What Are We Getting For The Money? | April 9, 2007 Issue - Vol. 85 Issue 15 | Chemical & Engineering News
Volume 85 Issue 15 | Web Exclusive
Issue Date: April 9, 2007

Cover Stories: Building Up Nanotech Research

What Are We Getting For The Money?

Assessing a return on investment in nanotechnology proves difficult
Department: Business, Science & Technology

In its 2004 strategic plan, the National Nanotechnology Initiative (NNI) laid out four goals for itself: maintain a world-class R&D program; facilitate the transfer of technology into products for economic growth; support the responsible development of nanotechnology; and develop educational resources, a skilled workforce, and supporting infrastructure and tools to advance nanotechnology.

Backing these goals is about $1.4 billion in annual spending by U.S. government agencies. Six years after NNI was created, it's reasonable to ask where the money has gone and what it's bought in return.

More than 70% of the government money funds research on fundamental processes, materials, and devices. The next largest chunk at about 11%, or a proposed $160 million for fiscal 2008, goes toward research facilities and equipment. Since 2001, more than 60 facilities, centers, and networks have emerged under NNI.

"When you think about return on investment, you can pretty easily figure out what the investment part is because those numbers are somewhat fixed and visible," explains Edward K. Moran, director of product innovation at the professional services firm Deloitte & Touche USA. Moran served on a National Academies committee that published the first triennial review of NNI in September 2006.

Figuring out the return, Moran says, is where the thinking "starts to get fuzzy." The review committee was challenged from the beginning by having to parse out what is and isn't nanotech-related spending and by conflicting definitions of nanotechnology itself. Moran and the rest of the committee were struck by how few metrics have been put in place and how little data is being collected. Without these, he says, there's no way to gauge progress.

"When government people look at outputs vis-à-vis science and technology, they have two suggestions: patents and papers," Moran says. And U.S.-funded scientists have generated several thousands of both related to nanotechnology in the past decade.

"Those are definitely data points, but considering that less than 10% of patents ever generate a dollar of revenue, is that really a metric you should use?" Moran calls patents a "very, very weak proxy for economic growth." And the publication of papers, he adds, probably is not driven by the need to demonstrate commercial results and may indicate many things other than economic return.

"One needs to raise these questions because they clearly indicate that you can maybe come to some qualitative conclusions, but it is very difficult to come to real quantitative ones," Moran explains. "They also point to recommendations and changes going forward." The bottom line, the review committee concluded, is that NNI is having a positive effect on coordinating nanoscale R&D across the federal government, but the committee found it "difficult at best to make any firm projections of economic impacts."

Of course, not all of NNI's goals are related to commercial development and economic growth. "One goal is to maintain a world-class R&D program, and you could argue that a manifestation of that are these various research facilities springing up seemingly everywhere," Moran says. Whether there are too many of them is unclear, but he believes that coordination and competition are in place, along with a demand for their use.

Tim E. Harper, chief executive officer of Cientifica, a U.K.-based market research and consulting firm, points out that the facilities are helping to bring together scientists and engineers from across disciplines to "leverage the whole of science." Many are producing good science, while others are spinning out companies or interacting closely with industry, he says, "but the output tends to be patchy."

"It's probably time to figure out which of these centers are actually doing great work and focusing on applications that will have an economic effect and which have been going down blind alleys," Harper says. But commercial results are not the only criteria by which to judge centers. Doing great basic science with no links to industry isn't necessarily bad, he says, and neither are strong commercialization efforts but no scientific publications.

When government funding started to be set up in the years before NNI, there wasn't a clear idea what direction nanotechnology would take, Harper explains. "We were really working in the dark, so I think it's probably time for a critical reevaluation," he says. "There isn't an infinite budget here, so we need to find ways to stimulate the good centers and either refocus or close down the ones that are probably not going to produce very much."

In the past 10 years, a primary industry based on nanomaterials has emerged. "You can buy nanomaterials off the shelf," Harper remarks. "And now we'll be moving more and more into seeing higher-value-added applications emerge." These are expected to include advances in drug delivery systems and medical diagnostics.

"Government funding is flattening now because we've built the infrastructure and we don't need that big capital investment," Harper says. Money will still go to fund research, scientists, and equipment, but at a lower level. "What we'll see now is corporations and private funding taking up the slack."

The National Academies committee concluded that the federal government should sustain support of NNI and ensure a balance between short-term goals and long-term R&D. Investments over the past several years, it concluded, are beginning to bear fruit and provide a framework for continued growth and achievement. And this has included the creation of facilities and tools that are beyond the means of any single organization.

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