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Hodge, Graeme; Bowman, Diana; Binks, Peter --- "Nanotech - the BIG business of small" [2005] MonashBusRw 17; (2005) 1(2) Monash Business Review 24

Nanotech – the BIG business of small

Graeme Hodge, Diana Bowman, Peter Binks

Its products may only be 100 billionths of a metre wide, but nanotech is big business. With the global market projected to grow by trillions over the next 10 years, is it time to get on board? Graeme Hodge, Diana Bowman and Peter Binks report.

Nanotechnology is a form of molecular engineering that enables the manipulation of matter at the atomic level, potentially enabling scientists to create specific molecular structures and devices in sizes that are barely comprehendible – 1,600 nanotech devices would fit across a human hair. It offers unrivalled possibilities in biotechnology, information technology, agriculture, medicine, and environment.

There are presently more than 1,200 nanotechnology companies in the world producing ‘first generation’ nanoscale applications such as atomic force microscopes, nanoscale compounds for use in sunscreens, cosmetics, coatings and paints, stain resistant clothing, dirt-resistant bathtubs and smaller, faster computer memory.

Within five to 15 years, a ‘second generation’ of nanotechnology applications will go from basic nanoscale compounds and composites to more complex nanostructures across a number of different sectors. A ‘third generation’ of nanotechnology, known as ‘molecular manufacturing’, may feature computer directed nanoscale robots capable of precise manipulation of atoms to form complex atomic devices and machines.

Risky business

Despite the attention on the scientific and commercial potential of nanotechnology, there has been little written about regulatory, ethical and legal issues, with most research conducted beneath the radar screen of civil society and government regulators. Potential risks like ‘grey goo’, where nano-devices are released into the wild and propagate uncontrollably like a virus, are overstated and would be comparable to your laser printer jumping off your desk to forage for black ink.

Having said this, real political, military and social risks do exist. A runaway military technological revolution fuelled by nanotechnology offers colourful possibilities for creative mass murder and programmable genocide. Technologically wealthy countries, such as the US, are already vigorously pursuing military nano-based research and development programs. Added to this are the growing problems of personal privacy in an age of invisible nano global tracking devices.

A global phenomenon

From a business perspective, the nanotechnology sector is already a global phenomenon. More than 1,200 nanotechnology companies have already created hundreds of nano-sized products such as Eddie Bauer’s use of nano-particles for wrinkle and stain resistant clothing, Oil of Olay’s invisible sunscreens, nano-composite materials to strengthen door panels on the 2004 Chevrolet Impala cars and the Kodak EasyShare LS633 digital camera. However, despite more than 600 nanotechnology companies operating in the US nanotechnology industry, to date less than 5 per cent of these companies have introduced commercial products.

In terms of global market size, the economic power of nanotechnology has been estimated to be worth $US45.5 billion, with a potential global human workforce of between 0.8 million to 2.0 million people. The Frost & Sullivan Nanotechnology Index (FS Nano Index), which analysed 16 listed nanotechnology companies in the US, estimated that the 2004 capital value of the US nanotechnology core production sector alone was approximately $US3.8 billion.

This field is an important component in the future of national economies, and in recognition, some 30 governments are already implementing national nanotechnology initiatives.

Global nanotech research and development (R&D) funding in 2004 alone was estimated at around $US8.6 billion, mostly from the public sector (some $US4.6 billion) and a minority (at $US3.6 billion) from the private sector.

The country with the largest private sector investments in nanotech is the US at $US1.7 billion, ahead of Japan $US1.1 billion and the European Union at $US 0.7 billion.

Lux Research predicts that emerging nanotechnology applications will affect nearly every type of manufactured good over the next 10 years, becoming incorporated into 15 per cent of global manufacturing output totaling $US2.6 trillion in 2014. Should this prediction be realised, Etc Group suggests that the commercial market for nanotechnology will be “10 times [that of] biotech and equaling the combined informatics and telecom industries”.

It has not, however, been all beer and skittles. A 2005 analysis of the US Nanotechnology Industry by Frost & Sullivan comparing a range of performance indicators in the Nano Index against the S&P 500 found that the FS Nano Index underperformed compared to the S&P 500 over the past five years.

Nanotech downunder

Two of the leading Australian nanotechnology companies are Advanced Nanotechnology Limited (Advanced Nano) and Starpharma Holdings Limited.

