11 Market Assessment Overview, Domestic/International R&D Funding Trends and Future Technology...

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Market Assessment Overview,Domestic/International R&D Funding Trends

and Future Technology Development Forecast

William ChardNational Technology Transfer Center (NTTC)

September 19, 2006

America’s Investment In The Future “America’s sustained economic prosperity is based on technological

innovation made possible, in large part, by fundamental science and engineering research. Innovation and technology are the engine of the American economy and advances in science and engineering provide the fuel. They have generated new knowledge and new industries, created new jobs, ensured economic and national security, reduced pollution and increased energy efficiency, provided better and safer transportation, improved medical care and increased living standards for the American people. These investments builds intellectual capital, integrates research and education and promotes partnerships.”

Dr. Arden Bement

Director, National Science Foundation

March 29, 2006

The Bottom LineGovernment:Fund basic and applied research to create new discoveries & technologies as a catalyst for national growth.

Perform targeted basic and applied research related to an agency’s mission & goals.

The Constitution of the United States:…”form a perfect Union, establish Justice, insure domestic Tranquility, provide for the common Defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity…”

Industry:To develop technologies that satisfies corporate objectives.

To bring new products to market.

Create wealth, contribute to the country’s economic well being and satisfystockholders and investors

The Bottom Line

Academia:

Perform basic and applied research that benefits society

Educate & train the citizens of the world

Expand human knowledge

“Sharing ideas and innovations in the service of society’s well-being”

Major Federal Agency’s TT ActivitiesFederal Agency

Appropriation

Invention Disclosures

Patent

Application

Patents

Issued

Active

Licenses

1999-2003

License

Income

1999-2003

Earned

Royalty

Income

1999-2003

USDA 2.22 121 60 64 270 2.3 1.6

DOC 1.14 21 5 9 101 0.1 0.1

DOD 70.92 1,332 810 619 364 10.0 ---

DOE 8.61 1,469 866 627 3,687 25.8 6.6

EPA 0.66 14 23 8 32 0.9 ---

HHS 29.08 472 279 136 1,380 55.2 38.3

DOI 0.63 --- --- --- --- --- ---

NASA 10.19 736 163 136 521 2.8 0.8

DOT 0.67 --- --- --- --- --- ---

VA 0.87 183 36 8 88 0.1 ---

TOTAL 124.99 4,348 2,242 1,607 6,443 97.2 47.4

Average License Income = $15,086 (about ¾ are non-exclusive licenses)

Average license execution time = 1.4 to 10.1 months

Federal R&D and TT Initiatives• Legislation that authorized & supported TT functions at all federal

laboratories• R&D Funding• Federal Funded R&D Centers (FFRDC)• Contract Research• CRADAs & SAAs• Facility & Software Usage Agreements• Material Transfer Agreements• Guest Scientists & Engineers• SBIR/STTR Programs• ATP Program• Consortia & Alliance Programs• R&D Tax Credits• R&D Incentive Prizes• FLC

Importance of Market Assessment

FACT: TT requires Skill, Patience, Resources & some Luck

FACT: TT is an extremely dynamic environment

FACT: TT is not a high percentage business

FACT: TT requires good communication & marketing skills

FACT: Difficult to measure success (metrics)

FACT: Revenue generation should not be primary goal

FACT: TT is driven by the market place

Role of Market Assessment

Decrease the Risk & Maximize Chances of Success

Key Market Assessment Goals

Identify Outside Drivers:

• Market Need & Potential

• Technology & Product Competition

• Market Barriers

• Market Size, Profile & Trends

• Qualify Candidate Commercial Partners

U.S. Industry R&D Spending (2006)$B

• Pharmaceuticals 76,875• Motor Vehicles & Car Bodies 47,487• Semiconductor 26,966• Prepackaged Software 23,009• Radio, TV Broadcast, Communications 17,518• Computer & Office Equipment 11,689• Conglomerate 10,489• Radiotelephone Communications 9,419• Electrical, Electrical Equipment 9,274• CMP Programming, Data Processing 8,492

