1. GLOBAL R&D BENCHMARKING STUDY - FY2011
June , 2012
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2. Executive Summary
1 • After witnessing a decline in the FY 2010, Global R&D spending has increased
Overall Global R&D
significantly in FY 2011. Both Net Sales and R&D Spending has increased
spending
significantly with a growth of 13.55 percent and 8.2 percent respectively
2 • The R&D spend for NA and EU is 36% and 34% respectively
Geographical split of
R&D spending • As compared to last year the R&D spending for companies headquartered in
APAC has increased by 28% followed by NA 11%
3 • Telecom & Networking, Electrical & Electronic equipment witnessed a
Vertical split of R&D
marginal increase in their Global R&D spending while Industrial sector
spending
witnessed a decline
4 • About one-third of the Global 1000 R&D spenders have centers in India
India presence of top
1000 R&D spenders • About 30 percent companies with HQs’ in EU are in India and about 15%
which have their HQs’ either in Japan or APAC, are in India
5
Vertical wise Intensity • Software and Semiconductor are mature verticals in terms of R&D headcount
of top R&D spenders in intensity in India.
India • Automotive and Aerospace are fast growing verticals
Source: Zinnov analysis of global top 1000 R&D spenders and India R&D landscape, The analysis has been done for FY2011

3. Vertical and Geo Definitions
Verticals Definition Sample Companies
Oracle, Microsoft, Amazon,
Software/ Internet Includes companies from software domain and Internet based companies
SAP Labs, Google
Include companies from semiconductors (Chip design, ASIC design) and
Semiconductors Intel, TI, AMD, Broadcom
power semiconductor companies
Includes companies operating in areas of mobile communications,
Telecom & Networking Erickson, Nokia, Cisco ,NTT
Telecommunication equipment, wireless services and Networking etc.
E&E** & Computer Includes companies manufacturing consumer electronic equipment, LG, Sony, Whirlpool, Apple,
Hardware motors, heavy electrical equipment Computer Hardware, etc. IBM, HP
Includes companies working on designing and manufacturing of EADS, Rockwell Collins,
Aerospace & Defense
aerospace equipment Boeing, Bombardier
Chemicals Includes Chemical companies BASF, Dupont, AKZO Noble
Includes companies which are into automotive , Transportation and Toyota, Volkswagen, GM,
Automotive
commercial vehicles Honda
Biotechnology & Includes companies working in areas of healthcare, pharmaceutical GE Healthcare, Novartis,
Pharmaceuticals manufacturing, biotechnology United Healthcare
Medical Equipment Includes healthcare equipment, device and services companies Medtronic, Baxter, Stryker
Nestle, Unilever, Shell,
Others Includes BFSI, Energy, FMCG, Media & Entertainment, Retail etc
HSBC, Shell, Exxon Mobil
Geographies EU NA APAC JAPAN ROW
European union North America Asia Pacific Japan Rest of the world
Source: Zinnov analysis of global top 1000 R&D spenders and India R&D landscape. **Electrical and Electronic equipment

4. Agenda
Global R&D Investment Analysis
R&D Globalization Analysis
4

5. Agenda
Global R&D Investment Analysis
R&D Globalization Analysis
5

6. Global R&D spend has Increased; however, R&D Spending as percentage of Net Sales has
remained constant from 2007-08 to 2010-11
Global R&D Investments Growth Trends, 2007-11 Global Net Sales Trends, 2006-11
(USD Billion) (USD Billion)
600 17,500
16,980*
580 17,000
16,684
582*
16,500
560
16,000
540 549
538 15,500 15,336
520 14,953
15,000
511
500
14,500
480 14,000
460 13,500
2007-08 2008-09 2009-10 2010-11 2007-08 2008-09 2009-10 2010-11
 R&D spending in FY 2011 witnessed an increase due to increase in spending of semiconductor, industrial &
consumer hardware and Electrical and Electronic equipment companies
 Intel, Samsung, General Motors, Pfizer, Volkswagen are the few companies which played a key role in increasing
R&D spend in FY 2011
Source: Zinnov analysis of global top 1000 R&D spenders
*Conversion Ratio from EURO to USD- 1.324. 6

7. The Top 500 R&D spenders account for nearly 90% of the total corporate R&D spending in
the world
Contribution of Top R&D Investors in the Total Company 2010-11 2009-10 2008-09
Global 1,000 R&D Spend Name Rank Rank Rank
Change Change
400000 Roche 1 +1 +3
Pfizer 2 +3 +4
350000 60% of R&D spend in 2010-11 was from top 100
companies, a similar trend from the previous year Microsoft 3 0 -1
300000 Toyota Motor 4 -3 -3
Merck US 5 +11 +20
250000
Volkswagen 6 -2 -3
200000 Samsung 7 +3 +17
Electronics
2010
150000 Novartis 8 -2 +2
General Motors 9 +3 -4
100000
Johnson & 10 -2 -3
Johnson
50000
Nokia 11 -4 -3
0 Intel 12 +5 +5
Daimler 13 +1 0
Sanofi- Aventis 14 -5 -2
R&D Investments rank
Panasonic 15 +3 -1
Companies marked in Red have shown continuous decrease in
rank in last four years. The Scenario is opposite for companies
Source: Zinnov analysis of global top 1000 R&D spenders marked in Green.

