UK economy
The UK invested £16.5bn in R&D in the last fiscal year, accounting for 4% of the total global spend of £446bn Reuters

UK is the eighth largest investor in the world when it comes to corporate research and development (R&D) spending. This was revealed in the 2016 Global Innovation 1000 study that was published on Tuesday.

The study as seen by IBTimes UK was conducted by Strategy&, the strategy consulting arm of professional services firm PwC. It took into account the R&D spending of 1,000 public companies around the world during the last fiscal year ended June 2016.

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According to the study, companies in the UK have invested £16.5bn ($20.17bn) in R&D in the last fiscal year. This accounted for 4% of the total global spend of £446bn. Industry-wise, the study showed that healthcare companies in the UK accounted for 48% of the total R&D spend in the country, while the automotive sector accounted for 18% with the consumer industry making up for 8% of the total. These three constituted the top three sectors for corporate R&D spending.

While 37 UK-headquartered companies were included in the Innovation 1000 list this year, it was noted that average R&D spending in the UK stood at 2.9% of revenues. The positive side of this reading was that this was up from 2.3% the year before. However, on the negative side, this percentage was much lower than the global average of 4.2%.

The study also listed the top 10 UK companies that invested the most on R&D. These were:

RankTop 10 UK R&D SpendersIndustryR&D Spending (GBP billions)Revenue
(GBP billions)		R&D Intensity*
1stAstraZeneca PLCHealthcare3.9216.1724.3%
2ndGlaxoSmithKline PLCHealthcare3.5623.9214.9%
3rdFiat Chrysler Automobiles NVAutomotive2.0880.322.6%
4thRolls-Royce Holdings PLCAerospace & Defence0.8213.736.0%
5thDelphi Automotive PLCAutomotive0.799.927.9%
6thUnilever NVConsumer0.7338.691.9%
7thBT Group PLCTelecoms0.5719.043.0%
8thCNH Industrial NVIndustrials0.5616.953.3%
9thARM Holdings PLCComputing & Electronics0.280.9728.7%
10thBP PLCChemicals & Energy0.27145.840.2%

*R&D Intensity is the percentage of revenue invested into R&D

Commenting on the study, Mark Couttie, partner at Strategy& said, "Innovation is an essential component of competitive advantage and UK business leaders clearly recognise the importance of R&D to their future success. Brexit has only made R&D investment more pertinent in the UK. It's vital that companies continue investing and remain agile to exploit new opportunities. To do this they need to ensure they have the right talent in place, invest in ambitious innovation models, and employ a strategic approach to M&A to help build the capabilities they will need to thrive."

In terms of global country rankings, the US came in first, accounting for 43% of the total global spend, while Japan stood second, accounting for 15% of the total. Coming in third place was Germany whose R&D spend accounted for 8% of the global total. The country, however, ranked first among other European countries.

The top five companies globally in terms of R&D spending were Volkswagen, Samsung, Amazon, Alphabet (Google) and Intel. Of these, Amazon and Google had shown a stark improvement in their rankings over last year.

Among trends noticed in the study, one of the key ones was that companies were shifting their R&D spending away from physical products and towards software and services. Commenting on this, Couttie said, "Regardless of industry, companies around the world are aiming to ensure competitive advantage by focusing on software investment, staying agile, and via ongoing testing and innovation."