Research and development expenditure grew dramatically in Q4 of 2020—by nearly 12% compared with Q3. However, just three sectors accounted for most of that growth: pharmaceuticals, biotechnology & medical research, and software & IT services.
Excluding these three sectors, R&D expenditure still increased, but at a more modest pace of around 3.5%.
In the Pharmaceutical sector alone, R&D expenditure increased by an estimated $7 billion. Some of this increase is attributable to large pharmaceutical firms’ seeking to bring COVID-19 vaccines and therapies to market through acquisitions and expansion of clinical trials.
Other sectors that saw significant growth (in percentage terms) include:
- Automobiles & Auto Parts
- Leisure Products
- Professional & Commercial Services
- Healthcare Equipment & Supplies
Each of these sectors’ investment in R&D is now significantly above pre-COVID levels.
On the other hand, sectors that decreased R&D investment in Q4 included:
- Renewable Energy
- Oil & Gas Related Equipment and Services
- Metals & Mining
- Telecommunication Services
- Aerospace & Defense
At a firm level, seven out of ten of the firms with the largest increase in R&D investment were pharmaceutical or biotech firms. The remaining firms were tech giants Amazon (which is also the largest overall investor in R&D at $12 billion—which they report as “Technology and Content” expense) and Facebook, as well as semiconductor leader Intel.