8. From a geography perspective, the North American and EU region continues to dominate
both in terms of numbers as well as the overall R&D spend
Split of Top 1000 Companies by Geography Split of R&D Investment of Top 1000 Companies by Geography
ROW Total R&D Investment USD 582 Billion
ROW, 1%
2% APAC, 7%
NA APAC
35% 11%
NA, 36%
EU EU, 34%
Japan 32%
20% Japan, 22%
Top companies by Net Sales Top companies by R&D investment
Company Geography Company Geography
Exxon Mobile North America Merck US North America
Royal Dutch Shell Europe Pfizer North America
Toyota Motor Japan Microsoft North America
China Petroleum & Chemicals APAC Roche Europe
Petro China APAC Toyota Motor Japan
Source: Zinnov analysis of global top 1000 R&D spenders 8

9. A positive sign is that despite widely varying macro economic variables, companies across
regions increased their R&D Investments in FY 2011
R&D investments in year 2008-2011 and split by Geography
• Though the number of companies in APAC
250000
R&D in 2008-09 R&D in 2009-10 R&D in 2010-11
region has marginally increased from 9.8%
in FY 2010 to 10.6% in FY 2011, the R&D
11% spend has significantly increased.
3% Companies with high R&D spending are
200000
Samsung, LG, Huawei, Teva Pharma, etc.
• The R&D spending for EU companies did
150000 not increase much but the net sales in this
6% region went up by 17%.
100000 • More than 75% of the North American
companies increased their R&D spend.
Companies headquartered in North
50000 28% America with increased R&D spending are
Google, Abott Laboratries, HP, EMC, Apple,
6% Caterpillar, Dupont, etc.
0
APAC EU Japan NA Others
Source: Zinnov analysis of global top 1000 R&D spenders

10. Comparative R&D Spend vs Net Sales for Telecom, EEE, Automotive and Aerospace have
remained constant since last year
Total R&D Investments as Percentage of Net Sales (Top 1,000 R&D Spenders) , 2010 -2011
20.0%
Semiconductors 1. Size of the Bubble Represents the relative
18.0% Total Net Sales of the Industry Vertical
Software
2. Arrow indicates whether R&D as a % of
16.0% sales increased or decreased compared o
last year
14.0% Telecom &
Percentage of Net Sales
Networking
R&D Investments as
12.0%
10.0%
E&E** / Computer
8.0%
Hardware
Aerospace & Defense Automotive
6.0%
4.0%
2.0%
Industrial
0.0%
0 20 40 60 80 100 120
Total Vertical R&D Investments
(USD Billion)
Source: Zinnov analysis of global top 1000 R&D spenders. **Electrical and Electronic equipment 10

11. Companies in the Industrial vertical are Small/Medium sized that contribute aggressively
towards R&D investments; companies from APAC are on the rise in this vertical
Distribution of Top 1000 Companies in Industrial Vertical by Distribution of R&D Investments Top 1000 Companies in
Geography and Revenue Ranges (USD) Industrial Vertical by Geography
ROW, 2%
69
APAC,
10%
2
NA, 20%
4
EU, 44%
Japan,
24%
32
63 2
1
20
17
29 Company Geography
20 3 Siemens Europe
17
General Electric North America
1 Honeywell North America
2
NA EU APAC Japan ROW ABB Europe
1 - 500 Mn 500 Mn - 1 Bn 1 - 10 Bn 10 Bn+ Mitsubishi Heavy Japan
Source: Zinnov analysis of global top 1000 R&D spenders 11

12. North America accounts for around 67% of total R&D Spend in Semiconductor vertical
Distribution of Top 1000 Companies in Semiconductor Vertical by Distribution of R&D Investments Top 1000 Companies in
Geography and Revenue Ranges (USD) Semiconductor Vertical by Geography
53
APAC,
5 12%
5
EU, 13%
Japan, 8%
NA, 67%
43
15
1 10
8 2
Company Geography
2
1 Intel North America
3 12
8 STMicroelectronics Europe
4
Advanced Micro Devices North America
NA EU APAC Japan Broadcom North America
1 - 500 Mn 500 Mn - 1 Bn 1 - 10 Bn 10 Bn+ Texas Instruments North America
Source: Zinnov analysis of global top 1000 R&D spenders 12

13. Companies from North America and Europe have a significant R&D spend in the Telecom &
Networking vertical
Distribution of Top 1000 Companies in Telecom & Networking Distribution of R&D Investments Top 1000 Companies in
Vertical by Geography and Revenue Ranges (USD) Telecom & Networking Vertical by Geography
ROW, 1%
25 APAC,
10%
3
NA, 37%
2
17
EU, 43%
3 Japan,
1 9%
20
6
13
4 Company Geography
2
1 Nokia Europe
4
1 1
2 Cisco Systems North America
1
Alcatel-Lucent Europe
NA EU APAC Japan ROW
Ericsson Europe
1 - 500 Mn 500 Mn - 1 Bn 1 - 10 Bn 10 Bn+
NTT Japan
Source: Zinnov analysis of global top 1000 R&D spenders 13

