Research shows that R&D is worth the investment

There is a widely held view among scientists and researchers of all disciplines that if you invest money in research it will pay dividends. Discoveries made as a result of the investment help to boost the reputation of a research centre or principal investigator but also open up the possibility of a commercial return if the discovery can be turned into a product.

This of course could be considered self-serving, with the people set to benefit from the availability of funds also dispassionately arguing the certainty of this money-in, money-out argument. But there are well-grounded studies to show that this “give us more cash” plea does in fact quickly pay for itself if there is quality research taking place.

The Thomson Reuters 2014 Top 100 Global Innovators study focuses on the commercial returns on research investment as measured by a series of patent-related metrics. It demonstrates the direct relationship between spending more on research and the returns that flow from the investment.

Year on year the top 100 innovator companies increased their spend on R&D by 17 per cent. They easily outstripped the level of research investment undertaken by the S&P 500 companies by a factor of four to one and more than doubled the spend made by Nasdaq-listed companies. The spending helped to deliver revenue growth for the top 100 innovators of 12.6 per cent, about double the 6.85 per cent annual revenue growth delivered by the S&P 500 companies, the report shows.

There can be a resistance to accept the numbers provided in these types of ranking systems and the usual array of top 10, 20 or 100 lists, yet everyone pays attention to them. The university ranking systems are an example: all of our institutions want to be in the top 100 but downplay the accuracy of the measurements if their position in the rankings declines. Often the collection of metrics used to achieve the ranking is described as flawed by those not flattered by their position on the list.

The Thomson Reuters list relies on the intellectual property outcome of the research investment as measured by patent activity. If the discovery is important, it will attract a patent or the IP will be protected in some way. If the discovery isn’t that important, the cost of a patent won’t be justified.

Patent volume

The method involves looking at overall patent volume and patent grant success rates. It measures the global reach of a company’s portfolio of IP entities and gauges the impact of a patent on the basis of citations linked to it. The reliance on patents could raise the assumption that we are talking about

translational research

only, but the research spend by these top 100 companies – €173 billion in 2013 – is so large that the investment could not all relate to this one component of a proper research ecosystem.

Certainly these companies are moving discoveries through translational research but also the wider applied research area where a range of possible impacts can be assessed. And of course basic research must also be a key part of the approach taken by these R&D giants given this is the only way that a steady stream of ideas can be kept flowing through the product pipeline.

The companies on the list are described as innovators but the term is now so overused that you could forget what true innovation looks like, says Thomson Reuters IP & science president Basil Moftah. He places the top 100 however at the vanguard of innovation, delivering breakthroughs, creating jobs and igniting the global economy.

Increased spending

This is very similar to the position held by the

Department of Jobs

,

Enterprise and Innovation

and by

Science Foundation Ireland

. Minister for Jobs, Enterprise and Innovation Richard Bruton argues that we must expect to see a commercial or social gain from the State’s investment in research but the Thomson Reuters data is very clear: if you put money into innovation, it will give a return.

Unfortunately the State investment in research has remained fairly static over the past few years and shows no signs of increasing in the short term. Bruton must fight harder to bring about increased spending for research if he wants to see the benefits enjoyed by the top 100 group of companies.

As we wait – and let’s hope it won’t be in vain – for an increase in State spending, we can take comfort from the fact that many of these top 100 companies have a presence in Ireland.

Abbott, Alcatel-Lucent, Apple, Hewlett-Packard, Google, IBM and Medtronic are all among the top 100 innovators for 2014 and all have a presence here.

See the Thomson Reuters 2014 Top 100 Global Innovators at http://top100innovators.com/pdf/Top-100-Global-Innovators-2014.pdf