R&D India

 

 

Newsletter 
Dec. 2006

 

 

 

 

Project Sponsored by 
DSIR, New Delhi

 

Dec. 2006

Global 1,250 Companies by R&D
Old Fashioned R&D is Losing its Ampersand 
News
SAP to Invest $1 billiion in India
Domestic Pharma Bullish on Research Spend
Ranbaxy: Long-term prescription
India Emerges as Hub for VAS
Yahoo Plans 2nd India R&D Unit
Anyone for Hen that Lays 300 Eggs?
Hyundai Plans New Engine Plant, R&D Centre in India
Force Multiplier: New R&D centre for Army's Needs
Foreign Nations May Not Get Home Remedies Sans Royalty
Israel Keen to Set Up Mutual R&D Fund With India
Global Manufacturing to step up R&D Activity in India
Branded Alleppey Coir in the Offing
Satyam sets up Global R&D Hub in Singapore
Xilinx sets up R&D Centre to Develop IP Cores
Agilent Tech Plans to Raise its R&D Stake
India now favourite R&D Hub for Multinations
Global Funds Hovering Over Bangalore R&D Park
India, China to Power R&D at Unilever
Law on Market Revenues for Scientists Planned
Indian Patent Applications Touche 24,000 in 5 Years
Microsoft IDC Hopes to File 100 Patents by 2007
IPR protection for Plant Products Soon
STPI Plans Sops for SMEs to Develop Patents
CIENA Earmarks 30% R&D Spend for India

Statistics
Asian Countries in the Global R&D
Top 10 Asian Companies in R&D 
Chinese Cos in FT Global 1250 by R&D Listing
R&D Intensity of Top 15 Countries

Interviews

End Notes

 

Old Fashioned R&D is Losing its Ampersand 

The Economist magazine in one of its recent issues has forcefully argued that the traditional separation of R&D, articulated by Vannevar Bush in 1945, is on the wane. It is the globalization which has led to this situation. Investment on long term research is a luxury only a monopoly can afford. Globalization has taken away any semblance of monopoly the companies could have even in the 80s or 90s. 

Only a few years ago research performance was judged on the basis of patents and papers, but today they work with company consultants to make meaningful products for the market. The laboratory has been asked to apply science to real and immediate concerns. Also such an application addresses the problem of taking research to market, which often failed in the earlier scenario. So much so, several industrial concerns seal patents in scores but would wait for the opportune time to make a product of the technologies developed. R&D has become more of shrewd technology management rather than a benign knowledge generation. 

Today, to add to these, software dominates the hardware. There is no need for the developers to fail the headway! This again brings the industrial R&D to the fore in a more pronounced way. Perhaps we need a well articulated policy to give a direction to our efforts in universities and research laboratories in the light of the changed scenario. 

R&D Intensity of Top 15 Countries
  R&D Investment R&D Intensity
USA  £103.0 bn  4.40% 
Japan  £48.7bn  3.80%
Germany  £25.7bn  4.10% 
France  £14.2bn 2.60% 
UK  £13.1bn  1.80% 
Switzerland  £8.9bn  6.80% 
S. Korea  £7.1bn 3.90% 
Netherlands  £5.6bn  6.40% 
Sweden  £4.2bn  4.60% 
Finland  £3.2bn  5.00% 
Italy  £2.9bn  2.20% 
Taiwan  £2.6bn  2.50% 
Canada  £2.3bn 4.00% 
Denmark  £1.4bn 4.40% 
Belgium  £1.1bn  4.20% 

From the Global 1250 R&D Co. list.

Global 1,250 Companies by R&D

India is on the way towards 9 percent growth. Our exports are looking up. MNCs have made a beeline to exploit our talent pool. Our R&D prowess is getting noticed. So far so good. But where do we stand in the global R&D scene? 

