Prospects Of Market Volumes And Shares Economics Essay
Nanotechnology qualifies for having a major impact on the world economy, because nanotechnological applications will be used in virtually all sectors. Scientists, researchers, managers, investors and policy makers worldwide acknowledge this huge potential and have started the nano-race.
Prospects of Market Volumes and Shares
The NSF [1] estimated a world market for nanotechnological products of $1 trillion for 2015. Depending on the definition of nanotechnology and its contribution to added value of the final products as well as the degree of optimism, many other forecasts vary between moderate $150 bn in 2010 [2] and $2.6 trillion in 2014 [3] . The latter, most optimistic scenario would imply that the market for nanotechnology-based products would be larger than the prospected information and communication technology market and would exceed the future biotech market by ten times. The forecasts differ significantly from each other, but have common thread in that they predict a substantial increase of the market for nanotechnological products with a take off some when in the early 2010s. The figures presented above show the possible direction, but are not adequate for deeper analyses of the development of the nanotechnology market. Lux Research and the NSF have both spent some efforts in breaking the figures down in nanotechnology subfields, the first in an analysis of 5 years in the past (1999-2003), the NSF shows the expected breakdowns of the $1 trillion world market share in 2015 shows that in the today’s market for nanotechnology products, nanodevices and nanobiotechnology are estimated to be responsible for the largest shares of around $420 mn and $415 mn. Materials and tools play a minor role with $145 mn and $50 mn. Compared to the forecasts for 2015, all areas are expected to undergo significant increases, e.g. for materials from $145 mn up to $340 bn. Nanoelectronics will amount to $300 bn, followed by pharmaceuticals, chemical processing and aerospace. Many studies have tried to prospect the nanotechnology market. Table A1 at annexe (under typing) compiles selected forecasts from some studies, including the figures of NSF, Lux Research and Fecht et al. All data differ, depending on the study and the point of reference, even sometimes significantly for the same year. However, they give a comprehensive overview of market expectations and a first indication of which market segments can play a major role in the future. In this compilation of different nanotechnological subareas, applications and markets, nano enabled products are expected to be responsible for the largest share. The estimates for the whole area of nanoelectronics are around $300 bn for 2015, which covers semiconductors, ultra capacitors, nanostorage and nanosensors. The market for nanomaterials estimates can be broken down to some more or less important subareas, amongst which nanoparticles, nanocoatings and lateral nanostructures account for more than 300 bn Euro in all materials around 2010. These figures come very close to the NSF estimate for $340 bn US Dollar in 2015.
The three phases model of Lux Research (2004) shows the so far most comprehensive and sophisticated prospect of the developments in the nanotechnology market. The model includes a first phase up to 2004 with some nanotechnology incorporated in high-tech products. The next phase up to 2009 will bring breakthroughs for nanotechnology innovations. Nanoelectronics would dominate this market. In a third phase from 2010 onwards, nanotechnology will become commonplace in manufactured goods with healthcare and life science applications entering the pharmaceutical and medical devices markets. Nanobiotechnologies will contribute significantly to the developments in the pharmaceutical industry. Basic nanomaterials as such will lose importance at this time. Lux Research (2004) estimates a market share for nanotechnology products of 4 % of general manufactured products in 2014, with 100 % nanotech in PCs, 85% in consumer electronics, 23 % in pharmaceuticals and 21 % in automobiles. This would lead for nanotechnology to an overall share of 15 % of the global manufacturing output in 2014. In an analysis of the drug delivery market, estimates for nano-enabled drug delivery market support the above presented projections.
The expected development of the market for nano-enabled drug delivery shows an average annual increase of 50 % between 2005 and 2012. The increase of the market share follows a same path, but with slightly lower rates. In 2012, about $4.8 bn will be earned with nanotechnology on the drug delivery market, which would be a market share of 5.2 %. If the development continues, this market share will increase to 7 % in 2015 and 10 % in 2020.
Public Acceptance of Nanotechnology
None of the above presented projections include ranges of scenarios that are related to the public acceptance of nanotechnology, though lessons should be learnt from former emerging technologies such as nuclear power technology or Genetically Modified Organisms (GMO). Experience shows that citizens’ expectations and concerns as well as perceptions of risks and benefits have to be taken into account, since they present an important impact on the acceptance of new technologies on the market and can decide market success or failure. The ongoing debates on nanotechnology show that some controversies exist and that market success could be jeopardised if public opinion feels that it is not being addressed and consequently takes over a critical view about nanotechnology as such, due e.g. to health and environmental risks of nanoparticles or ethical concerns about privacy [4] . When talking about economic potentials of nanotechnology, these debates have always to be addressed and must be taken seriously.
