nanoarticle_hullmann_nov2006 by girlbanks

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									  The economic development
      of nanotechnology
- An indicators based analysis




              Author: Dr. Angela Hullmann
          European Commission, DG Research,
 Unit “Nano S&T - Convergent Science and Technologies”

              Version: 28 November 2006

          This article can be downloaded from:
 http://cordis.europa.eu./nanotechnology
The views expressed in this document are entirely those of the author
and do not engage or commit the European Commission in any way.

 More information on nanotechnology at the European Commission
       is available on http://cordis.europa.eu/nanotechnology




                                2/34
                                  Introduction


It is my pleasure to present this third publication in a series of Commission staff
working papers on nanotechnology research and development. After the two
predecessors "Some figures about nanotechnology R&D in Europe and
beyond", published in December 2005 and "Results of the informal collection of
inputs for nanotechnology R&D in the field of (eco)toxicology", published in
June 2006, this article analyses the economic development of nanotechnology.

Nanotechnology has the ability to become the most promising technology
advance for this century. It offers a huge potential of applications and economic
benefits significantly contributing to the European economy. Enormous
technological advances are being made in the worldwide race for progress.
Europe’s starting position for this interdisciplinary and knowledge-based
technology is promising. But much must be done in order to convert Europe’s
scientific and technological excellence into economic returns in the form of new
products, production processes and technology-intensive firms.

As stated in the European Commission's Communication: "Nanosciences and
nanotechnologies: An action plan for Europe 2005-2009" (COM(2005)243), the
European Commission aims at providing favourable conditions for industrial
innovation in nanotechnology to ensure that research and technological
development is translated into affordable and safe wealth-generating products
and processes. In order to do so, it is important to get a comprehensive picture
of the state of the art of markets, companies, funding and S&T performance and
prospective for development.

The present analyses are based on indicators of the economic development of
nanotechnology that can be publicly accessed. A focus has been put on the
analysis of Europe compared to its main competitors. The data presented
should not be deemed to be complete and in no way do they engage the
European Commission. I thank my colleague Angela Hullmann for collecting the
information from the various sources and for linking everything together in a
comprehensive analysis. We hope that you find this to be useful information and
would welcome any comments and suggestions on the indicators and analyses
presented.

More information on nanotechnology in Europe and in particular at the
European Commission is available on http://cordis.europa.eu/nanotechnology
and on http://www.nanoforum.org, amongst others.


                                           Renzo Tomellini
                                           Head of the Unit
                            Nano S&T - Convergent Science and Technologies
                                    renzo.tomellini@ec.europa.eu




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 The economic development of nanotechnology -
         An indicators based analysis
Table of content                                                           Page:

1.   Introduction                                                             7

2.   Commercialisation of nanotechnology:
     prospects of market volumes and shares                                   8

3.   The global nano race: some data on public and private funding           13

4.   Risk capital for high-tech research:
     venture capital funding of nanotechnology                               15

5.   Analysing the economic impact: jobs and companies in nanotechnology 16

6.   The technological development of nanotechnology: patent applications 21

7.   The scientific basis of nanotechnology:
     scientific publications and citations                                   26

8.   Conclusions                                                             29

List of tables and figures                                                 Page:

Figure 1: World market forecasts for nanotechnology in billion US Dollar      9

Figure 2: World market 1999-2003 and forecasts for 2015 in US $ billion      10

Figure 3: World market forecasts in different nanotechnology segments        10

Figure 4: Volume and world market share of the nano-enabled drug delivery
           market                                                         12

Figure 5: Global sales of products incorporating emerging nanotechnology
           by region - forecast in percent                                   13

Table 1: Estimated worldwide public funding, in 1000€, for nanotechnology
          R&D
          in 2004 by individual countries                                 14

Figure 6: Estimated public and private funding for nanotechnology R&D
           in 2004 by world regions in million €                             15

Figure 7: Venture Capital funding worldwide by application and by year,
           in million US$                                                    15



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Figure 8: Venture Capital funding worldwide in nano, in absolute numbers and
           as share                                                        16

Figure 9: Number of nanotechnology jobs in million and the share of
           nanotechnology jobs of all manufacturing jobs in percent           17

Figure 10: Nanotech Companies worldwide: decades and years (1981-2005)
           of creation                                               18

Figure 11: Companies worldwide in different nanotechnology segments and
           in most active countries                                     19

Figure 12: Nanotechnology companies in leading countries and by company
           size (turnover in US$ million) in most active countries      19

Figure 13: Nanotechnological institutions by country and by type of
           organisation                                                       20

Figure 14: European institutions (university and other research institutes,
           companies) active in nanotechnology                                21

Figure 15: Nanotech patents worldwide according to EPO tag Y01N. Line
           graph: Total number of patent families in Y01N                     22

Figure 16: Average annual growth rates (%) per nanotechnology subfield for
           two periods: 1995-1999, 1999-2003                               23

Figure 17: Patents worldwide according to applicant and inventor countries 23

Table 2: Top 10 patenting countries worldwide in each nanotech field, 2003 24

Figure 18: Nanotech patents in top 8 applicant countries                      25

Figure 19: Average annual growth rates of nanotech patents for in 2003 top 8
           countries according to EPO tag Y01N                             25

Figure 20: Scientific publications in nanotechnology in SCI database per world
           region, 1992-1995 and 1998-2001                                  26

Figure 21: Scientific publications in nanoscience per country and subfield,
           1999-2004                                                          27

Table 3: Number of nanotechnology publications and citations in the SCI
          database 1991-2000 for top 25 cited countries, ranked by average
          cites per paper                                                28

Table A1: World market forecasts for different nanotechnology subareas and
           applications in US$ million                                     34



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Note from the author:
Empirical analyses of nanotechnology have to suffer from the limited access to
reliable and comparable data and its complex nature. Official statistics do not
identify nanotechnology at all, or link it to various different categories where it
cannot be identified correctly, or the definition is at least questionable. Against
this background, the initiative of the European Patent Office of identifying and
labelling (‘tagging’) nanotechnology patents must be highly acknowledged. In
other cases such as the market prospects and the company data, large scale
surveys specifically dedicated to nanotechnology and have been carried out.
These provide valuable information, but lack of comparability with data retrieved
from other surveys. In this article, the weakness of the empirical base of
economic and S&T data of nanotechnology has been taken into consideration
by collecting data from different sources and pre-selecting them on the basis of
reliability of the source, plausibility of the methodology and consistency with
other data. It has been attempted to draw a most complete picture with the data
available and to draw conclusions on their basis. It was not possible and not the
intention of the author to generate data herself.



