In absolute terms Medtronic dedicates the most cash to research, with a $2.3bn R&D budget last year – unchanged from the year before. And Baxter International’s proportional investment fell from a peak of 8.6% in 2015 to just 6.9% last year.
Boston Scientific, for example, invested 12% of its revenues in research in 2010, versus 10.7% in 2019. But Stryker is relatively acquisitive, and prioritises its reinvestment towards buying companies with promising technologies.ĭespite the overall cohort boosting its R&D spend over the past decade, several groups have in fact decreased their research spend-to-sales ratio. The smallest spender on this measure is the orthopaedics company Stryker, which spent just 6.2% of its revenues on R&D last year – perhaps reflecting the orthopaedics sector’s reputation as one of the less innovative. The figures for groups with pharmaceutical operations, like Johnson & Johnson and Roche, will therefore differ from those seen in Evaluate Vantage’s similar analysis covering big pharma. The interactive graph above was compiled using companies’ stated expenditure on R&D specifically in medtech, as well as their medical devices sales. It is clearly serious about investing in innovative medical products to secure a reputation as a major medtech player. The company has reinvented itself to become totally focused on healthcare, selling off units such as audio-visual and lighting piecemeal over the past few years. The biggest proportional spender on research last year was Philips, which ploughed nearly 14% of its medical device sales into developing new technologies. Spending on acquisitions varies much more widely, with some groups spending more than a quarter of their cumulative revenues over the past decade on M&A. The below analyses show that as big medtech’s total spend on R&D has risen slightly over the past decade – from $9.5bn in 2010 to just under $10bn last year – investment as a percentage of medtech sales has also edged higher, to around 9%.
How much of a group’s revenue should be reinvested into research and development, and how much into buying in promising young companies?
Philips buy how to#
Decisions on how to allocate cash to ensure a steady stream of new medical technologies are the bread and butter of device companies’ management teams.
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