Open innovation reaches Japan | August 7, 2017 Issue - Vol. 95 Issue 32 | Chemical & Engineering News
Volume 95 Issue 32 | pp. 18-19
Issue Date: August 7, 2017

Open innovation reaches Japan

Accustomed to keeping R&D in-house, chemical producers are now reaching out
By Katsumori Matsuoka, special to C&EN
Department: Business
Keywords: research funding, Japan, R&D, DIC, outsourcing
A Sumitomo Chemical researcher developing organic light-emitting diode materials in the company’s lab in Tsukuba, Japan.
Credit: Sumitomo
A man dressed in a clean-room outfit holds an electrically illuminated square piece of synthetic material.
A Sumitomo Chemical researcher developing organic light-emitting diode materials in the company’s lab in Tsukuba, Japan.
Credit: Sumitomo

The Japanese dye, ink, and chemical producer DIC recently teamed up with Kyushu University to develop a new fluorinated polymer to create smoother photoresists for semiconductors and liquid-crystal displays.

DIC came up with the polymer via a living polymerization technology that its researchers had jointly developed with academics from several departments at Kyushu. In living polymerization, polymer chains grow freely without termination, resulting in chains of similar length.

The alliance would be prosaic in the West, but Japanese chemical companies are relatively new to the idea of collaborating with outside researchers. Making up for lost time, major Japanese companies are now busy setting up alliances with other companies, academia, and government labs.

Yoshiyuki Nakanishi, the chief executive officer of DIC, is among those backing the idea of open innovation, a method of conducting R&D in collaboration with outside partners including competitors, start-ups, universities, and research institutes. Not long after assuming his position in 2012, Nakanishi told his staff, “Don’t stick to doing it all by ourselves.” His support for collaboration with outsiders exemplifies the new thinking among R&D managers in Japan’s chemical industry.

In the past, Japanese chemical firms tended to conduct all their R&D work in-house. One reason was fear that sharing information with outsiders could cause intellectual property to leak out.

Another reason was a system of lifetime employment that encourages companies to invest in their employees. Over time, the thinking went, lifelong R&D staffers would prove their worth by developing unique technologies that allow their employers to differentiate themselves in the marketplace.

The traditional way of conducting R&D in Japan—internally—has led to numerous successes, many who are familiar with the Japanese chemical industry believe.

Customers, particularly in the electronics industry, often prefer to work with specialized materials suppliers that pursue their own unique technologies in isolation from competitors. Researchers at small and medium-sized Japanese chemical firms have amassed in-depth expertise in several niche performance materials.

But times are changing. In recent years, Japanese electronic materials suppliers lost market share to emerging competitors from China, South Korea, and Taiwan. This happened while the cost of developing new materials rose considerably, forcing Japanese chemical firms to reduce their focus on niche products that don’t have widespread market appeal.

Managers at DIC, among others, have concluded that it can be simpler to go to outsiders with particular expertise rather than try to do everything in-house.

“The engineering of new materials and evaluation of technologies for their performance are areas where we are open to collaborating with academics and research institutes,” says Toshifumi Tamaki, a managing executive officer for technical affairs at DIC.

Nowadays, Japanese companies, much like their Western counterparts, are trying to match their materials to major social themes, such as mobility, energy, the environment, and health and aging. And rather than just developing and producing materials, Japanese firms are working on applications development. Increasingly, firms are marketing not only materials but instead complete solutions that might consist of a mix of old and new products along with technologies for delivering them.

“We are facing difficulty supplying value to our customers with the technology from just one material,” acknowledges Ikuzo Ogawa, senior managing executive officer for R&D at Sumitomo Chemical.

For now, open innovation is not nearly as developed in Japan as it is in the Western chemical industry. For instance, a major Japanese company has yet to hold a contest for technology development or set up a website that invites outsiders to find solutions to specific industrial problems—steps that Western firms such as AkzoNobel, BASF, and Dow Chemical routinely take.

AkzoNobel’s chemical business, for instance, recently sponsored a contest for start-ups in which the prize for coming up with solutions to targeted problems was a commercial development partnership. The competition delivered dozens of suitable start-ups to the company’s front door, and AkzoNobel is now working with 10 of them.

But Sumitomo and other Japanese companies do use alliances with outside companies and organizations to speed new material development and keep up with the breakneck pace at which consumer products are introduced, particularly in the electronics sector.

Japanese pairings

Industry-academia collaborations yield an eclectic mix of research projects.