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  The economic development of nanotechnology
         - An indicators based analysis

When Nikolai Kondratieff published his theory of long waves in 1926, the third
wave induced by the electricity and chemistry industries was already on a
decline. Eighty years or two waves later (automobile and electronics,
information and communication technologies), nanotechnology is a promising
candidate for initiating a sixth Kondratieff wave, possibly in combination with
biotechnology. 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. The
purpose of this paper is to analyse the state of the art of nanotechnology from
an economic perspective, by presenting data on markets, funding, companies,
patents and publications. It will also raise the question of how much of the nano-
hype is founded by economic data and how much is based on wishful thinking.
It focuses on a comparison between the world regions, thereby concentrating
on Europe and the European Union in relation to their main competitors - the
United States and Japan and the emerging ‘nano-powers’ China, India and
Russia.


1. Introduction

Nanotechnology can be everywhere. It is in car tyres, in tooth paste, in sun
cream, in tennis rackets and tennis balls, in shirts and trousers, in CD players
and even in surfaces of bath tubes, toilets and wash basins. With new
properties such as smaller, lighter, faster, cheaper, water, dirt and stain
resistance which enhance consumer goods. Are these products signs for the
takeoff into the nanofuture, as many experts foretell? Are they first steps
towards ‘nanorobots’ and ‘matter compilers’, towards a world with eternal life
and inexhaustible resources?

Nowadays’ nanotechnology is still at the frontier between scientific reality and
ambitious visions, between first accomplishments and promising expectations,
between incremental improvements and disruptive innovations. This range of
opportunities can – explicitly or implicitly - be found in most assessments and
analyses of ongoing and future developments of nanotechnology. It is applied
by scientists as well as journalists, research managers as well as policy makers,
investors as well as pressure groups. In many statements the one or the other
extreme is emphasised, but points of reference are changed often and these
changes are often taking place unconsciously.

Many of these analyses used to have in common that they talk about
nanotechnology as one single concept. Nowadays it is widely accepted that
nanotechnology is a collection of different technologies and approaches, which



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all use the physical properties of dimensions on the nanometre scale, which
differ from those observed in the micro and macro world. In order to draw a
correct and comprehensive picture of the technology and to achieve a fair
assessment of its status, potentials and drawbacks, it is necessary – where
possible - to look at nanotechnology subareas such as nanomaterials and
nanoelectronics, nanobiotechnology and nanomedicine, or nanotools,
nanoinstruments and nanodevices.

Nanomaterials are expected to have the major influence on virtually all fields
where materials play a role. They include ultra-thin coatings and active surfaces
as well as the new generation of chemical engineering. Nanoelectronics has a
major impact on the information and communication technologies by continuing
or overcoming (with the help of quantum electronics) Moore’s law of doubling
data storage and processing capacities every 18 months. Nanobiotechnology
will make the difference in medicine, for pharmaceuticals and diagnostics, in
countless industrial processes, agriculture and food industry. Nanotools are
nanotech enabling technologies, such as electron microscopes (Scanning
Tunnel Microscope STM, Atomic Force Microscope AFM) and ultra-precision
machines.

In this article, the state of the art of nanotechnology will be analysed by
presenting available data on nanotechnology markets and market projections,
on jobs, on companies and other organisations active in nanotechnology, on
public and private funding, including Venture Capital funding, on patents, and
on scientific publications. The data have been collected from publicly available
sources and will be cited accordingly. The author cannot take the full
responsibility for their accuracy or trueness. Especially in the case of market
data, which can only be estimates, the data differ very much depending on
definition, source, methodology and purpose of collection and presentation. The
author sought to overcome this problem by not relying on a single source and
by comparing different sources before selecting them for further analyses.

The purpose of the analyses is twofold: On the one hand, nanotechnology and
its subareas will be analysed in order to present the state of the art, to identify
most promising fields and to predict future developments. On the other hand,
the analyses will shed a light on the contribution of nanotechnology to economic
and social goals of the European Union such as competitiveness, economic
growth and employment by focusing on Europe in comparison with its world
competitors, mainly the United States, Japan and emerging nano-powers such
as China, India and Russia.


2. Commercialisation of nanotechnology: prospects of market volumes
and shares

Because nanotechnology is expected to have a substantial impact on the
world’s economy, market volumes are an appropriate indicator for its economic
significance. On the other hand, nanotechnology does not correspond to an



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industry that can easily be identified and quantified. Nanotechnology will, if
successful, contribute substantially but not in an easily quantifiable way to many
product improvements and allow the production of completely new products.

Most market forecasts for nanotechnology originate from the early 2000s, with a
time horizon up to 2015. The maybe best known figure for the future
nanotechnology market has been published by the National Science Foundation
(NSF) of the United States in 2001. The NSF estimated a world market for
nanotechnological products of 1 trillion US Dollars 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 billion in 2010 (Mitsubishi Institute, 2002) and 2.6 trillion in 2014
(Lux Research, 2004). 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.

Figure 1 shows some forecasts from different sources (see footnote). The
forecasts differ significantly from each other, but have somehow in common that
they predict a substantial increase of the market for nanotechnological products
with a take off some when in the early 2010s.
         3,000

         2,500
                                                                       optimistic
         2,000
                                                                       scenario
         1,500

         1,000

          500
                                                                             pessimistic
                                                                             scenario
             0
            01

                  02

                        03




                                          06

                                                07

                                                      08



                                                                   10

                                                                          11

                                                                                12

                                                                                      13

                                                                                            14

                                                                                                  15
                              04

                                    05




                                                             09
          20

                 20

                       20




                                         20

                                               20

                                                     20



                                                                  20

                                                                        20

                                                                               20

                                                                                     20

                                                                                           20

                                                                                                 20
                             20

                                   20




                                                            20




                                                                                                       1
    Figure 1: World market forecasts for nanotechnology in billion US Dollar. Diverse sources

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 latter shows the expected breakdowns of the 1 trillion world
market share in 2015 (Figure 2).
1
         The forecasts originate from following sources: German Government, Evolution Capital, NSF
         2001, Evolution Capital 2001, Sal. Oppenheim 2001, DG Bank 2001, DTI 2001, US
         Nanobusiness Alliance 2001, Cientifica 2002, In Realis 2002, Mitsubishi Research Institute
         2002, Deutsche Bank 2003, Nomura Research Institute 2003, BCC 2004, GEMZ corp. 2004,
         Helmut Kaiser Consultancy 2004, Lux Research 2004.



