EU Companies Top Counterparts in R&D Investment Growth

Europe's industry has increased its investment in research and development by 9.8% in 2023, surpassing the growth in the US (+5.9%) and China (+9.6%) for the first time since 2013, according to the EU Industrial R&D Investment Scoreboard. In 2023, the EU was second globally in R&D private investment (18.7%), trailing the US (42.3%), but ahead of China (17.1%), Japan (8.3%), and countries in the rest of the world (13.6%).

Despite slowing global R&D growth (+7.8% vs. +12.6% in 2022), the top 2000 companies invested a record €1257.7 billion on R&D in 2023. The top 50, among them 11 EU companies, contributed 40.1% of investments, revealing a strong concentration of R&D in the biggest players. Research and innovation (R&I) will be at the center of the EU's economy in the coming years, aimed at boosting innovation and scientific excellence in the race to a clean and digital economy and contributing to the EU's sustainable competitiveness and prosperity.

This year's Scoreboard reaffirms that, while European companies are relevant global players, the industrial structure explains the innovation gaps with main competitors. Moreover, the EU must further boost private R&I investments, develop key sectors, such as Information & Communication Technologies (ICT) and health, address disparities among Member States, and promote technology deployment and the creation and growth of EU-based players.

In the past decade, four sectors – software, ICT hardware, health, and automotive – have accounted for more than three-quarters of global R&D investment. The ICT software sector has grown the fastest across the world, with a 10-year compound annual growth rate of 13.3%, followed by health (7%), ICT hardware (6.9%), and automotive (6.3%). R&D investments in ICT and health are now slowing down from their post-COVID-19 surge.

In the automotive sector, companies headquartered in the EU accounted for 45.4% of global investment of the sector in 2023 and invested over twice as much as their US and Japanese peers, and more than three times as much as Chinese competitors. On the other hand, the R&D investment of EU ICT software companies remained marginal on the global scale, whereas US-based firms constitute 70% of the sector's global R&D and China has established significant R&D-investing companies. Companies from the US also account for 43.3% of the total R&D of the ICT hardware sector, where large players from the Republic of Korea and Taiwan are gaining global relevance in semiconductor manufacturing.

At the same time, the health sector has the largest number of companies in the top 2000, with 437 companies, including smaller biotech ones. Among them, 238 US-based companies are leading in health R&D (52% of global total), while the number of Chinese companies in the health sector has increased from 13 to 63 over 10 years, closing in on the EU (64 firms in 2023). Global investment in the energy sector has seen a 21% increase in 2023 to €23.8 billion, surpassing the aerospace and defense and just below the chemicals sector.

Spread across 19 Member States, the top 800 companies based in the EU invested €247.7 billion in R&D in 2023, growing by 8.7% from the previous year. The automotive sector leads the EU-800 list, accounting for 34.2% of EU corporate R&D investments, followed by the health sector (19.3%), ICT hardware (14%), and ICT software (7.8%). Some of the EU companies in the semiconductor, automotive components, and biotech/pharma sectors have seen extraordinary increases in R&D investment, growing between two to fifty times over the past decade. Such investment increases suggest ongoing diversification and significant growth potential in these areas.

Among the top EU-800 companies, there are 99 small and medium-sized businesses (SMEs) with fewer than 250 employees. Most of them (74) are in the health sector and are based in Sweden, France, Denmark, and Germany. French SMEs lead in R&D investment (34% of the total), followed by Sweden (21.3%) and the Netherlands (16.6%). These SMEs invested €2.4 billion in R&D in 2023, a 3.7% increase compared to the previous year.

Lower-performing research and innovation countries, the so-called widening countries, are less represented in the Scoreboard ranking. In 2023, of the 2000 top corporate R&D investors in the world, only four have headquarters in one of the EU's 15 widening Member States (one each in Portugal, Hungary, Slovenia, and Malta). Over half of the 14000 subsidiaries of Scoreboard companies in EU widening countries are in Czechia (34.1%) and Poland (16.6%), revealing the importance of these top innovators headquartered in other EU countries for some of the widening countries.