These aspects can also have a substantial impact on the global distribution of sales and economic returns of nanotechnology products. While some world regions might be more inclined to accept the risks related to nanotechnology, even if they are not fully known or quantified yet, others can be more critical and more reluctant in their acceptance. The difference between the acceptance of genetically modified crops between the European and the American public illustrates this case adequately. Stricter regulations and less explicit marketing of the nanotech element in the products can be the consequence for the more critical regions. Independent of these aspects, Lux Research (2004) has broken down the figures of their forecasts ($2.6 bn in 2014) by region.
Most interestingly, the most important region for the sales of nanotechnology products is Asia and the Pacific region, followed by the USA and Europe on similar levels. While Europe is predicted to have a small but continuous increase of its share, the US is decreasing until 2008 and increasing afterwards, Asia and the Pacific undergo the opposite development. The reasons Lux Research gives for these developments are related to the three phase model of the nanotechnological development: in the nearest future, products will dominate the world market that primarily originate from strong Asian companies, such as PCs, mobile devices or vehicles. After 2008, pharmaceuticals will become stronger and these are dominated by US companies.
Public and private funding
The National Nanotechnology Initiative (NNI) in the United States, launched by the former president Clinton and entering into force in 2001, can be seen as the starting point of a global race for the world leading economies in nanotechnology research programmes. However, funding for nanoscience was already established in many regions of the world by this time, with Europe already being strong in nanomaterials by the mid- 1980s. Up to now, many other countries and the European Union have dedicated considerable amounts of money to nanotechnology research and development. Table 1 gives public funding activities in 2005. It is in 1000 euro for nanotechnology R&D in 2004,(*data is from 2003), source EU commission 2005 [5] .
The European Commission is the largest funding organisation of nanotechnology research in Europe and as an individual agency even worldwide. In the 6th European Framework Programme for Research and Technological Development (FP6), nanotechnology has been defined, together with materials and production technologies (NMP), as a priority for European research. It is estimated that 1.3 bn Euro have been dedicated to nanotechnology projects between 2004 and 2006 (2004: 370 mn Euro, 2005: 470 mn Euro, 2006: 500 mn Euro), also in other priorities than NMP such as the information society technologies, infrastructures, or research and training activities. Already, from 1994 to 2002, nanotechnology related projects were funded which amounted to 300 mn Euro in total. In the upcoming FP7 (2007-2013), nanotechnology will continue as a priority within the NMP theme and is expected to at least double the budget, In addition, some emphasis will be put on nanoelectronics and nanomedicine as topics of European Technology Platforms and on safety, environmental and health aspects, nanometrology, converging technologies and international cooperation.
Regarding the EU Member States, which are accounting together for a much larger share of European public expenditure in nanotechnology than the European Commission, Germany is the top spender, followed by France and the UK. Japan and South Korea are on a comparable level. In addition, taking into consideration that the figures are not reflected in purchase power parities, China's efforts must be considered as substantial and more than significant in a worldwide comparison. All countries are outdone by the United States, which is with the total expenditures of more than 1.2 bn Euros in 2004 and 1.7 bn Euros in 2005 by the federal government agencies and the federal states the largest public spending country worldwide. However, as a whole, and only taking into account the public funding of nanotechnology, Europe would be on a similar level as the United States.
Adding the private funding figures, the picture looks different: In Europe, only one third of the total funding stem from private sources. In the United States, the private sources are around 54 % and in Japan they account for almost two thirds. For all other, mainly emerging Asian countries, the share is around 36 %. In absolute numbers, the US research community can spend more than 3.5 billion Euros for nanotechnology, while it is 2.7 billion in Japan and less than 2.5billion in Europe. This shows the difference between Europe and its competitors in nanotechnological research: The public funding level is competitive, but European industry is lagging behind.
Venture capital funding of Nanotechnology
Which technological areas are already especially dynamic and thus attractive for investors? A closer look at the risk capital market up to 2002 gives an indication. Figure 4 shows nanobiotechnology as the most attractive market for Venture Capitalists, followed by nanodevices, while nanomaterials and nanotools play only a marginal role.
Figure 4: VC funding worldwide by application(left) and by year, in $mn(right). Source: Paull et al. 2003.
Proportions have changed considerably; nanobiotechnology’s dominant role remains, but decreases.Fig 5 shows the overall Venture Capital (VC) funding increased from $63 mn in 1999 to more than $400 mn in 2002, thus an increase of more than 500 % within 3 years. But here again, the decrease from 2000 to 2002, mainly in nanobiotechnology, shows that the VC market might still be in the wait-and-see mode.
