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Building an R&D strategy for modern times

The global investment in research and development (R&D) is staggering. In 2019 alone, organizations around the world spent $2.3 trillion on R&D—the equivalent of roughly 2 percent of global GDP—about half of which came from industry and the remainder from governments and academic institutions. What’s more, that annual investment has been growing at approximately 4 percent per year over the past decade. 1 2.3 trillion on purchasing-power-parity basis; 2019 global R&D funding forecast , Supplement, R&D Magazine, March 2019, rdworldonline.com.

While the pharmaceutical sector garners much attention due to its high R&D spending as a percentage of revenues, a comparison based on industry profits shows that several industries, ranging from high tech to automotive to consumer, are putting more than 20 percent of earnings before interest, taxes, depreciation, and amortization (EBITDA) back into innovation research (Exhibit 1).

What do organizations expect to get in return? At the core, they hope their R&D investments yield the critical technology from which they can develop new products, services, and business models. But for R&D to deliver genuine value, its role must be woven centrally into the organization’s mission. R&D should help to both deliver and shape corporate strategy, so that it develops differentiated offerings for the company’s priority markets and reveals strategic options, highlighting promising ways to reposition the business through new platforms and disruptive breakthroughs.

Yet many enterprises lack an R&D strategy that has the necessary clarity, agility, and conviction to realize the organization’s aspirations. Instead of serving as the company’s innovation engine, R&D ends up isolated from corporate priorities, disconnected from market developments, and out of sync with the speed of business. Amid a growing gap in performance  between those that innovate successfully and those that do not, companies wishing to get ahead and stay ahead of competitors need a robust R&D strategy that makes the most of their innovation investments. Building such a strategy takes three steps: understanding the challenges that often work as barriers to R&D success, choosing the right ingredients for your strategy, and then pressure testing it before enacting it.

Overcoming the barriers to successful R&D

The first step to building an R&D strategy is to understand the four main challenges that modern R&D organizations face:

Innovation cycles are accelerating. The growing reliance on software and the availability of simulation and automation technologies have caused the cost of experimentation to plummet while raising R&D throughput. The pace of corporate innovation is further spurred by the increasing emergence of broadly applicable technologies, such as digital and biotech, from outside the walls of leading industry players.

But incumbent corporations are only one part of the equation. The trillion dollars a year that companies spend on R&D is matched by the public sector. Well-funded start-ups, meanwhile, are developing and rapidly scaling innovations that often threaten to upset established business models or steer industry growth into new areas. Add increasing investor scrutiny of research spending, and the result is rising pressure on R&D leaders to quickly show results for their efforts.

R&D lacks connection to the customer. The R&D group tends to be isolated from the rest of the organization. The complexity of its activities and its specialized lexicon make it difficult for others to understand what the R&D function really does. That sense of working inside a “black box” often exists even within the R&D organization. During a meeting of one large company’s R&D leaders, a significant portion of the discussion focused on simply getting everyone up to speed on what the various divisions were doing, let alone connecting those efforts to the company’s broader goals.

Given the challenges R&D faces in collaborating with other functions, going one step further and connecting with customers becomes all the more difficult. While many organizations pay lip service to customer-centric development, their R&D groups rarely get the opportunity to test products directly with end users. This frequently results in market-back product development that relies on a game of telephone via many intermediaries about what the customers want and need.

Projects have few accountability metrics. R&D groups in most sectors lack effective mechanisms to measure and communicate progress; the pharmaceutical industry, with its standard pipeline for new therapeutics that provides well-understood metrics of progress and valuation implications, is the exception, not the rule. When failure is explained away as experimentation and success is described in terms of patents, rather than profits, corporate leaders find it hard to quantify R&D’s contribution.

Yet proven metrics exist  to effectively measure progress and outcomes. A common challenge we observe at R&D organizations, ranging from automotive to chemical companies, is how to value the contribution of a single component that is a building block of multiple products. One specialty-chemicals company faced this challenge in determining the value of an ingredient it used in its complex formulations. It created categorizations to help develop initial business cases and enable long-term tracking. This allowed pragmatic investment decisions at the start of projects and helped determine the value created after their completion.

Even with outcomes clearly measured, the often-lengthy period between initial investment and finished product can obscure the R&D organization’s performance. Yet, this too can be effectively managed by tracking the overall value and development progress of the pipeline so that the organization can react and, potentially, promptly reorient both the portfolio and individual projects within it.

Incremental projects get priority. Our research indicates that incremental projects account for more than half of an average company’s R&D investment, even though bold bets and aggressive reallocation  of the innovation portfolio deliver higher rates of success. Organizations tend to favor “safe” projects with near-term returns—such as those emerging out of customer requests—that in many cases do little more than maintain existing market share. One consumer-goods company, for example, divided the R&D budget among its business units, whose leaders then used the money to meet their short-term targets rather than the company’s longer-term differentiation and growth objectives.

Focusing innovation solely around the core business may enable a company to coast for a while—until the industry suddenly passes it by. A mindset that views risk as something to be avoided rather than managed can be unwittingly reinforced by how the business case is measured. Transformational projects at one company faced a higher internal-rate-of-return hurdle than incremental R&D, even after the probability of success had been factored into their valuation, reducing their chances of securing funding and tilting the pipeline toward initiatives close to the core.

As organizations mature, innovation-driven growth becomes increasingly important, as their traditional means of organic growth, such as geographic expansion and entry into untapped market segments, diminish. To succeed, they need to develop R&D strategies equipped for the modern era that treat R&D not as a cost center but as the growth engine it can become.

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Choosing the ingredients of a winning r&d strategy.

Given R&D’s role as the innovation driver that advances the corporate agenda, its guiding strategy needs to link board-level priorities with the technologies that are the organization’s focus (Exhibit 2). The R&D strategy must provide clarity and commitment to three central elements: what we want to deliver, what we need to deliver it, and how we will deliver it.

What we want to deliver. To understand what a company wants to and can deliver, the R&D, commercial, and corporate-strategy functions need to collaborate closely, with commercial and corporate-strategy teams anchoring the R&D team on the company’s priorities and the R&D team revealing what is possible. The R&D strategy and the corporate strategy must be in sync while answering questions such as the following: At the highest level, what are the company’s goals? Which of these will require R&D in order to be realized? In short, what is the R&D organization’s purpose?

Bringing the two strategies into alignment is not as easy as it may seem. In some companies, what passes for corporate strategy is merely a five-year business plan. In others, the corporate strategy is detailed but covers only three to five years—too short a time horizon to guide R&D, especially in industries such as pharma or semiconductors where the product-development cycle is much longer than that. To get this first step right, corporate-strategy leaders should actively engage with R&D. That means providing clarity where it is lacking and incorporating R&D feedback that may illuminate opportunities, such as new technologies that unlock growth adjacencies for the company or enable completely new business models.

Secondly, the R&D and commercial functions need to align on core battlegrounds and solutions. Chief technology officers want to be close to and shape the market by delivering innovative solutions that define new levels of customer expectations. Aligning R&D strategy provides a powerful forum for identifying those opportunities by forcing conversations about customer needs and possible solutions that, in many companies, occur only rarely. Just as with the corporate strategy alignment, the commercial and R&D teams need to clearly articulate their aspirations by asking questions such as the following: Which markets will make or break us as a company? What does a winning product or service look like for customers?

When defining these essential battlegrounds, companies should not feel bound by conventional market definitions based on product groups, geographies, or customer segments. One agricultural player instead defined its markets by the challenges customers faced that its solutions could address. For example, drought resistance was a key battleground no matter where in the world it occurred. That framing clarified the R&D–commercial strategy link: if an R&D project could improve drought resistance, it was aligned to the strategy.

The dialogue between the R&D, commercial, and strategy functions cannot stop once the R&D strategy is set. Over time, leaders of all three groups should reexamine the strategic direction and continuously refine target product profiles as customer needs and the competitive landscape evolve.

What we need to deliver it. This part of the R&D strategy determines what capabilities and technologies the R&D organization must have in place to bring the desired solutions to market. The distinction between the two is subtle but important. Simply put, R&D capabilities are the technical abilities to discover, develop, or scale marketable solutions. Capabilities are unlocked by a combination of technologies and assets, and focus on the outcomes. Technologies, however, focus on the inputs—for example, CRISPR is a technology that enables the genome-editing capability.

This delineation protects against the common pitfall of the R&D organization fixating on components of a capability instead of the capability itself—potentially missing the fact that the capability itself has evolved. Consider the dawn of the digital age: in many engineering fields, a historical reliance on talent (human number crunchers) was suddenly replaced by the need for assets (computers). Those who focused on hiring the fastest mathematicians were soon overtaken by rivals who recognized the capability provided by emerging technologies.

The simplest way to identify the needed capabilities is to go through the development processes of priority solutions step by step—what will it take to produce a new product or feature? Being exhaustive is not the point; the goal is to identify high-priority capabilities, not to log standard operating procedures.

Prioritizing capabilities is a critical but often contentious aspect of developing an R&D strategy. For some capabilities, being good is sufficient. For others, being best in class is vital because it enables a faster path to market or the development of a better product than those of competitors. Take computer-aided design (CAD), which is used to design and prototype engineering components in numerous industries, such as aerospace or automotive. While companies in those sectors need that capability, it is unlikely that being the best at it will deliver a meaningful advantage. Furthermore, organizations should strive to anticipate which capabilities will be most important in the future, not what has mattered most to the business historically.

Once capabilities are prioritized, the R&D organization needs to define what being “good” and “the best” at them will mean over the course of the strategy. The bar rises rapidly in many fields. Between 2009 and 2019, the cost of sequencing a genome dropped 150-fold, for example. 2 Kris A. Wetterstrand, “DNA sequencing costs: Data,” NHGRI Genome Sequencing Program (GSP), August 25, 2020, genome.gov. Next, the organization needs to determine how to develop, acquire, or access the needed capabilities. The decision of whether to look internally or externally is crucial. An automatic “we can build it better” mindset diminishes the benefits of specialization and dilutes focus. Additionally, the bias to building everything in-house can cut off or delay access to the best the world has to offer—something that may be essential for high-priority capabilities. At Procter & Gamble, it famously took the clearly articulated aspiration of former CEO A. G. Lafley to break the company’s focus on in-house R&D and set targets for sourcing innovation externally. As R&D organizations increasingly source capabilities externally, finding partners and collaborating with them effectively is becoming a critical capability in its own right.

How we will do it. The choices of operating model and organizational design will ultimately determine how well the R&D strategy is executed. During the strategy’s development, however, the focus should be on enablers that represent cross-cutting skills and ways of working. A strategy for attracting, developing, and retaining talent is one common example.

Another is digital enablement, which today touches nearly every aspect of what the R&D function does. Artificial intelligence can be used at the discovery phase to identify emerging market needs or new uses of existing technology. Automation and advanced analytics approaches to experimentation can enable high throughput screening at a small scale and distinguish the signal from the noise. Digital (“in silico”) simulations are particularly valuable when physical experiments are expensive or dangerous. Collaboration tools are addressing the connectivity challenges common among geographically dispersed project teams. They have become indispensable in bringing together existing collaborators, but the next horizon is to generate the serendipity of chance encounters that are the hallmark of so many innovations.

Testing your R&D strategy

Developing a strategy for the R&D organization entails some unique challenges that other functions do not face. For one, scientists and engineers have to weigh considerations beyond their core expertise, such as customer, market, and economic factors. Stakeholders outside R&D labs, meanwhile, need to understand complex technologies and development processes and think along much longer time horizons than those to which they are accustomed.

For an R&D strategy to be robust and comprehensive enough to serve as a blueprint to guide the organization, it needs to involve stakeholders both inside and outside the R&D group, from leading scientists to chief commercial officers. What’s more, its definition of capabilities, technologies, talent, and assets should become progressively more granular as the strategy is brought to life at deeper levels of the R&D organization. So how can an organization tell if its new strategy passes muster? In our experience, McKinsey’s ten timeless tests of strategy  apply just as well to R&D strategy as to corporate and business-unit strategies. The following two tests are the most important in the R&D context:

• Does the organization’s strategy tap the true source of advantage? Too often, R&D organizations conflate technical necessity (what is needed to develop a solution) with strategic importance (distinctive capabilities that allow an organization to develop a meaningfully better solution than those of their competitors). It is also vital for organizations to regularly review their answers to this question, as capabilities that once provided differentiation can become commoditized and no longer serve as sources of advantage.
• Does the organization’s strategy balance commitment-rich choices with flexibility and learning? R&D strategies may have relatively long time horizons but that does not mean they should be insulated from changes in the outside world and never revisited. Companies should establish technical, regulatory, or other milestones that serve as clear decision points for shifting resources to or away from certain research areas. Such milestones can also help mark progress and gauge whether strategy execution is on track.

Additionally, the R&D strategy should be simply and clearly communicated to other functions within the company and to external stakeholders. To boost its clarity, organizations might try this exercise: distill the strategy into a set of fill-in-the-blank components that define, first, how the world will evolve and how the company plans to refocus accordingly (for example, industry trends that may lead the organization to pursue new target markets or segments); next, the choices the R&D function will make in order to support the company’s new focus (which capabilities will be prioritized and which de-emphasized); and finally, how the R&D team will execute the strategy in terms of concrete actions and milestones. If a company cannot fit the exercise on a single page, it has not sufficiently synthesized the strategy—as the famed physicist Richard Feynman observed, the ultimate test of comprehension is the ability to convey something to others in a simple manner.

Cascading the strategy down through the R&D organization will further reinforce its impact. For example, asking managers to communicate the strategy to their subordinates will deepen their own understanding. A useful corollary is that those hearing the strategy for the first time are introduced to it by their immediate supervisors rather than more distant R&D leaders. One R&D group demonstrated the broad benefits of this communication model: involving employees in developing and communicating the R&D strategy helped it double its Organizational Health Index  strategic clarity score, which measures one of the four “power practices”  highly connected to organizational performance.

R&D represents a massive innovation investment, but as companies confront globalized competition, rapidly changing customer needs, and technological shifts coming from an ever-wider range of fields, they are struggling to deliver on R&D’s full potential. A clearly articulated R&D strategy that supports and informs the corporate strategy is necessary to maximize the innovation investment and long-term company value.

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Start » strategy, what is research and development .

Research and development provides businesses with the information they need to successfully bring their products or services to market.

In any industry, even the most revolutionary products and services are rarely fully conceptualized on day 1. Most often, success in the market stems from extensive, effective research and development (R&D). This is especially true for small businesses, which contribute a significantly higher percentage of sales to R&D work than larger businesses.

Here’s everything you need to know about R&D and why it’s well worth the investment.

What is research and development?

R&D refers to the various activities businesses conduct to prepare new products or services for the marketplace. Businesses of all sizes and sectors can partake in R&D activities, though the amount of investment can vary. For example, technology and health care companies tend to have higher R&D expenses , as do enterprises with larger budgets.

Typically the first step in the development process, R&D is not expected to yield immediate profits. Rather, it focuses on innovation and setting up a company for long-term profitability. During this process, businesses may secure patents, copyrights, and other intellectual property associated with their products and services.

At larger companies, R&D activities are often handled in-house by a designated R&D department. However, some smaller companies may opt to outsource R&D to a third-party research firm, a specialist, or an educational institution.

