japan 140.32 1 2.7 6.6 5295 4056 4Kellogg, USA 105.43 22 1.8 17.0 5928 11061 1General Mills, USA 100.77 3 1.5 16.9 6780 10762 6Danisco, Denmark 86.87 69 4.5 6.4 1926 2159 12Danone, France 85.89 -5 0.9 13.4 9099 19418 26Kerry, Ireland 85.71 12 2.8 7.9 3044 2017 -25Meiji Seika Kaisha, Japan 83.17 1 4.6 -3.7 1796 1135 -3Cadbury Schweppes, UK 58.00 -8 0.8 15.4 7157 11177 0Campbell Soup, USA 55.34 2 1.3 16.0 4397 8806 21Meiji Dairies, Japan 37.30 2 1.0 2.5 3578 1159 19Yakult Honsha, Japan 33.44 5 2.7 9.6 1221 2700 30Numico, The Netherlands 30.92 36 2.3 18.1 1366 4892 15Effem (aka Mars), UK 26.32 31 1.3 9.0 2080 n/l n/lArla Foods, Denmark 25.42 -20 0.6 3.1 4270 n/l n/lWm Wrigley Jr, USA 24.80 23 1.0 18.9 2423 8646 n/aMcCormick, USA 24.52 7 1.6 14.1 1510 2431 n/aVilmorin Clause, France 24.46 3 7.1 9.0 342 570 64CSM, The Netherlands 23.84 -13 1.3 4.4 1882 1227 -14Tate & Lyle, UK 21.00 11 0.6 2.0 3720 3339 48Barilla GeR Fratelli, Italy 20.61 n/a 1.2 7.2 1741 n/l n/lSudzucker, Germany 20.61 9 0.6 7.6 3674 2502 1213 Forestry & paper 367.44 0.6 0.5 4.4 79030 42278 3.7Stora Enso, Finland 60.46 7 0.7 -0.2 9061 6152 -1Oji Paper, Japan 56.75 -4 1.0 6.9 5849 3677 15SCA, Sweden 45.16 -6 0.6 1.8 7055 5748 20Nippon Paper, Japan 37.33 6 0.6 3.9 5822 2497 7International Paper, USA 36.70 -7 0.3 5.3 14036 9659 8Georgia-Pacific, USA 35.53 -5 0.3 7.8 11449 n/l n/lWeyerhaeuser, USA 35.53 11 0.3 5.9 13397 8228 -14UPM-Kymmene, Finland 34.36 6 0.5 4.0 6423 6317 10Metsaliitto, Finland 25.63 1 0.4 0.3 5939 n/l n/l14 Gas, water & multiutilities 503.08 -3.0 0.4 15.5 129739 111897 -11.6Gazprom, Russia 132.63 12 0.5 33.7 28040 11940 -75RWE, Germany 87.26 -1 0.3 12.4 27840 26955 27Suez, France 58.27 0 0.2 9.0 28507 28536 65Osaka Gas, Japan 56.28 -8 1.2 8.4 4813 4406 5Gaz De France, France 50.16 -19 0.3 13.3 15387 18712 -3Veolia Environnement, France 43.22 0 0.2 7.3 17346 11582 28Tokyo Gas, Japan 41.13 -25 0.7 11.8 5877 8314 36Nalco, USA 34.13 4 1.8 10.5 1929 1453 -415 General financial 189.51 14.5 6.7 26.8 2810 13020 n/aSEI Investments, USA 73.80 33 16.4 38.2 450 2860 30Deutsche Borse, Germany 49.68 -14 4.0 37.5 1253 7823 39WCM, Germany 25.05 -1 3.9 -2.3 640 49 n/aInvestment Technology, USA 21.73 18 9.1 26.7 238 1190 n/aOMX, Sweden 19.25 119 8.4 27.0 230 1097 2516 General industrials 6216.61 11.4 2.4 14.6 262676 373159 -2.2General Electric, USA 1994.99 11 2.3 25.0 87198 196808 -8Honeywell, USA 624.42 17 3.9 9.6 16107 18375 -5Mitsubishi Heavy, Japan 612.07 25 4.8 0.0 12786 8050 51Tyco International, Bermuda 486.95 7 2.0 14.4 24336 30784 -93M, USA 464.82 5 3.8 23.5 12329 30424 -6Textron, USA 189.89 6 3.2 6.3 5850 6820 18Eaton, USA 167.17 10 2.6 9.8 6474 5705 -2JM Voith, Germany 122.99 20 5.0 6.1 2440 n/a n/aFreudenberg, Germany 113.71 12 3.4 6.8 3323 n/l n/lKubota, Japan 112.18 3 2.2 12.8 5187 6802 39Dover, USA 111.95 2 3.2 12.4 3541 5632 16Diehl Stiftung, Germany 109.94 -1 9.7 2.7 1132 n/l n/lITT Industries, USA 103.45 14 2.4 6.5 4326 5456 -6SMC, Japan 73.78 3 5.3 26.1 1383 5112 3Trumpf, Germany 73.52 9 7.7 10.1 959 n/l n/lOnex, Canada 73.30 220 0.8 7.2 8699 1368 n/aUnaxis, Switzerland 65.41 -18 9.2 1.8 709 2344 94Dainippon Screen Mfg, Japan 62.32 13 4.7 6.9 1329 1103 7NGK Insulators, Japan 52.58 -15 4.0 7.7 1313 2663 24Clorox, USA 51.26 5 2.0 18.5 2607 5195 1Tomkins, UK 46.70 -9 1.5 9.0 3182 2345 8Orkla, Norway 46.54 n/m 1.0 12.3 4631 5863 n/aSealed Air, USA 44.15 4 1.9 12.7 2379 2361 -8Koc, Turkey 43.41 4 0.4 5.0 10496 2603 n/aAbengoa, Spain 38.33 139 2.8 8.1 1390 1156 62SIG, Switzerland 35.04 -26 3.5 5.6 997 832 -7NACCO Industries, USA 33.14 -2 1.8 4.0 1839 640 47Meidensha, Japan 30.53 -9 3.3 0.1 915 462 28MeadWestvaco, USA 29.12 -32 0.7 2.9 4009 2673 -14Mitsui, Japan 27.87 -6 0.2 5.5 17400 14900 53York International, USA(now part of Johnson Controls) 27.78 13 1.1 3.0 2627 n/l n/lCrown, USA 27.38 0 0.7 6.2 4053 1662 5Seton House, UK 26.70 38 5.8 6.1 459 n/l n/lAptarGroup, USA 26.64 9 3.3 11.0 804 1060 n/aNichias, Japan 23.26 2 3.9 7.7 594 n/l n/lCookson, UK 22.30 -8 1.4 7.0 1635 1016 57Rexam, UK 21.00 62 0.6 13.0 3237 2944 217 General retailers 704.38 39.4 2.2 11.9 31573 54271 -18.1Amazon.com, USA 315.12 65 6.4 5.9 4945 6503 -39eBay, USA 212.77 30 9.8 38.6 2175 19844 -39Nitto Denko, Japan 82.61 6 3.3 13.8 2541 7148 24Federated Department Stores, USA 51.26 9 0.4 10.6 13599 11304 52GUS, UK 22.00 47 0.3 10.3 7915 8745 -6Netflix, USA 20.61 101 5.2 0.4 397 726 n/a18 Health care equipment & services 4508.21 12.5 6.4 15.7 69955 189823 0Medtronic, USA 648.24 17 9.9 27.2 6577 29811 -23Boston Scientific, USA 396.09 20 10.8 15.6 3660 13873 3Guidant, USA(now part of Boston Scientific) 348.32 16 16.8 12.5 2068 n/l n/lBaxter International, USA 310.46 3 5.4 15.8 5737 15972 9St Jude Medical, USA 215.07 31 12.7 21.0 1698 7085 -26Stryker, USA 162.98 33 5.7 20.5 2838 10955 -11Becton Dickinson, USA 158.22 15 5.0 19.2 3154 9471 20Carl Zeiss, Germany 158.03 10 10.4 9.5 1527 n/l n/lBeckman Coulter, USA 121.68 4 8.5 7.8 1423 1869 -4Fresenius, Germany 102.38 12 1.9 12.3 5421 10824 366Zimmer, USA 102.23 5 5.3 32.1 1914 9299 -20Bausch & Lomb, USA 94.65 8 7.3 12.5 1300 1465 -42BioMerieux, France 89.80 3 13.2 13.7 683 1295 17Thermo Electron, USA 88.99 13 5.8 10.1 1534 3461 26Essilor International, France 77.98 6 4.7 16.3 1666 5497 31Dragerwerk, Germany 74.45 4 6.6 8.0 1121 221 4Terumo, Japan 67.80 -7 6.0 18.9 1135 4391 22Bio-Rad Laboratories, USA 67.05 6 9.7 8.5 688 1053 22Smith & Nephew, UK 67.00 1 4.8 18.6 1407 4209 -15Synthes, Switzerland 66.89 5 5.5 31.8 1210 7833 -6B Braun Melsungen, Germany 66.87 3 3.2 8.2 2079 n/l n/lCR Bard, USA 66.75 3 6.5 25.1 1032 4289 7Edwards Lifesciences, USA 57.67 14 9.9 11.0 581 1535 0Gambro, Sweden (now part of Investor) 54.24 21 2.9 11.7 1860 n/l n/lVarian Medical Systems, USA 47.80 14 5.9 22.1 805 3790 26Biomet, USA 46.42 23 4.2 29.3 1095 4813 -13Affymetrix, USA 45.38 5 21.2 15.5 214 787 -54Waters, USA 38.97 3 5.8 24.2 675 2451 -18Millipore, USA 38.47 6 6.7 14.2 577 1998 9Advanced Medical Optics, USA 35.91 35 6.7 -44.4 536 1964 29William Demant, Denmark 35.24 18 8.1 23.2 434 2842 51Sorin, Italy 34.12 -8 6.6 2.2 517 488 -18Varian, USA 31.42 11 6.3 8.2 497 799 17Diagnostic Products, USA(now part of Siemens, Germany) 30.35 15 10.8 19.8 280 n/l n/lGetinge, Sweden 30.18 4 3.5 15.2 870 1998 31Hillenbrand Industries, USA 29.42 -10 2.6 -6.3 1129 1770 -3Phonak, Switzerland 27.86 29 7.3 24.4 383 2416 60Dentsply International, USA 27.38 5 2.7 4.3 999 2840 14Respironics, USA 26.58 55 5.0 14.9 531 1618 n/aFisher Scientific International, USA 25.75 20 0.8 11.8 3256 5503 n/aCooper Companies, USA 24.98 560 5.3 16.9 470 1117 n/aMDS, Canada 24.93 -12 2.7 4.1 916 1564 n/aBiosite, USA 24.59 18 14.7 28.8 168 423 n/aIDEXX Laboratories, USA 23.85 16 6.4 18.0 372 1609 n/aNihon Kohden, Japan 23.65 2 5.7 8.9 414 460 4ev3, USA 22.88 1 29.4 -77.8 78 511 n/aBruker Biosciences, USA 22.87 -9 13.2 3.0 173 334 57Aloka, Japan 22.66 -14 9.9 62.7 228 205 n/aInamed, USA (now part of Allergan) 22.60 35 8.9 -0.6 255 n/l n/lDatascope, USA 21.09 12 10.3 5.3 205 270 n/aNDChealth, USA(now part of Per-Se Technologies) 19.79 -3 7.2 7.4 276 n/l n/lColoplast, Denmark 19.71 5 3.3 15.4 601 1973 25Steris, USA 19.57 -5 2.8 9.4 688 873 n/a19 Household goods 2512.27 7.5 2.3 11.0 110928 186170 n/aProcter & Gamble, USA 1130.01 8 3.4 19.9 33050 113630 46Henkel, Germany 222.62 19 2.7 10.2 8227 9068 22Whirlpool, USA 197.46 8 2.4 5.1 8339 3606 10Electrolux, Sweden 160.07 7 1.7 3.2 9476 2614 -38Sekisui Chemical, Japan 113.38 -3 2.7 4.5 4229 2851 48Black & Decker, USA 77.94 13 2.1 13.3 3800 3117 -24Swatch, Switzerland 65.85 -6 3.5 17.1 1897 6280 16Reckitt Benckiser, UK 63.00 5 1.5 20.1 4179 15378 23Newell Rubbermaid, USA 60.00 -3 1.6 7.0 3694 4297 8Maytag, USA (now part of Whirlpool) 53.00 -7 1.9 -1.1 2855 n/l n/lSekisui House, Japan 30.55 7 0.4 4.8 7412 6214 41Snap-On, USA 29.12 -18 2.1 7.2 1376 1420 18Groupe SEB, France 28.51 -2 1.7 7.4 1692 1008 -2Armstrong, USA 28.25 4 1.4 3.2 2073 12 -80Daiwa House Industry, Japan 28.20 1 0.4 4.7 6741 5656 45Steelcase, USA 27.61 15 1.7 2.8 1671 1222 n/aPentair, USA 26.82 46 1.6 11.1 1716 1740 n/aNoritz, Japan 25.30 21 2.9 4.5 869 525 n/aJuki, Japan 23.94 4 3.8 6.9 631 402 32Church & Dwight, USA 22.54 17 2.2 12.5 1011 1405 n/aMakita, Japan 20.16 0 2.1 17.1 961 2633 n/a130 The 2006 R&D ScoreboardThe 2006 R&D Scoreboard 131

Ranking of the top 1250 global companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %Indesit, Italy 19.58 60 0.9 3.8 2105 673 n/aBriggs & Stratton, USA 19.51 29 1.3 8.7 1546 782 n/aBIC, France 19.44 14 2.0 16.9 949 1639 -4Dyson James, UK 19.42 31 4.6 17.5 426 n/l n/l20 Industrial engineering 6079.57 9.2 2.7 8.2 223748 206359 21.9Volvo, Sweden 772.97 18 4.4 7.2 17607 13202 21Caterpillar, USA 631.41 17 3.0 11.2 20719 28205 28Deere, USA 394.51 11 3.2 9.6 12394 10019 -3MAN, Germany 375.84 37 3.7 5.0 10080 5816 44Komatsu, Japan 247.80 8 3.0 9.6 8399 11283 74Scania, Sweden 203.10 20 4.3 10.6 4704 5243 5Heidelberger Druckmaschinen, Germany 169.57 1 6.9 6.7 2464 1820 -2Cummins, USA 161.93 15 2.8 8.9 5777 3226 37Liebherr, Switzerland 158.03 15 5.0 6.5 3154 n/l n/lNavistar International, USA 120.57 -4 2.2 4.6 5515 942 -31Sandvik, Sweden 116.59 -5 2.5 15.0 4638 7283 15IHI, Japan 104.66 -6 1.9 -0.7 5375 2118 72Ingersoll-Rand, Bermuda 94.60 9 1.5 12.8 6143 7277 -8Atlas Copco, Sweden 92.29 -1 2.4 18.1 3860 8876 40Knorr-Bremse, Germany 91.11 7 4.8 9.2 1885 n/l n/lFurukawa Electric, Japan 84.85 -10 2.2 -0.2 3829 2618 58Nissan Diesel Motor, Japan 79.78 5 3.5 7.9 2276 700 17Parker Hannifin, USA 76.06 38 1.6 10.1 4817 5221 13Illinois Tool Works, USA 74.48 4 1.0 17.5 7527 15388 7NTN, Japan 73.80 10 3.9 7.4 1917 1971 22AGCO, USA 70.89 17 2.2 4.8 3174 1345 22Paccar, USA 68.62 14 0.9 12.7 7935 8035 13Kawasaki Heavy Industries, Japan 65.06 -11 1.1 1.4 6127 2636 47Glory, Japan 64.39 10 6.9 17.1 932 733 -1Rieter, Switzerland 63.95 7 4.6 5.8 1397 996 22SKF, Sweden 62.14 7 1.7 10.8 3607 3750 10Metso, Finland 60.47 -15 2.1 7.3 2918 2834 52Danfoss, Denmark 59.51 14 3.9 5.6 1512 n/l n/lKrones, Germany 56.75 n/a 4.9 5.3 1165 774 n/aGeorg Fischer, Switzerland 54.80 9 3.4 6.7 1632 1080 56Grundfos, Denmark 54.32 3 4.4 9.7 1236 n/l n/lCitizen Watch, Japan 50.42 8 2.9 10.8 1763 1929 24Ebara, Japan 49.32 -9 2.1 -4.3 2361 990 29Saurer, Switzerland 49.16 -5 4.6 5.6 1079 637 0Schindler, Switzerland 48.62 -4 1.2 7.1 3920 3813 25Wartsila, Finland 48.17 18 2.7 8.0 1813 1966 27Mettler-Toledo International, Switzerland 47.70 -2 5.5 11.8 864 1422 15Deutz, Germany 43.29 -9 4.8 3.8 909 425 11Assa Abloy, Sweden 43.04 18 2.1 14.6 2035 3367 18Claas, Germany 41.18 -17 2.8 4.9 1495 n/l n/lGEA, Germany 40.51 1 1.1 4.6 3745 1701 27Bobst, Switzerland 40.26 3 5.7 4.7 703 502 n/aShimadzu, Japan 39.05 10 3.4 7.4 1153 1287 26Koenig & Bauer, Germany 38.07 -5 3.4 1.8 1114 267 36IWKA, Germany 35.10 -14 2.5 -3.9 1422 315 -9Sauer-Danfoss, USA 34.18 13 3.8 5.5 902 679 22Alfa Laval, Sweden 32.78 11 2.7 8.1 1195 2155 89Pall, USA 32.73 -2 3.0 10.9 1108 1898 -12Amada, Japan 31.49 -11 3.2 8.2 992 2464 40Sumitomo Heavy Industries, Japan 31.18 1 1.2 8.2 2573 3010 52Timken, USA 30.81 6 1.0 8.4 3011 1808 19IMI, UK 29.40 11 1.9 10.9 1578 1690 7Kone, Finland † 29.09 -37 1.2 9.3 2475 2656 28Bucher Industries, Switzerland 28.02 17 3.3 6.0 861 548 34Gildemeister, Germany 27.89 6 3.6 4.9 774 237 29Jungheinrich, Germany 27.64 6 2.4 6.4 1130 239 12Hexagon, Sweden 27.15 116 3.9 4.0 705 1623 140Terex, USA 26.97 20 0.9 4.8 2924 2663 n/aCrane, USA 26.85 -12 2.2 10.5 1201 1392 n/aJCB Service, UK 26.79 18 2.4 5.0 1100 n/l n/lStork, The Netherlands 24.59 19 2.0 6.5 1249 857 -5Gamesa, Spain 24.55 -28 1.6 10.5 1559 2817 44Daifuku, Japan 24.53 17 3.0 5.8 820 926 n/aJenoptik, Germany 23.67 8 1.8 -1.5 1315 240 -15Kurita Water Industries, Japan 20.87 -1 2.6 9.9 794 1470 n/aCargotec, Finland † 20.85 n/a 1.2 8.1 1671 1199 n/aHitachi Zosen, Japan 20.26 0 1.2 2.2 1667 393 n/aKomori, Japan 19.68 2 3.6 9.0 552 896 n/aOshkosh Truck, USA 19.45 21 1.1 9.1 1724 2118 n/aISEKI, Japan 19.44 3 2.5 3.5 777 372 n/a21 Industrial metals 1579.45 3.3 0.8 10.3 189646 145418 39.3JFE, Japan 183.55 2 1.3 11.8 13837 13625 42Alcan, Canada 132.22 -5 1.1 3.2 11836 10435 33POSCO, South Korea 130.01 -19 0.9 20.8 15156 12494 13ThyssenKrupp, Germany 