Financial Times’ annual R&D scoreboard for 2006 is out. Among the top 1250 global R&D investing companies only three are from India – Dr. Reddy Research Labs, Ranbaxy labs and Tata Motors. There is a steep skewness in R&D over the yeas in favour of the US and the trend continues to hold steady. More relevant question could be how do we fare in comparison with other Asian countries? But the first things first, here are the salient points coming from the Survey: 

  • Global industrial R&D is dominated by a few major economies;
  • Top 1250 companies invest UKP 249 billiion on R&D during 2005-06;
  • There are 39 countries with companies in the global 1250 but five of them contribute 82 percent of the total and 12 contribute 96 percent;
  • There are 20 companies from Europe, 18 from USA and 12 from Asia in the top 50 by R&D;
  • 82 percent of the R&D is from companies based in the USA, Japan, Germany, France and the UK;
  • 61 percent of the R&D is done b the top 100 companies;
  • 70 percent of the R&D is in the top five sectors, namely Technology Hardware, Pharma, Automotive, Electronics and Software;
  • Pharma and software R&D is growing faster than other large sectors;
  • Countries on the top have different sector mixes in R&D. Automotive dominates in Germany, Pharma in UK, and electronics in South Korea;
  • One quarter of the global 1250 are middle-sized companies;
  • 2005-06 registered an increase of 7 percent over the previous years’ R&D spend;
  • South Korea occupies 7th place and Taiwan sixth largest number of companies in R&D scoreboard;
  • USA has 63 percent of its global 1250 R&D in pharma, software and technology hardware;
  • The top 15 sectors show very different growth rates of R&D. Aerospace and defence have the highest growth but software and pharma have the highest growth among the top five sectors.

Japan is the R&D giant in Asia. In all 312 Asian companies are listed among the 1250. 73 percent of these are in Japan. Taiwan South Korea, China and Israel follow in the same order. 

China (with HK)

9

Israel

8

Japan

229

Malaysia

1

Singapore

1

South Korea

17

Taiwan

44

India

3

The centre of gravity in research is shifting toIndia and China. According to Booz Allen Hamilton, growth of corporate R&D in the two countries (17 percent) outpaced North America (5.2 percent) and Europe (2.3 percent)

Clearly we have a lot of ground to cover in the world comparisons. There is no scope to be proud of our R&D prowess, just yet.

 

SAP TO INVEST $1 BILLION IN INDIA

SAP, which completed a decade of operations in India in 2006, has announced an investment of $1 billion in India over the next five years. Of this, the company plans to invest $38.4 million in its Indian research and development (R&D) operations in 2006. It also plans to increase the number of employees from the present 2,750 to 4,000 by the end of 2006. The company has spent $500 million in India till now. It currently serves 26 industry verticals such as healthcare, retail and financial services through its two centres, SAP Labs and SAP India. Its R&D centre at Bangalore is its second-largest R&D centre outside Germany, and is expected to contribute 20 percent to the company's global R&D process by the end of 2006. SAP has also opened a new office at Gurgaon, housing 250 employees, which will serve as a Centre of Excellence. The centre will concentrate on the retail, public sector and small and medium enterprise (SME) segments. The company aims to increase the number of its Indian customers from the current 1,000 to 15,000 by 2010.

DOMESTIC PHARMA BULLISH ON RESEARCH SPEND

Indian pharmaceutical companies are significantly increasing expenditure on research and development (R&D). These companies are facing increasing pricing pressure in foreign markets and the Government of India is threatening to bring 663 additional formulations under price control in the Indian market. Five pharma companies, which are the largest spenders on R&D in India, have increased research expenditure by 29 percent to Rs1,436 crore in 2005-2006. R&D expenditure represented 8 percent of the top-five companies' global sales in 2005-2006 against 7 percent in 2004-2005. Ranbaxy Laboratories has emerged as the largest pharmaceutical R&D organisation in India, with an expenditure of Rs492 crore in 2005. R&D expenditure represented over 9 percent of its consolidated sales in 2005 compared to 6 percent in 2004. In the case of Nicholas Piramal India Ltd (NPIL), the company has spent Rs77 crore on R&D in 2005-2006 compared to Rs50 crore in 2004-2005. The company spent 5 percent of its total sales on R&D in 2005-2006 compared to 3.5 percent in 2004-2005. Sun Pharma increased its R&D expenditure by 52 percent to Rs135 crore in 2005-2006, from Rs102 crore in 2004-2005. This represents 9 percent of the company's total sales in 2005-2006 compared to 8 percent in 2004-2005. Torrent Pharma, Cadila Healthcare, Lupin and the Glenmark Pharma spend 4-6 percent of their global sales on R&D.