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500                                                            materials
                                                           electronics
400
                                                      pharmaceuticals
300                                               chemical processing
                                                           aerospace
200
                                                            healthcare
100                                                                tools
                                                 sustainable processes
  0
        devices    nanobio materials    tools                              0         100        200         300         400
   Figure 2: World market 1999-2003 and forecasts for 2015 in US $ billion. Sources: left:
   Lux Research, 2004, right: NSF, 2001

The figure 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 and 415 million US Dollar. Materials and tools play
a minor role with 145 and 50 million US Dollar. Compared to the forecasts for
2015, all areas are expected to undergo significant increases, e.g. for materials
from 145 million up to 340 billion US Dollar. Nanoelectronics will amount to 300
billion US Dollars, followed by pharmaceuticals, chemical processing and
aerospace.

However, any comparisons of actual numbers and forecasts from different
sources and with different breakdowns have to be interpreted carefully. The
forecast exercise undertaken by Fecht et al. (2003) in their “Finding hidden
pearls” report is more reliable because more focused on the near time horizon,
i.e. 2002 to 2006 (Figure 3).

  140
                                                                           nanobiotech
  120                                              nanobiotech
  100                                              nanomaterials
                                                                      nanomaterials
  80                                               nanodevices

  60                                               nanotools
                                                                           nanodevices
  40
  20                                                                           nanotools
    0
        2002      2003   2004    2005     2006                                             0%   5%    10%   15%   20%    25%

   Figure 3: World market forecasts in different nanotechnology segments, left: in billion
   US Dollar, right: average annual growth rate 2002-2006 in %. Source: Fecht et al.,
   2003

In these estimates, nanotools play the most prominent role on the world market,
though with smallest growth rates. Nanodevices and nanomaterials start on a
slightly lower level, but nanodevices increase with a much higher rate.
Contrarily to the above observations of Lux Research, nanobiotechnology is
only marginal, but increases substantially during the period of reference. Overall
increases are at on average of 15 % annually, which does not yet reflect a real
breakthrough. From these figures, it is obvious to conclude that nanotechnology
is not yet on the take off point of revolutionising the world economy. So, which



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developments between 2006 and 2015 will lead to a one trillion market for
nanotechnology?

Many other studies have tried to prospect the nanotechnology market. Table A1
in the Annex compiles selected forecasts from different studies, without claiming
to be exhaustive or methodological comparable, and including the above
presented 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
billion 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 billion Euro
in all materials around 2010. These figures come very close to the NSF
estimate for 340 billion US Dollar in 2015. The data - though fragmented and
partially not comparable - lead to the assumption that nanomaterials will give a
great contribution to future markets and applications. Compared to the data in
Figure 3, one could conclude that the moderate increases up to 2006 will be
topped by much stronger dynamics at some time between 2006 and 2010,
depending on the material area.

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 loose 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. Figure 4 shows the
volume and share of the enabled drug delivery market compared to the
worldwide drug delivery market.




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                                                    5000                                             6.0%

                                                    4500




                     market volume (million US $)
                                                                  nanoenabled drug                   5.0%
                                                    4000
                                                                  delivery market volume
                                                    3500




                                                                                                            market share
                                                                                                     4.0%
                                                    3000          world market share
                                                    2500                                             3.0%

                                                    2000
                                                                                                     2.0%
                                                    1500
                                                    1000                                             1.0%
                                                    500
                                                       0                                             0.0%
                                                           2005 2006 2007 2008 2009 2010 2011 2012
      Figure 4: Volume and world market share of the nano-enabled drug delivery market.
      Source: Moradi, 2005

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 billion US Dollar 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.

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. When
talking about economic potentials of nanotechnology, these debates have
always to be addressed and must be taken seriously.2

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

2
    In the Communications “Towards a European Strategy for Nanotechnology” (2004) and “Nanosciences
    and Nanotechnologies: An action plan for Europe for 2005 to 2009” (2005), the European Commission
    highlighted the importance of an integrated and responsible approach towards nanotechnology, by
    identifying not only scientific, technological and economic conditions as being important for the further
    development of nanotechnology, but also the societal dimension, risk assessment and an international
    dialogue. See on http://cordis.europa.eu/nanotechnology/actionplan.htm.



                                                                           12/34
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 (Figure 5).
                   100%
                                                                     Rest of
                    80%                                              World
                                                                     Asia/
                    60%
                                                                     Pacific
                    40%                                              US

                    20%
                                                                     Europe
                     0%
                           2004   2006   2008   2010   2012   2014

Figure 5: Global sales of products incorporating emerging nanotechnology by region - forecast
                            in percent. Source: Lux Research, 2004

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.


3. The global nano race: some data on 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 a snap
shot of public funding activities in 2005.




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   USA (Federal)    910,000      Australia     62,000      Finland    14,500        India      3,800
            Japan   750,000      Belgium*      60,000      Austria    13,100   Malaysia        3,800
 Eur. Commission    370,000           Italy*   60,000       Spain     12,500   Romania         3,100
     USA (States)   333,300          Israel    46,000      Mexico     10,000   S. Africa       1,900
        Germany     293,100   Netherlands      42,300   New Zeal.      9,200    Greece*        1,200
           France   223,900       Canada       37,900    Denmark       8,600    Poland*        1,000
      South Korea   173,300        Ireland     33,000   Singapore      8,400   Lithuania       1,000
  United Kingdom    133,000   Switzerland      18,500     Norway       7,000
            China    83,300     Indonesia      16,700        Brazil    5,800      others        2,800
          Taiwan     75,900       Sweden       15,000    Thailand      4,200        total   3,850,000
   Table 1: Estimated worldwide public funding, in 1000€, for nanotechnology R&D in 2004
   by individual countries. * Data are from 2003. Source: European Commission, 2005

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 billion Euro have been dedicated to
nanotechnology projects between 2004 and 2006 (2004: 370 million Euro,
2005: 470 million Euro, 2006: 500 million Euro), also in other priorities than
NMP such as the information society technologies, infrastructures, or research
and training activities. Already within FP4 and FP5, from 1994 to 2002,
nanotechnology related projects were funded which amounted to 300 million
Euro in total. In the upcoming FP7 (2007-2013, for more information see
http://cordis.europa.eu/fp7), nanotechnology will continue as a priority within the
NMP theme and is expected to at least double the budget, with additional cross
cutting activities related to the other FP7 themes (health, food, information &
communication technologies, energy, socio-economic research and security) or
programmes (infrastructures, SMEs, training, societal aspects). 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 billion Euros in 2004 and 1.7 billion
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 (Figure 6).




