increase about 4% per year, but with researchers demanding
a premium due to staffing shortages, this ratio may increase
faster over the next several years to entice highly qualified
personnel to the company. A special budget line item can be
created for these situations. The relationship of the other components (which is averaged for our report) will vary between
industries with the distributions being different between
industries, i.e., life science, automotive, materials and others.
As in all industrial budgets, the relationships between
budget components depends upon the specific organization.
Overhead, for example, is most times a fixed percentage-
based component that varies from company to company, and
even division to division within the same company. Outsourc-
ing, on the other hand, is often
flexible and monies can be
added or subtracted from it
and put into the budgets of
The definition and criteria
of capital spending also varies
between organizations. Some
companies put any device or
instrument costing more than
$10,000, such as a high-end
GCMS analytical instrument,
into the capital budget while
other organizations increase or
decrease these cut-off points.
New R&D lab construction
can also be accommodated
as an addition to a corporate R&D budget, a general
construction fund or a special
building fund. These decisions
are done primarily for taxes
and/or depreciation reasons.
R&D operations involving
outside contributions from
collaborators are often handled
as contractual arrangements
that are separate from the conventional R&D budget.
As noted in the Chart, most R&D-related areas are xpected to improve or increase in 2019, accord- ing to the respondents to our 2019 R&D Magazine
Global R&D Funding Forecast reader survey. Nearly 90% of
the respondents expect their total R&D budgets to increase,
while only a slightly smaller number (83%) expect their
technology-based capital spending levels to increase.
A smaller number (70%) expect the ratio of their organization’s R&D as a percent of sales to increase, while more
than 80% of the organizations expect their participation in
alliances and their acquisition of intellectual property (IP) to
increase in 2019 from what they did in 2018. All the budgetary changes one can measure are improving substantially in
2019, according to these survey results.
R&D budgets consist of about six major components as
shown on page 6 of this report—salaries, supplies, materials, outsourcing, capital spending and overhead. Researchers
creating a 2019 R&D budget can obtain local cost increases
and availabilities for each of these items (they do vary based
on location). This R&D distribution has not changed dramatically over the past 15 years.
Salaries are always the largest portion of the budget—
at 23% for 2018. R&D salaries are generally expected to
The 2019 R&D Budget
Salaries are always the
largest portion of the
budget—at 23% for 2018.
R&D Budgetary Changes Expected in 2019
Total R&D - Increase
Total R&D - Decrease
Capital spending - Increase
Capital spending - Decrease
R&D/sales - Increase
R&D/sales - Decrease
Participation in alliances - Increase
Participation in alliances - Decrease
Acquisition of IP - Increase
Acquisition of IP - Decrease
Contracts with academia - Increase
Contracts with academia - Decrease
0% 10% 20% 30% 40% 50%