RANBAXY: LONG-TERM PRESCRIPTION

Ranbaxy, a leading pharmaceutical company, has manufacturing operations in eight countries and its products are available in over 125 countries with the US market being the largest. The company's performance in the US market has been affected with the entry of competitors, leading to pricing pressure. On account of this, the company is increasing its presence in Europe, Japan and other Asia Pacific countries. The company has announced a 30.5 percent growth in net profit to Rs99.83 crore for the second quarter to Jun 2006. The company has one of the largest R&D budgets covering over seven percent of its sale and hopes to increase it to ten percent in 2007. Also, the company has the highest number of products for approval in the pipeline, having completed regulatory filing for 721 products.

INDIA EMERGES AS HUB FOR VAS

Technology companies expect India to emerge as the centre for value added services (VAS) in the telecommunication sector. The voice mobile telephony is approaching the saturation level in urban markets. Revenues from the VAS sector are growing at the rate of 30 percent per year. Telenity proposes to invest Rs30 crore to set up a research and development (R&D) centre in India. OnMobile of the US proposes to enter into the mobile industry in India.

YAHOO PLANS 2ND INDIA R&D UNIT

Yahoo! Inc is mulling a second research and development (R&D) centre in India. It is considering various cities for this purpose including Hyderabad and Bangalore. Yahoo finds India a growing market for its services in view of India's expanding economy and the increased Internet penetration.

ANYONE FOR HEN THAT LAYS 300 EGGS?

The Indian Council of Agricultural Research (ICAR) will soon bring out guidelines for transfer of its intellectual property- related transfers. This will enable sale of its products and technology developed by the scientists. The products and technologies include agricultural software, lamb-fattening techniques, harvesting and tilling machines. ICAR has even developed the hen that lay 300 eggs a year in lab conditions. One of its achievements include developing bird-flu vaccine.

HYUNDAI PLANS NEW ENGINE PLANT, R&D CENTRE IN INDIA

Hyundai Motor Company Ltd is planning to set up an engine and transmission plant and a research and development (R&D) centre in India. The company expects to commission the second car manufacturing facility near Chennai by Oct 2007. The new facility will have a capacity to produce three lakh cars every year.

FORCE MULTIPLIER: NEW R&D CENTRE FOR ARMY'S NEEDS

A consortium of 40-member Pune-based Defence Manufacturers Association (DEMA) has raised a Rs5 crore to set up a research and Development (R&D) centre for defence products. DEMA comprises small and medium scale units. It has sought help from the Defence Research and Development Organisation (DRDO) for a five-acre land in Pune. DEMA needs Rs50 crore to develop two major products, a small hand-held unmanned aerial vehicle (UAV) and various kinds of fuses for ammunition used by the Indian Army. Presently India imports UAVs worth Rs1,000 crore. The army also uses one million fuses, worth Rs500 crore, which is imported.

FOREIGN NATIONS MAY NOT GET HOME REMEDIES SANS ROYALTY

The Government of India, in association with Ayush, has prepared a database of 1,06,000 traditional medicines and will soon place them in the public domain in a move to pre-empt any kind of international patents on the medicines. Once this traditional knowledge is in the public domain, international associations can use it only by paying a royalty to the institute or association that it is attributed to. The Centre is planning an agreement with international patent offices to ensure that India gets royalty under the benefit share agreement.

ISRAEL KEEN TO SET UP MUTUAL R&D FUND WITH INDIA

Tzakhi Selzer, Counsellor for Economic Affairs, Embassy of Israel, says that his country is keen to establish a mutual research and development fund in India. He says that both nations could put in about $25 billion each to fund companies involved in R&D activities. He says that Israel is interested in setting up such funds with some states in India starting with Tamil Nadu. Bilateral trade between India and Israel presently stands at $2.4 billion levels.