[Read more: 7 Ways to Find Small Business Grant Opportunities ]

Types of research and development

R&D activities typically fall into one of three main categories:

• Basic research: Basic research, sometimes called fundamental research, aims to provide theoretical insight into specific problems or phenomena. For example, a company looking to develop a new toy for children might conduct basic research into child play development.
• Applied research: This type of research is practical and conducted with a specific goal in mind, most often discovering new solutions for existing problems. The children’s toy company from the previous example might conduct applied research into developing a toy that facilitates play development in a new or improved way.
• Development research: In development research, researchers focus exclusively on applied research to develop new products and improve existing ones. For example, a team of development researchers may test the hypothetical company’s new toy or implement feedback obtained from customers.

Small businesses have limited resources. They don’t have that endless budget that the Fortune 500 company has, which means the small business will have to get creative to conduct worthwhile research and development.

Becca Hoeft, CEO and Founder of Morris Hoeft Group

Why invest in research and development?

While R&D can require a significant investment, it also yields several advantages. Below are four specific areas where your business can benefit by conducting R&D.

New products

R&D supports businesses in developing new offerings or improving existing ones based on market demand. By conducting research and applying your findings to your final product, companies are more likely to develop something that meets customers’ needs and performs well in the marketplace.

R&D can help businesses understand their place in the market as well as identify inefficiencies in their workflows. Insights from R&D activities can illuminate ways to improve operations as well as where to most effectively allocate resources, increasing overall efficiency.

Cost reductions

While developing a well-researched product or service that performs well is likely to maximize profit, R&D aimed at improving internal processes and technologies can reduce the cost of bringing products and services to market.

Businesses that invest in R&D may be eligible for specific tax incentives. For one, the federal R&D tax credit offers a dollar-for-dollar reduction in tax liability for businesses that partake in various research-based activities. Eligible companies can apply for this credit by submitting Form 6765 with their business taxes.

[Read more: How to Seek Funding for Your Invention ]

Overcoming the challenges of small business R&D

According to Becca Hoeft, CEO and Founder of Morris Hoeft Group , small businesses may face numerous challenges related to R&D that their larger counterparts might not experience.

“Small businesses have limited resources,” said Hoeft. “They don’t have that endless budget that the Fortune 500 company has, which means the small business will have to get creative to conduct worthwhile research and development.”

While R&D funding is available through various government grants, university programs, and research institutions, Hoeft noted that it may take some time and strategic planning to obtain it. She recommended that small business owners start talking publicly about what kind of research they are doing and what they need to conduct it.

“Don’t hide under a rock and expect money to magically appear,” Hoeft told CO—. “Get on a stage at a relevant conference [or] start a blog series about your idea.”

Keep in mind that once you start sharing your ideas and what you want to research, “it’s out there in the universe,” said Hoeft. Therefore, protecting your intellectual property before you begin and during the research process is extremely important.

“Ensure your trademarks, patents, and copyrights are in place to protect you and your small business,” Hoeft added.

[Read more: How to Qualify for and Claim the R&D Tax Credit ]

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Fresh’s engineering team is equipped to handle projects of all sizes. There’s no effort too big or too small. If you have an innovative, complex project that pushes the boundaries of what’s possible, we want to hear about it and help you accelerate product development.

Fresh provides dedicated engineering teams, but with our cross-disciplinary focus as an organization, the insight and expertise you receive will account for every dimension of your project. From user experience design to software applications and customer experience strategy, we approach projects holistically.

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The World’s Biggest R&D Spenders

It may come as no surprise that the companies spending the most on research and development are the tech giants. According to data collected by Nasdaq.com , Amazon wins the title of the world’s biggest spender, with R&D investments that amounted to nearly $43 billion in 2020, or about 11 percent of its revenue. Completing the podium are Alphabet and Huawei, which spent $27.6 billion and $22 billion, respectively, on innovation that year, or around 15 percent of their revenues. As our chart also shows, Meta Group (formerly Facebook) was the company in the top 7 that spent the most relative to its revenue, at 21 percent ($18.5 billion).

Nasdaq reports that the final big players to round off the top 10 include companies in the automotive and pharmaceutical industries, with Volkswagen, Intel, Roche and Johnson & Johnson occupying those spots. According to the National Science Board , the majority of global R&D investments are performed by just a few countries, with the U.S. accounting for 27 percent of the global share (or $656 billion) and China making up 22 percent (or $526 billion) in 2019.

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Research and Development sparks innovative solutions

Achieve business goals by implementing cutting-edge R&D products

Outpace the competition with new or improved offerings

Utilize an effective research and development strategy to enhance existing products, launch new services and technologies, and avoid obsolescence, while gaining an innovative edge and satisfying unmet needs .

Validate your idea quickly with fast prototyping

Discover solutions.

Identify challenges, validate feasibility, and develop innovative fixes

Prototype in weeks

Rapidly model ideas, features, and technologies to test usability

Research challenges

Understand potential objections and create an R&D strategy accordingly

Activate your resources

Utilize client expertise to discover problems and possible solutions

Click and collect grocery shopping revamped for both retailers and end-users

Leverage prototyping and technology to build a seamless, safe, and flexible experience.

Starting with thorough research and using a data-based approach, we determined what creates a quality online shopping trip.

Our rapid prototyping took just one month using two developers to implement three innovative features, offering a personalized user experience.

Netguru has been the best agency we've worked with so far. The team is able to design new skills, features, and interactions within our model, with a great focus on speed to market. Adi Pavlovic Director of Innovation at Keller Williams

Research & Development - from idea to working prototype

• R&D Sprint

Empower clients with knowledge, expert solution design, and roadmap recommendations

Rapid prototyping

Deliver an end-to-end working prototype that will take your products to the next level

Hackathon by Netguru

Facilitate a client event to creatively uncover ideas and collectively establish solutions

Run quick experiments to verify technologies and ideas, and determine expected value

What Is Research and Development (R&D)?

Also known as research and technical or technological development (RTD), R&D is all about engaging in activities to innovate. By doing that, an organization presents new products and services to market or enhances its existing offering.

Research and development objectives? Typically the primary stage in the product life cycle, R&D aims to gain companies a competitive edge and generate long-term profit. R&D may lead to entirely new product discoveries and associated patents, copyrights, and trademarks.

R&D departments are generally well-funded, with capital risk, lack of immediate payoff, and uncertain ROI weighed up against estimated risk-adjusted returns. Greater R&D investment equates to increased capital risk, meaning some businesses choose to outsource R&D functions.

The role of research and development? Without R&D entrepreneurship or an effective strategy, a business may become obsolete, unless it uses other methods such as M&A to survive.

Who’s investing in research and development? Tech companies are among the top R&D investors, with pharmaceuticals and semiconductors also high up the rankings.

Examples of research and development activities include Netguru’s R&D project with Roboteam and Alphabet’s Waymo self-driving cars.

Why is Research and Development important?

R&D solutions differentiate businesses from the competition, yielding critical technologies from which new products, services, and models spawn.

Technology progresses quickly, and if organizations are to keep up, R&D is key. With R&D, the chances of building successful products and services increase. It can also enhance employee productivity and boost profits.

Research and development companies or departments devise innovative products, services, and solutions that dominate the market and are tricky to imitate.

A modern R&D division connects technical teams with marketing, sales, and customer service. That way, challenges and opportunities are fully understood.

An effective research and development team defines the right business opportunity and performs rapid tests to validate business value assumptions.

Then, successive solution prototypes and usability testing realize that value by identifying user habits, problems, and expectations, as well as anticipating demands and trends.

Types of Research & Development

There are several types of R&D. First up, there’s the model where engineers undertake extensive research to develop new products and services with no real objective in mind.

That falls under basic research, whereby the aim is to grasp fuller fundamental knowledge of a subject, process, or technology, as opposed to a specific application.

The second type of R&D? Industrial scientists or researchers carry out applied research to support the development of future products and/or enhance existing product and service offerings – there’s a specific target in mind.

Basic research is time-consuming. Applied R&D is more expensive, meticulous, and complex.

Business incubators and accelerators are types of R&D, whereby companies invest in startups in the hope they’ll come up with usable innovations.

Mergers and acquisitions (M&As) and partnerships are also varieties of R&D, with corporations making the most of each other’s expertise and skills.

Who spends the most on R&D?

Based on yearly reports, Amazon is the top R&D spender, forking out $42.74 billion in 2020. Calling it ‘technology and content’ the multinational behemoth spent more than in 2019 ($35.93 billion), with 2,244 patents granted – most of which in technologies like AI, machine learning, and computer vision.

Number two? Alphabet, at $27.57 billion. The multinational conglomerate formed in 2015 via a restructuring of Google, becoming the parent company of the search engine and several former subsidiaries. R&D expenditure has more than doubled since 2016.

Coming in third is Huawei, with R&D investment in 2020 totaling $22.04 billion. The year 2020 saw 2,761 patents granted, an increase of 14% compared to 2019. Huawei R&D employees amount to around 105,000 – more than half the total workforce.

The list goes on as follows in billions:

• Microsoft: $19.27
• Apple: $18.75
• Samsung: $18.75
• Facebook: $18.45

The remainder of the top 10: Volkswagen, Intel, Roche, and Johnson & Johnson.

Why to hire Netguru R&D Consultants?

At Netguru, R&D is multipurpose, and the benefits are meaningful:

• Developing new skills
• Steering strategic direction
• Innovation consulting

To maximize success, we have four types research and development services:

• Rapid Prototyping

We start with a problem, then implement effective solutions, rather than “attractive” solutions that merely offer technological advancements but aren’t actually fit for purpose.

We also embrace agile development principles and record and distribute lessons learned.

Our R&D experts are world-class professionals, including Innovation Consultants, Design Consultants, R&D Experts, Engineers, and Developers who are open source contributors with over 220 repositories on GitHub .

We invest in developing new technologies and testing R&D solutions, offering a first-rate and expert service to clients.

Unveil imaginative solutions that eclipse competitors

Our competent team of experts deliver innovative products across various industries, from fintech to retail. With 900+ projects implemented and 12+ years in the market, we offer a wealth of experience.

Creating Temi, a state-of-the-art personal assistant robot combining sight, touch, and hearing

Designing and delivering a premium yet affordable device to dominate the home robotics market.

A prime R&D example and three years in development, Temi plays music, answers calls, and provides the weather forecast, offering users a cutting edge experience.

We focused on R&D: scoping and testing, to suggest the best possible technology stack for the project before building Temi from scratch, including hardware, design, and software. As part of the R&D process and iterative cycles, we revised code to deliver upgrades and an iconic product.

Kunster: An R&D project to build an augmented reality mobile app

Using research skills to create an art-focused app.

Cross-generational app Kunster brings art closer to people. Users see their surroundings through the eyes of painters such as Van Gogh and Da Vinci.

Using PyTorch and Core ML tools throughout our R&D process, we developed a pipeline to experiment with real-time style transfer and integrate models into the application.

R&D for Good: Partnering with non-profit Pure Earth to help the environment

Developing a pollution app to raise awareness and connect government officials.

Leveraging our innovation expertise, we worked with Pure Earth as part of our R&D for Good program. Aiming to support NGO organizations in their digital journeys, we helped Pure Earth by investigating new technologies.

Our solution? Expanding their existing offering by creating the inventive Report Pollution app to document and report polluted sites.

Devising CarLens, a slick mobile app to detect car models with AR

Researching, prototyping, and implementing new technologies including tensorflow and ml.

CarLens recognizes cars using your smartphone’s camera. During this experimental R&D project, we used image recognition and machine learning to test and create a fun and cutting-edge solution.

How? By building a precise algorithm to detect vehicle models. CarLens is a proof of concept iOS and Android app exploring the capabilities of ML-based image recognition.

Our partners about the cooperation with Netguru

My experience working with Netguru has been excellent. Outstanding software teams are resilient, and our developers at Netguru have certainly proven to be that. Our Netguru friends have become as close to team members as possible, and I am grateful for the care and excellence they have provided. Gerardo Bonilla Product Manager at Moonfare

Whenever we faced challenges this year, we could rely on Netguru for our urgent staffing needs and time-critical deliverables. The Netguru team has gone above and beyond any expectations of what a strong and reliable partner can be. Hima Mandali CTO at Solarisbank

Working with Netguru has been a fantastic experience. We received a lot of support in terms of thinking about how we track metrics, how we design this properly, and how we build the architecture. We are extremely grateful for making our platform what it is today. Manon Roux Founder at Countr

Netguru in numbers

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People on Board

Projects Delivered

Our Current NPS Score

Delivered by Netguru

Self-care mobile app that lets users practice gratitude.

$5M Granted in funding

Investment platform that enable to invest in private equity funds

$28M Granted in funding

Data-driven SME lending platform provider

$20M Granted in funding

Lead generation tool that helps travelers to make bookings

$47M Granted in funding

Hand to answer your R&D concerns

According to McKinsey, pharmaceuticals are traditionally known for R&D spending, but these days, high tech, automotive, and consumer sectors invest even more – greater than 20% of earnings EBITDA.

Amazon’s research and development programs amounted to 11.1% of net sales in 2020, Alphabet laid out 15.1% of revenue, and Huawei invested 15.9% of revenue. In 2019, companies spent $2.3 trillion on R&D globally – around 2% of global GDP. Annual R&D investment has grown at around 4% a year since 2010.

As a result of R&D, new products are designed and existing ones revamped. R&D is part of the product development life cycle – the ideation stage. For example, let’s say a client has a challenge to solve or isn’t sure how to approach a problem.

Via R&D, it’s possible to make recommendations, impacting solution design and the roadmap.

Following the R&D phase where feasibility is validated and prototyping takes place, the groundwork is in place for further design work.

R&D project management involves taking the lead in designing processes, sharing knowledge, and tracking the overall value of R&D via metrics. A top-notch strategy combines:

• Comprehending what an organization wants to (and can) deliver
• Alignment of R&D and corporate initiatives
• Determining and prioritizing capabilities and technologies for delivery
• Deciding how to deliver – operating model and organizational design
• Testing the strategy for robustness
• Clear communication of the strategy

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• Investing in R&D
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• Business Essentials

Why You Should Invest in Research and Development (R&D)

Research and development (R&D) is the part of a company's operations that seeks knowledge to develop, design, and enhance its products, services, technologies, or processes. Along with creating new products and adding features to old ones, investing in research and development connects various parts of a company's strategy and business plan.

According to the latest Business Enterprise Research and Development survey by the National Center for Science and Engineering and the U.S. Census Bureau, businesses spent $32.5 billion to support their R&D activities in 2020.

Here are some reasons your business should invest in research and development.

Key Takeaways

• Research and development (R&D) is an essential driver of economic growth as it spurs innovation, invention, and progress.
• R&D spending can lead to breakthroughs that can drive profits and well-being for consumers.
• Today, R&D is present in nearly every business sector as companies jockey for position in their respective markets.
• Smaller firms engaged in R&D can offset some of these costs and attract investors thanks to a federal tax break.

Investing in Research and Development (R&D)

The Internal Revenue Service's definition of research and development is investigative activities that a person or business chooses to do with the desired result of a discovery that will create an entirely new product, product line, or service.

However, the activities don't only need to be for disovering new products or services—this is only for tax purposes.

R&D isn’t just about creating new products; it can be used to strengthen an existing product or service with additional features.

Research refers to any new science or thinking that will result in a new product or new features for an existing product. Research can be broken down into either basic research or applied research. Basic research seeks to delve into scientific principles from an academic standpoint, while applied research aims to use that basic research in a real-world setting.

The development portion refers to the actual application of the new science or thinking so that a new or increasingly better product or service can begin to take shape.

Research and development is essentially the first step in developing a new product, but product development is not exclusively research and development. An offshoot of R&D, product development can refer to the entire product life cycle , from conception to sale to renovation to retirement.

