Canada’s Top 100 Corporate R&D Spenders posted $16.05 billion in combined research and development (R&D) spending in Fiscal 2022. This was a significant increase of 20.2% over Fiscal 2021. Encouragingly, R&D spending increased at 81 companies and declined at only 19. Combined revenue of 94 of the Top 100 that disclosed their data was $403.62 billion. This produced an overall R&D intensity (R&D spending as % of revenue) of 3.5%.
In Fiscal 2022, the leading Corporate R&D spender was Shopify Inc. which devoted $1.96 billion to R&D (up 82.7%), followed by Constellation Software Inc. ($1.31 billion, up 36.2%) and Magna International Inc. ($844.5 million, up 6.3%). TELUS Corporation Inc. landed in 4th spot with $819.0 million of R&D spending (up 2.5%) and AMD Canada rounded out the top five R&D spenders with $698.8 million (up 45.6%).
$100 Million Club
Thirty-one Top 100 firms each reported R&D spending in excess of $100 million in Fiscal 2022, thus qualifying for membership in Research Infosource’s $100 Million Club. In Fiscal 2022, total Club members’ R&D spending was $13.48 billion, accounting for 84% of total Top 100 R&D spending.
R&D Spenders Tiers
Grouping the Top 100 companies into three R&D spending tiers (Tier 1 = $100 million or more of R&D spending, Tier 2 = $30 million-$99.9 million, Tier 3 = less than $30 million), three firms emerged as the respective tier leaders: Tier 1 – Shopify Inc. ($1.96 billion), Tier 2 – Kinaxis Inc. ($96.5 million) and Tier 3 – Neo Performance Material Inc. ($27.1 million).
R&D Spending Growth
The leading firms in Fiscal 2022 for growth in R&D spending in Tier 1 were Lightspeed Commerce Inc. (129.6%), Shopify Inc. (82.7%) and AbCellera Biologics Inc. (80.5%). The Tier 2 leaders were Absolute Software Corporation (99.8%), Coveo Solutions Inc. (94.3%) and Thales Canada Inc. (88.5%). Tier 3 R&D growth leaders were: ProMIS Neurosciences Inc. (231.8%), Semova Corp. (205.1%) and NervGen Pharma Corp. (141.7%).
R&D Intensity
Combined Top 100 R&D intensity (R&D spending as a percent of revenue) was 3.5% in Fiscal 2022. Among the 94 firms for which complete data were available, a number posted very strong gains in R&D intensity. In Tier 1, the leading firms were: Xenon Pharmaceuticals Inc. (1,121.2%), Ballard Power Systems Inc. (114.5%) and Repare Therapeutics Inc. (91.4%). Tier 2 leaders were: Milestone Pharmaceuticals Inc. (805.6%), Thinkific Labs Inc. (53.3%) and Theratechnologies Inc. (46.5%). Heading Tier 3 were: Taiga Motors Corporation (319.6%), AEterna Zentaris Inc. (221.7%) and Blackline Safety Corp. (33.8%).
Regional Performance
In Fiscal 2022, 46 companies headquartered in Ontario reported combined R&D spending of $9.16 billion, representing 57% of the Top 100 total, followed by 25 Quebec-based companies ($4.02 billion, 25% of the total) and 27 firms located in Western Canada ($2.82 billion, 18% of the total). Overall R&D growth jumped by a combined rate of 23.0% in Ontario, 17.8% in Western Canada and 15.7% in Quebec.
Top Corporate R&D Spenders by Tier FY2022
R&D Spending
Rank
Tier 1
$000
1
Shopify Inc.
$1,956,158
2
Constellation Software Inc.
$1,314,313
3
Magna International Inc.
$844,544
Rank
Tier 2
$000
1
Kinaxis Inc.
$96,487
2
MDA Ltd.
$94,000
3
Descartes Systems Group Inc.
$91,550
Rank
Tier 3
$000
1
Neo Performance Materials Inc.
$27,080
2
Blackline Safety Corp.
$24,684
3
Winpak Ltd.
$23,747
R&D Spending Growth
(% Change FY2021-FY2022)
Rank
Tier 1
%
1
Lightspeed Commerce Inc.
129.6
2
Shopify Inc.