 

GLOBAL MANUFACTURERS TO STEP UP R&D ACTIVITY IN INDIA

Global manufacturers who are selling their products in India are planning to increase their research and development (R&D) activity in India in the next three years. This has been revealed by a report, called Innovation in Emerging Markets: Strategies for Achieving Commercial Success, prepared by Deloitte Touche Tohmatsu. The study surveyed 418 executives from companies in 28 countries. The report also states that 51 percent of these companies expected to see a significant increase in their sales in India in the coming three years

BRANDED ALLEPPEY COIR IN THE OFFING

The Coir Board is taking steps to register Alleppey Coir under the Geographical Indication of Goods (Registration and Protection) Act so as to give it patent status and brand name, as over 80 percent of the coir exports are from the Alleppey district. The Board is optimistic that the registration will happen in the next five-year plan. The board has appointed a domestic market consultant and exports consultant to evolve a strategy for the 11th plan. The branding is expected to help the Board achieve its export target of Rs1,000 crore by 2010 (Rs508 crore in 2005-2006).

SATYAM SETS UP GLOBAL R&D HUB IN SINGAPORE

Satyam Computer Services has established an innovation hub for research & development in Singapore to host two centres, for telecom and for business intelligence. Satyam's world customers will benefit from the continual improvement in technology.

XILINX SETS UP R&D CENTRE TO DEVELOP IP CORES

Fabless semiconductor unit Xilinx Inc has established its research & development centre in Hyderabad to focus on intellectual property (IP) issues of its world customers. Twenty-six percent of its revenues of $1.73 billion come from Asia-Pacific region. Fabless Xilinx will conduct part of its programme at the facility of CMC Ltd

AGILENT TECH PLANS TO RAISE ITS R&D STAKE

Agilent Technologies, which is a testing technology company, earns revenue of around $100 million from its operations in India. The company is targeting revenue of $200 million from its Indian operations over the next three years. It also plans to raise its headcount from 1,300 to 2,000 people, with most of the hiring in research and development (R&D). The Indian operations of Agilent Technologies is the fourth largest in the Asia-Pacific region and has been recording growth of 25-30 percent. The company has opened its Life Sciences and Chemical Analysis (LSCA) centre of excellence in Bangalore. It is setting up an R&D centre in Manesar, Haryana, with an investment of $30 million.

INDIA NOW FAVOURITE R&D HUB FOR MULTINATIONALS

India is attracting 25 percent of fresh global investments in research and development (R&D). Multinational companies (MNC) have set up many of these centres, which are their largest R&D units outside the US or Europe. More than 200 MNCs that are into information technology (IT), telecommunication, biotechnology, chemicals, automobiles, consumer goods and pharmaceuticals have set up R&D centres in India. Some of these companies are Oracle, Intel, Adobe, STMicroelectronics (STM) and SAP. Companies like IBM, Texas Instruments, Delphi, Hewlett-Packard (HP), Microsoft, General Electric (GE), Philips, Motorola, Google, Cisco, Eli Lily, Bayer, Siemens and LG Electronics have been using Indian talent to conduct cutting-edge research.

GLOBAL FUNDS HOVERING OVER BANGALORE R&D PARK

Gandhi City, at Ramanagaram near Bangalore, is a 1,000-acre knowledge special economic zone (SEZ) project for advanced research and development (R&D). Gandhi City intends to raise $25 million through divestment of 5-10 percent stake and is in talks with global infrastructure funds like Singapore-based Jurong and Macquarie for this purpose. The promoters of Gandhi City are also likely to go in for debt financing to the tune of $100 million. The project is carrying a valuation of $500 million and Avendus holds the mandate for raising funds.

INDIA, CHINA TO POWER R&D AT UNILEVER

India will have a major role in offering R&D expertise to the Anglo-Dutch consumer products company, Unilever. Unilever has five research centres across the world and in view of the significant progress achieved by India and China, plans to grow its R&D activities in these countries. Unilever has benefited immensely by the progress achieved by its R&D centre in Bangalore, particularly in the food sector. Unilever spent 953 million euros on its global R&D initiatives in 2005.