R&D Offers Productivity, Product Differentiation

Firms gain a competitive advantage by performing in some way that their rivals cannot easily replicate. If R&D efforts lead to an improved type of business process—cutting marginal costs or increasing marginal productivity—it is easier to outpace competitors.

R&D often leads to a new type of product or service—for example, without research and development, cell phones or other mobile devices would never have been created. The internet, and even how people live today, would be completely different if businesses had not conducted R&D in the past.

Research results give businesses a means to find issues people have and ways to address them, and development allows companies to find unique and different ways to fix the problems.

This leads to many different product and service variations, which gives consumers choices and keeps the markets competitive. Some examples of companies that carry out R&D activities are auto manufacturers, software creators, cutting-edge tech companies, and pharmaceutical firms.

The R&D Tax Credit

In 1981, the IRS started offering tax breaks for companies to spend money and hire employees for research and development. Qualifying companies include startups and other small ventures with qualified research expenses. Such expenses can be used to offset tax liabilities , along with an impressive 20-year carry-forward provision for the credit.

Many entrepreneurs and small businesses have made a large sum of money in a short time by selling good ideas to established firms with many resources. Buyouts are particularly common with online companies, but they can be seen wherever there is a lot of incentive to innovate.

Research and development can help your ideas or business become more attractive to investors and other companies looking to expand.

Advertising and Marketing R&D Benefits

Advertising is full of claims about revolutionary new techniques or never-before-seen products and technologies. Consumers demand new and improved products, sometimes simply because they are new. R&D departments can act as advertising wings in the right market.

R&D strategies let companies create highly effective marketing strategies around releasing a new or existing product with new features. A company can create marketing campaigns to match innovative products and market participation.

What Are the Reasons for R&D?

Research and development keep your business competitive. Without R&D, you risk losing your competitive advantage and falling behind other companies researching and developing new products in your industry.

Why Is R&D Important for Startups?

R&D is essential because it helps you keep your business momentum going. New products and services help you attract more customers, make sales, and give you something to talk about with your investors.

What Factors are Essential in Successful R&D?

Successful research and development depend on many factors, but the most important is a strong interest from your customer base and investors. If you spend money and time researching and developing something no one wants, it's being wasted.

Increased market participation, cost management benefits, advancements in marketing abilities, and trend-matching are all reasons companies invest in R&D. R&D can help a company follow or stay ahead of market trends and keep the company relevant.

Although resources must be allocated to R&D, the innovations gained through this research can actually work to reduce costs through more efficient production processes or more efficient products. R&D efforts can also reduce corporate income tax, thanks to the deductions and credits they generate.

National Center for Science and Engineering. " Businesses Invested $32.5 Billion in Assets to Support Their R&D Activities in the United States in 2020 ."

Tax Foundation. " Reviewing the Federal Tax Treatment of Research & Development Expenses ."

Internal Revenue Service. " About Form 6765, Credit for Increasing Research Activities ."

Internal Revenue Service. " Instructions for Form 3800 (2022) ," Page 2.

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3M Research & Development

Designed to be a LEED Certified building

100+ 3M products used in the construction

Under the parking lot is a 640,000 gallon storm water retention system (size of an Olympic Pool).

We are a new group, working on new products for new markets – like optical films that can go into augmented-reality wearable devices. It’s exciting that we are investing in higher-risk, higher-reward innovation. – Susan Kent

I am working on an adhesive for a new dry erase surface with my counterparts in the New Platform group, who were in another building. Now, I can see them face-to-face and collaborate much easier. This fits perfectly into 3M’s core culture. –Ying-Yuh Lu

This space represents an opportunity to work differently. Sometimes that’s enough to cause you to think in a different way. Just like visiting customers, you see things in new ways. We don’t know yet what can happen. – Lee Stanek

This building is beautiful and future-oriented. This is the ideal environment to brainstorm together and with our customers. We will work on solutions to reduce emissions, improve safety lighting and develop advancements for automotive. – Terry Ceulemans

There are 414 trees, 2,730 shrubs and 4,366 perennials planted on the site

Technologies

The company owns 51 technology platforms, which range from adhesives and abrasives, to ceramics and nanotechnology. Our scientists around the world share and combine these technologies across all our businesses to invent and manufacture cutting-edge products. Roughly one-third of 3M’s sales come from products introduced in the last five years.

3M R&D at a Glance

Wanted: insatiable curiosity. 3M’s work – with integrity, collaboration and innovation at its core – changes lives, homes and businesses in real ways every day. Here, you can explore your talents and reinvent your career – all with one company.

3M applies science to life around the world. The Carlton Society is our science hall of fame, honoring the very best among our scientific community for extraordinary work as scientists and mentors.

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List of Research And Development Companies

List of the top research and development companies in the world, listed by their prominence with corporate logos when available. This list of major research and development companies includes the largest and most profitable research and development businesses, corporations, agencies, vendors and firms in the world. If you are wondering what the biggest research and development companies are, then this list has you covered. This list includes the most famous research and development companies in the industry, so if you're thinking of working in the research and development industry you might want to look to these companies for jobs. This list includes names of both small and big research and development businesses.

A factual list, featuring companies like Microsoft Corporation and Applied Minds.

Applied Minds

At&t laboratories.

Axis Communications

Benchmark systems.

Boeing Phantom Works

Center for Assistive Technology and Environmental Access

Clear Channel Outdoor

Coral group.

Digital Heaven

ENSCO, Inc.

FSA Corporation

Georgia Tech Research Institute

Global CyberSoft

Market leader inc., ideaconnection.

Industrial Technology Research Institute

Innocentive.

Integrated Microelectronics, Inc.

Jasomi networks, language computer corporation.

Lawrenceville Plasma Physics

MERA Networks

Microsoft Corporation

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26 Most Important R&D KPIs and Metrics

• Updated on July 13, 2023

If you want to accurately measure your Research and Development performance but don’t where to start, we collected all the necessary R&D KPIs and metrics for you!

Also, we are proud to present our R&D Dashboard templates if you need to make the analysis and recording within you Research and Development department. But first, you can learn more about the R&D key metrics!

What is KPI in research and development?

Research and development KPIs or key performance indicators are used to determine the performance of research and development departments in businesses.

Why should you track r&d KPIs?

You should track research and development key metrics to have a clear point of view about the state of your R&D department. That way, you can improve and anvance your R&D department in an organized manner.

What are the most important KPIs in r&d?

Research and development departments deal with different issues in each other company, so there are various metrics you can use. However, you can see the top 26 research and development KPIs below to get a better idea.

Research and Development Metrics

1. Proposal Success Rate

R&D Metrics / Project Progress / Work Effectiveness

Description: Percentage of grant applications that successfully received funding and can go further with the R&D.

Calculation Method / Formula: number of applications that were accepted and got funds / number of all applications

Should be High or Low?: The higher % the better. Otherwise there is needed extra work time on creating or redefining ideas.

2. Ideas turned into experiments

Description: This shows of how many ideas within some period of time went into the experimental phase. It depends on how many ideas there is; has granted funds and if the R&D team is managing the time given properly.

Calculation Method / Formula: number of ideas within some period of time went into the experimental phase / number of ideas that were supposed to be in the experimental phase within specified period of time

Should be High or Low?: If the % is going down it may indicate not enough resources in people or equipment.

3. Projects completed

R&D Metrics / Project Progress / Work Effectiveness / Time Management

Description: Shows the ratio of completed within all started projects. But in case there are some changes, or the grant funds are frozen or for some other seasons the project cannot continue it can have influence on the completion ratio. This metrics allows you to track if you have enough resources and capability to open more tasks and manage to stay on time with the work planned.

Calculation Method / Formula: completed projects / all planned projects

Should be High or Low?: If the % is going down it may indicate not enough resources in people or equipment or some changes in a project or requirement that may close the project not completed.

4. Time-to-market

Description: This metrics stands for how quickly your company plan and execute the projects. It is the duration from Phase 0 to Market Release. Average number of days per project

Calculation Method / Formula: It can be calculated as simple average: Cumulative number of days of all finished projects / number of projects

Should be High or Low?: If the time to market exceed planned days, it can give some indication about incorrect assumptions or some unexpected problems

5. Time for the experiments

Description: This is metrics shows time spent only for the experiment phase. That time can be very different depending on a sector of the R&D department. The unit of time may be measured in Days as default, but it can be also adjusted for your needs.

Calculation Method / Formula: cumulative experimental time of number of projects / number of projects

Should be High or Low?: If the time goes over a target this may indicate problems that weren’t predicted in the planning phase.

6. Deviation from Schedule

Description: This metrics measures how accurate planned project schedules are. And may indicate if there is some need for changing the system of planning or find some bottleneck of the process.

Calculation Method / Formula: (Actual Time to Make – Planned Time to make) / Planned Time to Make.

Should be High or Low?: Based on the equation if the value is below zero it means the projects’ time are overcalculated and probably the time evaluation should be restructured. The same if the value goes above zero but it means the predicted time probably was too small for the available resources.

7. Portfolio in existing products

R&D Metrics / Product Investment / Budget Management

Description: Percentage of R&D Budget which keep the existing products.

Calculation Method / Formula: Cost of sustaining the exisiting products / total R&D budget

8. R&D costs / Total costs

R&D Metrics / Product Investment / Budget Management / Cost

Description: This metrics shows what is the percentage of exactly the R&D cost among Total Costs of the R&D department. (or among total cost of the company)?

Calculation Method / Formula: R&D cost / Total cost of R&D dept.

Should be High or Low?: This is just an orientation information.

9. License costs / Total R&D cost

Description: Shows how big part of Total costs is License Costs.

Calculation Method / Formula: Licence cost / Total cost od R&D dept.

10. R&D Costs / Sales

R&D Metrics / Product Investment / Budget Management / Cost / Sales / Performance

Description: It shows the ratio between money spend on R&D and the money earned from Total Sales

Calculation Method / Formula: Total R&D cost / Total sales

Should be High or Low?: First of all, R&D cost should not be higher than total sales, but also the higher difference there will be the higher profit will be observed

11. Product improvements / R&D cost

Description: Shows how big part of R&D costs is Product Improvements.

Calculation Method / Formula: Improvement Costs / R&D Costs

Should be High or Low?: This is an orientation information. There might be some target to reduce that cost, but it depends on the characteristics of R&D projects.

12. Cost Savings Attributable to R&D

R&D Metrics / Product Investment / Budget Management / Cost / Savings

Description: This metrics helps to calculate the cost savings because of the R&D Department’s improvements. Cost savings in given period of time.

Calculation Method / Formula: Might be calculated by (time needed to compleete some task before – time needed after improvenents) * workinghour cost in some period of time

Should be High or Low?: Based on that measurement we can measure how long it will take to “pay back” the cost of improvement.

13. Total Patents Filed

R&D Metrics / Cost / R&D Investment / Product Investment / Brand Value

Description: This metrics shows the number of patents waiting to be approved by the patent institution.

Should be High or Low?: If the patents are unique or it is predicted that they will bring income higher than cost of keeping patent itself then the higher number is better but the target should be set based on how much valuable they can be.

14. Ideas in the Pipeline

Description: It helps to track the number of ideas that were completed and put in a schedule in an assumed time or period.

Should be High or Low?: Target depends on the R&D sector and taken period of time.

15. Projects that meet planned targets

Description: It helps to track the number of projects which follow to the plan schedule in each time or period.

16. Products launched on time

Description: This metrics shows how many projects were completed and launched out of the planned to be completed in that given period.

Calculation Method / Formula: number of projects completed / number of sheduled projects to be completed

Should be High or Low?: If the % is much lower the assumption in scheduling should be checked.

17. Number of products released

R&D Metrics / Work Effectiveness / Products / Brand Value

Description: Shows how many products were released in a given time.

Should be High or Low?: Target depends on the R&D sector, time and value per product.

18. Income from New products

R&D Metrics / Products / Revenue / Sales / Profitability

Description: New products (which might not be yet noticed by all the target customers) sales value among total sales in percentage.

Calculation Method / Formula: new product sales value / total incom from all product sales

Should be High or Low?: It can help to plan in future some steps to make the product more visible from the beginning.

19. Budget Variance / Cost Variance (CV)

R&D Metrics / Budget Management / Financial Performance / Revenue / Cost

Description: This metrics shows how accurate is your planning the project costs and how well you manage the budget during the time of project life from the beginning until Market Release. The percentage in the end of project shows what is the percentage of assumed at the beginning cost. If the value comes close to zero long before the end of the project it may show that the budget evaluation was wrong.

Calculation Method / Formula: Earned Value – Actual Cost

Should be High or Low?: If the conclusion is: below 0 – you are behind the schedule; 0 – you are on schedule; above zero – ahead of schedule.

20. Return on Innovation Investment (ROI)

R&D Metrics / Revenue / Budget Management / Financial Performance / Investment

Description: This metrics can help to predict if the investment in the new product was worth the cost and how long it might take for money return.

Calculation Method / Formula: ( Profits of New Product or Service Sales) / (Expenditures Generated in Creating these New Products or Services)

21. Products launched on budget

R&D Metrics / Budget Management / Product Investment / Work Efficiency

Description: This metrics shows percentage of new services or products that has been finished within expected budget. It shows how accurate is the cost projection.

Should be High or Low?: If the metrics should be as close as possible to 100%, if it is much lower it may indicate wrong budget planning or lots of unexpected changes that were not included in the calculations.

22. Research & Development Effectiveness Index (RDEI)

R&D Metrics / Work Efficiency / Revenue / R&D Investment / Profitability

Description: It shows how the profit generated by new products compares to total R&D expenses. Success of product vs development efforts.

Calculation Method / Formula: Profit from New Products / R&D Sending

23. Total R&D Headcount

R&D Metrics / Employee Management / Budget Management

Description: Number of employees in the R&D department.

Should be High or Low?: The target should be based on projections and which direction company is going, what is the budget for hiring.

24. Portfolio in Core and Growth Projects

R&D Metrics / Project Progress / Work Effectiveness / Cost

Description: This metrics is the percentage of Projects that will not be completed even though company has already invested in them.

Should be High or Low?: It will have strong negative or positive impact on the growth and prosperity of the company.

25. R&D Budget

R&D Metrics / Budget Management / R&D Investment / Cost

Description: This metrics is the budget of the company intended for the R&D Department.

Should be High or Low?: May depend on the target and the direction of the company.

26. Suggested ideas by the team

R&D Metrics / Work Effectiveness / Product Investment

Description: That is a number of ideas which the R&D Department came up with during some period of time.

Should be High or Low?: In general, the more ideas the better, but the quality of ideas has an impact on further work and eventual success.

Below is the summary of R&D KPI metrics:

Most Important KPIs for Different Industries

If you are interested in other industries or departments and their performance, you should learn more about their KPIs via our related articles!

Related Posts

How to Start a Profitable Research And Development Business [11 Steps]

By Nick Cotter Updated Feb 02, 2024

Business Steps:

1. perform market analysis., 2. draft a research and development business plan., 3. develop a research and development brand., 4. formalize your business registration., 5. acquire necessary licenses and permits for research and development., 6. open a business bank account and secure funding as needed., 7. set pricing for research and development services., 8. acquire research and development equipment and supplies., 9. obtain business insurance for research and development, if required., 10. begin marketing your research and development services., 11. expand your research and development business..