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                 4000



                 3000
                                         Private

                 2000      Private
                                                          Private
                                         States

                 1000      States                                             Private
                                        Federal
                                                          Public
                            EC                                                Public
                    0
                           Europe     United States          Japan            others

   Figure 6: Estimated public and private funding for nanotechnology R&D in 2005 by world
   regions in million € (1€=1$). Source: updates figures of European Commission, 2005

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 2.5
billion 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.


4. Risk capital for high-tech research: 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.

                                               500
Materials                             Tools            Nanotechnology     Nanobiotechnology
  12%                                          400
               Devices                 4%
                32%                            300                                            190

                         NanoBio
                                               200
                           52%
                                                                        145             87
                                               100                                            217
                                                        51              68              90
                                                   0          12
                                                       1999          2000              2001   2002

   Figure 7: Venture Capital funding worldwide by application (left) and by year, in million
   US Dollar (right). Source: Paull et al., 2003.

Figure 7 shows nanobiotechnology as the most attractive market for Venture
Capitalists, followed by nanodevices, while nanomaterials and nanotools play
only a marginal role. Proportions have changed considerably;
nanobiotechnology’s dominant role remains, but decreases. The overall Venture
Capital (VC) funding increased from 63 million US Dollar in 1999 to more than
400 million in 2002, thus an increase of more than 500 % within 3 years. But



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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.

The continuation of the development of the VC world market for nanotechnology
is presented in Figure 8.
                                                  600                                                              2.5
                                                               VC investment in nano
               VC nano investment (million US$)




                                                                                                                         share of total investment (%)
                                                  500
                                                                                                                   2.0
                                                               share of total VC
                                                  400          investments
                                                                                                                   1.5
                                                  300
                                                                                                                   1.0
                                                  200

                                                                                                                   0.5
                                                  100


                                                    0                                                              0.0
                                                        1999      2000      2001       2002   2003   2004   2005

   Figure 8: Venture Capital funding worldwide in nano, in absolute numbers and as
   share. Sources: 1999-2003: Anquetil (2005), 2004/2005: Lux Research, 2006,
   PriceWaterhouseCoopers 2006

The figures show a stagnation of the total VC funding development in 2002 and
a moderate but steady increase afterwards. The share of nanotechnology in the
world market of VC funding undergoes a similar development. This decrease
can be explained by the fact that Venture Capitalists consolidated their views on
nanotechnology, especially in regard to the risk debates related to possible
dangers. The discussions became more vivid in the early 2000s when first
results of toxicity analyses that have been published show a certain potential
hazard related to nanoparticles. They are still going on and some investors
might prefer to wait for more clear indications of the outcomes.

On the other hand, some experts believe that a massive investment in
nanotechnology could lead to products that society does not need (Nanologue,
2005). This lack of public involvement combined with huge investment and the
hype surrounding nanotechnology would result in a “bubble” that could finally
burst. In addition, the stagnation in 2002 and the decreasing growth afterwards
might also be due to the fact that the market is already starting to get saturated.
This is because demand for VC funding depends very much on the number of
start up companies. Are there enough nanotechnological entrepreneurs who
can absorb more than 500 million US Dollar annually or 2.2 percent of VC
available world wide?


5. Analysing the economic impact: 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



                                                                                   16/34
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 (Roco, 2003). Even more optimistic, Lux Research expects a
number of 10 million manufacturing jobs related to nanotechnology by 2014.
Figure 9 shows the total number of jobs in nanotechnology and its share of all
manufacturing jobs.
               12

               10            number of nanotechnology
                             jobs in million
                8
                             share of all manufacturing
                6            jobs in %
                4

                2

                0
                     2004     2006       2008       2010   2012    2014
   Figure 9: Number of nanotechnology jobs in million and the share of nanotechnology
   jobs of all manufacturing jobs in percent. Source: Lux Research, 2004.

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 10 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.




                                           17/34
      250                                     60
             Asia                                         all
      200    Americas
                                              50
                                                          Americas
             Europe                           40
      150                                                 Europe
                                              30          Asia
      100
                                              20
       50
                                              10

        0                                       0
        31 0




        81 0
        11 0

        21 0



        41 0

        51 0

        61 0

        71 0



        91 0

        01 0

               5
        00 0




      19 193




      19 198
      19 191

      19 192



      19 194

      19 195

      19 196

      19 197



      19 99

      20 200

             00
      19 190




                                             19 1



                                             19 7



                                             19 3
                                             19 5
                                             19 7

                                             20 1
                                             20 3
                                             19 3
                                             19 5

                                             19 9
                                             19 1




                                             20 9


                                               05
           -1



           -2
           -




           -
           -

           -



           -

           -

           -

           -




           -




                                               8



                                               8



                                               9
                                               9
                                               9


                                               0
                                               0
                                               8
                                               8


                                               8
                                               9




                                               9
         re




                                             19
       fo
     be




   Figure 10: Nanotech Companies worldwide: decades and years (1981-2005) of
   creation. Note that some recently created companies (2001 or later) are not completely
   covered. Source: NanoInvestorNews database as of 8th May 2005 on
   www.nanoinvestornews.com.

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.

Is there any difference between the world regions for number and year of the
creation of nanotech companies? The numbers up to the 1990s should not be
overrated, because of statistical distortions due to small numbers. However,
they reflect the same proportions between the word regions in a constant way:
The Americas are in the lead, followed by Europe and Asia. In the late 1990s,
Europe reduced the gap to the Americas from half to two thirds. The point of
take off is for both, the Americas and Europe, in 1996, with a peak at 2000 for
Europe and 2001 for the Americas for the present. It has to be noted that these
figures of the today's state of the art cannot reveal the solidity of the companies
regarded. Analyses of differences in the founding culture have that US
companies are often less resilient compared to European companies and get
bankrupted faster. This phenomenon is not examined here for companies active
in nanotechnology.

In which nanotechnology segments are nanotech companies active? Figure 11
shows the result from a survey by Fecht et al., which covered 357 companies
worldwide.




                                           18/34
                   Nano-                                  100%
                                          Nano-
                  devices                                                                      Nanomaterials
                                         materials         80%
 Nanotools         10%                    33%
   25%                                                                                         Nanotools
                                                           60%

                                                           40%                                 Nanodevices
                                                           20%
                                                                                               Nanobio
                                                           0%
                                             Nanobio-
                                             tech 32%            US Germany UK         Japan
    Figure 11: Companies worldwide in different nanotechnology segments (left) and in
    most active countries (right). Data refer to a sample of 357 companies from a survey
    by Fecht et al., 2003

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 12 shows the size of the companies in terms of turnover in most active
countries.

