Corporate R&D dips slightly in 2019 with Bombardier dropping 60%, and cannabis firms investing heavily

Canada’s biggest research performers recorded another healthy year for R&D investments in 2019, posting a 7.5% increase in spending over the previous year. The Top 100 Corporate R&D spenders reported a combined total of $13.46 billion in R&D investments in the 2019 fiscal year, according to Research Infosource Inc.’s recently released annual ranking.

While lower than fiscal year 2018’s 10.6% increase, Research Infosource CEO Ron Freedman calls 2019 “a very strong year for the Top 100.” Indeed, 28 of the top 100 companies spent more than $100 million on R&D, with 69 companies on the list increasing their overall R&D investments, compared to only 30 companies where spending decreased.

Claiming the number one spot in 2019 was Magna International Inc., whose $849.2 million investment in R&D raised the company from 2018’s second place finish. Magna’s investment represents an 11.5% increase from their previous year’s spending.

Suncor Energy Inc. came in at a close second in 2019, with $830 million in R&D outlays – however, their total R&D spending showed a greater increase between 2018 and 2019 (30.7%) than Magna International’s. Finally, Constellation Software Inc. earned the number three spot in fiscal 2019, with a $701.9 million investment. This is an increase in spending of 20% compared to fiscal 2018.

The embattled number one spender in 2018, Bombardier Inc., fell to number six, with a 60% drop in R&D spending, reflecting the sale of several key divisions as the firm attempts to stem losses. Meanwhile Shopify Inc. – a new entry in 2018’s top 10 – fell one spot to number 11. The company still showed an impressive 57.6% increase in R&D spending, however, relative to 2018.

Within the three tiers of corporate R&D spending ($100 million+ per year, $30-$99 million per year, and less than $30 million per year), Zymeworks Inc. had the highest rate of spending growth among tier one companies, with a 109.6% increase over fiscal year 2018.

In tier two, Acasti Pharma Inc. came in first with a 142.3% increase. Finally, and perhaps reflecting the projected growth trends in Canada’s cannabis industry over the next five years, Canopy Growth Corp came in first in the third tier, with a staggering 948.7% increase over fiscal year 2018. Notably, the second-place finisher in this group was also a cannabis company, Aurora Cannabis Inc. It showed a similarly astronomical rise in R&D spending between fiscal years 2018 and 2019, at 780.2%.

Sectoral representation within the rankings showed that pharmaceutical and biotechnology firms accounted for 27% of the top 100 (more than double that of 2018’s 13%), followed by software and computer services at 18% (a 5% drop from 2018), and energy/oil & gas at 10% (unchanged from 2018).

In a shift from previous rankings, Freedman notes, “for the first time in many years, we have no [individual] company in Canada that has spent more than a billion dollars on R & D. That’s a departure.” Still, describing this year’s total increase in R&D spending, he strikes an optimistic tone: “a gain of 7.5% is an excellent result as we continue to see strong R&D spending.”

Source: Canada's Top 100 Corporate R&D Spenders 2020

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