127.80 -3 0.4 4.7 28902 9877 77AlCoA, USA 113.00 7 0.7 8.5 15237 14774 -2Kobe Steel, Japan 97.22 16 1.4 8.0 7125 5318 38Arcelor, Luxembourg 94.82 2 0.4 14.1 22407 18133 128Umicore, Belgium 76.96 26 1.6 3.8 4954 1791 40Sumitomo Metal Industries, Japan 72.71 8 1.2 14.1 6104 7690 38Corus, UK 66.00 5 0.7 6.4 10140 3587 67USEC, USA 55.04 62 6.1 4.3 908 510 -33Mitsubishi Materials, Japan 51.57 -7 1.1 3.7 4860 2774 44Voest-Alpine, Austria 42.26 2 0.9 11.3 4475 3108 78Salzgitter, Germany 39.51 1 0.8 12.2 4914 2715 111Heraeus, Germany 37.10 n/a 0.6 1.9 6398 n/l n/lNovelis, Canada 33.78 -6 0.7 3.5 4517 847 -15Bekaert, Belgium 30.90 -17 2.3 9.6 1315 1110 10Mitsui Mining & Smelting, Japan 29.02 99 1.3 9.6 2162 1872 9Phelps Dodge, USA 28.31 50 0.5 26.5 5260 10262 n/aNippon Light Metal, Japan 27.33 15 1.0 4.3 2765 807 1Sumitomo Metal Mining, Japan 23.75 12 1.0 12.0 2392 4741 n/aOutokumpu, Finland 22.67 -20 0.5 1.0 4448 2466 61Eramet, France 21.99 -9 1.2 24.2 1863 2185 42China Steel, Taiwan 21.55 14 0.4 23.8 5039 5125 n/aInco, Canada 20.39 21 0.8 29.1 2632 9173 n/a22 Industrial transportation 401.43 -13.8 0.5 7.2 84800 n/a n/aDeutsche Post, Germany 120.24 -40 0.4 7.9 30640 15668 -1East Japan Railway, Japan 76.89 -2 0.6 12.0 12523 17285 39Hyundai Heavy Industries, South Korea 76.04 13 0.9 2.3 8013 5273 88SNCF, France 37.79 n/a 0.3 3.1 14425 1186 n/aBAA, UK(now part of Airport Development and Investment) 27.00 n/a 1.2 38.6 2275 n/l n/lDaewoo Shipbuilding & Marine, South Korea 23.97 43 0.9 -0.4 2717 3603 n/aFinland Post, Finland 20.27 51 2.2 9.7 926 n/l n/lLa Poste, France 19.24 22 0.1 4.4 13281 n/l n/l23 Leisure goods 10671.95 1.7 7.0 4.6 153218 135249 10.6Matsushita Electric, Japan 2787.28 -8 6.4 4.2 43895 29328 18Sony, Japan 2624.49 6 7.7 5.2 34268 26192 32Philips Electronics, The Netherlands 1605.74 -8 7.7 5.2 20884 22087 14Fuji Photo Film, Japan 898.96 8 6.8 2.5 13164 10063 1Eastman Kodak, USA 519.57 4 6.3 -4.4 8311 3335 -23Electronic Arts, USA 441.52 20 25.7 11.0 1719 8841 -16Konica Minolta, Japan 325.69 34 6.2 3.8 5268 3973 29Harman International Industries, USA 129.66 3 7.3 11.4 1765 3168 -2Take-Two Interactive Software, USA 128.29 50 18.3 3.3 700 455 -56Yamaha, Japan 113.28 2 4.3 5.3 2636 2480 23Namco, Japan (now part of Namco Bandai) 108.11 11 12.3 8.4 881 n/l n/lMattel, USA 106.01 6 3.5 13.4 3017 3961 -5Bandai, Japan (now part of Namco Bandai) 96.28 6 7.2 8.3 1332 n/l n/lCasio Computer, Japan 89.84 10 3.1 6.7 2864 3000 33Hasbro, USA 87.71 -4 4.9 11.1 1798 1886 -13Brunswick, USA 84.29 10 2.4 8.4 3450 1629 -36Activision, USA 76.76 52 9.0 1.2 855 2072 -11Midway Games, USA 63.34 46 72.5 -72.2 87 492 n/aThq, USA 49.07 15 10.4 4.2 470 917 8Pentax, Japan 48.34 9 7.3 4.3 659 391 38Bang & Olufsen, Denmark 46.22 10 13.4 10.2 345 689 40Garmin, Cayman Islands 43.62 22 7.3 32.9 599 5609 59Shimano, Japan 41.69 39 5.0 14.3 828 1760 -11Leapfrog Enterprises, USA 30.49 -14 8.1 3.2 378 297 15Hannstar Display, Taiwan 28.34 n/a 2.6 -12.0 1106 490 n/aAmer Sports, Finland 27.07 26 2.9 5.5 937 811 6Pace Micro Technology, UK 23.98 12 9.5 2.8 253 93 -46TiVo, USA 23.93 9 21.0 -19.1 114 339 n/aHeiwa, Japan 22.39 0 3.5 11.2 632 892 -924 Life insurance 62.54 n/a 0.3 10.5 20112 n/a n/aOld Mutual, UK 40.00 700 0.3 12.2 12709 8809 n/aEureko, The Netherlands 22.54 n/a 0.3 7.7 7403 n/l n/l25 Media 1331.49 10.0 1.8 11.5 75496 91912 -9.4Lagardere, France 260.41 18 2.9 6.9 8941 5485 -5Vivendi Universal (now Vivendi), France 233.61 75 1.7 20.9 13387 21053 11Thomson, France 172.46 -9 3.5 -3.1 4864 2337 -33Dai Nippon Printing, Japan 130.22 1 1.9 8.0 7032 6677 -3Reuters, UK 121.00 -5 5.0 12.3 2409 5120 -1Toppan Printing, Japan 109.84 4 1.6 5.7 6976 4638 14Scientific-Atlanta, USA(now part of Cisco Systems) 107.84 11 9.7 15.4 1113 n/l n/lReed Elsevier, UK 102.00 -7 2.0 16.3 5166 6752 n/aTime Warner, USA 71.65 -8 0.3 12.2 25426 39229 -20Arbitron, USA 22.46 16 12.4 32.7 181 620 n/a26 Mining 184.65 35.8 0.8 26.0 24596 67678 34.2Vale Do Rio Doce, Brazil 161.35 47 2.2 42.5 7451 32312 45Anglo American, UK 23.30 -11 0.1 18.9 17145 35366 2627 Mobile telecommunications 612.47 10.3 0.8 -16.2 76074 126241 n/aVodafone, UK 206.00 -6 0.6 -50.4 36616 61607 -35SK Telecom, South Korea 146.09 -7 2.4 23.6 6178 9267 3Pantech & Curitel, South Korea 81.34 19 8.3 -10.6 981 93 n/aPantech, South Korea 63.18 73 16.7 -6.9 377 215 n/aTelenor, Norway 60.99 68 1.0 19.0 5929 13145 51Alltel, USA 27.49 46 0.5 22.9 5791 12354 n/aSprint Nextel, USA 27.38 47 0.1 11.5 20200 29560 n/a28 Nonequity investment instruments n/a n/a n/a n/a n/a n/a n/aNo companies with sufficient R&Dfor inclusion n/a n/a n/a n/a n/a n/a n/a29 Nonlife insurance 122.00 4.3 1.9 11.4 6420 4012 n/aRoyal & Sun Alliance, UK 122.00 4.3 1.9 11.4 6420 4012 n/a30 Oil & gas producers 2864.49 11.8 0.3 17.0 1091222 1132886 8.2TOTAL, France 464.48 6 0.6 20.0 84250 87302 -4Exxon Mobil, USA 414.73 10 0.2 18.3 184879 240948 7Royal Dutch Shell, UK 342.50 6 0.2 14.5 178664 124031 -5BP, UK 292.40 14 0.2 12.4 145308 126066 -8Petroleo Brasiliero, Brazil 232.41 61 0.7 26.3 32808 57659 61PetroChina, China 230.61 9 0.6 35.8 39859 116717 24Chevron, USA 184.06 31 0.2 14.9 100687 83860 11China Petroleum & Chemical, China 161.90 48 0.3 8.5 59412 35666 48ENI, Italy 138.79 -21 0.3 23.7 50658 66050 -1Statoil, Norway 91.70 4 0.3 24.0 33596 37271 23ConocoPhillips, USA 72.81 -1 0.1 14.9 94037 65768 22Norsk Hydro, Norway 61.59 -6 0.4 27.0 14986 20333 30Nippon Oil, Japan 56.46 18 0.2 4.4 24301 6944 3Repsol YPF, Spain 43.29 11 0.1 12.3 33921 18664 -8132 The 2006 R&D ScoreboardThe 2006 R&D Scoreboard 133