82.7
3
AbCellera Biologics Inc.
80.5
Rank
Tier 2
%
1
Absolute Software Corporation
99.8
2
Coveo Solutions Inc.
94.3
3
Thales Canada Inc. (fs)
88.5
Rank
Tier 3
%
1
ProMIS Neurosciences Inc.
231.8
2
Sernova Corp.
205.1
3
NervGen Pharma Corp.
141.7
R&D Intensity*
(R&D Spending as % of Revenue)
Rank
Tier 1
%
1
Xenon Pharmaceuticals Inc.
1,121.2
2
Ballard Power Systems Inc.
114.5
3
Repare Therapeutics Inc
91.4
Rank
Tier 2
%
1
Milestone Pharmaceuticals Inc.
805.6
2
Thinkific Labs Inc.
53.3
3
Theratechnologies Inc.
46.5
Rank
Tier 3
%
1
Taiga Motors Corporation
319.6
2
AEterna Zentaris Inc.
221.7
3
Blackline Safety Corp.
33.8
Notes:
1. R&D Spending Tiers: Tier 1 = $100 million or more of R&D spending, Tier 2 = $30 million-$99.9 million, Tier 3 = less than $30 million. *Based on companies with $2 million or more of revenue
fs = Foreign subsidiary (included revenue and R&D spending for Canadian operations only)
Top 100 - Leading Industries
Industry
% of Total
Software & Computer Services (23)
36
Pharmaceuticals/Biotechnology (36)
16
Telecommunications Services (5)
12
Aerospace & Defence (5)
7
Automotive (3)
6
Energy/Oil & Gas (5)
5
Comm/Telecom Equipment (5)
5
Industry Performance
In Fiscal 2022, a selection of industry sectors posted the most R&D spending: 23 companies in the Software & Computer Services sector accounted for 36% of total Top 100 R&D spending, 36 Pharmaceuticals/Biotechnology firms accounted for a combined 16% of R&D spending, five Telecommunications Services companies accounted for 12% of the top 100 total, five Aerospace & Defence companies accounted for 7% of the total, three Automotive companies accounted for 6% of the total. Five Energy/Oil & Gas companies and five companies in the Comm/Telecom Equipment sector each respectively accounted for 5% of all R&D spending total in Fiscal 2022.
R&D spending growth among these industry sectors was strongest in Fiscal 2022: Software & Computer Services (up 36.5%), Energy/Oil & Gas (up 19.9%), Aerospace & Defence (up 17.8%), Pharmaceuticals/Biotechnology (up 17.2%) and Comm/Telecom Equipment (up 14.3%).
Bucking the Trend
Normally, Research Infosource expects R&D spending trends to broadly align with revenue trends. In Fiscal 2022, several industry sectors performed counter to expectations: The Telecommunications Services sector experienced a combined increase of revenue of 4.8%, but posted an overall drop in R&D spending of -6.3%. The Energy/Oil & Gas sector posted revenue gains of 44.4% in Fiscal 2022, while posting a combined R&D spending increase of 19.9%. The Comm/Telecom Equipment sector had a combined revenue gain of 31.5% and expanded its R&D spending by less than half, at 14.3%. However, the Software & Computer Services sector had revenue gains of 13.8%, while posting a much higher combined R&D spending increase of 36.5%, as did the Pharmaceutical/Biotechnology sector with revenue gains of 9.1%, while posting a 17.2% increase in R&D spending in Fiscal 2022.
This Year and Next
Corporate R&D spending appears to be on a roll. Following a 10.9% gain in Fiscal 2021, the Top 100 Corporate R&D Spenders lodged an impressive 20.2% increase in their combined R&D spending in Fiscal 2022, to $16.05 billion. (Note that the composition of the Top 100 does change from year to year.)
The Fiscal 2022 results run counter to expectations. Clearly, economic conditions did not deteriorate sufficiently to hobble R&D spending. Rather, the opposite was the case; 58 of the Top 100 reported triple and double-digit increases in R&D spending in Fiscal 2022.
A big question is whether the torrid Fiscal 2022 results can continue, against a backdrop of rising interest rates, slowing interest rates and a cloudy political economy. Regardless, let us celebrate our firms’ R&D performance and hope that it will herald an era of ongoing growth.
