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The R&D Index: Market Watch for the U.S. holiday-shortened week ending Nov. 25, 2016 closed at 1,506.59 for the 25 companies in the R&D Index. The Index was up 0.05 percent (or 0.75 basis points) over the week ending Nov. 18, 2016. Sixteen companies gained value last week from 0.30 percent (Microsoft) to 3.79 percent (General Motors). Nine companies lost value last week from -0.07 percent (Astra Zeneca) to -9.85 percent (Eli Lilly). Lilly's large loss was due to its announcement last week of the clinical trial failure of its Alzheimer's drug Solanezumab. Even more disturbing is the fact that Solanezumab had the greatest potential of any product in development by any company. There are about five drugs on the market that temporarily treat Alzheimer's symptoms, but none that can stop its assault on patients' memories. Lilly is now also about 18 percent below its value at the beginning of the year. Its failure is also likely to have a slowing effect on the research programs (and R&D investments) of other companies for similar drugs due to the now increased risk of success.

News of new offshore capital investment controls that could be put in place soon by China were released last week. These controls are anticipated to lessen the effects of China's slowing economy, the devaluation of the yuan last year and direct investments overseas. Investments by Chinese companies rose more than 50 percent in the first nine months of 2016 to $145 billion over that invested in 2015. Chinese companies have been purchasing technology and management expertise at an increasing rate over the past several years, basically with the government's blessings. Commercial targets of these purchases have been companies like Syngenta, Supercell Oy, Ingram Micro and a large number of real estate dealings. The new controls would primarily be focused on $10 billion or more corporate mega-deals, $1 billion or more property deals and $1 billion or more purchases of overseas entities unrelated to the Chinese investor's core business. China has been attempting to quell the level of these purchases for several years with little success.

Following their pollution fraud debacle and the resultant billion-dollar fines, Volkswagen announced last week that it was done selling diesel vehicles in the U.S. The company also announced that it would shed 30,000 production workers, mostly in Germany. The company revealed its long-term strategies, which will see it shift toward electric vehicles and SUVs. The company also expects to simplify its models and components by up to 60 percent. VW said it would begin manufacturing electric vehicles in the U.S. by 2021, following similar startups in Europe in 2020.

    Ticker Exchange 2015 R&D billions$ 11/18/16 11/25/16 11/25/16 to 11/18/16 11/25/16 to 1/1/16
1 Microsoft MSFT NASDAQ 12,448 60.35 60.53 0.30% 9.10%
2 Intel INTC NASDAQ 12,128 34.95 35.44 1.40% 2.87%
3 Roche Holdings RHHBY OTC 10,242 28.67 28.02 -2.27% -18.71%
4 Toyota TM NYSE 9,112 114.04 117.80 3.30% -4.26%
5 Johnson & Johnson JNJ NYSE 9,046 115.36 114.13 -1.07% 11.11%
6 Novartis NVS NYSE 8,935 70.64 69.58 -1.50% -19.17%
7 Apple AAPL NASDAQ 8,397 110.06 111.77 1.55% 6.18%
8 Pfizer PFE NYSE 7,690 31.48 31.69 0.67% -2.16%
9 General Motors GM NYSE 7,500 33.00 34.25 3.79% 0.71%
10 Merck & Co. MRK NYSE 6,704 61.87 62.21 0.55% 17.78%
11 Ford Motor F NYSE 6,700 11.76 12.04 2.38% -14.55%
12 Cisco CSCO NASDAQ 6,411 30.18 30.07 -0.36% 10.71%
13 Oracle ORCL NYSE 6,042 39.86 40.27 1.03% 10.24%
14 Astra Zeneca PLC AZN NYSE 5,997 27.12 27.10 -0.07% -20.18%
15 Honda HMC NYSE 5,990 28.71 29.41 2.44% -7.89%
16 Bristol-Myers Squibb BMY NYSE 5,920 56.76 56.98 0.39% -17.18%
17 Qualcomm QCOM NASDAQ 5,833 67.31 68.29 1.46% 36.63%
18 Sanofi SA SNY NYSE 5,519 40.03 39.84 -0.47% -6.59%
19 Eli Lilly Co LLY NYSE 5,331 76.67 69.12 -9.85% -17.95%
20 GlaxoSmithKline GSK NYSE 5,250 38.11 38.86 1.97% -3.69%
21 IBM IBM NYSE 5,247 160.39 163.14 1.71% 18.58%
22 Daimler DDAIY OTC 5,169 65.26 64.72 -0.83% -16.92%
23 Siemens SIE XETRA 4,929 106.65 107.35 0.66% 19.44%
24 Bayer AG BAYN XETRA 4,649 91.46 88.80 -2.91% -23.58%
25 Ericsson ERIC NASDAQ 4,124 5.15 5.18 0.58% -46.10%
      Total 175,313 1505.84 1506.59 0.05% -0.98%
                 
      Biopharmaceutical 638.17 626.33 -1.86% -9.84%
      Automotive 252.77 258.22 2.16% -8.10%
      ICT   503.10 509.51 1.27% 14.05%

About the R&D Index/Market Pulse

R&D Magazine's R&D Index is a weekly stock market summary of the top international companies involved in research and development. The top 25 industrial spenders of R&D in 2014 were selected based on the latest listings from Schonfeld & Associates' June 2015 R&D Ratios & Budgets. These 25 companies include pharmaceutical (11 companies), automotive (5), ICT  (7) and conglomerate (2) organizations who invested a cumulative total of more than $170 billion in R&D in 2014, or approximately 10.8% of all the R&D spent in the world by government, industries and academia combined, according to R&D Magazine's 2014 Global R&D Funding Forecast. The stock prices used in the R&D Index are tabulated from NASDAQ, NYSE, XETRA and OTC common stock prices (in U.S. dollars) for the companies selected at the close of stock trading business on the Friday preceding the publication of the R&D Index in R&D Magazine's R&D Daily eNewsletter.

The companies used in the R&D Index include Microsoft, Intel, Roche Holdings, Novartis, Johnson & Johnson, Pfizer, Toyota Motor, General Motors, Merck & Co., Ford Motor, Cisco, Apple Computer, Sanofi SA, Qualcomm, IBM, Astra Zeneca plc, Honda Motor, Daimler, Oracle, GlaxoSmithKline, Siemens, Eli Lilly Co., Ericsson, Bristol-Myers Squibb and Bayer AG. Stock prices are based on those stocks traded on the U.S. exchanges. R&D Index trends (in the stock prices) are just one indicator of the amount of capital available to these high-technology companies to invest in R&D and should not be implied to indicate the absolute value of R&D investments made by these organizations. The companies chosen for the R&D Index have very large sophisticated internal and global R&D organizations with each company investing between $4.3 and $11.7 billion annually on their R&D efforts.

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