CCR Study Phase II Measure for PPT

CCR Phase II Study “Measure for Measure: Chemical R&D Powers the U.S. Innovation Engine”: 

CCR Phase II Study “Measure for Measure: Chemical R&D Powers the U.S. Innovation Engine” Donald B. Anthony, Sc.D. President & Executive Director

Council for Chemical Research: 

The Council for Chemical Research (CCR) was created in 1979 to improve trust and collaboration between the public and private research sectors. “CCR's purpose is to benefit society by advancing research in chemistry, chemical engineering, and related disciplines through leadership collaboration across discipline, institution, and sector boundaries.” Council for Chemical Research

CCR Membership & Goals: 

CCR Membership & Goals Represents research leadership in 3 sectors Industrial (27 corporations) Academic (134 research universities) Governmental (10 national labs and 1 international affiliate) Goals Advance research collaboration Advocate research investment Enrich graduate education Address long-range issues

1987 Nobel Prize: 

1987 Nobel Prize Robert M. Solow, a professor at the Massachusetts Institute of Technology, was awarded the 1987 Nobel Prize for Economics for identifying technological change as the chief factor underlying economic growth. His 1957 article, "Technical Change and the Aggregate Production Function," showed that half of economic growth cannot be accounted for by increases in capital and labor. He then demonstrated that technological change—ignored by mainstream theory—is responsible for that unaccounted-for portion of economic growth—now called the "Solow residual.”

Measuring the “Solow” Residual: 

Measuring the “Solow” Residual labor capital land residual labor capital land residual labor capital land residual 1870-1930 1840-1860 1940-1990

CCR Study: 

CCR Study In the Fall 1999, the CCR commenced a special study with the objective: Measure the impact (return or payoff) of chemical research and development Provide comprehensive and quantitative results Use leading edge methodologies Econometric production function (Dr. Baruch Lev, NYU) Bibliometric analysis (Dr. Francis Narin, CHI Research, now ipIQ)

Phase I Results: 

Phase I Results $2 Operating income per $1 R&D invested 17% after tax return Publicly funded science links highly to chemical patents, 6 citations per patent Published Summer, 2001: “Measuring Up: R&D Counts for the Chemical Industry”

Macroeconomic Implications: 

Macroeconomic Implications $1 B Federal R&D Funding In Chemical Sciences $5 B Chemical Industry R&D Funding $10 B Chemical Industry Operating Income* Basis: *estimated from CCR study **extrapolated from LANL study by Thayer, et al., April 2005 using REMI economic model

Phase II Results: 

Phase II Results Published February 2006 “Measure for Measure: Chemical R&D Powers the U.S. Innovation Engine”

Phase II: 

Phase II What are the financial payoffs for technology quality, innovation speed and strong scientific links? What industries are significantly impacted by the chemical sciences? How long does it take for public funded science to yield commercial innovation?

Phase II: 

Phase II What are the financial payoffs for technology quality, innovation speed and strong scientific links? What industries are significantly impacted by the chemical sciences? How long does it take for public funded science to yield commercial innovation?

Approach to Question 1: 

Approach to Question 1 Determine any correlations between chemical companies’ patent holdings and their financial performance Financial measures included: Sales Market to book value Stock price Bibliometric methodology (Patrick Thomas and Michael Albert, ipIQ)

Patent Portfolio Indicators: 

Patent Portfolio Indicators Current Impact Index (CII) a measure of the impact of a company’s patents, based on how frequently its patents are cited by subsequent patents Science Linkage (SL) average number of citations a company’s patents make to scientific papers, a measure of its links to scientific research Innovation Speed (IS) – measures median age of the patents cited by a company’s patents, an indicator of its speed of innovation

Slide14: 

Introduction to Patents and Patent Citation Analysis 14 U.S. Patents 2 Foreign Patents Dow Patent No. 5, 272,236 Issued 1993 510 U.S. Patents 32 Science References Backward Citations (References) Forward Citations Time 1970-93 1993 1994-2006 A Starting Patent references prior art, and is cited by later patents CII Ext CII SL IS

Highly Cited Chemical Patents: 

Highly Cited Chemical Patents U.S. Patent 5,055,438 Awarded to Exxon in 1991 “Olefin polymerization catalysts” With Dow’s discoveries, launched a rebirth of the polymers industry U.S. Patents 5,064,802, 5,272,236, and 5,278,272 Awarded to Dow in 1991, ‘93 and ‘94 “Metal complex compounds”, and “Elastic substantially linear olefin polymers” With Exxon’s discoveries, launched a rebirth of the polymers industry Chemical & Engineering News, September 11, 1995 Copyright © 1995 by the American Chemical Society. Metallocene Catalysts Initiate New Era In Polymer Synthesis Well-defined catalysts now allow producers to design polymers with exact properties and to create as yet unknown materials

Examples of “Metallocene” Polymers: 

Examples of “Metallocene” Polymers Improved "non woven" fabrics reduce healthcare and childcare costs with more comfortable and less expensive disposable garments Agricultural and greenhouse films with longer service life, increased crop yields, and thinner films lower food costs and solid waste volumes