Asahi Kasei Kyushu University Refining of bamboo into raw materials for medicine and food
Asahi Kasei University of Miyazaki Chemical transformation of cellulose to create new molecules
Kaneka Kansai University Development of antifreezing protein derived from enoki mushrooms
Mitsubishi Chemical University of Toyama Technology to analyze the causes of sepsis
Nippon Shokubai Okayama University Commercial production process for oxidized graphene
Sumitomo Chemical Purdue University Technology to optimize agrochemical use by analyzing photos of plant roots and leaves
Toray Industries Waseda University affiliate Thin films to prevent unwanted internal adhesion after surgery

Note: List is not comprehensive. Sources: Companies, Japanese media reports

“Whereas it might take us 10 years to develop a new material, new models of [liquid-crystal display] TVs are launched every six months or so,” Ogawa says. Among initiatives to advance its research in display materials, Sumitomo Chemical subsidiary Cambridge Display Technology, a U.K. firm, has set up alliances with the University of Cambridge and National University of Singapore in areas such as polymeric organic light-emitting diodes.

Sumitomo has multiple ongoing projects with a handful of academic institutions both in Japan and abroad. With Purdue University, for example, the firm is developing a photographic diagnosis system to provide information on the roots and leaves of growing plants. The technology will help farmers understand the growing process, evaluate plant stress, and support the precise application of agrochemicals and fertilizers.

In Japan, Sumitomo has set up a comprehensive alliance with Riken, a large network of publicly funded labs focused on natural sciences. Under the alliance, cooperative life sciences research is ongoing in Riken’s Kobe lab, while at Riken Wako, near Tokyo, the focus is on new materials.

Ogawa and other Sumitomo managers are convinced that open innovation is necessary to develop new products for the firm’s information and electronics, environment and energy, and life sciences businesses. The company is also counting on collaboration with others to help it come up with new technologies for catalysts, precision machining, organic and inorganic chemicals, and polymers.

Other firms are trying to move beyond garden-variety academic collaborations and into something more sweeping. Take Mitsubishi Chemical Holdings as an example, a conglomerate that includes the chemical producer Mitsubishi Chemical, the drug firm Mitsubishi Tanabe Pharma, the industrial gas maker Taiyo Nippon Sanso, and other subsidiaries.

The firm has several partnerships with universities in Japan and abroad. One is an alliance formed in 2001 between Mitsubishi Chemical and the University of California, Santa Barbara, to research new materials such as organic solar cells and gallium nitride for use in light-emitting diodes.

This agreement involves only Mitsubishi’s chemical arm. Now, the conglomerate wants to reach out to external organizations more broadly and strategically. It plans to establish teams in China, Germany, Singapore, and the U.S. that will approach local research groups about alliances that would impact businesses across the whole of Mitsubishi Chemical Holdings.

Likewise, the chemical maker Nippon Shokubai in 2014 established a joint research chair at Osaka University’s graduate school of engineering in an effort to tap the school’s catalyst and synthesis expertise. In April of this year, the company decided to expand the alliance into a full research center staffed with seven instructors and 14 guest lecturers.

Japan’s government firmly encourages collaborative research. Hitoshi Yamada, a former official in charge of promoting industry-academia collaboration at the Ministry of Economy, Trade & Industry (METI), tells C&EN that Western companies are more advanced in open innovation and that Japanese companies need to catch up.

To that end, the government introduced a tax break two years ago that allows companies to deduct 30% of the expenses of joint research with academia, research institutes, and contract research firms. The 30% deduction also applies to the use of intellectual property from small and medium-sized firms. Firms already benefit from a 10% tax deduction on all R&D activities.

In 2015, the METI-funded New Energy & Industrial Technology Development Organization started an innovation committee with 177 companies—including 40 chemical firms—and 41 universities. The goal is to promote networking, expose scientists to research in different organizations, and encourage matchmaking. The participating chemical companies include the big firms Mitsubishi, Mitsui, and Sumitomo as well as smaller players such as Sakai Chemical and Teika.

In Tsukuba, a leafy town near Tokyo that is home to several government labs, the National Institute for Materials Science recently set up a research agreement with Asahi Kasei, Mitsubishi, Mitsui, and Sumitomo. Although the institute has collaborated with those companies in the past, this time the firms will also share information among themselves to advance common research objectives.

Initially, the research will focus on lighter and stronger polymers for vehicles and aircraft; fabrics that can absorb heat, light, vibration, or sound; and polymers that can control gas or ion permeability in a range of applications.

The pace at which public agencies and companies in Japan are launching new initiatives is accelerating. Recently, the Japanese government helped fund a consortium of nine chemical companies that will collaborate on the development of new materials.

And in July, the government launched the Science Innovation Matching Forum to increase the frequency and depth of open innovation among Japanese industry, academia, and government research institutes. Like chemical companies, the government hopes the increased collaboration will help Japan keep up as a world-leading supplier of advanced materials.

Katsumori Matsuoka has covered the chemical industry for Japan’s Chemical Daily for the past four decades.

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