Ranking of the top 1250 global companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %CNOOC, China 28.99 50 0.6 52.9 5013 21592 n/aNexen, Canada 26.93 54 1.1 20.9 2484 9353 n/aSasol, South Africa 20.85 -43 0.3 21.1 6359 14660 831 Oil equipment, services & distribution 778.84 7.2 1.8 15.7 42519 124128 53.9Schlumberger, USA 294.45 8 3.5 22.2 8335 46367 57Halliburton, USA 140.38 -4 1.1 11.7 12229 20247 16Baker Hughes, USA 109.62 7 2.6 18.7 4185 14911 28Weatherford International, USA 62.54 28 2.5 13.3 2536 9543 79Smith International, USA 42.87 10 1.3 12.0 3250 5520 31BJ Services, USA 31.57 15 1.7 20.1 1889 6852 16FMC Technologies, USA 30.00 2 1.6 5.3 1879 2585 61Compagnie Generale de Geophysique,France 27.00 17 4.5 7.1 598 1634 144Tenaris, Luxembourg 20.21 32 0.5 30.7 3924 13311 917Technip, France 20.20 -11 0.5 4.0 3695 3157 232 Personal goods 1536.03 2.3 2.2 15.0 70575 119803 9.9L'Oreal, France 340.94 -2 3.4 15.6 9985 34892 21Kao, Japan 196.24 3 4.2 13.0 4624 8406 10Kimberly-Clark, USA 186.10 14 2.0 14.2 9263 16330 -7Colgate-Palmolive, USA 143.47 7 2.2 18.1 6638 17513 10Gillette, USA(now part of Procter & Gamble) 121.74 3 2.0 23.1 6103 n/l n/lInternational Flavors & Fragrances, USA 104.74 3 9.0 13.6 1161 1980 -3Givaudan, Switzerland 97.23 6 7.9 18.5 1228 3367 19Shiseido, Japan 81.19 -2 2.5 4.2 3311 4613 29Yue Yuen Industrial, Hong Kong 54.79 5 3.0 10.0 1838 2676 -9Adidas-Salomon, Germany 43.29 -28 0.9 10.1 4559 5038 -3Estee Lauder, USA 42.11 8 1.1 11.4 3691 4647 59Avon Products, USA 37.40 1 0.8 14.2 4747 7174 -19Reebok International, USA(now part of Adidas-Salomon, Germany) 31.83 8 1.4 7.6 2205 n/l n/lPUMA, Germany 28.86 14 2.4 22.4 1221 3271 32Christian Dior, France 26.11 -7 0.3 17.7 10001 9896 2033 Pharmaceuticals & biotechnology 46733.85 8.2 14.9 20.2 313721 1174336 9.3Pfizer, USA 4334.81 -3 14.5 21.8 29912 108877 -3Johnson & Johnson, USA 3676.61 21 12.5 26.2 29423 108795 -1GlaxoSmithKline, UK 3136.00 10 14.5 32.0 21660 83331 9Novartis, Switzerland 2822.69 15 15.0 22.0 18763 89341 12Sanofi-Aventis, France 2778.62 2 14.8 11.8 18765 66208 -2Roche, Switzerland 2521.44 12 16.1 24.4 15695 89009 21Merck, USA 2241.38 -4 17.5 32.9 12821 52872 35AstraZeneca, UK 1968.20 -11 14.1 27.1 13950 50344 20Eli Lilly, USA 1762.29 12 20.7 19.2 8531 37285 7Wyeth, USA 1601.46 12 14.7 25.9 10925 38055 7Bristol-Myers Squibb, USA 1599.49 10 14.3 21.9 11188 27248 -4Amgen, USA 1347.86 14 18.6 39.0 7240 48713 -16Schering-Plough, USA 1086.32 16 19.6 5.2 5538 17817 -5Abbott Laboratories, USA 1060.80 7 8.2 21.5 13011 41978 0Boehringer Ingelheim, Germany 934.45 10 14.3 20.2 6551 n/l n/lTakeda Pharmaceutical, Japan 698.09 9 12.6 37.6 5542 34373 27Schering, Germany (now part of Bayer) 679.54 6 18.6 17.6 3647 12046 70Merck, Germany 489.90 19 12.1 13.6 4033 9342 266Novo Nordisk, Denmark 468.41 17 15.1 24.9 3110 11332 20Biogen Idec, USA 435.50 10 30.9 8.7 1411 8534 4Sankyo, Japan(now part of Daiichi Sankyo) 427.14 0 14.7 11.0 2901 n/l n/lEisai, Japan 386.55 14 14.7 16.2 2630 8053 29Serono, Switzerland 354.09 -1 23.5 -4.9 1506 4245 -8UCB, Belgium 351.11 42 20.2 13.6 1740 4492 -1ALTANA, Germany 319.47 4 14.2 20.5 2248 4340 -1Yamanouchi Pharmaceutical(now Astellas Pharma), Japan 290.39 -16 13.2 13.6 2206 12856 11Daiichi Pharmaceutical, Japan(now part of Daiichi Sankyo) 283.36 -3 17.5 19.0 1621 n/l n/lGenzyme, USA 281.04 27 17.6 22.6 1593 10553 0Mitsubishi Pharma, Japan(now part of Mitsubishi Chemical) 249.14 0 21.6 9.6 1156 n/l n/lChiron, USA(now part of Novartis, Switzerland) 245.11 2 21.9 8.0 1118 n/l n/lForest Laboratories, USA 239.07 40 14.7 29.4 1627 8741 10Allergan, USA 227.75 13 16.9 24.8 1351 9676 34MedImmune, USA 224.02 18 30.9 -3.6 725 3642 -9Teva Pharmaceutical Industries, Israel 214.88 9 7.0 25.0 3058 15750 37Cephalon, USA 206.68 30 29.3 -18.2 706 2319 73Applera, USA 192.65 -12 17.9 7.8 1075 3416 43Millennium Pharmaceuticals, USA 185.64 20 57.1 -38.8 325 1880 4Schwarz Pharma, Germany 177.91 31 26.1 -1.6 681 2309 52Shire, UK 167.26 49 18.0 -10.3 932 4226 34Kyowa Hakko Kogyo, Japan 162.25 14 9.3 6.2 1744 1848 2Gilead Sciences, USA 161.77 24 13.7 54.7 1182 16451 46Lundbeck, Denmark 159.72 35 19.1 23.5 835 3245 -6Ono Pharmaceutical, Japan 151.19 -1 21.1 41.7 717 3531 2Shionogi, Japan 145.14 -1 14.8 15.7 984 3825 44Tanabe Seiyaku, Japan 137.14 13 16.2 14.9 849 1983 28Elan, Ireland 136.18 26 54.7 -113.5 249 4401 120Human Genome Sciences, USA 122.09 -3 >999.9 >-999.9 11 721 -29Taisho Pharmaceutical, Japan 114.60 -4 8.3 19.6 1379 3636 1Pierre Fabre, France 106.02 6 10.5 5.1 1010 n/l n/lProtein Design Labs(now PDL Biopharma), USA 100.21 40 61.5 -59.1 163 1163 -28Ipsen, France 99.23 17 18.3 20.6 542 1651 n/aMerial, UK 88.30 7 7.7 13.1 1152 n/l n/lCelgene, USA 87.08 6 27.8 14.3 313 9296 103Dainippon Pharmaceutical(now Dainippon Sumitomo Pharmaceutical), Japan 86.09 10 10.0 4.9 858 2971 166Sepracor, USA 84.17 -10 17.6 0.1 478 3148 -6Dade Behring, USA 82.42 6 8.5 12.2 966 2063 8Exelixis, USA 82.21 2 185.8 -123.7 44 438 22Hospira, USA 80.87 16 5.6 13.6 1431 3977 11Ivax, USA(now part of Teva Pharmaceutical Industries, Israel) 79.33 -4 6.0 11.8 1317 n/l n/lMedarex, USA 79.13 11 264.0 -312.1 30 677 4Actelion, Switzerland 75.78 26 25.8 23.0 293 1644 13Barr Pharmaceuticals, USA 74.78 -24 12.3 30.5 610 3207 12Theravance, USA 73.54 53 >999.9 >-999.9 7 832 31OSI Pharmaceuticals, USA 73.37 14 72.3 -94.9 101 1137 -3Novozymes, Denmark 73.05 -2 12.6 19.1 579 2673 n/aWatson Pharmaceuticals, USA 72.96 -2 7.6 13.0 959 1466 -31Kos Pharmaceuticals, USA 71.78 11 16.4 24.1 438 1144 -41Pliva, Croatia 70.40 -7 10.4 1.7 675 1550 n/aAbgenix, USA (now part of Amgen) 69.12 11 646.9 >-999.9 11 n/l n/lValeant Pharmaceuticals, USA 66.26 23 13.7 -13.0 484 1001 -6CV Therapeutics, USA 63.78 5 577.8 >-999.9 11 302 -55Ranbaxy Laboratories, India 63.74 21 9.2 3.1 691 1854 -31Vertex Pharmaceuticals, USA 63.05 1 67.3 -123.1 94 2071 119Kyorin Pharmaceutical (now Kyorin), Japan 62.67 54 19.2 5.0 327 531 n/aSanten Pharmaceutical, Japan 62.28 6 13.6 19.4 457 1215 0CSL, Australia 62.27 44 5.3 14.1 1175 4128 n/aNPS Pharmaceuticals, USA 60.94 -19 815.8 >-999.9 7 100 -56Regeneron Pharmaceuticals, USA 60.07 n/m 155.8 -141.7 39 446 n/aMylan Laboratories, USA 59.45 16 8.1 24.3 732 2826 24Invitrogen, USA 57.84 36 8.3 11.3 698 1757 -34Neurocrine Biosciences, USA 56.76 11 78.7 -20.2 72 196 n/aIncyte, USA 55.70 8 >999.9 >-999.9 5 213 -39Cell Genesys, USA 53.82 0 >999.9 >-999.9 3 122 -21Alexion Pharmaceuticals, USA 52.61 64 >999.9 >-999.9 0 629 42Endo Pharmaceuticals, USA 51.44 75 10.8 38.2 478 2555 19Idenix Pharmaceuticals, USA 50.26 8 133.3 -86.3 38 292 n/aKissei Pharmaceutical, Japan 48.82 1 16.2 12.2 301 591 -8InterMune, USA 