             US
                                                                 80
     Germany
             UK                                                  60
        Japan
                                                                 40
         Israel
   Switzerland                                                   20
                                                                                            US
      Canada                                                                               Germany
                                                                  0                       UK
      Sweden                                                                             Japan
                                                                       0m

                                                                      0m

                                                                             m

                                                                                  .




        others
                                                                    <1




                                                                                 n.a
                                                                            00
                                                                  -50

                                                                            >5
                                                                      10




                  0   25    50   75   100 125 150 175

    Figure 12: Nanotechnology companies in leading countries (left) and by company size
    (turnover in US$ million) in most active countries (right). Data refer to a sample of 357
    companies from a survey by Fecht et al., 2003

The observed companies are mainly located the United States or Germany and
to a lesser extent in the United Kingdom, Japan, Israel, Switzerland, Canada,
and Sweden. (A similar ranking can also be observed in the dataset of
NanoInvestorNews (see Figure 10, for which the figures are not given here.)
The majority of the companies in the United States for which data are available
are of medium size, i.e. 10 to 500 million US Dollar turnover. The majority of the
German and the UK companies are much smaller with a turnover of below 10
million US Dollar, while the peak for Japanese companies can be found at 500
million US Dollar or higher.

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



                                                        19/34
terms of scientific and applied research. Figure 13 shows the number of
organisations active in nanotechnology by institutional type, by most active
countries and by world region.

     430                                                120
                 Companies
                                                        100
                 Universities and research institutes
                                                                300
                                                        80

                                                        60      200

                                                        40      100

                                                        20                                  North Am.
                                                                  0                       Europe
                                                                                         Asia
                                                        0




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   Figure 13: Nanotechnological institutions by country (left) and by type of organisation
   (right). The overall number is 1198 (left) and 1050 (right) respectively. Source:
   Cientifica, 2003

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. 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, 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.

Another nanotechnology database focuses on European countries and shows
the entries on www.nanoforum.org. Nanoforum is a European internet gateway
for nanotechnology, financed by the European Commission. In August 2005,
1538 organisations were registered in this database, from 33 European
countries. Though half of the entries stem from Germany, this database shows
also the activity of smaller and less active countries in nanotechnology, as
displayed in Figure 14.

France and the United Kingdom are in the same level with together 250 entries,
followed with a larger gap by the Netherlands, Austria, Switzerland and
Belgium. Italy leads the midfield that includes Czech Republic, Denmark,
Poland, Hungary, Sweden, Iceland, Israel, Lithuania, Slovakia and Slovenia.
Compared to the country size, 19 entries from Iceland are as remarkable as the
low number of 32 of Italy. Finland, Spain and Norway are in the groups with less
then 10 entries, which is also against expectations for these countries.



                                                        20/34
          150
                758

          125

          100

           75

           50

           25

            0



                      e ry
               D R ly




                         ey
                     ua e l




                    lg a y




                     rtu us
                itz ust s




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                     lg d




                   ov ia
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         Li
   Figure 14: European institutions (university and other research institutes, companies)
   active in nanotechnology. The overall number is 1538. Note: Israel is associated to the
   Sixth European Framework Programme for Research and Technological Development
   (2002-2006) and thus included in these statistics. Source: NanoForum database as of
   11.8.2005, on www.nanoforum.org.

From the data presented in this section, one can conclude 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 take-
off 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. First evidence gives the
indicators for scientific and technological development, which are analysed in
the following chapters.


6. The technological development of nanotechnology: 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. The so
called ‘European paradox’, which referred to Europe’s strength in science and
its weakness in technological application and consequently economic success,
did reflect these causalities. Is there a European paradox for nanotechnology
also? For approaching the answer to this question, it is advisable to have a
closer look at the two main quantifiable indicators of scientific and technological
excellence: patents and publications.




                                           21/34
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. 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.3 The initial purpose was to facilitate the work of the patent
examiners and to identify developments in this emerging field in order to
respond upfront to increased need of new patent examiners and
interdisciplinary cooperation. The introduced ‘tagging’ method also serves
researchers who are interested in patent analyses in the field of
nanotechnology. 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.4 Figure 15 shows the evolution of the
number of patent families from 1995 to 2003 and the shares in the different
nanotechnology subfields.
               3000
                          Nanobiotech (Y01n2)
               2500       Nanoelectronics (Y01n4)
                          Nanomaterials (Y01n6)
                          Nanodevices (Y01n8)
               2000       Nanooptics (Y01n10)
                          Nanomagnetics (Y01n12)
                                                                        11%
               1500                                               14%

                                                            14%
               1000                                                       29%
                                                             7%
                 500                                               25%

                   0
                    1995 1996 1997 1998 1999 2000 2001 2002 2003

    Figure 15: Nanotech patents worldwide according to EPO tag Y01N. Line graph: Total
    number of patent families in Y01N. Pie: distribution of tag classes Y01N2-Y01N12 in
    2003. Source: EPO, 2006 and own calculations.

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.
Figure 16 shows the dynamics in each subfield.
3
       For more information on rationales and methodology of the Y01N nano tag see Scheu et al,
       2006. The tags are as follows: Y01N= Nanotechnology, Y01N2 = Nanobiotechnology, Y01N4 =
       Nanotechnology for information processing, storage and transmission (short: Nanoelectronics),
       Y01N6 = Nanotechnology for materials and surface science (short: Nanomaterials), Y01N8 =
       Nanotechnology for interacting, sensing or actuating (short: Nanodevices), Y01N10 =
       Nanooptics, Y01N12 = Nanomagnetics.
4
       For a comparison of patent analyses by different authors, their methodologies and results,
       advantages and shortcomings, see Hullmann/Meyer, 2003.



                                             22/34
                     40
                                    1995-1999
                     30
                                    1999-2003
                     20

                     10

                       0




                                                          es
                                                          ch
                                y




                                                            s
                                                          cs


                                                           ls




                                                            s
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                                                     er




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                                           N
                     ot




                                         an
                                          N




                                          N




                                        an
                 an




                                       an


                                        N




                                      N
                 N




                                      N



   Figure 16: Average annual growth rates (%) per nanotechnology subfield for two
   periods: 1995-1999, 1999-2003. Source: EPO, 2006 and own calculations.

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.

From which world regions do these nanotechnology patents stem? Figure 17
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).