R&D Expenditures at Universities and Colleges, by Source of Funds and Science and Engineering Field: FY 2004 (Millions of current dollars)

Field Federal R&D

USDA DOD DOE HHS NASA NSF Other*

All R&D

expenditures27,379 761 2,478 940 14,083 1,098 3,232 3,145

Computer sciences

1,028 2 303 32 27 39 411 119

Environmental sciences

1,596 44 140 68 31 232 521 474

Life sciences 15,744 618 390 129 12,062 105 484 1,261

Agricultural sciences

868 430 12 19 81 15 97 188

Biological sciences

5,504 461 121 66 4,247 45 347 308

Medical sciences

9,372 27 257 44 7,734 45 40 765

Mathematical sciences

319 2 31 7 50 5 154 25

Physical sciences

2,567 7 307 365 431 337 720 208

Psychology 587 0 27 0 435 10 46 56

Social Sciences 695 35 24 5 249 15 97 233

Engineering 3,902 34 1,205 306 225 346 720 613

SOURCE: National Science Foundation/Division of Science Resources Statistics, Survey of Research and Development Expenditures at Universities and Colleges, FY 2004

Global R&D SpendingCountry R&D as % GDP

R&D 2005*

Billions $Australia 1.54 9.75

Brazil 1.60 28.22

Canada 1.90 19.77

China (Mainland) 1.5 125.49

Taiwan 2.20 12.42

France 2.20 44.46

Germany 2.20 52.84

India 1.40 52.88

Israel 3.60 4.82

Italy 1.10 17.93

*Forecast

Sources: R&D Magazine, Battelle, OECD, World Bank

Global R&D SpendingCountry R&D as % GDP

R&D 2005*

Billions $Japan 3.20 123.33

Korea (South) 2.90 28.06

Mexico 0.50 5.28

Russia 1.24 18.66

Singapore 2.80 3.79

South Africa 0.90 5.09

Spain 1.10 10.58

Sweden 3.90 10.32

UK 2.00 36.78

U.S. 2.70 312.20*Forecast

Source: R&D Magazine, Battelle, OECD, World Bank

Source of R&D Funds

Country Industry Government Academia Other

Funds from

abroadAustralia 46.3% 45.7% 4.8% 3.3%

Brazil 32.2% 60.2% 1.6% ---

Canada 46.2% 25.4% 21.0% 7.9%

China (Mainland) 57.6% 33.4% 6.3% 2.7%

France 52.1% 38.4% 1.5% 8.0%

Germany 65.4% 31.9% 0.4% 2.3%

India 23.0% 74.7% 2.3% ---

Israel 69.6% 24.7% 2.9% 2.8%

Italy 43.0% 50.8% --- 6.2%

SOURCE: R&D Magazine, Battelle, UNESCO

Source of R&D Funds

Country Industry Government Academia Other

Funds from abroad

Korea (S) 74.0% 23.9% 1.7% 0.4%

Mexico 30.6% 61.0% 7.4% 1.0%

Russia 30.8% 59.6% 0.6% 9.0%

Singapore 49.9% 41.8% 1.1% 7.2%

South Africa 49.4% 33.0% 10.0% 7.0%

Spain 48.9% 39.1% 5.2% 6.8%

UK 46.7% 26.9% 5.9% 20.5%

U.S. 61.2% 31.3% 7.3% ---

SOURCE: R&D Magazine, Battelle, UNESCO

Top Corporations Patenting in the U.S.

• Over the past six years only 2 to 3 U.S. corporations

are in the annual top ten U.S. patent list.

International PatentsBased on original country of application (priority filling country)

Country 2004 2005* 2006*

Australia 4,262 4,130 4,000

Brazil 3,768 3,980 4,280

Canada 3,181 3,075 2,910

China (Mainland) 43,455 46,500 48,000

Taiwan 10,148 11,100 12,000

France 13,270 14,000 14,600

Germany 55,487 56,500 57,800

India 668 800 900

Israel 654 650 700

Italy 4,877 4,900 4,400

Japan 342,808 346,000 350,000

Korea (South) 79,558 82,000 86,500

*Forecast

SOURCE: Thomson Scientific, Derwent World Patents Index, R&D Magazine, Battelle.