Figure 5: VC funding world wide in nanotech in absolute nos. and as share . Sources Anquetil (2005), 2005/2005: Lux Research, 2006, PWC 2006.
The figures show a stagnation of the total VC funding development in 2002 and a moderate but steady increase afterwards. On the other hand, some experts believe that a massive investment in nanotechnology could lead to products that society does not need (Nanologue, 2005).
Jobs and companies in Nanotechnology
The creation of companies is an important indicator for the development and economic significance of a new technology. New companies are typically start ups with one main asset: the patent on a new technology which they can exploit themselves or license to other companies which are more capable in terms of production or distribution. Venture Capital is a major source of financing in this high tech and thus high risk sector. When it comes to the creation of new jobs, start ups and small and medium sized enterprises (SMEs) contribute most. The NSF estimates that about 2 million nanotechnology workers will be needed worldwide by 2015. They would be distributed across the world regions as follows: 0.8-0.9 million in the US, 0.5-0.6 million in Japan, 0.3-0.4 million in Europe, about 0.2 million in the Asia- Pacific region excluding Japan and 0.1 million in other regions. Additionally, 5 million related supporting jobs, or at average 2.5 jobs per nanotech worker, would be created [6] . Even more optimistic, Lux Research expects a number of 10 million manufacturing jobs related to nanotechnology by 2014.
Figure 6: No. of nanotechnology jobs in million and the share of these jobs as % of all manufacturing jobs. Source: Lux Research 2004.
Figure 6 shows the total number of jobs in nanotechnology and its share of all manufacturing jobs. Many of these jobs will be created in SMEs, but not exclusively. In the past few years, many already well established companies expanded their technology portfolio to nanotechnology in order to maintain their competitiveness. This explains why companies were identified as being nanotech oriented that sometimes even existed 100 years ago or even longer. Typical examples are big companies in chemical and pharmaceutical industry, optics and electronics (Bayer, BASF, Carl Zeiss, Agfa-Gevaert, General Electrics, Philips, all created before 1900), though these established companies form a minority in the list of all existing nanotech companies. Figure 7 shows nanotechnology companies by their years and decades of creation, worldwide and by world region. The data stem from the publicly available database of nanotech companies provided by NanoInvestorNews. For 522 companies out of the total of 1000 companies in this database the year of creation was provided. The world regions are composed mainly by Germany, Switzerland and the United Kingdom for Europe, the United States and Canada for the Americas and Japan, South Korea and China for Asia. Only a few of the today’s active nanotech companies had been created in the first eight decades of the 20th century, with an average of ten companies each decade. In the 1980s, the number increased significantly but the take off did not take place before 1996, in which about 30 nanotech companies were created – and up to 50 companies in 2000. This continues with increasing tendency, which is not reflected in the numbers due to incomplete data sets for the most recent years. It is important to note that all companies exist at the time of reference (May 2005), thus companies, which got bankrupt were acquired or got merged before, are not included in the statistics.
Figure 8 shows the result from a survey by Fecht et al. [8] , which covered 357 companies
Worldwide to analyse in which nanotechnology segments, nanotech companies active One third of the companies observed are active in nanomaterials, another third in nanobiotechnology. Nanotools and nanodevices play a smaller role. But there are significant differences between the four most active countries in the world: while the United States are pretty much average, Germany is stronger in nanotools, the United Kingdom in nanobiotechnology and Japan equally strong in nanomaterials and nanotools, above average in nanodevices and very weak in nanobiotechnology.
Figure 8: Companies world wide in different nanotech segments (left) and in most active countries (right). Sample survey of 357 companies by Fecht et al., 2003
Research organizations
Private companies are not the only organisations active in nanotechnology. The number of all organisations that do research or produce nanotechnology reflects all nanotechnology R&D activities and helps to identify patterns of activity in terms of scientific and applied research. Figure 9 shows the number of organisations active in nanotechnology by institutional type, by most active countries and by world region. The dataset comprises around 1100 organisations, of which 460 are SMEs or start-ups, 390 research institutes, 120 large companies and 80 subsidiaries or joint ventures [9] . But there are differences between the world regions: While SMEs and start ups have the by far largest share in the United States, universities and research centres play a bigger role in Europe and Asia. Grouped together in two groups - all companies (including SMEs,
Figure 9: Nanotechnological institutions by country(left) and by type of organization (right). The overall no. is 1198 (left) and 1050 (right) resp. Source Cientifica, 2003 big companies and subsidiaries) on the one side and research institutes (universities and research centres) on the other side , interesting differences between the countries can be observed. The share of research institutes of all organisations is very high in Japan, the United Kingdom, China, France, Australia and Sweden. In Austria, Spain, Italy and Poland, they even outnumber the companies. The proportion is different in the
United States, Germany, Switzerland, Israel and Taiwan as well as in South Korea and Finland, where the number of companies doubles or more the research institutes.