Highly Cited Chemical Patents: 

Highly Cited Chemical Patents U.S. Patents 3,953,566 and 4,482516 Awarded to W. L. Gore in 1976 and 1984 “Process for producing porous products” and “Process for producing a high strength porous polytetrafluoroethylene product having a coarse microstructure” Gore-Tex® grafts and implants, clothing, and cable shielding

Highly Cited Chemical Patents: 

Highly Cited Chemical Patents U.S. Patent 4,576,850 Awarded to 3M in 1986 “Shaped plastic articles having replicated microstructure surfaces” Technology underlying all reflective traffic signs as well as impacting contact lenses, video discs, indirect lighting, biosensors, etc.

Highly Cited Chemical Patents: 

Highly Cited Chemical Patents U.S. Patent 5,085,698 Awarded to DuPont in 1992 “Aqueous pigmented inks for inkjet printers” Over 254 follow-on citations covering every aspect of inkjet printing

Conclusion: Strong Technology Pays Off: 

Conclusion: Strong Technology Pays Off Chemical companies with strong patent portfolio indicators tend to exhibit consistently strong financial performance, such as higher stock market valuations (35-60% higher on average) Correlation between CII (patent impact) and financial performance is particularly strong Correlations between financial performance and SL (science linkage) and IS (innovation speed) are also positive

Phase II: 

Phase II What are the financial payoffs for technology quality, innovation speed and strong scientific links? What industries are significantly impacted by the chemical sciences? How long does it take for public funded science to yield commercial innovation?

Approach to Question 2: 

Approach to Question 2 Examine patent database to determine which industries Patent chemical technology vs. other technologies Reference chemical technology patents vs. other technology patents Reference chemical science literature vs. other sciences Bibliometric methodology (Michael Albert, Diana Hicks and Peter Kroll, ipIQ)

The 15 Industries (1151 companies) : 

The 15 Industries (1151 companies) Automotive* (90) Biotechnology* (41) Chemicals* (143) Computers & Semiconductors* (164) Electrical & Electronics* (116) Energy (34) Engineering, Oil Field Services (5) Food, Beverage & Tobacco* (28) Forest, Paper, Textiles* (37) Health Care (78) Instruments & Optical (49) Materials (24) Metals & Mechanical (238) Pharmaceuticals* (58) Telecommunications* (46) * - denotes names that are very similar to the names of a technology

The 29 Technologies : 

The 29 Technologies Aerospace & Parts Agriculture Biotechnology* Chemicals, Plastics, Polymers & Rubber* Computers & Peripherals* Electrical Appliances & Components Fabricated Metals Food & Tobacco* Glass, Clay & Cement Heating, Ventilation & Refrigeration Industrial Machinery & Tools Industrial Process Equipment Measurement & Control Equipment Medical Electronics Medical Equipment Miscellaneous Machinery Motor Vehicles & Parts* Office Equipment & Cameras Oil & Gas, Mining Other Other Transport Pharmaceuticals* Power Generation & Distribution Primary Metals Semiconductors & Electronics* Telecommunications* Textiles & Apparel* Wood & Paper* * – denotes names that are very similar to the names of an industry

How many industries build on chemical technology?: 

How many industries build on chemical technology? Definitions:  Core technology: Technology accounts for at least 10% of patents or citations for an industry  Important technology:Technology accounts for between 1% and 10% of patents or citations for an industry  Irrelevant technology: Technology accounts for less than 1% of patents or citations for an industry

Chemical technology creation is core or important in all 15 of the industries: 

Chemical technology creation is core or important in all 15 of the industries

No other technology comes close: 

No other technology comes close Industrial Machinery & Tools

Again, no other technology comes close: 

Misc. Manufacturing Again, no other technology comes close Technologies whose patents earned at least 60,000 citations, descending by overall importance Cited Technology

Science Base Across Industries: Chemistry Ranks First: 

Science Base Across Industries: Chemistry Ranks First Fields ordered descending by overall importance Scientific field Core Important Irrelevant Small fields with <3% total citations

Conclusion: Chemistry is the most enabling science / technology: 

Conclusion: Chemistry is the most enabling science / technology More than any other technology: All industries create chemical technology. Evidence: patent counts The underpinning of all industries’ technology relies on chemical technology. Evidence: industry-to-technology patent citations Chemistry is an important part of the science base of all industries. Evidence: patent-to-paper citations

Macroeconomic Implications: 

Macroeconomic Implications $1 B Federal R&D Funding In Chemical Sciences $5 B Chemical Industry R&D Funding $10 B Chemical Industry Operating Income* Basis: *estimated from CCR study **extrapolated from LANL study by Thayer, et al., April 2005 using REMI economic model

Phase II: 

Phase II What are the financial payoffs for technology quality, innovation speed and strong scientific links? What industries are significantly impacted by the chemical sciences? How long does it take for public funded science to yield commercial innovation?

