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Shift in 2009 R&D Spending Forecast

Posted: February 24, 2009

R&D spending in the U.S. consumer product sector will shift from existing products to new business products in 2009, according to the Industrial Research Institute's (IRI) annual "R&D Trends Forecast for 2009."

This shift is reportedly due to R&D budgets being focused on areas with the highest potential to generate a substantial return, and new business projects are more apt to do just that, targeting new consumption on untapped market segments. Overall projected R&D spending varied by sector in the forecast. For example, those in the petroleum and food sectors are forecasting larger R&D budgets, while those in the consumer products area are expecting reductions.

Overall, roughly half the companies that participated in the survey expect cuts in R&D spending and half expect increases. Some companies, according to the forecast, are banking on an economic recovery and want to be ready when that happens.

The forecast also found that  more than 20% of respondents are predicting spending increases of 5% or more on research supporting new product development. Conversely, nearly the same 20% predict spending cuts on research for existing business. In addition, the forecast finds more collaboration in U.S. companies, which are: forming more joint ventures, forming consortia to share the costs of pre-competitive university research and establishing contracts with federal laboratories in attempts to offset reduced spending in fundamental research.

To make up for the loss in research in existing business, IRI is hoping that the government increases research funding. This will happen through funding university research and promoting regulatory policies that stimulated continues investment in R&D.