From the data it can be concluded that the most significant developments in the creation and activity of nanotech companies and nanotech related jobs can be observed in the United States. In Europe, Germany plays the most significant role, but on a rather moderate level when compared to the United States. Japan is the United States’ most important competitor. When it comes to competitiveness and job creation, the significance of companies being built on nanotechnological inventions or applying nanotechnology within their technological portfolio will increase.
The emerging nanotech countries China, India and Russia are prepared to takeoff and to approach Europe. Although none of them appear prominently in the company statistics, it can be assumed that they will show significant dynamics in the next decades and can become serious competitors on the world market for products and for research and production sites.
Patent applications
Durable economic success would not be possible without a strong scientific and technological basis. On the other hand, scientific and technological excellence does not automatically facilitate economic success and breakthrough. Therefore it is advisable to analyse the two main quantifiable indicators of scientific and technological excellence: patents and publications.
Patents reflect the ability of transferring scientific results into technological applications. Patents are also a prerequisite for economic exploitation of research results and are thus central for any analysis which deals with economic potentials of a technology and the identification of most promising fields and actors in terms of persons, organisations, or countries [10] . The European Patent Office (EPO) has developed a methodology in order to identify and classify nanotechnology patents and patent families at most important patent offices worldwide. It has the clear advantage that nanotech patents can be identified more adequately and that worldwide comparisons are more reliable because no world region is favoured. Figure 10 shows the evolution of the number of patent families from 1995 to 2003 and the shares in the different nanotechnology subfields.
Figure 10: nanotech patents world wide according to EPO tag Y01N. Line graph: Total no. of patent families in Y01N. Pie: Distribution of tag classes Y01N2-Y01N12 in 2003. Source EPO, 2006.
The number of patent families increases continuously but with as yet no real take-off. Two small peaks in 1999 and in 2002 pointed to an exponential growth path, but in each case in the following year it had to suffer a slow-down which affects the overall growth rates in the period regarded. In 2003, the largest group of nanotechnology patents is related to nanoelectronics. Nanomaterials are on second place, followed with distance by nanomagnetics and nanooptics.
The overall growth rate of nanotechnology patents between 1995 and 2003 is at 14 % annually with lower rates in the second period compared to the first period. However, huge differences occur between the fields. Nanoelectronics, nanomaterials, nanodevices and nanomagnetics had the highest growth rates in the 1990ies but lower ones (to even negative growth in case of nanodevices) between 1999 and 2003. On the other hand, nanobiotech and nanooptics had to undergo negative growth in the late 1990ies, but increased to around 20% per year in the years 2000. However, in absolute terms both are on a much lower level than nanoelectronics and nanomaterials. Therefore, this increase can not be seen as an early indication of the growing significance of nanobiotechnology for the market of nanotechnology products.
Figure 11: Patents worldwide according to applicant (left) and inventor (right). Source EPO, 2006.
Figure 10 [11] shows the number of nanotechnology patents worldwide, broken down to applicants and inventors from the Americas (mainly the US and Canada), Asia (mainly Japan and South Korea) and Europe (mainly Germany, the UK, France and the Netherlands). It is obvious that America is the by far most active world region for registering patents in nanotechnology. For each year in question they count for half of the patents for which the country of applicant could be identified. Interestingly, this leading position is slightly weaker when it comes to the country of inventor, where Asia improves its position. The difference between country of applicant and country of inventor is - generally spoken - due to the difference between location of a company and living place of the researcher which occur in cases of research visits and of commuting between countries in border regions. In the case of nanotechnology, a significant number of inventors registered Asian home addresses and worked for American applicant companies. Because of the huge number of cases, mobility of researchers might not be a sufficient explanation. It might be fair to assume that this difference is also due to the fact that their Asian research centre, owned by an American company, did not apply for the patent itself but left it to the American headquarter. Interestingly, the differences decrease in 2002 and 2003. This is an indication either for a change of habits in patenting or an increasing activity of Asian applicant companies. The American slope shows also that the peaks in world wide nanotechnology patenting (see Figure 10) has been caused mainly by an unusual large number of American applicants in 1999 and in 2002. The United States is the most active patenting country, both for applicants and for inventors. Germany, France and Canada rank higher for nanobiotechnology, the Netherlands and Sweden come up in nanoelectronics, while Belgium and Taiwan rank high in nanomaterials. Switzerland is in particular strong in nanodevices, and the UK in nanooptics.