48.19 2 56.3 -27.8 86 302 6Amylin Pharmaceuticals, USA 45.65 -8 55.8 -149.0 82 3425 183King Pharmaceuticals, USA 43.11 9 4.2 9.8 1034 2411 25Biovitrum, Sweden 42.16 8 61.5 -12.3 69 n/l n/lImClone Systems, USA 41.88 24 18.7 17.4 223 1648 7Nippon Shinyaku, Japan 41.85 3 15.6 15.0 268 359 8MGI PHARMA, USA 41.29 13 25.4 -47.8 163 656 -40Nektar Therapeutics, USA 40.81 58 55.5 -145.6 74 578 -1Chr Hansen (now ALK-Abello), Denmark 40.72 -2 10.1 7.5 404 708 -16Genmab, Denmark 40.69 18 448.4 -434.4 9 795 188Cell Therapeutics, USA 40.06 -32 427.3 -841.3 9 76 -24Cambridge Antibody, UK(now part of AstraZeneca) 39.17 -11 20.2 -4.8 194 n/l n/lNabi Biopharmaceuticals, USA 38.93 10 61.9 -120.6 63 180 -63Medicis Pharmaceutical, USA 38.26 298 17.4 26.1 220 615 n/aICOS, USA 37.92 17 91.2 -104.0 42 896 0Medicines, USA 37.51 31 42.9 -8.0 87 615 -3Encysive Pharmaceuticals, USA 36.99 12 453.4 -555.4 8 146 -64Par Pharmaceutical Companies, USA 36.67 25 14.5 3.1 252 316 n/aVasogen, Canada 35.61 38 n/a n/a 0 20 n/aBiovail, Canada 35.23 21 6.5 32.1 545 1493 -11CuraGen, USA 35.13 -9 256.3 -326.2 14 102 -29Acambis, UK 34.50 19 84.4 -74.8 41 142 -49Gedeon Richter, Hungary 34.35 19 7.4 23.5 467 2210 30Nuvelo, USA 33.65 45 >999.9 >-999.9 0 489 n/adeCODE genetics, Iceland 33.33 22 156.0 -188.0 21 164 n/aSysmex, Japan 32.12 17 8.5 11.4 380 1256 37Basilea Pharmaceuticals, Switzerland 32.00 5 237.4 -166.7 13 602 78GPC Biotech, Germany 31.84 68 496.1 -696.9 6 245 12QLT, Canada 31.57 39 26.2 -143.7 121 366 n/aZeltia, Spain 31.39 24 63.4 -56.0 50 877 7Isis Pharmaceuticals, USA 31.37 -37 134.2 -142.5 23 281 50Kaken Pharmaceutical, Japan 30.95 -1 8.4 8.6 370 465 16Recordati, Italy 30.89 20 7.7 18.8 401 796 -9Dr Reddy's Laboratories, India 29.73 26 12.5 2.6 238 1373 n/aCubist Pharmaceuticals, USA 28.52 -12 40.6 -21.0 70 705 33Toyama Chemical, Japan 28.44 12 36.1 10.2 79 762 77Myriad Genetics, USA 28.05 29 58.4 -51.9 48 580 n/aTanox, USA 27.90 76 107.2 -54.1 26 362 n/aKrka, Slovenia 27.57 15 7.2 21.3 381 1683 92Flamel Technologies, France 27.55 34 200.5 -156.3 14 233 10Antigenics, USA 27.42 15 >999.9 >-999.9 0 47 n/aGen-Probe, USA 26.80 11 15.0 30.0 178 1602 n/aAriad Pharmaceuticals, USA 26.75 66 >999.9 >-999.9 1 144 n/aTsumura, Japan 26.51 -1 6.3 12.1 419 1111 36Vernalis, UK 26.49 24 187.5 -232.3 14 211 56SkyePharma, UK 26.00 -7 42.4 -63.0 61 181 -51Biomarin Pharmaceutical, USA 25.49 -12 170.5 -250.2 15 778 126Suzuken, Japan 25.44 12 0.4 1.7 6569 2119 47Parexel International, USA 25.28 15 6.5 -0.2 391 457 n/aAlkermes, USA 25.15 -34 25.9 7.7 97 914 10Pharmion, USA 25.01 51 19.4 2.1 129 308 n/aSartorius, Germany 24.58 21 7.4 8.3 333 393 40Stada Arzneimittel, Germany 23.69 32 3.4 12.5 702 1369 27Neurochem, Canada 22.99 57 >999.9 >-999.9 2 244 n/aQiagen, The Netherlands 22.78 14 9.8 23.7 232 1306 21ProStrakan, UK 22.43 119 70.9 -117.0 32 197 n/aPerrigo, USA 22.38 39 3.8 -32.3 597 879 n/aBerna Biotech, Switzerland 22.23 -4 29.5 -9.0 75 187 4Zambon, Italy 21.30 -3 7.2 6.3 298 n/l n/lNyco, Denmark 21.12 20 6.1 -7.2 349 n/l n/lUnited Therapeutics, USA 21.00 18 31.1 36.4 68 741 n/aGeron, USA 20.43 17 569.6 -612.5 4 231 n/a134 The 2006 R&D ScoreboardThe 2006 R&D Scoreboard 135

Ranking of the top 1250 global companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %Neurogen, USA 20.13 56 457.3 -536.7 4 104 n/aSalix Pharmaceuticals, USA 20.12 70 22.3 -39.4 90 281 n/aXoma, Bermuda 20.01 -32 184.1 -191.7 11 101 2634 Real estate n/a n/a n/a n/a n/a n/a n/aNo companies with sufficient R&Dfor inclusion n/a n/a n/a n/a n/a n/a n/a35 Software & computer services 16370.69 9.3 10.4 19.6 157072 523459 n/aMicrosoft, USA 3835.04 6 14.9 37.2 25793 144035 -15IBM, USA 3132.57 4 5.9 14.2 53084 67661 -11Oracle, USA 1090.40 26 13.0 33.0 8376 45066 13SAP, Germany 748.00 7 12.8 27.5 5849 31037 -1CA, USA 454.92 3 20.5 4.3 2216 7244 -21Symantec, USA 397.32 104 16.5 6.6 2413 10370 -32Google, USA 349.20 52 9.8 32.9 3576 66292 41Yahoo!, USA 342.22 52 11.2 42.0 3062 22091 -22Cadence Design Systems, USA 246.59 9 31.8 7.7 774 2631 4Unisys, USA 226.93 -6 6.8 -1.8 3354 1011 -20Adobe Systems, USA 212.80 17 18.6 37.0 1145 10974 43Sega Sammy, Japan 205.25 n/a 8.1 17.5 2545 5610 n/aIntuit, USA 196.06 -3 16.5 26.0 1187 6106 24Synopsys, USA 186.39 11 32.3 -1.6 578 1504 4Dassault Systemes, France 177.93 17 27.7 24.6 642 3161 1Autodesk, USA 175.68 26 19.8 24.3 887 4554 -7Cerner, USA 159.59 19 23.6 12.2 676 1899 11BMC Software, USA 156.86 -5 18.0 8.6 873 2826 9SunGard Data Systems, USA † 142.59 -4 6.3 11.0 2280 n/l n/lMentor Graphics, USA 123.88 5 30.2 2.9 411 655 77Novell, USA 116.86 1 16.8 35.7 698 1236 -6BEA Systems, USA 106.16 24 15.2 17.5 699 2523 19McAfee, USA 102.72 2 17.9 16.0 575 1931 -31Nintendo, Japan 101.24 30 4.0 21.4 2542 15574 75Sybase, USA 100.72 11 21.1 14.9 477 1114 0Business Objects, France 94.68 8 15.1 12.3 627 1218 -34Compuware, USA 92.51 -8 13.2 12.9 702 1510 -19Misys, UK 89.70 -1 9.1 5.5 985 1320 13Amdocs, UK 84.14 14 7.1 16.6 1187 4178 19Sage, UK 81.61 10 10.5 27.2 777 2965 -2DST Systems, USA 76.19 -44 5.2 18.6 1465 2301 -6UBIsoft Entertainment, France 70.83 28 19.2 3.1 370 531 0Parametric Technology, USA 68.89 10 16.4 11.7 420 955 -5Citrix Systems, USA 63.31 26 12.0 22.5 529 3218 38Cognos, Canada 61.71 16 12.8 19.2 481 1620 -15Hyperion Solutions, USA 60.64 8 14.8 13.5 409 1075 4SSA Global Technologies, USA(now part of Infor Global Solutions) 59.88 8 14.4 9.7 415 n/l n/lIndra Sistemas, Spain 59.02 9 7.1 11.6 826 1589 n/aInfogrames Entertainment, France 58.88 -22 14.2 -1.1 414 56 -70Macromedia, USA(now part of Adobe Systems) 57.32 8 22.6 13.0 254 n/l n/lReynolds and Reynolds, USA 55.92 3 9.9 3.9 564 1578 50Verisign, USA 55.53 42 5.7 14.6 968 2510 -30Openwave Systems, USA 55.33 2 24.8 -14.0 223 369 -45Symbian, UK 54.48 19 47.5 6.2 115 n/l n/lWincor Nixdorf, Germany 53.60 7 4.5 6.3 1198 1263 49Quest Software, USA 51.19 12 18.4 13.8 277 763 0CheckFree, USA 48.08 25 10.9 8.5 441 1965 -4Fair Isaac, USA 47.35 14 10.2 24.3 465 1319 -11FileNET, USA 44.36 -3 18.1 11.2 246 850 23Mercury Interactive, USA(now part of Hewlett-Packard) 42.94 32 10.8 13.0 399 n/l n/lTibco