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The annual R&D Scoreboard, published in collaboration with the Department for Business, Enterprise and Regulatory Reform (BERR), also shows that the 75 biggest R&D investors based in the UK have increased their R&D spend by 12 per cent. Pharmaceuticals companies are now the top investors in R&D worldwide, with the report revealing that the UK is a global leader in this sector.

The R&D Scoreboard is an international league table of R&D active companies, designed primarily as a benchmarking tool for use by companies, investors and policy makers. It is endorsed by 16 leading business and technical organisations including the CBI, EEF, Institute of Directors and the Royal Society.

Many more opportunities 

Science and innovation minister Ian Pearson wants to see more R&D and innovation across the board. He said that this year's figures show that more and more British firms are taking innovation seriously. Developments in science and technology are opening up many more opportunities for companies to innovate and grow, and Pearson hopes that the R&D Scoreboard will continue to help inform their plans for the future.

The Government is providing a new package of support for technology and innovation in business, with £1 billion to support the technology strategy board over the next three years. It is expected to publish a science and innovation strategy in the spring.

"Innovation will be a key driver of UK prosperity in the decades ahead. Without it, our industries won't be able to compete with the growing economic powers of East Asia," Pearson said.

R&D is an important element in many companies' financial success, driving not just high-value products and services but also playing a role in improving firms' own operations.

Stephen Timms, minister of state for competitiveness at BERR, said that the report shows that UK businesses recognise that investments in R&D and innovation are essential in order to compete successfully in the global economy.

"In addition to sustained or increasing investment in key areas of manufacturing strength - such as pharmaceuticals, aerospace and defence sectors -, we also see increased investment by other sectors such as telecommunications and financial services," Timms commented.

Short-term gains

This year's Scoreboard shows that British firms compared favourably with their global competitors, with the UK's top 75 growing their R&D by 12 per cent. This is faster than the global average of 10 per cent and partly reflects the UK's strengths in the R&D-intensive pharmaceuticals sector.

There is evidence that companies in some sectors are putting R&D investment before short-term gains, with the UK's aerospace and software firms putting more money into R&D than they reported as operating profit. Although the pharmaceuticals sector continues to be the UK's largest R&D investor, the fastest R&D growth has been in fixed-line telecoms, where increased spending by BT is the main driver behind a 54 per cent increase in the sector's R&D.

World R&D spending continues to be dominated by companies registered in just five countries - the USA, Japan, Germany, France and the UK - which contributed 81 per cent of the R&D done by the top 1250 global firms. Firms from India and China have yet to establish themselves as significant players in the G1250, although other evidence suggests that both countries are increasingly important locations for R&D.

R&D investment in the global pharmaceuticals sector grew by 16 per cent in the last year. It has replaced technology hardware - which grew by 13 per cent - as the largest global R&D sector. The software and aerospace and defence sectors both grew at more than 12 per cent, above the global average.

Related links

• Department for Innovation, Universities and Skills
• Department for Business, Enterprise and Regulatory Reform
• 2007 R&D Scoreboard