Commercializing Nanomaterials

Engineered nanoparticles have already found their way into fabrics and sporting equipment, and they are being studied for use in drug delivery systems and enhanced sensors. But some federal policymakers worry that companies may be deterred from developing nanomaterials into commercial products because of regulatory uncertainty and funding shortfalls.

To examine the issues related to commercializing nanomaterials, Congress, the Environmental Protection Agency, and the National Academies each held independent meetings late last month. These meetings targeted ways in which the government can facilitate the movement of these new materials into the market while ensuring that proper safeguards are in place to protect the public and the environment.

"Nanotechnology is already changing the products we use and has the potential to revitalize our manufacturing base," said Rep. Bob Inglis (R-S.C.), chairman of the House Science Committee's Research Subcommittee, at a hearing held on June 29. "It promises to impact virtually every field," he noted.

Because of the potentially significant impact that nanotechnology holds, the subcommittee hearing focused on how successful the U.S. is in the field of nanotechnology compared with other nations and ways in which federal R&D programs can ensure continued success. Of particular interest to the subcommittee were the findings of a recent assessment of the National Nanotechnology Initiative (NNI) by the President's Council of Advisors on Science & Technology (PCAST) in its capacity as the National Nanotechnology Advisory Panel (C&EN, May 23, page 30).

On hand to present PCAST's findings was the council's cochair, E. Floyd Kvamme, partner at the investment firm of Kleiner Perkins Caufield & Byers. According to the assessment, NNI--which coordinates nanotechnology-related activities across more than 20 federal agencies--is being well-managed, and the funding designated for this area is being well-spent. The report also noted that appropriate steps are being taken to address environmental, health, and safety risks.

With respect to the U.S.'s position in global nanotech R&D, Kvamme pointed out that "the data surveyed indicate that today the U.S. is the leader in nanotechnology R&D." For example, in total annual investments--private, state, and federal--the U.S. spends about $3 billion annually on nanotech R&D, which is a third of the total world investment. He also noted that the U.S. leads the world in start-up companies based on nanotech.

Matthew M. Nordon, vice president of research at Lux Research, a nanotechnology research and advisory firm, affirmed the leadership role of the U.S. in his testimony by noting that 69% of all nanotechnology patents issued by the U.S. Patent & Trademark Office were assigned to U.S.-based entities. He also said that, of a representative sample of nearly 110,000 peer-reviewed research articles, U.S.-based scientists authored 24%, with the closest competition coming from China at 13% and Japan at 11%.

But the U.S. lead is slipping. "The data also show that other countries are aggressively chasing this leadership position, both in terms of ramping up coordinated national programs as well as in focusing investments to areas of existing national economic strength," Kvamme said. 

ONE WAY to stay ahead of the growing competition is to improve nanotech education and training, Kvamme noted. To that end, the PCAST report directs NNI to set up programs jointly with the Departments of Education and of Labor. The report also recommends that NNI do more to increase the transfer of resulting technology to the market through improved communication with and links to industry.

Steps must also be taken to remove the uncertainty surrounding environmental, health, and safety issues of nanotechnology, Nordon said at the hearing. Specifically, he noted that there are no clear guidelines from agencies such as EPA for how nanomaterials will be treated.

"Based on our contact with individuals driving nanotech initiatives at America's largest corporations, it's clear to us that ambiguity surrounding environmental, health, and safety regulations of nanoparticles is hampering commercialization," he said. He added, "Firms do not want to play a game whose rules may change at any time."

Just days before the House hearing, EPA held a public meeting to gather input on its proposed voluntary pilot program aimed at addressing this uncertainty. The pilot program was announced in the Federal Register on May 10. The core issue involves how nanomaterials are classified under the Toxic Substances Control Act.

Under current TSCA regulations, if the nanomaterial contains a compound that is not on the TSCA Chemical Substance Inventory, then the manufacturing company must follow the same procedures it would for any new compound prior to manufacturing the material and entering the market. If, however, a company wants to market a nanoscale version of a material that already appears on the TSCA inventory, the company can do so without notifying EPA--even though nanoscale compounds have been shown to have unique properties. Notice must be submitted to EPA under TSCA Section 8(e) only if information is found on an existing compound that suggests the nanomaterial poses a potential substantial risk to human health or the environment.

It's this situation for existing compounds that prompted EPA to propose a pilot program to collect data on nanoscale versions of known compounds. The data from this voluntary program would assist EPA in developing future regulations. At the June 23 public meeting, the agency heard from various interested parties from industry, trade and professional organizations, academia, and nongovernmental organizations.

In general, the agency received support for its program, with people agreeing that the collection of new information on materials already in commerce would be beneficial. Some people, however, called on the agency to move quickly to set up formal regulations as opposed to a voluntary program.

Attendees also called on the agency to look at the procedures for nanomaterials that fall into TCSA's new-chemical classification--something the agency agreed would be useful. The agency expects to develop an approach for its pilot program by the end of the year.

As EPA works toward developing ways to clarify key regulations, the National Academies' Committee to Review NNI held a workshop on technology transfer and the economic impact of nanotechnology. This meeting, held on June 27 and 28, was the committee's third public meeting. The group plans to hold one more public meeting in August before writing its report on NNI, which is expected early next year.

Meeting presenters--who represented government, consulting firms, and research institutes--generally agreed that although nanotech has some of the same problems with respect to commercialization that other new technologies encounter, it faces some unique challenges.

For example, nanotech research requires expertise from researchers from multiple disciplines. This multidisciplinary milieu creates a challenge in developing commercial products because not everyone speaks the same language, explained Derrick Boston, who recently left California NanoSystems Institute to join the law firm Guth/Christopher LLP.

Another important issue is securing funding for product development. This funding gap--often called "Death Valley"--comes after basic research but before a product has a proven commercial market. Venture-capital investors who bank on a product's commercial success often fill this gap.

In the case of nanotech, venture-capital money has been limited, several presenters noted. Part of the reason for the low funding is that investors don't understand the science, Boston said. He also noted that it's a function of the times: With the bursting of the dot-com bubble, investors are less likely to back early-stage technology.

In fact, Nordon, who spoke at the workshop as well as at the House hearing, pointed out at the workshop that, of the 1,200 total nanotech start-up companies in the U.S., only 109 of them had secured venture capital funding as of mid-2004. These statistics reinforce Boston's point that venture-capitalists are being cautious with their investments and are waiting for more defined products to emerge.

But it may be a while before any new, high-demand nanotech products hit the market. Instead, nanotech is having a more pervasive impact on products already being sold, such as fabrics and sporting equipment, pointed out Marlene Bourne, vice president of research and principal analyst at EmTech Research. In these cases, nanomaterials are incorporated to improve existing products with established market demands.

Bourne also noted that nanotech materials are being used to develop new variations of products already commercially available. This class of development would include novel sensors with enhanced sensitivity. Finally, she said, the development of new products that are unique to the market, such as nanotech drug delivery systems, are a more long-term application with potentially big returns on investments.

Several of the presenters noted that, to help get new products to the market, they would like to see NNI and other government programs give more support to businesses. This sentiment was echoed at the House hearing.

"Until the venture-capital cycle changes again and the stock markets allow companies to adopt longer time horizons, we have a substantial and growing Death Valley," said House hearing witness Sean Murdock, executive director of NanoBusiness Alliance. "Since the market is not prepared to take the risk, the government needs to develop programs to bridge this gulf."