Software, USA 42.60 20 16.4 13.1 260 1234 38Eclipsys, USA 41.90 -2 18.8 -0.7 223 433 -8Realnetworks, USA 41.20 36 21.8 127.7 189 965 86Intergraph, USA 40.81 1 12.1 30.1 336 606 -9TietoEnator, Finland 40.06 33 3.5 10.1 1155 980 n/aCGI, Canada 39.00 2 2.1 9.5 1838 1080 n/aIDX Systems, USA(now part of General Electric) 38.88 20 12.8 8.4 303 n/l n/lWind River Systems, USA 38.18 8 24.6 8.6 155 420 -46Open Text, Canada 37.94 49 15.7 6.9 242 394 16Progress Software, USA 36.74 4 15.6 15.7 236 545 -20RSA Security, USA 36.42 1 20.2 11.4 181 1220 132Lawson Software, USA 36.21 -4 18.5 1.1 195 405 22Cae, Canada 35.41 -14 6.4 9.2 552 1147 16Borland Software, USA 33.60 -15 20.8 -12.5 161 252 -7Intentia International, Sweden 32.86 -3 15.1 2.8 218 279 23Aspen Technology, USA 32.49 -16 20.7 -25.3 157 355 160SPSS, USA 31.71 -4 23.1 11.9 138 255 13Kronos, USA 29.91 29 9.9 14.5 302 546 n/aSoftware, Germany 29.68 -12 9.9 22.0 301 855 15NetIQ, USA (now part of Attachmate) 29.45 -26 23.7 -10.1 124 n/l n/lCheck Point Software Technologies, Israel 29.44 26 8.7 55.3 337 2379 n/aNihon Unisys, Japan 29.04 -15 1.9 2.8 1524 1048 71Msc Software, USA 27.53 12 15.5 10.1 178 410 n/aAriba, USA 27.50 -13 14.6 -107.9 188 336 45DoubleClick, USA 27.06 19 15.4 10.3 176 n/l n/lMagma Design Automation, USA 26.76 10 28.0 -12.4 96 141 n/aWebex Communications, USA 26.63 33 14.8 25.9 180 909 n/aS1, USA 26.60 -8 19.2 -12.2 139 174 -5Internet Security Systems, USA 26.32 5 13.7 16.7 192 615 5Retalix, Israel 26.03 31 23.8 10.8 109 224 n/aAspect Communications(now Aspect Software), USA 25.90 -10 12.0 18.4 216 n/l n/lJDA Software, USA 25.83 -16 20.6 2.1 126 266 13LogicaCMG, UK 25.50 -32 1.4 5.9 1836 1932 43IBS, Sweden 24.81 8 14.3 3.2 174 151 18Informatica, USA 24.81 -17 15.9 11.0 156 666 18Macdonald Dettwiler & Associates, Canada 24.45 13 5.9 13.1 415 898 n/aAltiris, USA 23.90 30 21.9 2.9 109 345 n/aRed Hat, USA 23.81 26 14.7 31.7 162 2530 n/aSonic Solutions, USA 23.63 28 27.3 16.6 87 211 n/aPortal Software, USA (now part of Oracle) 23.45 33 43.0 -92.7 55 n/l n/lTrizetto, USA 23.45 3 13.8 7.7 170 315 n/awebMethods, USA 23.41 -10 19.3 5.9 122 229 16Formula Systems (1985), Israel 23.37 60 7.9 4.0 295 83 n/aUnited Online, USA 23.30 46 7.6 16.5 306 409 n/aHummingbird, Canada 23.13 5 19.7 -4.7 118 288 n/aTransaction Systems Architects, USA 23.12 4 12.7 20.5 182 785 n/aScansoft (now Nuance Communications), USA 22.83 48 16.9 0.8 135 892 n/aSeeBeyond Technology, USA(now part of Sun Microsystems) 22.79 -4 23.9 0.0 95 n/l n/lIndustrial and Financial Systems, Sweden 22.54 20 14.3 4.2 157 164 15I2 Technologies, USA 21.75 -47 10.5 15.2 206 173 -37Verint Systems, USA 21.06 30 14.5 7.1 146 521 n/aD-Link, Taiwan 20.75 -7 3.2 6.1 645 372 n/aJack Henry & Associates, USA 20.68 26 6.6 22.2 312 984 n/aMicromuse, USA (now part of IBM) 20.45 12 21.8 -4.5 94 n/l n/lMacrovision, USA 20.02 20 16.9 18.0 118 601 n/aSeaChange International, USA 20.02 17 27.2 -13.7 74 114 n/aManhattan Associates, USA 19.89 18 13.9 11.8 144 337 n/aCSG Systems International, USA 19.77 -43 6.2 10.9 320 735 34Gameloft, France 19.58 n/a 60.8 -2.2 32 198 -19Advent Software, USA 19.44 3 19.8 5.9 98 568 n/aVignette, USA 19.35 -36 17.4 1.2 111 225 -1336 Support services 892.73 9.1 3.0 12.5 29771 49026 n/aAutomatic Data Processing, USA 363.53 7 7.3 19.0 4951 15329 1Accenture, Bermuda 141.80 -10 1.4 12.4 9957 9765 17Certegy(now Fidelity National Information), USA 66.11 53 9.7 16.5 684 4018 n/aNSK, Japan 48.39 12 1.7 6.5 2867 2502 48Giesecke & Devrient, Germany 46.46 8 5.5 6.6 848 n/l n/lSerco, UK 45.30 18 2.0 4.3 2260 1697 45Convergys, USA 44.79 -1 3.0 9.1 1504 1556 35Emdeon, USA 34.07 8 4.6 5.8 744 1921 -9Voca, UK 29.25 257 32.8 4.2 89 n/l n/lFiserv, USA 29.12 5 1.2 18.5 2365 4411 -14Secom, Japan 22.06 9 0.8 14.0 2726 6571 n/aAcxiom, USA 21.85 5 2.8 9.8 776 1256 n/a37 Technology hardware & equipment 47888.19 7.2 8.2 8.4 581659 907303 -4.8Intel, USA 2996.86 8 13.3 31.0 22615 58324 -38Nokia, Finland 2733.27 4 11.6 13.2 23493 43545 9Motorola, USA 2143.52 20 10.0 12.9 21460 33308 9Hewlett-Packard, USA 2032.85 0 4.0 3.9 50499 52954 31Hitachi, Japan 1999.13 4 4.3 2.5 46710 12012 -3Cisco Systems, USA 1935.00 4 13.4 30.2 14446 62477 -6Ericsson, Sweden 1875.74 16 16.9 21.8 11112 29102 -15Toshiba, Japan 1717.48 3 6.0 2.1 28802 11855 59NEC, Japan 1358.88 7 5.7 2.7 23961 6436 5Alcatel, France 1231.28 15 13.6 7.4 9025 8608 -2Fujitsu, Japan 1185.53 -4 5.0 5.0 23505 9197 30Texas Instruments, USA 1173.70 2 15.0 21.1 7801 27013 -10Nortel Networks, Canada 1081.08 -5 17.6 -23.4 6129 5007 -40Sun Microsystems, USA 1039.73 -7 16.1 -2.9 6448 8862 17STMicroelectronics, The Netherlands 905.17 7 17.5 1.3 5170 8071 -9Infineon Technologies, Germany 854.06 9 18.4 -5.8 4644 4397 10Lucent Technologies, USA 820.71 11 14.9 13.3 5499 5429 -29Freescale Semiconductor, USA 696.06 24 20.5 9.9 3403 11155 18EMC, USA 682.62 16 12.1 15.4 5629 13429 -28Advanced Micro Devices, USA 666.37 22 19.6 1.7 3406 5767 20Mitsubishi Electric, Japan 644.24 4 3.8 3.1 16832 9877 52Qualcomm, USA 588.89 40 17.8 41.6 3304 33542 -13Applied Materials, USA 547.83 -5 13.5 20.7 4073 14292 -14Ricoh, Japan 544.77 0 5.8 8.1 9451 8604 30Xerox, USA 439.77 -1 4.9 6.3 8956 7692 -1Broadcom, USA 378.98 18 24.4 12.7 1556 7639 11Micron Technology, USA 351.64 -20 12.4 4.1 2843 6717 68Apple Computer, USA 311.04 9 3.8 11.7 8115 30004 35Analog Devices, USA 289.55 -3 20.8 21.6 1391 6799 -15Dell, USA 269.69 0 0.8 7.7 32565 29242 -43Agere Systems, USA 269.11 -7 27.6 -7.4 976 1457 22Kyocera, Japan 268.46 17 4.6 8.5 5827 9081 13Corning, USA 258.04 25 9.7 27.1 2667 16781 1Taiwan Semiconductor Manufacturing,Taiwan 248.59 12 5.2 34.4 4821 25137 4LSI Logic, USA 231.43 -6 20.7 0.6 1118 1911 -7Avaya, USA 229.50 13 8.0 5.9 2855 2499 -7ASML, The Netherlands 226.06 -1 13.0 20.2 1738 5137 11Tokyo Electron, Japan 216.60 -1 6.9 8.8 3137 6707 11Juniper Networks, USA 207.02 49 17.2 21.7 1202 4350 -44Nvidia, USA 205.09 5 14.8 14.3 1384 4994 69Tellabs, USA 200.37 37 18.3 9.8 1097 2406 -1Kla-Tencor, USA 198.20 21 16.3 27.9 1215 4926 -11Lexmark, USA 195.95 8 6.4 10.1 3041 3281 -23National Semiconductor, USA 193.97 -6 17.4 20.6 1114 4711 -1Maxim Integrated Products, USA 191.15 7 19.6 46.7 974 5507 -32Hynix Semiconductor, South Korea 190.92 -16 5.6 24.1 3433 9320 64ATI Technologies, Canada 190.48 21 14.7 1.1 1295 3007 73Xilinx, USA 189.96 6 18.9 23.8 1006 4060 -26Marconi (now Telent), UK 186.00 -6 13.9 -7.4 1337 302 -50NCR, USA 185.81 -2 5.3 6.4 3511 3444 -11Marvell Technology, Bermuda 182.24 18 18.7 21.5 973 6252 -14Maxtor, USA(now part of Seagate Technology,Cayman Islands) 170.99 -9 7.5 -0.5 2266 n/l n/l136 The 2006 R&D ScoreboardThe 2006 R&D Scoreboard 137