Approach to Question 3: 

Approach to Question 3 Trace the average time spans from successful commercial innovations back to originating patents and scientific literature citations. Determine start of funding from literature acknowledgements. Time intervals to determine: T1 = time from grant funding to paper publication T2 = time from paper publication to citing patent grant date (Science-to-Technology Cycle Time) T3 = time from predecessor patent issuance to patent grant date (Technology Cycle Time) T4 = time from patent issuance to product commercialization Bibliometric methodology (Peter Kroll, ipIQ)

Timeline from Conception to Market: 

Timeline from Conception to Market Foundational Research Funding Granted Patents Granted Papers Published Technology Commercialization Invention Development Foundational Science Foundational Technology Predecessor Patents Granted Patent Applications Time T1 T2 T3 T4

Timeline from Conception to Market: 

Timeline from Conception to Market Foundational Research Funding Granted Patents Granted Papers Published Technology Commercialization Invention Development Foundational Science Foundational Technology Predecessor Patents Granted Patent Applications Time 4-5 yrs 9-11 yrs 8-10 yrs (T4 > 5 yrs)

Conclusion: Big Opportunity to Reduce Innovation Cycle Time : 

Conclusion: Big Opportunity to Reduce Innovation Cycle Time Industry focused on later stages of innovation, in particular, applied research and patenting to commercialization Limited collaboration at basic research stage Significant upside financial value if 20 year innovation cycle is shortened

Overall Conclusions: 

Overall Conclusions Chemical companies get $2 of operating income for every $1 of R&D invested; that’s a 17% after tax return. Technology quality, innovation speed and strong scientific links deliver greater shareholder value. Chemical technology is highly dependent on publicly funded chemical science research All industries are significantly impacted by the chemical sciences. It is the most enabling science and technology. The big opportunity is to reduce the 20-year innovation time lag from initial public research funding to commercialization.

Acknowledgements: 

Acknowledgements Funding provided by National Science Foundation National Institutes of Health CCR member organizations

Slide39: 

Introduction to Patents and Patent Citation Analysis 9 U.S. Patents 5 Foreign Patents IBM Patent No. 5, 278,955 Issued 1994 23 U.S. Patents 6 Other References, Including 3 Science References Backward Citations (References) Forward Citations Time 1985-92 1994 1995-2005 A Starting Patent references prior art, and is cited by later patents CII Ext CII SL IS

Highly Cited Chemical Patents: 

Highly Cited Chemical Patents U.S. Patents 5,064,802, 5,272,236, and 5,278,272 Awarded to Dow in 1991, ‘93 and ‘94 “Metal complex compounds”, and “Elastic substantially linear olefin polymers” With Exxon’s discoveries, launched a rebirth of the polymers industry

Highly Cited Chemical Patents: 

Highly Cited Chemical Patents U.S. Patent 5,540,853 Awarded to P&G in 1996 “Personal treatment compositions and/or cosmetic compositions containing enduring perfume” Cleansing solutions that leave behind a non-irritating fragrance

Highly Cited Chemical Patents: 

Highly Cited Chemical Patents U.S. Patent 5,143,854 Awarded to Affymax Technologies in 1991 “Large scale photolithographic solid phase synthesis of polypeptides and receptor binding screening thereof” Development of screening matrices

Highly Cited Chemical Patents: 

Highly Cited Chemical Patents U.S. Patent 4,340563 Awarded to Kimberly Clark in 1982 “Method for forming nonwoven webs” Surgical drapes, diapers, carpeting,….

Strong Patent Portfolios Correlate withHigher Sales Growth: 

Strong Patent Portfolios Correlate with Higher Sales Growth

Strong Patent Portfolios Correlate withHigher Market to Book Values: 

Strong Patent Portfolios Correlate with Higher Market to Book Values

Strong Patent Portfolios Correlate withHigher One Year Stock Price Growth: 

Strong Patent Portfolios Correlate with Higher One Year Stock Price Growth

Age of Cited Prior Art: 

Age of Cited Prior Art

A Sample of Cited Science References (Papers) Was Examined in Detail: 

355 papers cited by Chemical Industry patents, 395 papers cited by Public Sector patents In library, identified (if possible) each paper’s Grant identifiers, where funding was acknowledged Author institution sector Determined date of grant from grant identifier only for NIH and NSF grants Calculated time from grant issuance to paper publication A Sample of Cited Science References (Papers) Was Examined in Detail

Time from Grant to Paper: 

Time from Grant to Paper

Findings: 

Findings The time for the results of basic research to reach the stage of patented invention may typically take 13-16 years from the time funding is provided by a support agency. On average, the lag to commercialization from patent is additional 5+ years providing an overall cycle time of 18-21+ years.

Limited Collaboration in Cited Papers: 

Limited Collaboration in Cited Papers

NRC Workshop: 

NRC Workshop “Reducing the Time from Basic Research to Innovation in the Chemical Sciences” June 4, 2002 54 participants Workshop report to Chemical Sciences Roundtable, Board on Chemical Sciences and Technology