Launching a research and development business begins with a thorough understanding of the market landscape. A comprehensive market analysis will help you identify your potential customers, competitors, and overall industry trends. Here are key points to consider when performing your market analysis:

• Define your target market: Understand who your potential customers are, what needs they have, and how your R&D business can meet those needs.
• Analyze competition: Research existing companies in your niche, their product offerings, market share, strengths, and weaknesses.
• Assess market trends: Look into current and future trends that may affect your industry, including technological advancements, regulatory changes, and funding availability.
• Identify market gaps: Spot opportunities for innovation by finding areas where customer needs are not being met by current products or services.
• Understand regulatory environment: Investigate the legal and compliance requirements relevant to your industry and how they might impact your business operations.
• Collect and analyze data: Use surveys, interviews, and secondary research reports to gather quantitative and qualitative data that will inform your business strategy.

Are Research And Development businesses profitable?

Yes, research and development businesses can be profitable. Depending on the type of research and products developed, these businesses can generate revenue from sales, licensing fees, and other forms of income. Additionally, research and development businesses can benefit from government grants and tax incentives.

Creating a research and development business plan is a pivotal step in transforming innovative ideas into marketable products or services. This plan serves as a roadmap for your R&D activities, ensuring they are aligned with your business goals and objectives. Consider the following key points when drafting your plan:

• Define your business vision, mission, and objectives to guide all R&D efforts.
• Identify the target market or sector for your R&D outcomes and analyze market needs and trends.
• Detail the specific technologies, products, or processes that will be the focus of your R&D.
• Establish a clear timeline for research phases, development milestones, and market entry.
• Outline the team expertise and resources required, including any partnerships or collaborations.
• Prepare a budget that encompasses staffing, equipment, materials, and other R&D expenses.
• Address intellectual property management, ensuring protection of innovations and compliance with regulations.
• Develop risk management strategies to mitigate potential challenges and obstacles.
• Include a financial plan with projections on R&D investment returns and funding strategies.

How does a Research And Development business make money?

Research and Development businesses make money by providing unique services to their target audiences. For example, a Research and Development business that focuses on antique business images might target antique business owners, antique collectors, or other professionals with an interest in antique business images. This business might offer services such as custom antique business image design, restoration, or digitization. These services would be provided to the target audience in exchange for a fee, generating revenue for the Research and Development business.

Developing a strong research and development (R&D) brand is a critical step in establishing your business within the competitive landscape. It reflects your company's vision, expertise, and the innovative value you offer. Here's how you can create a compelling R&D brand:

• Define Your Vision: Articulate a clear and forward-thinking vision statement that aligns with your R&D goals and resonates with your target audience.
• Identify Your Unique Selling Proposition (USP): Determine what sets your R&D business apart from competitors and emphasize that uniqueness in your branding.
• Create a Memorable Name and Logo: Choose a brand name and design a logo that is distinctive, relevant, and reflects the essence of your R&D work.
• Establish Brand Values: Select core values that represent your brand's ethics and approach to research, which will help build trust and credibility.
• Consistent Messaging: Ensure all communications, from marketing materials to research publications, consistently convey your brand's voice and message.
• Engage with Your Community: Actively participate in industry events, forums, and social media to increase visibility and establish your brand as a thought leader.
• Protect Intellectual Property: Safeguard your brand by registering trademarks and patents to prevent imitation and reinforce your market position.

How to come up with a name for your Research And Development business?

When coming up with a name for your Research And Development business, it is important to keep in mind what the company does and what it stands for. Brainstorming is a great way to come up with creative ideas. Additionally, doing some research on existing Research And Development businesses can be helpful to get inspiration. Lastly, try to make a name that is memorable, creative, and reflects the mission of your business.

Formalizing your business registration is a pivotal step in legitimizing your research and development business. This process varies by location, but certain universal steps must be taken to ensure your business operates within the legal framework. Follow these guidelines to register your business properly:

• Choose a business structure (e.g., sole proprietorship, partnership, LLC, corporation) that aligns with your needs for liability protection, taxation, and business scale.
• Register your business name with the appropriate government body, ensuring it's unique and meets all naming requirements for your jurisdiction.
• Obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) if you're in the US, or the equivalent in your country, which is necessary for tax purposes.
• Register for state and local taxes, as required, to ensure you're set up to pay sales, use, income, and employment taxes as necessary.
• Acquire all necessary permits and licenses specific to the research and development industry, which may include local, state, or federal approvals depending on the nature of your work.
• File for intellectual property protection if your business involves unique inventions, proprietary technology, or trade secrets.

Resources to help get you started:

Explore key resources designed for research and development entrepreneurs, providing access to the latest market trends, operational best practices, and strategies for business expansion:

• Harvard Business Review: Offers articles and case studies on innovation and R&D management strategies. Visit site .
• MIT Sloan Management Review: Provides insights on leading through innovation and the effective use of R&D resources. Visit site .
• R&D World: Features news, trends, and analysis for R&D leaders, including annual reports on global R&D funding forecasts. Visit site .
• Springer Nature’s Journal of Research-Technology Management: Scholarly articles focused on the intersection of research, technology, and management practices. Visit site .
• CB Insights Research: Publishes tech market intelligence reports that cover various sectors, including predictive insights on emerging tech sectors relevant for R&D. Visit site .

Starting a research and development business may require specific permits, especially if your R&D involves hazardous materials, biomedical research, or other regulated areas. Ensure compliance with all relevant regulations. Key requirements include:

• Business License: Secure a general business license from your local municipality.
• Specialized Permits: Depending on your field, you may need permits from environmental, health, or industry-specific regulatory agencies.

Securing your business's financial foundation is a crucial step in the establishment of your research and development company. Opening a business bank account is essential for managing your finances and transactions professionally. If your project requires additional capital, exploring funding options becomes equally important. Here's how to proceed:

• Research banks that offer business accounts with benefits suitable to your R&D business needs, such as low fees, high transaction limits, and robust online banking services.
• Prepare the necessary documentation, which typically includes your business formation papers, EIN (Employer Identification Number), and personal identification.
• Compare the terms and conditions of different banks, including any business loans or lines of credit they may offer.
• For funding, consider government grants specifically for R&D, venture capital from investors interested in innovation, or business loans if you have a solid business plan with financial projections.
• Network with other entrepreneurs and attend industry events to discover potential angel investors or partners willing to contribute funding.
• Explore crowdfunding platforms if your R&D project has a strong appeal to the general public or offers innovative consumer products.

Setting the right pricing for research and development services is crucial to ensure your business is competitive and profitable. It involves considering various factors like cost, market demand, perceived value, and the nature of the innovation. Here's a guide to help you establish a pricing strategy:

• Cost-Plus Pricing: Calculate the total costs of providing your service, including direct and indirect expenses, and add a markup percentage for profit.
• Value-Based Pricing: Determine the price based on the perceived or estimated value your service will bring to the customer, rather than just the cost of the service itself.
• Competitive Analysis: Research what competitors are charging for similar services and position your pricing in a way that reflects your unique value proposition.
• Flexible Pricing Models: Offer different pricing structures, such as hourly rates, project-based fees, or retainer models, to cater to various client needs and project scopes.
• Dynamic Pricing: Adjust prices based on demand, with the flexibility to offer discounts or premium charges depending on the market conditions and client relationships.
• Transparency: Clearly communicate what is included in the price and any potential additional costs to foster trust and avoid misunderstandings with clients.

What does it cost to start a Research And Development business?

Initiating a research and development business can involve substantial financial commitment, the scale of which is significantly influenced by factors such as geographical location, market dynamics, and operational expenses, among others. Nonetheless, our extensive research and hands-on experience have revealed an estimated starting cost of approximately $1169000 for launching such a research and developmentbusiness. Please note, not all of these costs may be necessary to start up your research and development business.

Starting a research and development business involves meticulous planning, particularly when it comes to acquiring the right equipment and supplies. These are essential tools that will enable your team to innovate, experiment, and develop new products or technologies. Below, you'll find a step-by-step guide to help you make informed decisions about the equipment and supplies you need.

• Assess Your Needs: Begin with a thorough assessment of the specific equipment and supplies your research and development activities will require. Consider the nature of your projects and the scale of your operations.
• Source Suppliers: Research and identify reputable suppliers who specialize in high-quality research and development equipment. Look for vendors that offer competitive pricing, good customer service, and reliable support.
• Compare Prices and Quality: Obtain quotes from multiple suppliers to compare prices. However, ensure you also consider the quality and longevity of the equipment.
• Consider Second-Hand Equipment: For cost savings, consider purchasing certified pre-owned or gently used equipment from trusted sources.
• Plan for Future Needs: Invest in scalable equipment that can grow with your business, avoiding the need for frequent upgrades.
• Secure Financing: Explore financing options if the upfront cost of equipment is prohibitive, such as leasing or payment plans.
• Review Warranties and Service Agreements: Ensure that the equipment comes with a solid warranty and check if the supplier provides service agreements for maintenance and repairs.
• Purchase Consumables in Bulk: Save on recurring costs by buying consumable supplies in bulk, but be wary of shelf life and storage requirements.
• Stay Updated on New Technologies: Keep abreast of the latest advancements in equipment and tools that could benefit your R&D processes and consider investing in them.

List of Software, Tools and Supplies Needed to Start a Research And Development Business:

• Software development tools
• Internet access
• Research materials and resources
• Office supplies and stationery
• Laboratory equipment
• Analytical tools
• Laboratory supplies
• Prototyping materials
• Marketing materials

Protecting your research and development business with appropriate insurance is a critical step in safeguarding your assets, intellectual property, and the overall health of your enterprise. It's crucial to assess the risks specific to your field and acquire insurance that addresses those potential vulnerabilities. Below are key considerations to guide you in obtaining the right business insurance:

• Evaluate Risks: Consider the types of risks your business might face, such as property damage, liability issues, or data breaches. This will help determine the necessary coverage.
• Consult with Professionals: Speak with an insurance broker who specializes in business insurance. They can provide tailored advice and help you understand the specific policies that suit your R&D business.
• Consider Intellectual Property Insurance: Given the nature of R&D, protecting your intellectual property (IP) is crucial. IP insurance can help cover legal costs in case of infringement disputes.
• General Liability Insurance: This is a foundational insurance that covers bodily injury, property damage, and advertising injury claims against your business.
• Product Liability Insurance: If your R&D involves creating prototypes or products, this insurance can protect against claims related to product defects.
• Review Regularly: As your business evolves, so will your insurance needs. Make it a practice to review and adjust your insurance policies annually or when significant changes occur.

Successfully launching your research and development services requires a strategic marketing approach. By effectively promoting your unique capabilities and expertise, you can attract clients who are seeking innovative solutions to complex problems. Here are several steps to consider when beginning to market your R&D services:

• Identify Your Target Market: Clearly define who will benefit most from your services, whether it's startups, large corporations, or specific industries.
• Develop a Strong Brand: Create a memorable brand identity, including a professional logo and a compelling tagline that conveys the essence of your R&D services.
• Build a Professional Website: Launch an informative website that showcases your expertise, services, and past projects to establish credibility.
• Utilize Content Marketing: Share your knowledge through blogs, white papers, and case studies to demonstrate thought leadership in your field.
• Network and Collaborate: Attend industry conferences and networking events to build relationships and collaborate with potential clients and partners.
• Leverage Social Media: Use platforms like LinkedIn and Twitter to connect with your audience and share insights and updates about your R&D work.
• Consider Paid Advertising: Invest in targeted ads on search engines and social media to reach potential clients actively searching for R&D services.

Once your research and development business is established, expanding your operations can help in tapping into new markets and opportunities. A thoughtful approach to scaling up will ensure sustainability and innovation continue to thrive. Here are key strategies to consider:

• Explore partnerships with universities and industry leaders to gain access to a wider range of expertise and cutting-edge technology.
• Diversify your R&D portfolio by investing in new areas that align with emerging trends and customer demands.
• Apply for additional funding through grants, venture capital or partnerships to finance your expansion efforts.
• Enhance your facilities and equipment to support increased capacity and more sophisticated research projects.
• Attract top talent by offering competitive salaries, professional development opportunities, and a collaborative work environment.
• Invest in intellectual property protection to safeguard your innovations and establish a competitive edge in the market.
• Use data analytics to assess market needs and direct your R&D efforts more effectively.
• Expand your geographical reach through global collaborations or setting up satellite research labs in strategic locations.

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India Organic Biofach 2022

Gulfood dubai 2023, research and development, research and development in india, india is presently ranked 76th among a total of 143 economies, as per the global innovation index (gii)..

Hyundai Motor India Engineering

Hyundai Motor India Engineering (HMIE) is a fully owned subsidiary of Hyundai Motor Company, South Korea, which has set up the R&D Centre in Hyderabad. HMIE is a centre with one of the most advanced research and development facilities which focuses on state of the art product and design engineering and rigorous quality enhancement. The new R&D Centre at Hyderabad in India is Hyundai Motor Company’s fourth overseas R&D centre.

Set up with an investment of Rs 184 crore (US$ 28.92 million), the new 200,000 square-foot facility R&D Centre, is aimed at further accelerating local content development and enable Hyundai to respond even more quickly to changing customer needs across the world. The R&D Centre will further facilitate the development of India as Hyundai’s global hub for manufacturing and engineering of small cars.

Company Website

Panasonic India Pvt Ltd

Panasonic makes available in India its wide range of consumer electronics, home appliances like LCD & plasma TVs, DVD players, home theatre systems, smartphones, cameras, camcorders, car audio systems, air conditioners, washing machines, refrigerators, microwave ovens, automatic cookers, vacuum cleaners and a wide range of system products including communication ones like mobile phones, high definition videoconferencing, professional audio video products like broadcast cameras, projectors and displays, business solutions including printers, whiteboards and security solutions. Panasonic has aggressively focuses on market research, product innovation and talent hiring in India for work in areas like energy, water, remote access and food. The company currently has a workforce of about 12,500 in India.

Jubilant Life Sciences Ltd.

Jubilant Life Sciences Ltd, is an integrated global pharmaceutical and life sciences company engaged in manufacture and supply of APIs, Solid Dosage Formulations, Radiopharmaceuticals, Allergy Therapy Products and Life Science Ingredients. It also provides services in Contract Manufacturing of Sterile Injectable and Drug Discovery Solutions. The Company’s strength lies in its unique offerings of Pharmaceutical and Life Sciences products and services across the value chain.

Biocon, India's largest biotech company is focused on delivering affordable innovation.

It is committed to reduce therapy costs of chronic diseases like diabetes, cancer and autoimmune diseases by leveraging India's cost advantage to deliver affordable healthcare solutions to patients, partners and healthcare systems across the globe.

Tata Consultancy Services Ltd

Tata Consultancy Services Ltd (TCS) is a leader in the global marketplace and among the top 10 technology firms in the world. Its continued rapid growth is a testament to the certainty clients experience every day. Building on more than 40 years of experience, TCS adds real value to global organisations through domain expertise plus solutions, with proven success in the field and world-class service.

Sun Pharmaceutical Industries Ltd is an international specialty pharma company. The Company manufactures and markets pharmaceuticals formulations as branded generics, as well as generics in India, the United States (US) and several other markets across the world.

The Company’s business is divided into four segments: Indian Branded Generics, US Generics, International Branded Generics (ROW) and Active Pharmaceutical Ingredients (API).

Bajaj Auto is a part of the Bajaj Group, which was founded by Mr Jamnalal Bajaj in 1926. The Group's footprint stretches over a wide range of industries, spanning automobiles (two-wheelers and three-wheelers), home appliances, lighting, iron and steel, insurance, travel and finance.