Ranking of the top 1250 global companies by R&D investment within industry sectors–2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap – –2005/06 R&D investment – –– Profit & Sales –– – Market cap –Op. Op. Op.R&D profit R&D profit R&D profitchange sales sales sales change change sales sales sales change change sales sales sales changeCompany £m 1yr % % % £m £m % Company £m 1yr % % % £m £m % Company £m 1yr % % % £m £m %United Microelectronics, Taiwan 170.86 31 9.6 -5.8 1779 13111 61Nikon, Japan 165.63 11 5.3 4.8 3151 3802 45Murata Manufacturing, Japan 162.10 -4 7.7 16.6 2095 8639 31Atmel, USA 161.12 12 16.5 -3.7 976 1389 128Rohm, Japan 159.62 3 8.8 18.2 1821 5988 -5Conexant Systems, USA 156.10 12 37.1 -20.3 421 479 1UTStarcom, USA 147.45 13 8.6 -13.2 1706 491 -13Novellus Systems, USA 144.06 -2 18.5 10.1 781 1883 -14Network Appliance, USA 141.54 42 11.8 15.0 1204 6558 32ZTE, China 141.44 -13 9.1 7.6 1557 1704 -86Comverse Technology, USA 140.29 7 25.1 4.7 559 2280 -24Western Digital, USA 138.92 19 6.6 5.4 2120 2205 22Benq, Taiwan 136.66 70 4.4 -3.9 3135 831 -47Oce, The Netherlands 132.41 -7 7.2 4.1 1840 759 3Cypress Semiconductor, USA 132.08 -13 25.6 -10.6 516 1249 7Teradyne, USA 129.90 -15 20.7 9.5 626 1520 -11Advantest, Japan 129.70 21 11.0 0.4 1182 5510 18MediaTek, Taiwan 128.21 98 13.7 34.4 936 4602 n/aNidec, Japan 127.91 196 5.3 11.3 2398 5761 19Altera, USA 122.18 16 18.7 28.7 655 3648 -23Storage Technology, USA(now part of Sun Microsystems) 114.58 -4 8.8 10.0 1295 n/l n/lSanDisk, USA 113.47 56 8.4 25.2 1343 5421 41Lam Research, USA 113.07 14 12.9 25.6 875 3236 40Lenovo, Hong Kong 111.94 293 1.4 0.7 7779 1632 -18Asustek Computer, Taiwan 107.98 83 1.7 5.9 6347 3994 -14Winbond Electronic, Taiwan 103.65 23 20.4 -4.9 507 638 -32Pitney Bowes, USA 100.07 6 3.1 19.6 3199 5438 -9RF Micro Devices, USA 98.36 8 21.9 2.6 449 671 6OKI Electric, Japan 96.80 -11 2.9 1.8 3358 748 -35Tektronix, USA 95.22 25 15.8 10.3 603 1318 14Research In Motion, Canada 91.82 56 7.6 20.4 1203 7039 -8Skyworks Solutions, USA 88.66 0 19.2 7.0 462 415 -33ARM, UK 80.27 47 34.5 15.1 232 1586 -5Harris, USA 79.97 23 4.6 10.6 1748 3474 22Ciena, USA 79.94 -33 32.1 -103.3 249 1246 77Palm, USA 79.19 51 8.6 6.7 919 865 -3Linear Technology, USA 76.56 26 12.5 56.2 611 5644 -16Nanya Technology, Taiwan 76.43 0 8.6 1.2 889 1499 -10Brocade Communications, USA 76.27 -12 22.8 7.0 334 992 54Integrated Device Technology, USA 74.32 23 24.2 -18.3 307 1807 166Pou Chen, Taiwan 73.36 250 2.7 6.8 2675 1120 n/aTekelec, USA 73.20 28 23.4 -8.2 313 401 -45Applied Micro Circuits, USA 71.10 -5 48.1 -56.4 148 432 -10ASM International, The Netherlands 69.17 19 13.9 4.0 499 456 -4PMC-Sierra, USA 69.15 -1 40.7 7.4 170 593 -35Intersil, USA 68.88 5 19.7 16.5 350 1885 11Micronas Semiconductor, Switzerland 67.49 19 18.1 8.9 373 428 -46McData, USA 65.84 24 18.4 -5.0 358 281 -35Lite-On Technology, Taiwan 65.33 27 1.6 4.6 4032 2141 n/aAvid Technology, USA 64.85 17 14.4 4.8 452 899 9Electronics For Imaging, USA 63.80 -1 23.4 -2.8 273 718 10Andrew, USA 62.82 -2 5.5 3.8 1142 733 -30Spirent (now Spirent Communications), UK 62.80 -7 13.5 1.5 465 352 -32Quantum, USA 62.56 11 12.9 -5.0 486 221 -27International Rectifier, USA 61.09 14 8.9 15.8 684 1454 -10Vitesse Semiconductor, USA 59.09 -7 53.2 -65.3 111 94 -65Silicon Laboratories, USA 58.96 35 23.8 13.5 248 1140 28Lattice Semiconductor, USA 55.58 5 45.2 -27.2 123 380 30ECI Telecom, Israel 55.51 25 15.1 5.1 367 423 -20Microchip Technology, USA 55.29 2 10.2 35.4 540 3996 73Com, USA 55.09 -1 14.5 -32.8 379 1074 40JDS Uniphase, USA 54.58 -6 13.2 -35.1 415 2120 62ON Semiconductor, USA 54.58 -1 7.4 12.9 734 1173 48Silicon Graphics, USA 54.00 -15 12.7 -9.9 425 5 -96Credence Systems, USA 53.90 15 21.6 -25.2 250 160 -69Polycom, USA 53.29 -1 15.8 14.0 338 1099 22Sanken Electric, Japan 52.97 10 6.9 6.3 771 932 11American Power Conversion, USA 52.73 6 4.6 10.6 1153 1866 -38Qlogic, USA 52.28 -6 15.2 36.7 343 1587 -11Anritsu, Japan 51.89 6 12.5 3.5 415 395 -4Zoran, USA 51.86 12 22.5 -7.0 231 449 23Macronix International, Taiwan 51.56 15 15.7 -37.4 329 525 21Logitech International, Switzerland 51.23 19 4.9 11.1 1047 2258 3AMIS, USA 50.91 13 17.4 6.4 293 467 -18Sunplus Technology, Taiwan 50.18 38 10.4 8.5 480 537 n/aAdvanced Semiconductor Engineering, Taiwan 49.40 8 3.2 -5.1 1528 2321 28ProMOS Technologies, Taiwan 48.95 16 9.3 3.5 529 1365 n/aCreative Technology, Singapore 47.95 18 6.7 -5.9 713 267 -25Emulex, USA 46.58 9 21.3 27.4 219 740 -21Italtel, Italy 46.40 8 12.4 9.8 375 n/l n/lSemiconductor Manufacturing, China 45.94 1 6.7 -7.5 682 1361 n/aVarian Semiconductor Equipment, USA 45.24 15 12.9 14.7 350 1052 13Fairchild Semiconductor, USA 45.20 -5 5.4 -0.3 830 1151 1Sigmatel, USA 44.24 126 23.4 17.4 189 91 n/aEnterasys Networks, USA 42.99 -12 20.7 -24.4 208 n/l n/lADC Telecommunications, USA 41.71 21 6.1 6.1 686 835 -48Mindspeed Technologies, USA 41.56 -10 63.8 -54.1 65 96 7Axcelis Technologies, USA 41.30 12 19.0 -0.2 217 327 -10Wistron, Taiwan 40.03 0 1.4 2.2 2922 758 n/aUnova (now Intermec), USA 38.74 7 6.1 4.0 640 1083 10LTX, USA 38.62 -2 49.3 -97.5 78 192 -6Cymer, USA 37.29 10 16.7 10.6 223 892 31Inventec Appliances, Taiwan 36.95 21 10.3 17.4 358 740 n/aInterdigital Communications, USA 36.75 23 38.7 10.5 95 884 54Plantronics, USA 36.58 85 8.4 14.7 437 440 n/aBrooks Automation, USA 36.56 -6 13.5 -0.2 270 578 46ADTRAN, USA 36.50 -7 12.2 28.4 299 909 -19Aeroflex, USA 35.76 23 12.8 6.5 279 469 19Extreme Networks, USA 35.69 5 16.0 3.3 223 251 -18Adaptec, USA 35.47 -46 15.4 -43.0 230 280 30Diebold, USA 