International PatentsBased on original country of application (priority filing country)

Country 2004 2005* 2006*Mexico 326 380 370

Russia 19,297 20,300 21,200

Singapore 315 320 320

South Africa 1,090 1,040 990

Spain 2,279 2,320 2,400

Sweden 2,334 2,150 2,000

UK 12,290 12,350 13,000

U.S. 167,414 168,900 169,100

*Forecast

SOURCE: Thomson Scientific, Derwent World Patents Index, R&D Magazine, Battelle.

Top 10 Most-emphasized U.S. Patent Classes for Corporations from United States (2003)

1. Business practice, data processing2. Surgery: light, thermal, and electrical applications3. Computers and digital processing systems4. Data processing, file management5. Surgery instruments6. Data-processing software7. Wells8. Prosthesis9. Processing architectures10. Input/output digital processing systems

NOTES: Rank based on patenting activity index for nongovernmental U.S. or foreign organizations, which areprimarily corporations. Patenting by individuals and governments excluded.

SOURCE: U.S. Patent and Trademark Office, Office of Electronic Information Products, Patent TechnologyMonitoring Division, special tabulations (December 2004).

Top 10 Most-emphasized U.S. Patent Classes for Corporations from Germany (2003)

1. Printing2. Clutches and power-stop control3. Land vehicles, bodies, and tops4. Machine element or mechanism5. Brake systems6. Power delivery controls, engines7. Internal combustion engines8. Metal forming9. Valves10. Joints and connections

Top 10 Most-emphasized Patent Classes for Corporations from Japan (2003)

1. Electrophotography2. Television signal processing3. Computer storage and retrieval4. Photography5. Photocopying6. Liquid crystal cells7. Ceramic compositions8. Facsimile9. Power delivery controls, engines10. Optical image projector

Top 10 Most-emphasized U.S. Patent Classes for Corporations from South Korea (2003)

1. Liquid crystal cells, elements, and systems2. Electric lamp and discharge devices3. Semiconductor device manufacturing process4. Dynamic magnetic information storage or retrieval5. Electric lamp and discharge systems6. Static information storage and retrieval7. Brushing, scrubbing, and general cleaning8. Television9. Refrigeration10. Active solid-state devices

NOTES: Rank based on patenting activity index for nongovernmental organizations, which are primarilycorporations. Patenting by individuals and governments excluded.

SOURCE: U.S. Patent and Trademark Office, Office of Electronic Information Products, Patent TechnologyMonitoring Division (2004).

Top 10 Most-emphasized U.S. Patent Classes for Corporations from Taiwan: 2003

1. Semiconductor device manufacturing process2. Electrical connectors3. Electrical systems and devices4. Circuit makers and breakers5. Electric power conversion systems6. Active solid-state devices7. Typewriting machines8. Substrate etching process9. Sheet-feeding machines10. Illumination

NOTES: Rank based on patenting activity index for nongovernmental organizations which are primarilycorporations. Patenting by individuals and governments excluded.

SOURCE: U.S. Patent and Trademark Office, Office of Electronic Information Products, Patent TechnologyMonitoring Division (2004).

Number of Graduates in STEM and Non-STEM Fields1994-1995 through 2003-2004 Academic Years

Estimated Numbers of Employees in STEM Fieldsfrom Calendar Years 1994 through 2003

Major Technology Development Issues & Trends

Science and technology are key drivers in economic growth, Improved health and quality of life. Over half of U.S. economicgrowth over the past 50 years relate to advances in technology ofwhich major funding was provided by federal governmentsupporting about 65% of the U.S. basic research and 58% of academic research. U.S. political & world impacts will occurWhich disrupt long term continuity of existing programs.