 

LAW ON MARKET REVENUES FOR SCIENTISTS PLANNED

The Government of India aims to give incentives to scientists for innovations by bringing in a legislation that would be applicable to all public funded research and academic institutions. The Public Funding of R&D Project (Protection of IP) Act is ready in a draft form and would be put up on the website of Ministry of Science and Technology, Government of India for public comments. As per this proposed law, out of the revenues earned from licence fee or commercialisation of a project, 30 percent will go to the scientists who worked on the project.

INDIAN PATENT APPLICATIONS TOUCHE 24,000 IN 5 YEARS

The number of patent applications in India has increased significantly during 1999-2006. The number of patent applications has increased from about 5,000 in 1999-2000 to 24,000 in 2005- 2006. The number of patents granted has also increased from 1,881 in 1999-2000 to 4,320 in 2005-2006

MICROSOFT IDC HOPES TO FILE 100 PATENTS BY 2007

Microsoft India Development Centre (MSIDC) has filed 100 patents in the last 2 years. It is hoping to file 100 patents in 2006-2007. It is looking at incubating projects for budding markets. It will focus on emerging markets as it serves as a test bed to make a product that is internationally deployable

IPR PROTECTION FOR PLANT PRODUCTS SOON

The Protection of Plant Varieties and Farmers' Rights Authority, which has been set up to grant intellectual property rights protection to plant varieties and rights of farmers and plant breeders, will commence the process of registration from Feb 2007. It will initially take up registration of 12 crops - rice, wheat, bajra, maize, sorghum, black gram, green gram, channa, rajmah, lentil, peas and pigeon pea. The authorities are expecting registration of a minimum of 1,000 varieties in a year. Annual crops will get IPR protection for 15 years while perennial crops would be extended the protection for another three years over this figure.

STPI PLANS SOPS FOR SMEs TO DEVELOP PATENTS

Software Technology Parks of India (STPI) is planning to provide incentives to small and medium enterprises (SMEs) to develop intellectual property rights (IPRs). STPI intends to set up IPR cells in the technology parks to help the SMEs. STPI has set up incubation centres for SMEs to reduce capital expenditure.

 

CIENA EARMARKS 30% R&D SPEND FOR INDIA

Ciena a US company, which specializes in high-performance network systems, software and professional services,has decided to set apart 30 percent of its research and development (R&D) investment for India. The company has set up an R&D centre in Gurgaon. The R&D centre in Gurgaon will focus on storage extension and optical transport. Ciena is also planning to set up a manufacturing plant in the country

Asian Countries in the Global R&D

Top 10 Asian Companies in R&D

China [ +HK ] 838.63 2.6 Toyota Motor 3726.77 4.1
India 155.08 3.8 Samsung Electronics 3169.3 6.8
Israel 446.53 8.3 Matsushita Electric 2787.28 6.4
Japan 48678.84 3.8 Sony 2624.49 7.7
Malaysia 53.51 4.1 Honda Motor 2308.44 5.4
Singapore 47.95 6.7 Hitachi 1999.13 4.3
South Korea 7117.24 3.9 Nissan Motor 1964.92 4.6
Taiwan 2662.44 2.5 Toshiba 1717.48 6
    NTT 1569.74 2.9

FT Global 1250 by R&D

 Canon 1413.8 7.6

Chinese Cos in FT Global 1250 by R&D Listing [including HongKong]
Companies
R&D Exp.
UKP
R&D Intensity
PetroChina 230.61 0.6
China Petroleum & Chemical 161.9 0.3
ZTE 141.44 9.1
Semiconductor Manufacturing 45.94 6.7
CNOOC 28.99 0.6
Lenovo 111.94 1.4
Yue Yuen Industrial 54.79 3
Techtronic Industries 36.98 2.2
TCL Communication Technology 26.05 6.1
 

Endnotes:

Companies that under-invest in R&D in R&D-intensive sectors are likely to see their products become less competitive and this will be reflected in business performance.

Nearly a half of the US Cos in1250 in the Fiancial Times R&D survey 2006) have R&D intensity of more than 10 percent.

Only one-tenth of the Cos in Japan have R&D intensity of over 10 percent

FT Report on Global 1250 Cos by R&D

In the last four years Indian Industrial R&D has grown from Rs. 2,405 crores to Rs. 5,333 crore. 16 companies in India invest 10 percent of their turnover to R&D

Capitaline Database