Bajaj Auto is one of the foremost motorcycle manufacturers of the country. It also manufactures three-wheeler commercial vehicles under the brand name Bajaj RE, which has been in operation since 1977, as well as gearless scooters. At present, Bajaj Auto's turnover stands at around Rs 120 billion (US$ 1.95 billion). Its product portfolio has expanded and the brand has found a global market. The Bajaj brand is well-known across several countries in Latin America, Africa, Middle East, South and Southeast Asia.

Samsung India

Samsung India or Samsung R&D Institute India - Bengaluru (SRI-Bengaluru), earlier known as Samsung Electronics India Software Operations (SISO), is one of the 24 research & development (R&D) centres of Samsung Electronics Co Ltd, and is housed in the IT hub of India, Bengaluru. With its inception in February 1996, today it has grown in magnitude and proportions as a location for research and software development encompassing a wide range of technology domains.

Glenmark Pharmaceuticals

Glenmark Pharmaceuticals Pvt Ltd is headquartered in Mumbai, India and was established in 1977. Today, it is a leading player in the discovery of new molecules, both NCEs (new chemical entity) and NBEs (new biological entity), and it currently has seven molecules in various stages of clinical development and pre-clinical development. The company has a significant presence in branded generics markets across emerging economies, including India. Its subsidiary, Glenmark Generics Ltd has a fast growing and robust US generics business. The subsidiary also markets APIs to regulated and semi-regulated countries. Glenmark employs over 10,400 people in over 80 countries. It has 14 manufacturing facilities in four countries and has six research and development (R&D) centres.

Hindustan Aeronautics Ltd

Hindustan Aeronautics Ltd (HAL) came into existence on October 1, 1964. The company was formed by the merger of Hindustan Aircraft Ltd with Aeronautics India Ltd and Aircraft Manufacturing Depot, Kanpur.

The company traces its roots to the pioneering efforts of industrialist Mr Seth Walchand Hirachand, who set up Hindustan Aircraft Ltd at Bengaluru in association with the erstwhile princely State of Mysore in December 1940. The Government of India became a shareholder in March 1941 and took over the management in 1942.

The Indian Council of Medical Research (ICMR) is the apex body in India for the formulation, coordination and promotion of biomedical research and is also one of the oldest medical research bodies in the world.

The Government of India had set up the Indian Research Fund Association (IRFA) in 1911, with the specific objective of sponsoring and coordinating medical research in the country. This was later redesigned in 1949, to form the ICMR, with considerably expanded scope of functions. The ICMR is funded by the Government of India through the Department of Health Research, Ministry of Health and Family Welfare.

Cipla began in 1935 when their founder Dr KA Hamid set up an enterprise with the vision to make India self-sufficient in healthcare.

Indian Space Research Organisation (ISRO) was established in the year 1969. In 1972, it came under the newly established Department of Space (DOS).

The DOS formulates the policies and oversees the implementation of the Indian space programme to promote the development and application of space science and technology for the socio-economic benefit of the country.

Established in 1981, Infosys is an NYSE listed global consulting and IT services company with more than 158,000 employees. From a capital of US$ 250, the company has grown to become a US$ 8.095 billion (LTM Q3 FY 14 revenues) company with a market capitalisation of approximately US$ 33 billion.

Incorporated in 1933, Hindustan Unilever Ltd (HUL) is India's largest fast moving consumer goods (FMCG) company. In a highly competitive scenario, where new brands and offerings are entering the market almost every quarter, HUL regularly delivers double-digit growth driven by innovations and maintenance of marketing and trade investments at competitive levels.

Headquartered in Mumbai, India, Lupin Ltd today is an innovation led transnational pharmaceutical company producing a wide range of quality, affordable generic and branded formulations and Active Pharmaceutical Ingredients (API) for the developed and developing markets of the world.

Lupin first gained recognition when it became one of the world's largest manufacturers of Tuberculosis drugs. The Company today has significant market share in key markets in the Cardiovascular (prils and statins), Diabetology, Asthma, Pediatrics, CNS, GI, Anti-Infectives and NSAIDs therapy segments, not to mention global leadership positions in the Anti-TB and Cephalosporins segments.

Related News

Bengaluru: Indian Space Research Organisation (ISRO) has 21 rocket launches in the pipeline, as a part of which it will also test its heaviest rocket called the Geosynchronous satellite launch vehicle (GSLV) MK-III.

Bengaluru: Intel India plans to invest Rs 1,100 crore (US$ 171.05 million) to expand its research and development centre in Bengaluru, which would be the largest such centre outside the US.

New Delhi: The Government of India aims to develop India into a global innovation hub by 2020 on the back of effective government measures taken to provide an enabling environment for growing research and development in India, says Mr Y. S. Chowdary, Minister of State for Science and Technology & Earth Sciences, Government of India.

Mumbai: Tata Motors has tied up with Microsoft for using its connected vehicle technology along with artificial intelligence (AI) capabilities to improve the in-car connected experience and compete with Google and Uber.

Mumbai: Mr Paul Stouffels, Executive Vice President, Chief Scientific Officer and Worldwide Chairman, Pharmaceuticals,  Johnson & Johnson (J&J), has stated that clinical trial norms in India have started to get harmonised with global norms, and J&J is restarting clinical trials in India with seven trials currently underway.

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April 11, 2024

NSF awards $275K grant to Amplified Sciences to develop new platform of ultrasensitive clinical diagnostics

Amplified Sciences, a clinical-stage life sciences diagnostic company, has received a $275,000 Small Business Innovation Research grant from the National Science Foundation. The funding will support critical development of the company’s tests for early, more accurate detection of challenging diseases, starting with pancreatic cancer. (Purdue Research Foundation photo/Vincent Walter)

State has awarded $50K matching grant through the Indiana Economic Development Corp.’s Applied Research Institute

WEST LAFAYETTE, Ind. — The National Science Foundation has awarded a $275,000 Phase 1 Small Business Innovation Research (SBIR) grant to Amplified Sciences . The clinical-stage life sciences diagnostic company is developing tests for early, more accurate detection of challenging diseases, starting with pancreatic cancer.

Amplified Sciences has received a Phase I matching grant of $50,000 from the Indiana Economic Development Corp.’s Applied Research Institute.

CEO Diana Caldwell said the funding will support critical development of Amplified Sciences’ novel ultrasensitive optical reporter platform technology.

“This, our second SBIR award, will enable further development of multiplexing capabilities for pancreatic cancer panels and beyond,” Caldwell said. “We are excited to be awarded this highly competitive NSF SBIR grant. This brings our total of nondilutive funding to over $1 million.”

Amplified Sciences also recently received investments worth $108,000 from the Flywheel Fund . In 2023 the company received a Phase 1 SBIR grant of approximately $400,000 from the National Cancer Institute and a $50,000 match from the state of Indiana to develop pancreatic cancer risk stratification tests. It was named to the Pepperdine University Graziadio Business School’s Most Fundable Companies list in 2021 and to the New York University Stern School of Business’ Endless Frontier Labs life science cohort in 2022.

The Purdue innovations  

Amplified Sciences’ diagnostic tests are based on technology invented by V. Jo Davisson , professor of medicinal chemistry and molecular pharmacology in Purdue University’s College of Pharmacy and a faculty member of the Purdue Institute for Cancer Research and the Purdue Institute for Drug Discovery . Davisson serves as the company’s chief scientific officer. The company licenses Davisson’s intellectual property through the Purdue Innovates Office of Technology Commercialization .

Facts about pancreatic cancer  

In its Cancer Facts & Figures 2023 report , the American Cancer Society estimated that more than 64,000 Americans were expected to be diagnosed with new cases of pancreatic cancer in 2023. It estimated that more than 50,000 would die from the disease in 2023.

Pancreatic cancer signs and symptoms, like jaundice, severe abdominal pain, weight loss and vomiting, don’t appear until advanced stages of the disease. If a diagnosis is made at an advanced stage, treatments including surgery and pharmaceuticals seldom produce a cure. The five-year relative survival rate is 12% for all patients; for those diagnosed with localized cancer, the rate is 44%.  

About Amplified Sciences

Amplified Sciences is a clinical-stage life science diagnostics startup focused on detecting and preempting the risks of debilitating diseases, thus providing health care professionals the ability to treat patients earlier with better outcomes. The company’s ultrasensitive chemistry platform leverages technology licensed from Purdue University, and its headquarters is in West Lafayette, Indiana. Its lead assay has published clinical evidence in pancreatic cancer. To learn more about Amplified Sciences, visit amplifiedsciences.com .  

About Purdue Innovates Office of Technology Commercialization

The Purdue Innovates Office of Technology Commercialization operates one of the most comprehensive technology transfer programs among leading research universities in the U.S. Services provided by this office support the economic development initiatives of Purdue University and benefit the university’s academic activities through commercializing, licensing and protecting Purdue intellectual property. In fiscal year 2023, the office reported 150 deals finalized with 203 technologies signed, 400 disclosures received and 218 issued U.S. patents. The office is managed by the Purdue Research Foundation, which received the 2019 Innovation & Economic Prosperity Universities Award for Place from the Association of Public and Land-grant Universities. In 2020, IPWatchdog Institute ranked Purdue third nationally in startup creation and in the top 20 for patents. The Purdue Research Foundation is a private, nonprofit foundation created to advance the mission of Purdue University. Contact [email protected] for more information.

Writer/Media contact: Steve Martin, [email protected]

Source: Diana Caldwell, [email protected]

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• UB startup Abceutics Inc. acquired by biopharma company Merck

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UB startup Abceutics Inc. acquired by Merck

Abceutics was founded by UB faculty member Joseph P. Balthasar and colleagues in 2020. It is improving the safety and efficacy of an important emerging class of cancer drugs. Photo: Douglas Levere

By LAURIE KAISER

Published April 12, 2024

Abceutics Inc., a startup preclinical-stage biopharmaceutical company that was spun out of the laboratory of UB researcher Joseph P. Balthasar, has been acquired by the global biopharmaceutical company Merck, known as MSD outside the U.S. and Canada.

Merck acquired Abceutics for a potential consideration of up to $208 million, including contingent milestone payments based upon the progress of candidates under the agreement.

Balthasar, the David and Jane Chu Endowed Chair in Drug Discovery and Development in the Department of Pharmaceutical Sciences, launched the startup in 2020.

The company’s core technology was licensed from UB. The technology has been developed through grants from the National Institutes of Health, as well as $110,000 from the Buffalo Innovation Accelerator Fund, which is operated by UB’s Business and Entrepreneur Partnerships office.

Abceutics has operated out of incubator space in UB’s New York State Center of Excellence in Bioinformatics and Life Sciences, which also provided the company $50,000 from Empire State Development’s Division of Science, Technology and Innovation. Additionally, the company has benefitted from the National Science Foundation’s Innovation Corps program at UB.

Co-founders included Brandon Bordeau and Toan Duc Nguyen, former students of the Balthasar lab, and Larry Wienkers, a pharmaceutical consultant who previously served as vice president and global head of pharmacokinetics and drug metabolism at Amgen Inc. Bordeau, who is now an assistant professor at the University of Michigan, served as the startup’s chief executive officer.

The work of Abceutics is synergistic with an important emerging class of medicines called antibody-drug conjugates (ADCs). ADCs consist of a monoclonal antibody coupled to a cytotoxic payload via a linker. The antibody component of an anticancer ADC specifically targets the medicine to particular cancer cells, and the cytotoxic payload uses highly potent cell-killing properties to then kill the targeted cancer cells.

The team engineered “payload-binding selectivity enhancers” (PBSEs) to bind and neutralize stray payload molecules, reducing the impact of these agents on otherwise healthy cells.

“PBSEs are intended to be administered along with ADCs to reduce the risk of side effects, thereby potentially optimizing the therapeutic selectively and efficacy of ADC therapy,” Balthasar explains.

David Weinstock, vice president of oncology discovery in Merck Research Laboratories, highlights Abceutics’ success.

“The Abceutics team has already made remarkable progress in translating this novel idea into reality with a series of candidates and compelling early evidence,” he says. “We look forward to further evaluating the potential of this innovative approach in the clinic.”

Bordeau says the team is excited for Merck, based in Rahway, N.J., to continue to explore and develop the PBSE technology.

“Merck is recognized as a leader in cancer research and has the expertise and capabilities needed to bring our PBSE technology to patients,” Bordeau says. “We are proud to have advanced PBSEs to this stage of development and believe that Merck is well-suited to build upon the progress our company has made.”

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April 15, 2024 | News & Notices Opening of the R&D Center of Shimadzu Scientific Instruments Strengthen development functions for pharmaceutical business expansion

Shimadzu Scientific Instruments, Inc. (SSI), a Shimadzu Group company in the United States, established an R&D Center to enhance its product development capabilities for analytical and measurement equipment. The opening ceremony was held on April 10. The R&D Center consists of three locations, with one laboratory located at SSI’s headquarters in Maryland, an East Coast (near Boston, Massachusetts) laboratory, and a West Coast (near San Francisco, California) laboratory. The North American market is a region where investment in advanced technologies and products is strong. Through the R&D Center, Shimadzu will be able to accurately understand customer needs and accelerate product and technology development.

In North America, SSI provides analytical and measuring instruments to customers in multiple markets, including pharmaceutical, clinical, energy and forensics. SSI established an Innovation Center in 2015 to promote joint research and development with customers. The new R&D Center will expand on the capabilities of the Innovation Center and serve to increase Shimadzu’s presence in the North American market.

Boston, where the East Coast center is located, is home to many prestigious academic institutions and a hub for biopharmaceutical R&D initiatives. The San Francisco area, location of the West Coast laboratory, is home to global pharmaceutical companies and biotechnology ventures. These two facilities will primarily investigate the needs of pharmaceutical companies and will jointly evaluate prototypes developed based on those needs by bringing them to customers’ sites. At its headquarters in Maryland, the R&D Center will be used to evaluate prototypes and undertake agile development in cooperation with the Analytical and Measuring　Instruments Division of Shimadzu Corporation. The Maryland headquarters will also include laboratories for the installation of prototypes and new products and for conducting joint research with customers.

The Shimadzu Group plans to use its SSI base to expand its business to pharmaceutical companies, increasing sales in North America from 51 billion yen in fiscal 2022 to more than 70 billion yen in fiscal 2025.

the R&D Center laboratories

ribbon-cutting at the opening ceremony

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Biden-harris administration announces preliminary terms with tsmc, expanded investment from company to bring world’s most advanced leading-edge technology to the u.s., office of public affairs.

With Up to $6.6 Billion in Proposed CHIPS Direct Funding, TSMC Announces 2 Nanometer Technology at Second Fab and a New Third Fab to Produce 2 Nanometer or More Advanced Chips

Proposed CHIPS Investment in Arizona Would Support AI, High-Performance Computing, 5G/6G Communications, and More Applications

Today, the Biden-Harris Administration announced that the U.S. Department of Commerce and TSMC Arizona Corporation (TSMC Arizona), a subsidiary of Taiwan Semiconductor Manufacturing Company Limited (TSMC), have signed a non-binding preliminary memorandum of terms (PMT) to provide up to $6.6 billion in direct funding under the CHIPS and Science Act. This proposed funding would support TSMC’s investment of more than $65 billion in three greenfield leading-edge fabs in Phoenix, Arizona, which will manufacture the world’s most advanced semiconductors.

Through this proposed investment in TSMC Arizona, the Biden-Harris Administration would take a significant step in strengthening U.S. economic and national security by providing a reliable domestic supply of the chips that will underpin the future economy, powering the AI boom and other fast-growing industries like consumer electronics, automotive, Internet of Things, and high-performance computing. After initially announcing two fabs in the U.S., TSMC Arizona is committing to build an additional third fab before the end of the decade. With this proposed funding, TSMC Arizona would be ensuring the formation of a scaled leading-edge cluster in Arizona, creating approximately 6,000 direct manufacturing jobs, more than 20,000 accumulated unique construction jobs, and tens of thousands of indirect jobs in this decade and bringing the most advanced process technology to the United States.