R&D programs are typically not ends in themselves but the means to the end of agency missions (short term). A majorconcern is the long term health of the overall enterprise.

• Current administrative priorities are:Defense DevelopmentSpace ExplorationPhysical Sciences ResearchHome Land Security

• Reduction in U.S. rate of growth for industry and federal R&D

• Federal R&D funding expanding slightly, dominated by defenserelated programs & war on terrorism, but decreasing based onpercent of GDP.

• Major focus has been on large development programs (DOD,Space, DOE).

• Basic research continues to be primarily performed by academiaand funded by the federal government.

DOE up 14.4%NSF up 8.3%NIST up 21%

• Tough allocation choices by all agencies in setting priorities andsustaining programs continuity.

• Federal agencies are being motivated to collaborate on R&Dbecause of budget cuts.

• The development of new & improved goods, services &processes continues to be performed by industry (90%).

• U.S. industry spends more on tort litigation than R&D

• Major R&D investment is geographically concentrated in the U.S. as well as globally.

• U.S. continues to increase Consortia, Contract R&D, CRADAsand Collaborations & Partnerships, domestic as well as global.

• U.S. Trade Balance continues to worsen. The $500B/year is 80% of world’s net savings.

• The savings rate in U.S. is 3%, Asia is 30%.

• Product manufacturing & technology services will continue to move off-shore.

• About half of IBM’s 190,000 S&T staff reside overseas

• Rapid industrialization, technology IP development and growth in Asia, Europe, Taiwan & South Korea.

• Israel & China increasing prominence as technology exporter.

• U.S. export of Hi Tech goods & services high althoughdecreasing and passing conventional manufacturing. Imports of High Tech exceeds exports.

• U.S. continues as net exporter of manufacturing technologies as IP.

• VC investments targeted the formation & expansion of small

Hi-tech companies in software, medical/health, Internet and

biotech. Over the past 25 years the average seed-stage

investment increased from $700K to $1.4M.

• Biotech IP remains high but not as active.

• Of the 120 major chemical plants under construction, 1 is in the U.S. and 50 in China.

2006 Presidential R&D Priorities

• Climate Change

• Combating Terrorism

• Hydrogen Fuel

• Nanotechnology

• Networking & Information Technology

Strategic Technologies for 2020• Genetic based medical & healthcare products• High-power energy packages• Green Integrated Technology (GIT)• Omnipresent computing• Nanomachines• Personalized public transportation• Designer foods & crops• Intelligent goods & appliances• Worldwide inexpensive & safe water• Super sensors

Battelle Technology Forecasts

Primary Areas of Human Needs

• Clothing• Communications• Education/Training• Employment/Income• Energy• Food/Water• Healthcare/Medicine• Housing• Information• Personal/National Security• Transportation

New Product/Technology Trends• Compact/Miniaturization

• Environmentally Friendly

• Global In Scope

• Highly Efficient

• Highly Secure

• High Speed

• Intelligent

• Less Expensive

• Long Life

• Multifunctional

• Nutritional

• High Reliability

• User Friendly

• Low cost/High profit

Major Market Areas for Future Technological Development

• Autonomous Devices, Machines & Manufacturing Systems• Advanced Detection, Monitoring & Tracking Systems• Biometric Security & Identification Systems• Biological organic-inorganic hybrid systems• Environmental Friendly Materials and Processing Systems• Fuel Efficient Transportation Systems• Genetically Designed Agriculture Plants & Food• Genetic Based Medical & Healthcare Products• High Performance Computing• Intelligent & Secure Information Management Systems• Multifunctional, Imbedded, Wireless Sensors• Non-invasive & Non-destructive Imaging• Renewable Energy Sources• Smart Materials & Systems

The National Technology Transfer Center

316 Washington Ave

Wheeling, WV 26003

1-800-243-NTTC (6882)

www.nttc.edu

William Chard

(304) 243-2039

wchard@nttc.edu

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