         Nanotech patents by region of applicant                 Nanotech patents by region of inventor
1400                                                  1400

1200      Europe                                      1200         Europe
1000      Americas                                    1000         Americas
          Asia                                                     Asia
 800                                                   800

 600                                                   600
 400                                                   400
 200                                                   200
   0                                                       0
   1995 1996 1997 1998 1999 2000 2001 2002 2003            1995 1996 1997 1998 1999 2000 2001 2002 2003

   Figure 17: Patents worldwide according to applicant (left) and inventor countries (right).
   Source: EPO, 2006 and own calculations.




                                                   23/34
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, apparently and not further analysed here, 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 15) has
been caused mainly by an unusual large number of American applicants in
1999 and in 2002. The following table provides the top 10 countries for each
N01Y subclass in 2003.

 nanotechnology (y01n)                nanobiotechnology (y01n2)                  nanoelectronics (y01n4)               nanomaterials (y01n6)
 Appl. Country   No. Inv. Country No. Appl. Country No. Inv. Country No.         Appl. Country No. Inv. Country No.    Appl. Country No. Inv. Country No.
          USA 1136           USA 1177           USA 146          USA 188                  USA 422           USA 413             USA 303           USA 345
         Japan 461          Japan 600     Germany 25        Germany 27                   Japan 192         Japan 258           Japan 114         Japan 146
     Germany 199        Germany   200         Japan 14         Japan 17              Germany 55         Germany 60         Germany 65         Germany 61
             UK   59 South Korea   73        France 11       Canada 12            Netherlands 28 South Korea 40                   UK 21             UK 21
        France    52           UK  68       Canada 10               UK 10         South Korea 24 Netherlands 19               France 17 South Korea 21
  South Korea     48      Canada   38            Italy 8      France    9              Canada 11 Switzerland 12         South Korea 15          Taiwan 15
  Netherlands     37       France  37              UK  6          Italy 9               France 10             UK 11          Belgium    8       France 14
       Canada     32       Taiwan  29           India  6         India  6                   UK     8     Sweden 10            Taiwan    8      Canada    9
           Italy  16 Netherlands   29          Israel  3        Israel  4              Sweden      6      Taiwan 10          Canada     6      Belgium   7
        Taiwan    15 Switzerland   21 South Korea      2 South Korea    4               Taiwan     5     Canada 10             China    5    Singapore   7
 ranks 11-25:
    Singapore      13          Israel    19 nanodevices (y01n8)                  nanooptics (y01n10)                   nanomagnetics (y01n12)
       Belgium     13       Sweden       19 Appl. Country No. Inv. Country No.   Appl. Country No. Inv. Country No.    Appl. Country No. Inv. Country No.
   Switzerland     13            Italy   19           USA 103          USA 106             USA 171         USA 162               USA 214          USA 191
         China     13    Singapore       17         Japan 30         Japan 35            Japan 102       Japan 120             Japan 112        Japan 166
       Sweden      12       Belgium      16     Germany 21       Germany 19                  UK 26            UK 25        Germany 29       Germany 27
          Israel   12      Denmark       14   Switzerland   8 Switzerland    9       Germany 16       Germany 18        Netherlands 10 South Korea      7
     Denmark       10         China      14 South Korea     7 South Korea    8          France 10 South Korea     9           France   6 Netherlands    5
      Australia     7      Australia     10    Singapore    4   Singapore    4    South Korea    6      Canada    8     South Korea    5       France   3
   African IPO      7   African IPO       7       Sweden    4      Sweden    4         Canada    6    Denmark     7            China   2        China   2
           India    6        Finland      7          Israel 3         Israel 4            Israel 5          Italy 6              India 2       Finland  2
        Finland     5           India     6        France   3            UK  3      Singapore    5   Singapore    6             Israel 1         Israel 2
          Spain     3        Russia       5  Netherlands    2       France   3       Denmark     5        Israel  5             Brasil 1          India 1
          Brasil    3          Spain      4         Spain   2 Netherlands    3                                            Singapore    1         Brasil 1
        Austria     3        Cyprus       3         China   2                                                                              Singapore    1
        Russia      3          Brasil     3                                                                                                   Belgium   1
        Cyprus      2        Austria      3                                                                                                    Taiwan   1


 Table 2: Top 10 patenting countries worldwide in each nanotech field, 2003, Note: numbers
 of patents are rounded, ranking refers to fragmented numbers. Source: EPO, 2006.

Table 2 shows that the United States are the most active patenting country in
each subfield, both for applicants and for inventors. But the countries on the
following ranks change their position depending on the field. 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




                                                                         24/34
nanooptics. Figure 18 shows the breakdown for the top 8 applicant countries in
2003, for two different periods.

   1.0                                                                                                             1.0


   0.8                                                                                                             0.8
                                                                                                          y01n12
                                                                                                          y01n10
   0.6                                                                                                             0.6
                                                                                                          y01n8
                                                                                                          y01n6
   0.4                                                                                                             0.4
                                                                                                          y01n4
                                                                                                          y01n2
   0.2                                                                                                             0.2


   0.0                                                                                                             0.0




                                                                                                                                                    Kingdom
                                        Kingdom
         United




                                                                                                                         United
                                                                                            Canada




                                                                                                                                                                                                     Canada
                                                                                                                                          Germany
                     Japan




                                                                                                                                  Japan




                                                                                                                                                                         South Korea



                                                                                                                                                                                       Netherlands
                              Germany
         States




                                                                                                                         States
                                                  France




                                                                                                                                                               France
                                                            South Korea



                                                                          Netherlands




                                                                                                                                                     United
                                         United




                                                                              The




                                                                                                                                                                                           The
                  1995-1999                                                                                                  2000-2005

Figure 18: Nanotech patents in top 8 applicant countries according to EPO tag classes Y01N2-
Y01N12. Left: 1995-1999, right: 2000-2005. Source: EPO, 2006.

Comparing the breakdown of subclasses between two periods, some interesting
shifts of centres of gravity can be observed. While the United States continued
with a similar breakdown, Japan, Germany, France, South Korea and Canada
moved towards nanomaterials. Germany, South Korea and in particular the
Netherlands improved in nanoelectronics, while nanooptics gained weight in the
United Kingdom, as did nanodevices in Canada and nanomagnetics in South
Korea. Interestingly, the share of nanobiotechnology patents stagnated or
decreased in each country analysed.

The annual growth rates of nanotechnology patents in each of the top eight
applicant countries in 2003 are displayed in Figure 19.
                             50

                             40
                                                           1995-1999
                             30                            1999-2003
                             20

                             10

                              0
                                                                                                                   s
                                                  y
                                 es




                                                                                                                  a




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 Figure 19: Average annual growth rates of nanotech patents for in 2003 top 8 countries
 according to EPO tag Y01N. Source: EPO, 2006 and own calculations.