“Semiconductors – those tiny chips smaller than the tip of your finger – power everything from smartphones to cars to satellites and weapons systems. America invented these chips, but over time, we went from producing nearly 40% of the world’s capacity to close to 10%, and none of the most advanced chips, exposing us to significant economic and national security vulnerabilities. I was determined to turn that around, and thanks to my CHIPS and Science Act – a key part of my Investing in America agenda – semiconductor manufacturing and jobs are making a comeback,” said President Joe Biden . “TSMC’s renewed commitment to the United States, and its investment in Arizona represent a broader story for semiconductor manufacturing that’s made in America and with the strong support of America’s leading technology firms to build the products we rely on every day.”

“One of the key goals of President Biden’s CHIPS and Science Act was to bring the most advanced chip manufacturing in the world to the U.S., and with this announcement and TSMC’s increased investment in their Arizona campus, we are working to achieve that goal,” said U.S. Secretary of Commerce Gina Raimondo . “The leading-edge semiconductors that will be made here in Arizona are foundational to the technology that will define global economic and national security in the 21st century, including AI and high-performance computing. Thanks to President Biden’s leadership and TSMC’s continued investments in U.S. semiconductor manufacturing, this proposed funding would help make our supply chains more secure and create thousands of good-quality construction and manufacturing jobs for Arizonans.”

“America’s ability to maintain our competitive edge in advanced technologies like artificial intelligence is essential to igniting the next generation of research, innovation, development, and production,” said Under Secretary of Commerce for Standards and Technology and National Institute of Standards and Technology Director Laurie E. Locascio . “Our proposed support for TSMC Arizona represents an inflection point for America’s innovative capacity that would restore our nation’s leadership in an industry that is foundational to the U.S. and global digital economy.”

“The proposed funding from the CHIPS and Science Act would provide TSMC the opportunity to make this unprecedented investment and to offer our foundry service of the most advanced manufacturing technologies in the United States,” said TSMC Chairman Dr. Mark Liu. “Our U.S. operations allow us to better support our U.S. customers, which include several of the world’s leading technology companies. Our U.S. operations will also expand our capability to trailblaze future advancements in semiconductor technology.”

“We are honored to support our customers who have been pioneers in mobile, artificial intelligence and high-performance computing, whether in chip design, hardware systems or software, algorithms, and large language models,” said TSMC CEO Dr. C.C. Wei . “They are the innovators driving demand for the most advanced silicon that TSMC can provide. As their foundry partner, we will help them unleash their innovations by increasing capacity for leading-edge technology through TSMC Arizona. We are thrilled by the progress of our Arizona site to date and are committed to its long-term success.”

TSMC is widely recognized as a global leader in semiconductor manufacturing, having pioneered the pure-play foundry business model in 1987, and now manufactures over 90% of the world’s leading-edge logic chips. In Arizona, TSMC’s three fabs are expected to bring a suite of the most advanced process node technologies to the United States: the first fab  will produce 4nm FinFET process technologies; today, TSMC Arizona announced that the second fab will produce the world’s most advanced 2nm nanosheet process technology, in addition to previously announced plans to produce 3nm process technologies; and TSMC Arizona’s third fab will produce 2nm or more advanced process technologies depending on customer demand. At full capacity, TSMC Arizona’s three fabs would manufacture tens of millions of leading-edge chips that will power products like 5G/6G smartphones, autonomous vehicles, and AI datacenter servers. TSMC Arizona expects to begin high-volume production in their first fab in the U.S. by the first half of 2025.

Thanks to investments like those at TSMC Arizona, the United States is now on track to produce roughly 20% of the world’s leading-edge chips by 2030. With total capital expenditures of more than $65 billion, TSMC Arizona’s investment is the largest foreign direct investment in a greenfield project in U.S. history. TSMC Arizona’s investment in the United States is catalyzing meaningful investment across the supply chain, including from 14 direct suppliers that plan to construct or expand plants in Arizona or other parts of the U.S., further strengthening U.S. domestic supply chain resilience.

TSMC’s advanced chips are the backbone of core processing units (“CPUs”) for servers in large-scale datacenters and of specialized graphic processing units (“GPUs”) used for machine learning. Through the proposed funding for TSMC Arizona, the United States would onshore the critical hardware manufacturing capabilities that underpin AI’s deep language learning algorithms and inferencing techniques. This would help strengthen America’s competitive edge in science and technology innovation. Furthermore, through its Arizona fabs, TSMC will be able to better support its key customers, including U.S. companies AMD, Apple, Nvidia, and Qualcomm, among others, by addressing their leading-edge capacity demand, mitigating supply chain concerns, and enabling them to compete effectively in the ongoing digital transformation era. With the proposed incentives, TSMC Arizona has also committed to support the development of advanced packaging capabilities – the next frontier of technology innovation for chip manufacturing – through its partners in the U.S., creating the opportunity for TSMC Arizona’s customers to be able to purchase advanced chips that are made entirely on U.S. soil.

The PMT also proposes $50 million in dedicated funding to develop the company’s semiconductor and construction workforce. To build the long-term construction workforce needed to support these projects, TSMC Arizona recently signed an agreement with the Arizona Building and Construction Trades Council. The company also plans to utilize registered apprenticeship programs to meet a 15 percent apprenticeship utilization rate on the Phoenix construction site.

As part of its commitment to developing local talent, TSMC Arizona established one of the first state-supported Registered Apprenticeship programs for semiconductor technicians, with support from the City of Phoenix. TSMC's U.S.-based recruiting team is also actively collaborating with university engineering programs around the country, including Arizona State University, University of Arizona, and Purdue University, and is partnering with Maricopa Community Colleges and career technical education programs on initiatives to develop the skills for a career in the semiconductor industry. Site employees have access to discounts, reimbursements, and priority enrollment through partnerships for local area early education and childcare centers.

In addition to the proposed direct funding of up to $6.6 billion, the CHIPS Program Office would make approximately $5 billion of proposed loans – which is part of the $75 billion in loan authority provided by the CHIPS and Science Act – available to TSMC Arizona under the PMT. The company has indicated that it is planning to claim the Department of the Treasury’s Investment Tax Credit, which is expected to be up to 25% of qualified capital expenditures.

As explained in its first Notice of Funding Opportunity, the Department may offer applicants a PMT on a non-binding basis after satisfactory completion of the merit review of a full application. The PMT outlines key terms for a potential CHIPS incentives award, including the amount and form of the award. The award amounts are subject to due diligence and negotiation of a long-form term sheet and award documents and are conditional on the achievement of certain milestones. After the PMT is signed, the Department begins a comprehensive due diligence process on the proposed projects and continues negotiating or refining certain terms with the applicant. The terms contained in the long-form term sheet and the final award documents may differ from the terms of the PMT being announced today.

About CHIPS for America

The Department has received more than 630 statements of interest, more than 180 pre-applications and full applications for NOFO 1, and more than 160 small supplier concept plans for NOFO 2. The Department is continuing to conduct rigorous evaluation of applications to determine which projects will advance U.S. national and economic security, attract more private capital, and deliver other economic benefits to the country. The announcement with TSMC is the fifth PMT announcement the Department of Commerce has made under the CHIPS and Science Act, with additional PMT announcements expected to follow throughout 2024.

CHIPS for America is part of President Biden’s economic plan to invest in America, stimulate private sector investment, create good-paying jobs, make more in the United States, and revitalize communities left behind. CHIPS for America includes the CHIPS Program Office, responsible for manufacturing incentives, and the CHIPS Research and Development Office, responsible for R&D programs, that both sit within the National Institute of Standards and Technology (NIST) at the Department of Commerce. NIST promotes U.S. innovation and industrial competitiveness by advancing measurement science, standards, and technology in ways that enhance economic security and improve our quality of life. NIST is uniquely positioned to successfully administer the CHIPS for America program because of the bureau’s strong relationships with U.S. industries, its deep understanding of the semiconductor ecosystem, and its reputation as fair and trusted. Visit www.chips.gov to learn more.

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The White House 1600 Pennsylvania Ave NW Washington, DC 20500

United   States-Japan Joint Leaders’   Statement

Global Partners for the Future

Over the course of the last three years, the U.S.-Japan Alliance has reached unprecedented heights. We arrived at this historic moment because our nations, individually and together, took courageous steps to strengthen our collective capacity in ways that would have seemed impossible just a few years ago. Today, we, President Joseph R. Biden, Jr. and Prime Minister KISHIDA Fumio, celebrate this new era of U.S.-Japan strategic cooperation during the Prime Minister’s Official Visit and State Dinner in Washington, D.C.—and pledge that the United States and Japan will continue our tireless work, together and with other partners, to realize a free and open Indo-Pacific and world.

In this new era of U.S.-Japan cooperation, we recognize that global events affect the security and stability of the Indo-Pacific, and that developments in our shared region reverberate around the world. We are therefore working together, across all domains and at all levels, to build a global partnership that is fit for purpose to address the complex, interconnected challenges of today and tomorrow for the benefit of our two countries and the world. As our Alliance cooperation reaches new heights, we are expanding our engagement to reflect the global nature of our partnership.

At the core of our cooperation is a shared commitment to work with like-minded partners and multilateral institutions to address common challenges and to ensure a world that is free, open, connected, resilient, and secure. These joint efforts are based on our shared fundamental respect for international law, including the protection and promotion of human rights and dignity, the sovereignty and territorial integrity of all states, and the prohibition on acquisition of territory by force. Our purpose as partners is to uphold and bolster the free and open international order based on the rule of law that has allowed so many nations to develop and prosper, and to ensure our Alliance is equipped to tackle the challenges of the 21 st century.

To advance our global partnership, today we announce several new strategic initiatives to strengthen our defense and security cooperation; reach new frontiers in space; drive technology innovation; bolster economic security; accelerate climate action; partner on global diplomacy and development; and fortify the ties between our peoples. Through our global partnership, we are also synchronizing our strategies, and our two nations have never been more united as we work together to address the most pressing challenges and opportunities of the future.

Strengthening our Defense and Security Cooperation

The core of our global partnership is our bilateral defense and security cooperation under the Treaty of Mutual Cooperation and Security, which is stronger than ever. We affirm that our Alliance remains the cornerstone of peace, security, and prosperity in the Indo-Pacific. President Biden reiterated the unwavering commitment of the United States to the defense of Japan under Article V of the Treaty, using its full range of capabilities, including nuclear capabilities. Prime Minister Kishida reaffirmed Japan’s unwavering commitment to fundamentally reinforce its own defense capabilities and roles, and to enhance its close coordination with the United States under the Treaty.President Biden also reaffirmed that Article V applies to the Senkaku Islands. We reiterated our strong opposition to any attempts by the People’s Republic of China (PRC) to unilaterally change the status quo by force or coercion in the East China Sea, including through actions that seek to undermine Japan’s longstanding and peaceful administration of the Senkaku Islands. We welcome the progress in optimizing Alliance force posture in areas including the Southwestern Islands to strengthen U.S.-Japan deterrence and response capabilities, and we confirm the importance of further advancing this initiative.

The United States welcomes the steps Japan is taking to fundamentally enhance its defense capabilities, including its plans to increase the budget for its defense capabilities and complementary initiatives to two percent of GDP in Japanese Fiscal Year (JFY) 2027 in accordance with Japan’s National Security Strategy, its decision to possess counterstrike capabilities, and its plans to stand up the Japan Self-Defense Forces (JSDF) Joint Operations Command to enhance command and control of the JSDF. Together, these initiatives elevate our defense ties to unprecedented levels and launch a new era of U.S.-Japan security cooperation, strengthening our Alliance and contributing to stability in the Indo-Pacific.

Today, we announce several new strategic initiatives to further advance our Alliance. Recognizing the speed at which regional security challenges evolve and to ensure our bilateral Alliance structures meet these critical changes, we announce our intention to bilaterally upgrade our respective command and control frameworks to enable seamless integration of operations and capabilities and allow for greater interoperability and planning between U.S. and Japanese forces in peacetime and during contingencies. More effective U.S.-Japan Alliance command and control will strengthen deterrence and promote a free and open Indo-Pacific in the face of pressing regional security challenges. We call on our respective defense and foreign ministries to develop this new relationship through the Security Consultative Committee (our security “2+2”). In support of this vision, we also reaffirm our goal to deepen Intelligence, Surveillance, and Reconnaissance cooperation and Alliance information sharing capabilities, including through the Bilateral Information Analysis Cell.

We will also continue to implement efforts to strengthen our Alliance force posture, build high-end base capabilities, and increase preparedness that are necessary to deter and defend against threats. We resolve to deepen bilateral cooperation toward the effective development and employment of Japan’s suite of counterstrike capabilities, including the provision of U.S. materiel and technological support to enhance Japan’s indigenous stand-off programs. The United States expressed its commitment to start the training pipeline and ship modifications for Japan to acquire operational capability of the Tomahawk Land Attack Missile (TLAM) system. We also reaffirmed our pursuit of a Glide Phase Interceptor (GPI) cooperative development program to counter high-end, regional hypersonic threats.

As our countries strengthen our bilateral ties, we will continue to build our relationships with like-minded partners in the region. Today, we announce our vision to cooperate on a networked air defense architecture among the United States, Japan, and Australia to counter growing air and missile threats. Recognizing Japan’s strengths and the close bilateral defense partnerships with the AUKUS countries, AUKUS partners – Australia, the United Kingdom, and the United States – are considering cooperation with Japan on AUKUS Pillar II advanced capability projects. Continuing the momentum from the Camp David Summit, we welcome progress on establishing an annual multidomain exercise between the United States, Japan, and the Republic of Korea (ROK). Recognizing the commitments made in the Atlantic Declaration and the Hiroshima Accord, and as the Indo-Pacific and Euro-Atlantic regions become ever more interlinked, we welcome the announcement of regular U.S.-Japan-UK trilateral exercises, beginning in 2025, as we enhance our shared and enduring security. Building on the announcement at the Australia Official Visit in October to pursue trilateral cooperation with Japan on unmanned aerial systems, we are exploring cooperative opportunities in the rapidly emerging field of collaborative combat aircraft and autonomy.

The United States welcomes Japan’s revision of the Three Principles on the Transfer of Defense Equipment and Technology and its Implementation Guidelines, which bolsters cooperation through joint development and production to enhance our deterrence capabilities in the region. To leverage our respective industrial bases to meet the demand for critical capabilities and maintain readiness over the long term, we will convene a Forum on Defense Industrial Cooperation, Acquisition and Sustainment (DICAS) co-led by the U.S. Department of Defense and Japan’s Ministry of Defense to identify priority areas for partnering U.S. and Japanese industry, including co-development and co-production of missiles and co-sustainment of forward-deployed U.S. Navy ships and U.S. Air Force aircraft, including fourth generation fighters, at Japanese commercial facilities, in coordination with relevant ministries. This forum, in conjunction with our existing Defense Science and Technology Cooperation Group, will better integrate and align our defense industrial policy, acquisition, and science and technology ecosystems. The DICAS will provide updates on progress to the foreign and defense ministers in the security “2+2.” We also commit to establishing a working group to explore opportunities for future fighter pilot training and readiness, including AI and advanced simulators, and co-development and co-production of cutting-edge technologies such as common jet trainers to maintain combat-ready next-generation fighter airpower.