35.19 1 2.3 5.5 1507 1621 -18CSR, UK 35.15 119 12.4 23.0 283 1462 137Bull, France 35.04 -6 4.3 0.4 806 300 -33Arris, USA 35.03 -5 8.8 7.8 396 647 5FEI, USA 34.87 7 14.0 -12.7 249 401 -2Realtek Semiconductor, Taiwan 34.78 44 17.9 15.7 194 520 n/aRedback Networks, USA 33.98 3 38.1 -13.0 89 515 75Standard Microsystems, USA 33.94 36 18.3 4.2 186 341 22Neopost, France 33.60 25 5.9 24.9 568 1860 11Coherent, USA 33.52 -8 11.1 7.2 301 591 4Avocent, USA 33.13 25 15.4 15.6 215 725 -22MKS Instruments, USA 32.57 -2 11.0 8.0 297 654 16Disco, Japan 31.35 2 9.2 19.2 340 1097 40Tokyo Seimitsu, Japan 31.09 14 7.4 8.5 418 1062 9Filtronic, UK 31.08 11 11.8 2.2 263 139 -30Powerchip Semiconductor, Taiwan 30.52 64 3.2 9.6 956 2248 n/aFinisar, USA 30.23 -17 14.2 -2.8 212 515 207Pixelworks, USA 30.18 70 30.2 -13.5 100 62 n/aFoundry Networks, USA 29.88 17 12.7 16.4 235 876 3Imation, USA 29.88 -10 4.1 7.7 733 822 -1TTP Communications, UK 29.50 31 47.6 -1.7 62 101 25Mercury Computer Systems, USA 29.17 30 20.0 16.9 146 162 n/aSilicon Storage Technology, USA 28.56 5 11.4 -6.7 251 228 -9Komag, USA 28.47 20 7.1 16.9 400 683 n/aInventec, Taiwan 28.39 13 1.0 1.8 2883 779 36Actel, USA 28.06 6 26.9 3.3 104 211 4Micro-Star International, Taiwan 27.98 -2 2.1 1.5 1317 255 -26Atheros Communications, USA 27.84 12 26.0 3.0 107 499 n/aTriQuint Semiconductor, USA 27.21 -23 15.3 1.2 178 353 21Sonus Networks, USA 27.02 27 23.8 -0.2 113 602 n/aZebra Technologies, USA 26.79 24 6.6 21.9 409 1362 n/aGenesis Microchip, USA 26.73 38 17.0 7.1 157 286 n/aKinpo Electronics, Taiwan 26.28 13 2.3 3.3 1145 280 n/aCirrus Logic, USA 26.27 -33 23.3 20.3 113 320 -12Micrel, USA 26.25 8 18.0 13.2 146 477 n/aSilicon Image, USA 26.13 -43 21.1 24.3 124 499 16Bookham, USA 26.11 -11 22.4 -121.5 117 84 -3TCL Communication Technology, Hong Kong 26.05 61 6.1 -33.2 425 111 n/aAastra Technologies, Canada 25.40 116 9.7 6.9 261 248 n/aSycamore Networks, USA 25.33 -10 66.5 -67.8 38 594 5Cabot Microelectronics, USA 25.05 -2 15.9 16.2 158 408 0Cree, USA 24.91 16 11.0 30.8 227 844 n/aVerifone, USA 24.87 18 8.8 14.0 283 949 n/aAdvanced Digital Information, USA 24.75 12 9.4 0.8 265 437 n/aCray, USA 24.30 -8 20.7 -30.3 117 179 n/aGN Store Nord, Denmark 24.04 -24 3.9 12.4 612 1828 23Kulicke & Soffa, USA 23.90 19 7.3 -17.9 327 239 n/aRambus, USA 23.87 26 26.1 13.8 92 678 n/aOmniVision Technologies, USA 23.63 59 8.2 21.7 287 579 n/aDSP, USA 23.47 25 21.5 13.5 109 424 n/aAdvanced Energy Industries, USA 23.14 -23 11.8 5.4 196 323 57M-Systems Flash Disk Pioneers(now M-Systems), Israel(now part of SanDisk, USA) 22.38 55 6.2 11.2 358 n/l n/lHarmonic, USA 22.23 7 14.8 -3.1 150 224 n/aMEMC Electronic Matrials, USA 22.12 n/a 3.7 26.1 599 3869 n/aC-Cor, USA 22.02 76 15.9 -11.6 138 192 n/aSemtech, USA 21.86 12 15.7 19.7 139 521 n/aZarlink Semiconductor, Canada 21.84 -42 21.0 -7.2 104 171 72Amkor Technology, USA 21.75 2 1.8 1.4 1223 624 n/aHutchinson Technology, USA 21.45 30 5.8 9.1 368 273 n/aSEZ, Switzerland 20.96 7 15.2 2.4 138 230 n/aShindengen Electric Manufacturing, Japan 20.81 -15 4.7 4.1 439 263 n/aImagination Technologies, UK 20.65 7 58.5 -20.3 35 136 14Accton Technology, Taiwan 20.45 -14 6.3 0.4 325 168 n/aELMOS Semiconductor, Germany 20.41 15 20.2 -118.5 101 107 -39Asyst Technologies, USA 20.32 -4 5.7 -2.1 357 188 n/aSilicon Integrated Systems, Taiwan 20.26 3 10.1 5.4 201 371 n/aIntracom, Greece 19.98 -46 4.7 9.4 426 455 10Ess Technology, USA 19.79 -9 18.7 -55.0 106 34 n/aTerayon Communication Systems, USA 19.78 -21 22.6 -24.5 88 38 n/aInter-Tel, USA 19.37 15 7.5 5.1 258 338 n/aDialog Semiconductor, UK 19.31 -3 21.5 5.7 90 39 -55Micros Systems, USA 19.31 22 5.5 13.3 348 857 n/aAvanex, USA 19.29 -21 20.6 -65.6 94 157 n/a38 Tobacco 846.23 9.3 0.9 14.4 94152 148998 24.8Altria, USA 549.28 17 1.0 17.0 56998 97513 21Japan Tobacco, Japan 200.08 -4 0.9 1.0 23020 11069 36BAT, UK 66.00 -1 0.7 29.4 9325 29666 27Reynolds American, USA 30.87 10 0.6 18.4 4809 10751 5239 Travel & leisure 442.40 12.8 3.5 15.8 12484 22311 n/lAmadeus Global Travel, Spain ! 125.18 19 7.6 17.2 1656 n/l n/lInternational Game Technology, USA 80.62 7 5.8 27.8 1386 7468 39Expedia, USA 65.40 32 5.3 17.2 1235 2983 n/aWest Japan Railway, Japan 30.45 2 0.5 12.1 6025 5056 27WMS Industries, USA 29.30 12 13.0 7.9 226 475 -14GTECH, USA 29.13 -18 3.8 26.0 760 2534 28Aruze, Japan 28.96 20 8.1 -1.9 358 853 n/aAristocrat Leisure, Australia 28.11 11 5.1 27.4 554 2427 -14Alliance Gaming(now Bally Technologies), USA 25.26 18 8.9 -1.1 285 514 n/a138 The 2006 R&D ScoreboardThe 2006 R&D Scoreboard 139

Accessing the full data using the websiteThis section describes how you can access the full 2006 Scoreboarddata set including UK and global companies, as well as the text partsof the Scoreboard.The Scoreboard websiteThe Scoreboard website is on www.innovation.gov.uk/rd_scoreboard.From this page, the main text parts of the Scoreboard can be viewedon screen or printed off.Downloading the data for remote analysisThe data can also be accessed from the above page by choosing theoption to download the data as a CSV file. These files can usually beopened in a spreadsheet program (e.g. Lotus 123 or Microsoft Excel)and converted into a spreadsheet from where the data can be studied.Printed copies of the ScoreboardPrinted copies of the Scoreboard are available from the DTI publicationsorderline via e-mail from publications@dti.gsi.gov.uk or by calling0845 015 0010 or fax: 0845 015 0020.Company DataThe company data contained in this Scoreboard is provided by:Company Reporting Ltd11 John’s PlaceEdinburghEH6 7ELTel: 0131 561 8000Fax: 0131 561 8001Email: research@comrep.co.uk140 The 2005 R&D Scoreboard

The following organisations have kindly agreed to endorse theScoreboard as a source of information for companies and theirshareholders when considering the amount invested in R&D aspart of the innovation process and business strategy.

Printed in the UK on recycled paper containing a minimum of 75% post consumer waste.First published October 2006. Department of Trade and Industry. www.dti.gov.uk/© Crown Copyright. DTI/Pub 8415/2.5k/10/06/NP. URN 06/31