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




                                                                                                      25/34
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 1990ies 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.


7. The scientific basis of nanotechnology: 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 20 shows Europe in the lead in the number of scientific publications in
nanotechnology.

     other
           others                        1998-2001           others
     Asia
             5%                                                8%
      7%
                                                    other Asia
  Japan             Europe                             14%              Europe
   15%               39%                                                 41%
                                                     Japan
         US+CA                                        13%
          34%                                                US+CA
                                                              24%
                         1992-1995
   Figure 20: Scientific publications in nanotechnology in SCI database per world region,
   1992-1995 and 1998-2001. “Europe” includes EU Member States and Associated
   Countries.            Source:           Glänzel          et         al.         2003,
   http://www.steunpuntoos.be/nanotech_domain_study.pdf

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. 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 21 shows more recent data on the number of publications
by country and by scientific disciplines.




                                           26/34
               18360
          10000

           8000
                                            Nanomaterials
           6000                             Superconductivity & Quantum Computing
                                            Chemical Synthesis
           4000

           2000

              0
                            Italy




                         Mexico
                         Turkey
                         Czech
                             US




                             UK




                          Brazil




                        Norway
                        France




                        Austria




                        Greece


                       Hungary


                       Slovakia
                      Germany




                           India
                          Spain
                         Japan




                        Ireland
                    Switzerland

                        Taiwan




                       Portugal
                      Australia
                         China




                        Poland




                        Finland
                   South Korea




                       Sweden
                       Canada




                       Belgium


                      Denmark




                  New Zealand
                        Russia
                   Netherlands


    Figure 21: Scientific publications in nanoscience per country and subfield, 1999-2004
    (SCI database). Sources: Igami, 2006, Science Citation Index 1999-2004. The analysis
    has been conducted by NISTEP, 2006.

Not surprisingly, the United States is most active with in total more than 18 000
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.

Not all scientific publications have the same quality and being active does not
necessarily create an impact. A good indicator for the quality of a paper and
thus its relevance and impact is the number of citations it receives.5 Table 3
shows the quotes ‘cites per paper’ for each of the 25 top cited countries in the
1990ies.




5
       More sophisticated analyses examine the number of citations relatively to the average number of
       citations in the field and the journal regarded, but these complex analyses are not done here.



                                              27/34
                    number of  total cites per                    number                cites per
 Nation               papers   cites    paper      Nation       of papers total cites      paper
 Switzerland             792   8233      10.40     Spain              874       5131         5.87
 Netherlands             514   4767       9.27     Israel             371       2063         5.56
 US                     9993  92108       9.22     Brazil             245       1253         5.11
 Canada                  754   5707       7.57     Austria            220       1103         5.01
 Belgium                 382   2873       7.52     Italy              958       4585         4.79
 Ireland                 131    926       7.07     Sweden             381       1729         4.54
 England+Scotland       1545  10325       6.68     Australia          349       1508         4.32
 EU-25                 22069 145681       6.60     India              636       2005         3.15
 Denmark                 217   1401       6.46     Poland             387         969        2.50
 France                 2673  17168       6.42     Russia            1708       4240         2.48
 Japan                  4251  26267       6.18     China             3168       7653         2.42
 Germany                3634  22373       6.16     Southkorea         579       1243         2.15
   Table 3: Number of nanotechnology publications and citations in the SCI database
   1991-2000 for top 25 cited countries, ranked by average cites per paper. Note that the
   EU-25 figures do only refer to the countries that appear in this table. Source: Thomson
   ISI database, 2001 on http://www.esi-topics.com/nano/nations/d1a.html

When it comes to the relative impact, two small countries are in the lead:
Switzerland and the Netherlands. The top three are completed by the United
States. The other most active countries United Kingdom (represented here by
England and Scotland), France, Japan and Germany are only in the midfield,
behind Canada, Belgium, Ireland and Denmark. The three most dynamic
countries Russia, China and South Korea complete the picture. The list of top
cited countries in nanotechnology does also reflect a general phenomenon: If a
country is English speaking or does not have a strong language in terms of
numbers of persons speaking it, or it is multilingual, it has a far greater tendency
for publications in ‘world journals’ in English language, which do have a higher
impact than national language oriented journals with a smaller potential
readership and thus a smaller impact.

The top cited journals for nanoscientific papers are the European ‘Nature’ and
the US ‘Science’ (see Thomson ISI database, 2001, on http://www.esi-
topics.com/nano/nations/d1a.html). 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:
A nanoscientific article can be relevant for many disciplines and has thus the
highest impact if the target community is broad – as it is the case for ‘Nature’
and ‘Science’ and the more general chemical and physical journals. Another,
more general reason is that only high quality articles are accepted in these high
level journals, which also leads to a larger number of cites. It can also be
concluded that the nanoscientific performance of most of the European
countries is ambiguous. European countries are either very active or with a high
impact, while the United States, though very active, are also strong on the
impact side.




                                           28/34
Compared with the patent data, two most important conclusions can be drawn.
First, neither for publications nor for patents, Europe is homogenous. There is
no evidence for a ‘European paradox’ but for a dispersed knowledge base and
technological applications across Europe. Second, the United States is the
benchmark when it comes to both scientific and technological excellence in
nanotechnology. This conclusion is not new, but reinforced by evidence.


8. Conclusions

The empirical analysis of the economic development of nanotechnology
obviously starts with the market prospects. Those prospects which referred to
nanotechnology as a whole vary a lot and are shaped by the purpose for which
they are intended. This is also due to the problem that real facts are not easy to
measure and almost impossible to prospect. However, the data presented are
sufficiently reliable because they are consistent and some anticipate the
different paces in different nanotechnology fields and different important
nanotech countries. Following this line, we can indeed expect a bright
nanotechnology future. 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. Once technologically successful, they will not necessarily be
doomed to be acquired by a large company. This externalisation of high risk
research, as observed as an R&D strategy in biotechnology for big
pharmaceutical companies during the 1990s, will probably not occur to the
same extent. 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.
Though not as optimistic as before the burst of the internet bubble, Venture
Capitalists have discovered nanotechnology as the next big thing and follow
with much attention and care 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. On the other hand
and in order to put it positively, the public funding of nanotechnology in Europe
is competitive on a world level and shows the early reaction of European
research policy to the new opportunities opened by nanotechnology and the



                                      29/34
participation at the "nano race". However, the lack of commitment of European
private investors is not nano specific – the same can be observed for the overall
R&D expenditures as well and therefore has to be put down to other, more
general reasons in the European industrial research system. The problem is
well known and falls within the "Barcelona 3% - and 2/3 from industry -
objectives" tackled on the European level (European Council, 2002).