Figure 12: Average annual growth rates of nanotech patents in 2003 for top 8 countries as per EPO tag Y01N. Source: EPO, 2006.
The annual growth rates of nanotechnology patents in each of the top eight applicant countries in 2003 are displayed in Figure 12. The growth of the number of nanotechnology patents originating from the United States is very similar to the overall development of all nanotechnology patents, which is marked by larger increases in the late 1990s and smaller ones in the early 2000s. With 50 % of all nanotechnology patents it is quite natural that the development in the United States also shapes the worldwide development. The opposite picture can be observed for all other countries: small increases or even decreases (France, the Netherlands) in the 1990s and significant growth in the years 2000. Germany, Canada, the UK and in particular the Netherlands and South Korea have shown a much more dynamic development in the last period regarded. Scientific publications and Citations
Scientific publications are the most appropriate indicator for measuring scientific excellence by quantifying the output. However, the pure output number could be misleading; other indicators such as citations do reflect the quality of a scientific paper and its impact on the scientific community. Comparing the world regions, Figure 13 shows Europe in the lead in the number of scientific publications in nanotechnology.
Figure 13: Scientific publications in Nanotechnology in SCI database per world region1992-1995 and 1998-2001. Source: Glanzel et al.2003
In the 1990s, the European share still slightly increased, while the number of scientific publication originating from the USA and Canada decreased and especially ‘other Asia’, i.e. China, gained significance [12] . Thus, it can be concluded that Europe has a large scientific basis in nanotechnology, comparable with its main competitors. ‘Other Asia’ is the most dynamic world region. A closer look at the different countries will shed some light at the origins of the nanoscientific publications.
Figure 14: Scientific publications in nanoscience per country and subfield, 1999-2004 SCI database. Sources: Igami 2006, Science Citation Index 1999-2004. Analysis by NISTEP,2006 [13]
Figure 14 shows more recent data on the number of publications by country and by scientific disciplines. Not surprisingly, the United States is most active with in total more than 18000 nanoscientific publications from 1999 to 2004. Japan and China follow, but with a large difference. The largest European countries are in position four to seven. South Korea, Canada, and Spain complete the top ten. The picture change slightly when one distinguishes between the three nanoscientific subfields chemical synthesis, superconductivity and quantum computing, and nanomaterials. In the first two fields, Germany is much stronger than China, on a similar level with Japan, and the UK and France are on a similar level with China. China is very strong in nanomaterials, it takes over the second position from Japan and reduces the gap to the United States. The top cited journals for nanoscientific papers are the European ‘Nature’ and the US ‘Science’ [14] .Both journals are multidisciplinary, which is very appropriate for nanoscientific publications. The vast majority of the nanoscientific high impact journals are in the fields of chemistry and physics, some are on materials research. Out of the top list, only ‘Nanostructured Materials’ is explicitly dedicated to nanoscience - with a relatively low impact rate and at the same time second highest number of nanoscientific articles. These observations do support the interdisciplinary character of nanosciences.
Conclusions
The data presented are sufficiently reliable because they are consistent and anticipate different paces in different nanotechnology fields and different important nanotech countries. A bright nanotechnology future can thus be predicted. Because of its cross cutting character and its particular significance for the pharmaceutical and electronics industry, it has the potential easily to overtake the traditional biotechnology and even reach the level of the current situation with information and communication technologies. These developments will have also a tremendous impact on the number of jobs in the manufacturing industries. Nanotech companies have been created in the past and much more are expected to emerge in the future. Unlike biotechnology, many of these companies will work in sectors where company size is less important for research and development (R&D), production or marketing. Large and multinational companies are already committed to nanotechnology and spend a substantial amount of money for nanotech related research. In addition, risk capital for nanotech start up companies is available. Venture Capitalists have discovered nanotechnology as the next big thing and follow the developments in the nanotech sector. Regarding the financing of nanotech research, some differences between the world regions become obvious. In Europe, the private investors are lagging behind the public funding agencies. While the United States and Japan have a more balanced partition of private and public funding, the European nanotech research has to suffer from lower private funding sources. Knowledge and intellectual property are created in research projects which are to a great extent publicly funded. However, the successful technological implementation and the translation into commercially successful products depend also on the integration of industry in these projects [15] . In this connection it relevant that Europe is focusing on civil applications of nanotechnology, whereas. the United States spends a great share of its public funding of nanotechnology for military research.