Listed on the Australian Stock Exchange in February 2005, Advanced Nano is a Perth-based company concentrating on the manufacture of nanopowders and nanopowder products. Current commercial applications include a range of nanoscale zinc oxide products for use in transparent sunscreens, alumina powders for cosmetic products and an industrial range of nanoscale zincoxide products for protective industrial coatings. The company distributes to the US, Japan, Korea, Italy, France and Switzerland and in 2005 generated $A1.5 million in sales, a 74 per cent increase on 2004.

Melbourne-based Starpharma Holding Limited was established in 1996 to develop and commercialise pharmaceutical compounds based on a novel branch of polymer chemistry utilising a type of nanoparticle. Its current research focus is on the development of a drug for the prevention of sexually transmitted diseases and the treatment of respiratory viruses, cancer and tropical diseases. The company sees itself as “leading the world in the creation of polyvalent dendrimer nano-drugs for serious human illnesses” and is globally the only company that has received regulatory approval for the testing of a dendrimer-based drug in human clinical trials. Starpharma is currently subjecting its products and processes to therapeutic evaluation in the US in order to ensure that these will meet the requirements for use in human medicine.

Onto these entrepreneurial corporate examples of nanotechnology in action could be added the attitudes of the broader Australian business sector, which according to a recent survey is overwhelmingly positive. Contrasting this, however, were the more measured comments of some companies like chemical manufacturer Du Pont which noted that “nanotechnology is the next biotech in the public’s mind” and commented that public education is a hugely important task. “It’s the one mistake that we made with biotech. We let the science precede the public education, and from then on we were constantly playing catch up.”

Biomimicry

There are three critical, and mutually supporting, parallel streams of activities on the horizon for the sector. First, the science has to be developed. Already science has the ability to manipulate individual atoms and molecules, but at high cost and with limited precision. Research teams are now looking to the biological world – biomimicry – for the means to create nano-structured materials efficiently and with high quality. They are seeking the mechanisms to store and convert energy with the efficiency of photosynthesis or to create monolayers of molecules on surfaces, or to move molecules without frictional effects.

Second, the industry needs to better understand the impact of the technology as it develops and is commercialised. For example, the transport and effect of nano-scale particles and nano-structures, such as nano-tubes, in the lungs, bloodstream, nervous system and on the skin are poorly understood.

Third, regulatory and ethical regimes need to be developed. The successful evolution of these new regulatory and ethical frameworks will be critical to the broad acceptance of nanotechnology by the public and will not simply be a matter of choice for the sector. It is crucial that Australia learn the lessons from the development of previous technologies, including asbestos and genetically modified organisms (GMOs), and adopt an integrated R&D approach to the development of the nanotechnology sector. The case of asbestos represents a clear example of poor technology governance with losses expected to reach $US200 billion. Meanwhile, the lack of public education and engagement in the commercialisation of GMO resulted in a consumer backlash against the technology, forcing industry onto the defensive and leaving the EU a GMO free zone.

Nanotechnology is already attracting large annual global investments and is probably the next technology-driven business transformation. So far the sector is meeting expectations in terms of scientific development and many Australian companies have been part of this leading wave. While its promises are big, nanotechnology has also been subject to criticism and serious concerns. In order for the business of nanotechnology to move ahead, the science and reality now need to be separated from the science fiction and rhetoric.

The successful development of nanotechnology business offers an exciting new stream of opportunities for the right people. However its social, health and environmental impacts must be clarified in order to intelligently govern the science and its commercial applications. Nanotechnology in Australia is beginning its own journey down these parallel paths and because it already has an eye on both the social impacts of the technology and the coming regulatory and public governance hurdles, it is likely to succeed.

Cite this article as

Hodge, Graeme; Bowman, Diana; Binks, Peter. 'Nanotech – the BIG business of small'. Monash Business Review. 2005.; Monash University ePress: Victoria, Australia. http://www.epress.monash.edu.au/. : 24–29. DOI:10.2104/mbr05017

About the authors

Graeme Hodge

Graeme.Hodge@law.monash.edu.au

Graeme Hodge (PhD) is Co-Director of the Centre for Regulatory Studies at Monash University. His current research includes governing nanotechnology, public accountability in the regulatory state, public-private partnerships and privatisation.

Diana Bowman

Diana.Bowman@law.monash.edu.au

Diana Bowman (LLB, BSc) is a PhD Candidate and Researcher in the Faculty of Law at Monash University. Her current research includes governing nanotechnology, public-private partnerships, and electricity regulation.

Peter Binks

Peter.Binks@nanovic.com.au

Peter Binks (PhD) is the CEO of Nanotechnology Victoria, and was a member of the Prime Minister’s Science Engineering and Innovation Council Working Party on Nanotechnology. He is recognised as one Australia’s leaders in the commercialisation of nanotechnology.


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