We reaffirm the critical importance of continuing to enhance U.S. extended deterrence, bolstered by Japan’s defense capabilities, and will further strengthen bilateral cooperation. In this regard, we call on our respective foreign and defense ministers to hold in-depth discussions on extended deterrence on the occasion of the next security “2+2” meeting.

We continue to deepen our cooperation on information and cyber security to ensure that our Alliance stays ahead of growing cyber threats and builds resilience in the information and communication technology domain. We also plan on enhancing our cooperation on the protection of critical infrastructure.

Recognizing the importance of rapidly responding to frequent and severe climate change-related and other natural disasters, we plan to explore cooperation on the establishment of a humanitarian assistance and disaster relief hub in Japan.

In order to maintain deterrence and mitigate impact on local communities, we are firmly committed to the steady implementation of the realignment of U.S. forces in Japan in accordance with Okinawa Consolidation Plan, including the construction of the Futenma Replacement Facility at Henoko as the only solution that avoids the continued use of Marine Corps Air Station Futenma.

Reaching New Frontiers in Space

Our global partnership extends to space, where the United States and Japan are leading the way to explore our solar system and return to the Moon. Today, we welcome the signing of a Lunar Surface Exploration Implementing Arrangement, in which Japan plans to provide and sustain operation of a pressurized lunar rover while the United States plans to allocate two astronaut flight opportunities to the lunar surface for Japan on future Artemis missions. The leaders announced a shared goal for a Japanese national to be the first non-American astronaut to land on the Moon on a future Artemis mission, assuming important benchmarks are achieved. The United States and Japan plan to deepen cooperation on astronaut training to facilitate this goal while managing the risks of these challenging and inspiring lunar surface missions. We also announce bilateral collaboration on a Low Earth Orbit detection and tracking constellation for missiles such as hypersonic glide vehicles, including potential collaboration with U.S. industry.

Leading on Innovation , Economic Security, and Climate Action

The United States and Japan aim to maximally align our economic, technology, and related strategies to advance innovation, strengthen our industrial bases, promote resilient and reliable supply chains, and build the strategic emerging industries of the future while pursuing deep emissions reductions this decade. Building on our efforts in the U.S.-Japan Competitiveness and Resilience (CoRe) Partnership, including through the U.S.-Japan Economic Policy Consultative Committee (our economic “2+2”), we intend to sharpen our innovative edge and strengthen our economic security, including by promoting and protecting critical and emerging technologies.

The United States and Japan welcome our robust economic and commercial ties through mutual investment, including Microsoft’s $2.9 billion investment in Japan on AI and cloud infrastructure, workforce training, and a research lab; and Toyota’s recent additional $8 billion battery production investment for a cumulative $13.9 billion investment in North Carolina. Japan is the top foreign investor in the United States with nearly $800 billion in foreign direct investment, and Japanese companies employ nearly 1 million Americans across all 50 states. Similarly, as a top foreign investor in Japan for many years, the United States is supporting Japan’s economic growth, and as two of the world’s largest financial sectors, we commit to strengthening our partnership to bolster cross-border investment and support financial stability. As robust and creative economies, we also plan to accelerate investment in our respective start-up environments to foster innovation through the “Japan Innovation Campus” in Silicon Valley and the “Global Startup Campus” to be established in Tokyo, and in companies that take actions toward sustainable value creation (SX). We welcome our new Japan-U.S. personnel exchange programs on startups and venture capital firms under the Global Innovation through Science and Technology (GIST) initiative.

We are committed to strengthening our shared role as global leaders in the development and protection of next-generation critical and emerging technologies such as AI, quantum technology, semiconductors, and biotechnology through research exchange and private investment and capital finance, including with other like-minded partners. We welcome our collaboration on AI for Science between Riken and Argonne National Laboratory (ANL) founded on the revised project arrangement.

We applaud the establishment of $110 million in new AI research partnerships – between the University of Washington and University of Tsukuba and between Carnegie Mellon University and Keio University – through funding from NVIDIA, Arm, Amazon, Microsoft, and a consortium of Japanese companies. We are committed to further advancing the Hiroshima AI Process and strengthening collaboration between the national AI Safety Institutes.

Building on our long history of semiconductor cooperation, we intend to establish a joint technology agenda for cooperation on issues such as research and development, design, and workforce development. We also welcome the robust cooperation between and with our private sectors, especially in next-generation semiconductors and advanced packaging. We also plan to work together along with like-minded countries to strengthen global semiconductor supply chains, particularly for mature node (“legacy”) semiconductors through information-sharing, coordination of policies, and addressing vulnerabilities stemming from non-market policies and practices. We also celebrate the signing of a Memorandum of Cooperation between Japan’s National Institute of Advanced Industrial Science and Technology (AIST) and the U.S. National Institute of Standards and Technology (NIST) as a first step in bilateral cooperation on quantum computing.

Building on the Indo-Pacific Economic Framework for Prosperity (IPEF) and our respective leadership of the G7 and Asia-Pacific Economic Cooperation (APEC) last year, we continue to advance resilience, sustainability, inclusiveness, economic growth, fairness, and competitiveness for our economies . We applaud the recent entry into force of the IPEF Supply Chain Agreement. We will continue to seek cooperation on critical minerals projects, including those along the Partnership for Global Infrastructure and Investment Lobito Corridor, and through the Minerals Security Partnership (MSP) as well as the Partnership for Resilient and Inclusive Supply-chain Enhancement (RISE). We are cooperating to deter and address economic coercion, through our bilateral cooperation as well as through our work with like-minded partners including the G7 Coordination Platform on Economic Coercion. We are working to uphold a free, fair and rules-based economic order; address non-market policies and practices; build trusted, resilient, and sustainable supply chains; and promote open markets and fair competition under the U.S.-Japan economic “2+2” and the U.S.-Japan Commercial and Industrial Partnership. We will advance our commitment to operationalize data free flow with trust, including with respect to data security. We will also discuss the promotion of resilient and responsible seafood supply chains.

The United States and Japan recognize that the climate crisis is the existential challenge of our time and intend to be leaders in the global response. Towards our shared goal of accelerating the clean energy transition, we are launching a new high-level dialogue on how we implement our respective domestic measures and maximize their synergies and impacts, including the U.S. Inflation Reduction Act and Japan’s Green Transformation (GX) Promotion Strategy aimed at accelerating energy transition progress this decade, promoting complementary and innovative clean energy supply chains and improving industrial competitiveness. Today we announce Japan joins as the first international collaborator of the U.S. Floating Offshore Wind Shot. We intend to work together towards global ambition in line with the Wind Shot, taking into consideration national circumstances, through the Clean Energy and Energy Security Initiative (CEESI) to pursue innovative breakthroughs that drive down technology costs, accelerate decarbonization, and deliver benefits for coastal communities. The United States welcomes Japan’s newly-launched industry platform, the Floating Offshore Wind Technology Research Association (FLOWRA), aiming to reduce costs and achieve mass production of floating offshore wind through collaboration with academia.

We are further leading the way in developing and deploying next generation clean energy technology, including fusion energy development through the announcement of a U.S.-Japan Strategic Partnership to Accelerate Fusion Energy Demonstration and Commercialization.

The United States remains unwavering in its commitment to support the energy security of Japan and other allies, including its ability to predictably supply LNG while accelerating the global transition to zero-emissions energy and working with other fossil energy importers and producers to minimize methane emissions across the fossil energy value chain to the fullest extent practicable.

We intend to advance widespread adoption of innovative new clean energy technologies, and seek to increase the globally available supply of sustainable aviation fuel or feedstock, including those that are ethanol-based, that show promise in reducing emissions.

We are also working to align global health security and innovation, including in such areas as pandemic prevention, preparedness, and response and promoting more resilient, equitable, and sustainable health systems. Today, we announce that the U.S. Food and Drug Administration and the Japan’s Pharmaceuticals and Medical Devices Agency (PMDA) intend to collaborate and exchange information on oncology drug products to help cancer patients receive earlier access to medications and to discuss future drug development and ways to prevent drug shortages. We welcome PMDA’s future representative office in Washington, D.C., to facilitate this cooperation.

Partnering on Global Diplomacy and Development

The challenges we face transcend geography. The United States and Japan are steadfast in our commitment to upholding international law, including the UN Charter, and call for all Member States to uphold the Charter’s purposes and principles, including refraining from the threat or use of force against the territorial integrity or political independence of any State. We remain committed to reforming the UN Security Council (UNSC), including through expansion in permanent and non-permanent categories of its membership. President Biden reiterated support for Japan’s permanent membership on a reformed UNSC.

We reaffirm our commitment made in Hiroshima last year and are determined to further promote our cooperation in the G7 and work together with partners beyond the G7.

We emphasize the importance of all parties promoting open channels of communication and practical measures to reduce the risk of misunderstanding and miscalculation and to prevent conflict in the Indo-Pacific. In particular, we underscore the importance of candid communication with the PRC, including at the leader level, and express the intent to work with the PRC where possible on areas of common interest.

We emphasize the importance of all States being able to exercise rights and freedoms in a manner consistent with international law as reflected in the United Nations Convention on the Law of the Sea (UNCLOS), including freedom of navigation and overflight. We strongly oppose any unilateral attempts to change the status quo by force or coercion, including destabilizing actions in the South China Sea, such as unsafe encounters at sea and in the air as well as the militarization of disputed features and the dangerous use of coast guard vessels and maritime militia. The PRC’s recent dangerous and escalatory behavior supporting its unlawful maritime claims in the South China Sea as well as efforts to disrupt other countries’ offshore resource exploitation are inconsistent with international law as reflected in UNCLOS. We also emphasize that the 2016 South China Sea Arbitral Award is final and legally binding on the parties to that proceeding. We resolve to work with partners, particularly in ASEAN, to support regional maritime security and uphold international law.

We emphasize that our basic positions on Taiwan remain unchanged and reiterate the importance of maintaining peace and stability across the Taiwan Strait as an indispensable element of global security and prosperity. We encourage the peaceful resolution of cross-Strait issues.

We continue working together with partner countries to make concrete progress in strengthening the international financial architecture and fostering investment under the Partnership for Global Infrastructure and Investment. We are committed to delivering better, bigger, more effective multilateral development banks including through our planned contributions that would enable more than $30 billion in new World Bank lending and securing ambitious International Development Association and Asian Development Fund replenishments. We also emphasize the importance of private sector investment in the Indo-Pacific. We welcome the announcement of Google’s $1 billion investment in digital connectivity for North Pacific Connect, which expands the Pacific Connect Initiative, with NEC, to improve digital communications infrastructure between the United States, Japan and Pacific Island Nations. Building on the U.S.-Australia joint funding commitment for subsea cables last October, the United States and Japan plan to collaborate with like-minded partners to build trusted and more resilient networks and intend to contribute funds to provide subsea cables in the Pacific region, including $16 million towards cable systems for the Federated States of Micronesia and Tuvalu.

We reaffirm our steadfast commitment to the Quad and its shared vision of a free and open Indo-Pacific that is stable, prosperous, and inclusive which continues to deliver results for the region. We reiterate the Quad’s unwavering support and respect for regional institutions, including ASEAN, the Pacific Islands Forum (PIF), and the Indian Ocean Rim Association. We also reaffirm our support for ASEAN centrality and unity as well as the ASEAN Outlook on the Indo-Pacific. Southeast Asian countries are critical partners in the Indo-Pacific and the U.S.-Japan-Philippines trilateral aims to enhance trilateral defense and security cooperation while promoting economic security and resilience. Japan and the United States reaffirmed our intention to work to support the region’s priorities as articulated through the 2050 Strategy for the Blue Pacific Continent, including through the PIF as the Pacific’s preeminent institution as well as through the Partners in the Blue Pacific (PBP).

As we pursue our shared vision of a free and open Indo-Pacific, we continue to build strong ties between key, like-minded partners in the region. Building on the historic success of the Camp David Trilateral Summit, the United States, Japan and the Republic of Korea continue to collaborate on promoting regional security, strengthening deterrence, coordinating development and humanitarian assistance, countering North Korea’s illicit cyber activities, and deepening our cooperation including on economic, clean energy, and technological issues. The United States and Japan also remain committed to advancing trilateral cooperation with Australia to ensure a peaceful and stable region.

We reaffirm our commitment to the complete denuclearization of North Korea in accordance with relevant UNSC resolutions. We strongly condemn North Korea’s continued development of its ballistic missile program—including through launches of intercontinental ballistic missiles (ICBM) and space launch vehicles using ballistic missile technologies—which poses a grave threat to peace and security on the Korean Peninsula and beyond. We call on North Korea to respond to continued, genuine offers to return to diplomacy without preconditions. We call on all UN Member States to fully implement all relevant UNSC resolutions, especially in light of Russia’s recent veto. We urge North Korea to cease illicit activities that generate revenue for its unlawful ballistic missile and weapons of mass destruction programs, including malicious cyber activities. President Biden also reaffirms U.S. commitment to the immediate resolution of the abductions issue, and the two sides commit to continuing joint efforts to promote respect for human rights in North Korea.

We continue to stand together in firm opposition to Russia’s brutal war of aggression against Ukraine, its strikes against Ukraine’s infrastructure and the terror of Russian occupation. We are committed to continuing to impose severe sanctions on Russia and provide unwavering support for Ukraine. Together, we reiterate our call on Russia to immediately, completely, and unconditionally withdraw its forces from within the internationally recognized borders of Ukraine. Any threat or use of nuclear weapons in the context of its war of aggression against Ukraine by Russia is unacceptable. We also express serious concerns about growing North Korea-Russia military cooperation, which is supporting Russia’s war of aggression against Ukraine and threatens to undermine peace and stability in Northeast Asia as well as the global non-proliferation regime.

As the linkages between the Euro-Atlantic and the Indo-Pacific regions have become stronger than ever, our two countries look forward to continuing to work together to enhance Japan-North Atlantic Treaty Organization (NATO) and NATO-Indo-Pacific Four partnerships.

We once again unequivocally condemn the terror attacks by Hamas and others on October 7 of last year, and reaffirm Israel’s right to defend itself and its people consistent with international law. At the same time, we express our deep concern over the critical humanitarian situation in the Gaza Strip. We affirm the imperative of securing the release of all hostages held by Hamas, and emphasize that the deal to release hostages would bring an immediate and prolonged ceasefire in Gaza. We affirm the imperative of realizing an immediate and sustained ceasefire in Gaza over a period of at least six weeks as part of a deal that would release hostages held by Hamas and allow for delivery of essential additional humanitarian assistance to Palestinians in need. We underscore the urgent need to significantly increase deliveries of life-saving humanitarian assistance throughout Gaza and the crucial need to prevent regional escalation. We reiterate the importance of complying with international law, including international humanitarian law, as applicable, including with regard to the protection of civilians. We remain committed to an independent Palestinian state with Israel’s security guaranteed as part of a two-state solution that enables both Israelis and Palestinians to live in a just, lasting, and secure peace.

We reaffirm the importance of supporting inclusive growth and sustainable development in Latin America and the Caribbean. We continue to enhance policy coordination in the region, in particular on Haiti and Venezuela. We also recognize that promoting the stability and security for Haiti is one of the most pressing challenges in the Western Hemisphere, and we continue to support Haiti in restoring democratic order.

We also support African aspirations for peace, stability, and prosperity based on the rule of law. We continue to work together to support the democratic process and economic growth through our respective efforts, including our cooperation with African countries, Regional Economic Communities, the African Union, and multilateral organizations.