14. Japanese and European corporations account for around 76% of the R&D spend in the
Automotive vertical
Distribution of Top 1000 Companies in Automotive Vertical by Distribution of R&D Investments Top 1000 Companies in
Geography and Revenue Ranges (USD) Automotive Vertical by Geography
APAC, 4%
29 29
NA, 20%
23 8
10 EU, 42%
4
3 Japan,
1
4 34%
13
1
18 18
15
12
Company Geography
Toyota Motor Japan
Volkswagen Europe
NA EU Japan APAC General Motors North America
Honda Motors Japan
1 - 500 Mn 500 Mn - 1 Bn 1 - 10 Bn 10 Bn+ Daimler Europe
Source: Zinnov analysis of global top 1000 R&D spenders 14

15. Agenda
Global R&D Investment Analysis
R&D Globalization Analysis
15

16. 30% of the Top 1,000 R&D spenders have a center in India. Less than 24% of the companies
headquartered in APAC, EU and Japan have an India R&D set-up for specific verticals
Top 1000 India
Globalization Landscape of
Top 1000 R&D Spenders 687 396
313 Total MNC Subsidiaries = 709
India MNC Subsidiaries Across Verticals & Geographies
E&E**/ Comp. Telecom & Aerospace/
Industrial Semiconductor Software Automotive
HW Networking Defense
APAC 2/ 22 2/ 15 6/ 7 3/ 22 2/ 6 4/ 14 -/ 2
EU 14/ 70 4/ 8 14/ 24 6/ 19 5/ 20 12/ 28 7/ 15
Japan 2/ 32 -/ 10 -/ 3 8/ 38 2/ 4 8/ 29 -/ 1
NA 9/ 21 34/ 53 44/ 58 15/ 31 16/ 27 13/ 23 8/ 14
ROW -/ 3 -/ - 1/ 2 -/ - -/ 1 -/ - -/ 1
Note: Fields highlighted in green color shows opportunity areas for new centers in India
opportunities with 50% have been considered however for aerospace we have considered 40% as
opportunity area
Note: The companies in the Others vertical (which include companies in Pharmaceuticals, Biotechnology, FMCG etc.) have not been included in the above table
Source: Zinnov analysis of R&D landscape in India. **Electrical and Electronic equipment 16

17. India accounts for a small proportion of the total R&D investments by global companies
despite having a strong talent pool across verticals
MNC Subsidiary R&D Investment in India (USD millions) MNC Subsidiary Talent Pool in India
MNC R&D spend on headcount in India MNC Subsidiary Installed Talent Pool in
= 7.0 – 7.5 billion USD India = ~220,000
Aerospace &
Software/Internet Defense
2%
2841 Computer
Hardware
Telecom & Networking and E&E**
12%
1322
Automotive
E&E** and Computer Hardware 9%
971 Total India Market Size =
Others USD 6.9 Bn
Semiconductors 8.0% Software/
Internet
799 34.0%
Automotive
Industrial
773 7.0%
Industrial
595
Semiconduct
ors
Aerospace & Defense
10.0%
149 Telecom &
Networking
Others 17.0%
660
Source: Zinnov analysis of R&D landscape in India. **Electrical and Electronic equipment 17

18. Large companies from Japan and APAC dominate R&D spending in Electrical and Electronic
Equipment; most India centers are currently operating at low intensity
E&E** and computer hardware R&D Intensity
60%
Denotes companies with global R&D
R&D Headcount Intensity as Percentage
spend > 1bn USD
of Total Global R&D Headcount
Denotes companies with global R&D
spend between 500 m-1bn USD
40%
Denotes companies with global R&D
spend < 500m USD
20%
0%
0 5 10 15 20 25
Years Since Inception in India
Recent Relevant India News
 Recently Panasonic opened its India R&D center in NCR region
 LG, Samsung, Toshiba has huge plans to increase the R&D spending in India
Note: The data set analyzed in the chart on the right is a sample list from the top 1000 r&d spenders which have an R&d center in India
Source: Zinnov analysis of R&D landscape in India. **Electrical and Electronic equipment 18

19. North America and Europe dominate the Aerospace and Defense vertical. Many India
centers were started in the last few years and many more are expected to enter this space
Aerospace & Defense R&D Intensity
60%
Denotes companies with global R&D
R&D Headcount Intensity as Percentage
spend > 1bn USD
of Total Global R&D Headcount
Denotes companies with global R&D
spend between 500 m-1bn USD
40%
Denotes companies with global R&D
spend < 500m USD
20%
0%
0 5 10 15 20 25
Years Since Inception in India
Recent Relevant India News
 Honeywell recently invested USD 34 million to build a new technology center in NCR, India
 Boeing had submitted a USD 300 million plan for investment in the Indian defence industry last year
Note: The data set analyzed in the chart on the right is a sample list from the top 1000 r&d spenders which have an R&d center in India
Source: Zinnov analysis of R&D landscape in India 19

20. Thank You
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