The United States and Japan are resolved to achieve a world without nuclear weapons through realistic and pragmatic approaches. It is critical that the overall decline in global nuclear arsenals achieved since the end of the Cold War continues and not be reversed, and the PRC’s accelerating build-up of its nuclear arsenal without transparency nor meaningful dialogue poses a concern to global and regional stability. We reaffirm the importance of upholding the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) as the cornerstone of the global nuclear disarmament and non-proliferation regime and for the pursuit of peaceful uses of nuclear energy. In promoting this universal goal of achieving a world without nuclear weapons, Japan’s “Hiroshima Action Plan” and the “G7 Leaders’ Hiroshima Vision on Nuclear Disarmament” are welcome contributions. The two leaders also welcomed the U.S. announcement to join the Japan-led “Fissile Material Cut-off Treaty Friends” initiative. We reaffirm the indispensable role of the peaceful uses of nuclear technology, committing to fostering innovation and supporting the International Atomic Energy Agency’s efforts in upholding the highest standards of safety, security, and safeguards. President Biden commended Japan’s safe, responsible, and science-based discharge of Advanced Liquid Processing System treated water at Tokyo Electric Power Company’s Fukushima Daiichi Nuclear Power Station into the sea. Our two countries plan to launch the Fukushima Daiichi Decommissioning Partnership focusing on research cooperation for fuel debris retrieval.

To effectively address the myriad challenges outlined above, our global partnership is launching a Deputy Secretary of State/Vice Minister for Foreign Affairs-level dialogue involving our respective aid agencies to align our diplomatic and development efforts globally.

Fortifying People-to-People Ties

People-to-people exchanges are the most effective way to develop the future stewards of the U.S.-Japan relationship. In this regard, we recognize the achievements of exchange programs between our two countries, including the Japan Exchange and Teaching (JET) Programme, KAKEHASHI Project, the Japan Foundation’s programs, and the U.S.-Japan Council’s TOMODACHI Initiative, and commit ourselves to providing more opportunities to meet today’s needs, including through enhanced subnational exchanges on critical issues such as climate and energy. We also recognize the important role civil society has played in strengthening the U.S.-Japan relationship over the past 170 years, including the 38 Japan-America Societies across the United States, the Asia Society, and the 29 America-Japan Societies across Japan.

Building on the Memorandum of Cooperation in Education signed between us on the sidelines of the G7 Leaders’ Summit in Hiroshima, today we announce our commitment to increase student mobility through the new $12 million “Mineta Ambassadors Program (MAP)” education exchange endowment administered by the U.S.-Japan Council for U.S. and Japanese high school and university students who will “map” the future of the relationship with support from Apple, the BlackRock Foundation, Toshizo Watanabe Foundation, and other founding donors. In this regard, we also welcome Japan’s new initiative to expand scholarship for Japanese students through the Japan Student Servicers Organization.

We recognize the significant contributions made by the binational Japan-U.S. Educational Commission (Fulbright Japan) over the past 72 years. We welcome recent changes to upgrade the program by reopening scholarships to Science, Technology, Engineering, and Math (STEM) fields for the first time in 50 years, with the first STEM students on track to participate in academic year 2025-26, as well as removing the tuition cap for Japanese Fulbright participants to attract the highest quality students and researchers.

Celebrating the 30th anniversary of the establishment of the Mansfield Fellowship Program, we honor the legacy of Ambassador Mansfield’s contributions through the University of Montana Mansfield Center and Mansfield Foundation. The two leaders also welcome the creation of the Government of Japan endowed Mansfield Professor of Japanese and Indo-Pacific Affairs at the University of Montana.

Upon the 100 th anniversary of the birth of the late Senator Daniel K. Inouye, who made incredible contributions to our bilateral relationship, we praise the efforts of Japanese American leaders to build a bridge between the two countries and to address common community issues, including through support to the U.S.-Japan Council’s newly launched TOMODACHI Kibou for Maui project. We also share the recognition on the importance of exchanges between our legislatures. We acknowledge the importance of language study, particularly in person, to develop long-term ties and announce a new Memorandum of Cooperation to increase opportunities for the number of exchange visitors from Japan to share their specialized knowledge of Japanese language and culture in the United States, as well as welcome efforts to expand the Japanese Language Education Assistant Program (J-LEAP).

The two leaders also affirm that women in leadership remain their focus and reaffirm our pledge to achieving gender equality and the empowerment of women and girls in all their diversity. We welcome close cooperation on Women, Peace, and Security and Women’s Economic Empowerment initiatives and efforts to promote women and girls’ full, equal, and meaningful participation and leadership in public life.

Finally, we emphasize the need to build a diverse pipeline of future U.S.-Japan experts who understand and support the Alliance. Our peoples form the core of our Alliance, and we reaffirm our commitment to forge ever-closer bonds for generations to come.

Through our shared and steadfast commitment, we have taken bold and courageous steps to bring the U.S.-Japan Alliance to unprecedented heights. In so doing, we have equipped our partnership to protect and advance peace, security, prosperity, and the rule of law across the Indo-Pacific and the globe so that everyone benefits. Today, we celebrate the enduring friendship among our peoples—and among ourselves—and pledge to continue our relentless efforts to ensure that our global partnership drives future peace and prosperity for generations to come.

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• Securing Canada’s AI advantage

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Artificial intelligence (AI) has incredible potential to transform the economy, improve the way we work, and enhance our way of life. The global race to scale up and adopt AI is on, and Canada is at the forefront of this technology. To make sure we can seize every opportunity in the economy of the future, and set every generation up for success, we need to scale up our innovation ambitions. And do it in a way that brings everyone along. For Millennials and Gen Z, who feel their hard work isn’t paying off like it did for previous generations, we must invest in good-paying opportunities that help them get ahead. That’s why we’re focused on creating more good jobs, including in innovation and technology, which are among the highest paying of all industries.

AI is already unlocking massive growth in industries across the economy. Many Canadians are already feeling the benefits of using AI to work smarter and faster. The rapid advance of generative AI today will unlock immense economic potential for Canada, significantly improving productivity and reducing the time workers have to spend on repetitive tasks. Researchers and companies in Canada are also using AI to create incredible new innovations and job opportunities across all facets of the Canadian economy, from drug discovery to energy efficiency to housing innovation. In the past year, job growth in AI increased by nearly one third in Canada – among the highest growth of any sector. And most AI jobs pay well above the average income.

Canada has a world-leading AI ecosystem – from development, to commercialization, to safety. We have an advantage that can make sure Canadian values and Canadian ideas help shape this globally in-demand technology. Canada was the first country in the world to introduce a national AI strategy and has invested over $2 billion since 2017 to support AI and digital research and innovation. Since then, countries around the world have begun investing significant funding and efforts into AI to advance their economies, particularly in computing infrastructure. In order to maintain Canada’s competitive edge, and secure good paying jobs and job security for generations of young Canadians, we must raise the bar.

The Prime Minister, Justin Trudeau, today announced a $2.4 billion package of measures from the upcoming Budget 2024 to secure Canada’s AI advantage. These investments will accelerate job growth in Canada’s AI sector and beyond, boost productivity by helping researchers and businesses develop and adopt AI, and ensure this is done responsibly.

These measures include:

• Investing $2 billion to build and provide access to computing capabilities and technological infrastructure for Canada’s world-leading AI researchers, start-ups, and scale-ups. As part of this investment, we will soon be consulting with AI stakeholders to inform the launch of a new AI Compute Access Fund to provide near-term support to researchers and industry. We will also develop a new Canadian AI Sovereign Compute Strategy to catalyze the development of Canadian-owned and located AI infrastructure. Ensuring access to cutting-edge computing infrastructure will attract more global AI investment to Canada, develop and recruit the best talent, and help Canadian businesses compete and succeed on the world stage.
• Boosting AI start-ups to bring new technologies to market, and accelerating AI adoption in critical sectors , such as agriculture, clean technology, health care, and manufacturing, with $200 million in support through Canada’s Regional Development Agencies.
• Investing $100 million in the NRC IRAP AI Assist Program to help small and medium-sized businesses scale up and increase productivity by building and deploying new AI solutions. This will help companies incorporate AI into their businesses and take on research, product development, testing, and validation work for new AI-based solutions.
• Supporting workers who may be impacted by AI, such as creative industries, with $50 million for the Sectoral Workforce Solutions Program, which will provide new skills training for workers in potentially disrupted sectors and communities.
• Creating a new Canadian AI Safety Institute, with $50 million to further the safe development and deployment of AI. The Institute, which will leverage input from stakeholders and work in coordination with international partners, will help Canada better understand and protect against the risks of advanced or nefarious AI systems, including to specific communities.
• Strengthening enforcement of the Artificial Intelligence and Data Act, with $5.1 million for the Office of the AI and Data Commissioner. The proposed Act aims to guide AI innovation in a positive direction to help ensure Canadians are protected from potential risks by ensuring the responsible adoption of AI by Canadian businesses.

Today’s announcement is about investing in innovation and economic growth to secure Canada’s world-leading AI advantage today and for generations to come. This will create good-paying opportunities for every generation, boost innovation across the economy, raise productivity, and accelerate economic growth – and it’s just one of the things that we are going to be doing in Budget 2024. Alongside these measures, we’re building more homes faster, ensuring every kid has the food they need, investing in health care, making life more affordable, and creating good jobs to make sure every generation can get ahead.

“AI has the potential to transform the economy. And our potential lies in capitalizing on the undeniable Canadian advantage. These investments in Budget 2024 will help harness the full potential of AI so Canadians, and especially young Canadians, can get good-paying jobs while raising our productivity, and growing our economy. This announcement is a major investment in our future, in the future of workers, in making sure that every industry, and every generation, has the tools to succeed and prosper in the economy of tomorrow.” The Rt. Hon. Justin Trudeau, Prime Minister of Canada

“Today, we are making a significant investment to boost our economic growth. This will keep Canada a global leader in AI and ensure we are at the very cutting-edge of new technologies. And most importantly, this will mean more high-paying careers for Canadians who are leading the charge in AI.” The Hon. Chrystia Freeland, Deputy Prime Minister and Minister of Finance

Quick Facts

• The Government of Canada’s Budget 2024 will be tabled in the House of Commons by the Deputy Prime Minister and Minister of Finance on Tuesday, April 16, 2024.
• In 2017, Canada was the first country to establish a national AI strategy. The Pan-Canadian Artificial Intelligence Strategy is helping Canada maintain its position as a world leader in AI, businesses be more competitive, and Canadians benefit from growth in the digital economy. Phase 2 of the strategy was announced in 2022 with funding of more than $443 million.
• The federal research granting agencies – the Canadian Institutes of Health Research (CIHR), the Natural Sciences and Engineering Research Council (NSERC), and the Social Sciences and Humanities Research Council (SSHRC) – together have awarded $936.8 million in funding for AI-related research since 2017-18.
• Since 2017, the National Research Council of Canada Industrial Research Assistance Program (NRC IRAP) provided $705.8 million in contributions to AI-related firms. This funding supported 1,111 firms and 3,837 projects in the AI and Big Data Technology space.
• In addition, the NRC Digital Technologies Research Centre has invested over $27 million both directly to firms and on collaborative AI projects related to natural language processing, Indigenous languages, and high-performance computing for AI.
• In 2023, Canada announced renewed funding for the Global Innovation Clusters , including Scale AI , bringing total funding for the company to up to $284 million. Scale AI is dedicated to promoting collaboration in AI and supply chain management research and innovation by strengthening linkages between researchers in industry, academia, and research institutes in Canada and abroad, and providing financial support for AI and supply chain management projects.
• Canada has also made significant investments in fast-scaling AI-related companies through the Strategic Innovation Fund , including Sanctuary AI and semiconductor firm Ranovus .
• Canada was recently ranked number 1 among 80 countries, tied with South Korea and Japan, in the Center for AI and Digital Policy’s 2024 global report on Artificial Intelligence and Democratic Values .
• The Artificial Intelligence and Data Act (AIDA) was introduced in Parliament as part of Bill C-27 in June 2022. It is designed to promote the responsible design, development, and use of AI systems in Canada’s private sector, with a focus on systems with the greatest impact on health, safety, and human rights. Since the introduction of the bill, the government has engaged extensively with stakeholders on the novel challenges posed by generative AI. Canada is one of the first countries in the world to propose a law to regulate AI. Learn more .
• The Voluntary Code of Conduct on the Responsible Development and Management of Advanced Generative AI Systems – announced in September 2023 and signed by major tech firms including Cohere, Ada, Coveo, BlackBerry, TELUS, OpenText, and IBM – enables companies to demonstrate that they are developing and using generative AI systems responsibly and strengthen Canadians’ confidence in the technology.
• The Public Awareness Working Group on AI was launched in 2020 under Canada’s Advisory Council on Artificial Intelligence with a mandate to examine avenues to boost public awareness and foster trust in AI. Its objective is to help Canadians have a more grounded conversation around AI, and help citizens better understand the technology, its potential uses, and its associated risks. The Working Group published a report on its public engagement activities in February 2023. A further public report is upcoming specifically on the Working Group’s engagement with First Nations, Inuit, and Métis communities to better understand their needs, interests, and priorities for AI development and use.
• Since the 1990s, Canada has been a leader in AI and deep learning, made possible by the research and innovations of the “Godfathers of AI”, Canadians Yoshua Bengio and Geoffrey Hinton. In the decades since, Canada has built up a robust and growing AI industry across Canada, anchored by our three national AI institutes in Montréal, Toronto, and Edmonton.
• In 2022-23, there were over 140,000 actively engaged AI professionals in Canada, an increase of 29 per cent compared to the previous year.
• Canada has 10 per cent of the world’s top-tier AI researchers, the second most in the world.
• Canada ranks first globally for year-over-year growth of women in AI (67 per cent growth in 2022-23 alone), first in the G7 for year-over-year growth of AI talent, and since 2019, has ranked first in the G7 for the number of AI-related papers published per capita.
• The number of AI patents filed by Canadian investors increased by 57 per cent in 2022-23 compared to the previous year – nearly three times the G7 average of just 23 per cent over the same period.
• In 2022, the Canadian AI sector attracted over $8.6 billion in venture capital, accounting for nearly 30 per cent of all venture capital activity in Canada.
• Canada ranks third in the G7 in total funding per capita raised for AI companies, with more than 670 Canadian AI start-ups and 30 Canadian generative AI companies receiving at least one investment deal valued at more than $1 million USD since 2019.
• Restore generational fairness for renters, particularly Millennials and Gen Z, by taking new action to protect renters’ rights and unlock pathways for them to become homeowners. Learn more .
• Save more young families money and help more moms return to their careers by building more affordable child care spaces and training more early childhood educators across Canada. Learn more .
• Create a National School Food Program to provide meals to about 400,000 kids every year and help ensure every child has the best start in life, no matter their circumstances. Learn more .
• Launch a new $6 billion Canada Housing Infrastructure Fund to accelerate the construction or upgrade of essential infrastructure across the country and get more homes built for Canadians. Learn more .
• Top-up the Apartment Construction Loan Program with $15 billion, make new reforms so it is easier to access, and launch Canada Builds to call on all provinces and territories to join a Team Canada effort to build more homes, faster. Learn more .
• Support renters by launching a new $1.5 billion Canada Rental Protection Fund to preserve more rental homes and make sure they stay affordable. Learn more .
• Change the way we build homes in Canada by announcing over $600 million to make it easier and cheaper to build more homes, faster, including through a new Homebuilding Technology and Innovation Fund and a new Housing Design Catalogue. Learn more .

Associated Links

• Responsible use of artificial intelligence (AI)
• Sectoral Workforce Solutions Program

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