The high level of public funding of nanotechnology research is very likely to
have a positive impact on the S&T excellence of Europe. 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, which is taking place but has to be improved. In
this connection it can be considered as advantageous that Europe is focusing
on civil applications of nanotechnology, other than e.g. the United States which
spends a great share of its public funding of nanotechnology for military
research. Another positive aspect of the substantial (civil) public funding in
Europe is the societal dimension: Nanotechnology will have a positive impact on
economic development – if it provides new solutions and does not create new
problems. Only in this case will society in form of consumers, pressure groups
and regulatory agencies accept and support nanotechnology products. The
current discussions on the potential dangers of nanoparticles are addressed by
contributing with research activities on the topic. Political action is also needed if
risks turn out to be socially unacceptably high. The possibility to politically steer
research, i.e. the definition of priority areas such as research on safety aspects
of nanotechnology, on new environmental solutions, or on new medical devices,
is one great advantage of publicly funded research. By influencing the direction
of nanotechnology research, it can correspond to the societal expectations and
consequently have a positive economic impact.

The political lessons learnt from the data are not new: Europe is doing well, but
has to reduce a gap to the United States and Japan in many fields and for many
indicators. In addition, Europe has to observe carefully the development in the
emerging nanotech countries China, India and Russia. Much will depend on
Europe's scientific and technological excellence in order to strengthen the
nanotech knowledge base in research and industry and not to ignore the
parallel need for well educated nanotech workers and researchers and world
wide competitive infrastructure for knowledge production.




                                        30/34
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      Nanotechnologies, Report in co-operation with the OECD International
      Futures Programme, 2005
Anquetil, P., The impact of nanotechnology, Susquehanna Financial Group,
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Aspen Systems, Aspen Systems takes a giant step toward commercialization of
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BASF 2002, cited by Diestler, D., Nanoteilchen in Megatonnen: Vielfältige
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      2002
Braun, A. E., Nanotechnology: genesis of semiconductors future,
Semiconductor International, November, 2004
Bundesministerium für Bildung und Forschung (BMBF): Nanotechnology
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Bureau d'Etude Marketing du CEA
Business Communication Company (BCC), Global Nanotechnology Market to
      Reach $29 Billion by 2008, Press Release, February, 2004
Business Communication Company (BCC) 2002, cited by Rittner, M., Market
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Business Communication Company (BCC), Opportunities in nanostructured
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Chilcott, J., Jones, A., Mitchell, M., Nanotechnology: Commercial Opportunity,
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Cientifica The Nanotechnology Opportunity Report, edition 2002
Cientifica The Nanotechnology Opportunity Report, edition 2003
Cientifica Nanotechnologies for the Textiles Market, April 2006
Compañó R., Hullmann, A.: Forecasting the development of nanotechnology
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Data Mine, Nanotechnology Grows Up, Data Mine Technology Review, June
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Department for Trade and Industry (DTI), 2001, cited by Greenpeace
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Deutsche Bank AG, Nanotechnology Market and Company Report, 2003
DG Bank 2001, cited by DG/WZ Bank, Im Fokus. Nanotechnologie in der
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European Commission, Some Figures about Nanotechnology R&D in Europe
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European Commission: Nanosciences and Nanotechnologies: An action plan
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European Commission: Towards a European Strategy for Nanotechnology,
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European Council, Presidency Conclusions, Barcelona European Council, 15
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                                    31/34
Evolution Capital Limited, Nanotechnology: Commercial Opportunity, London,
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Fecht, H.-J., Ilgner, J., Köhler, T., Mietke, S., Werner, M., Nanotechnology
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Freedonia: Nanotech Tools to 2008: Nanotech Tool Technologies – Microscopy,
on http://freedonia.ecnext.com/coms2/summary_0285-21108_ITM, August 2004
Frost&Sullivan 2002, cited by Carillo, D., Nanosensors' Niche in
     Nanotechnology, in: Cepmagazin-online, 2002
Frost&Sullivan 2003, cited by Stevenson, R, OLEDs set to glow, e-zine
     chemSoc, 2003
FTM consulting, Nanotechnology: Worldwide IC Market, November, 2004
Glänzel, W., Meyer, M., du Plessis, M., Thijs, B., Magerman, B., Schlemmer, B.,
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     Domain of Scientiifc and Technological Endeavour, Report of Steunpunt
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Helmut Kaiser Consultancy, Nanotechnology in Food and Food Processing
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Hullmann, A., Meyer, M.: Publications and Patents in Nanotechnology: An
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                                    33/34
                                                                                                                                                      2000       2001           2002         2003          2004           2005         2006           2007         2008           2009         2010           2011          2012        2013        2014           2015

                                                                                                                                                                               14 000 (6) 23 000 (7)    7000 (9)                                                  22 000 (6)
                                                                                                nanomaterials                                                                 21800 (23) 22 900 (23) 24 200 (23)        25 900 (23) 28 800 (23)                   21 000 (9) 13 000 (14)                                                          800 000 (4) 340 000 (5)
                                                                                                nanomaterials and molecular architectures                      13 000 (22)
                                                                                                basic nanomaterials (nanotubes, quantum dots)                                                               134 (4)                      288 (4)                   1 304 (4)                   2 784 (4)                    5 947 (4)              12 892 (4)
                                                                                                nanoparticles                                        493 (9)                                                 46 (4)         900 (9)
                                                                                                synthethic nanoparticles                                                     40 000 (21)
                                                                                                metal oxide/metal nanoparticle                                     493 (9)                                                               900 (9)
                                                                                                nanoparticles and composites                                   12 000 (12)                                                                                                                   62 000 (12)
                                                                                                carbon black                                                                   3000 (20)                                                5.7 (10)
                                                                                                carbon nanotubes                                                                                                           145 (11)
                                                                                                                                                                                                                                                                                 1500 (17)
                                                                                                polymer nanocomposites                                                                                     320 (21)                    300 (10)                                  1400 (21)
                                                                                                                                                                                                                                                                                                                                                                              Annex I: Table A1




                                                                                                polymer dispersions                                                          15 000 (21)
                                                                                                nano coatings                                                  24 000 (12)                                              40 000 (12)                              81 000 (12)                 81 000 (12)
                                                                                                nanosurfaces                                                   13 000 (22)

                                                                                                                                                                1 600 (22)
                                                                                                lateral nanostructures                                         13 000 (12)                                                                                                                   48 000 (12)
                                                                                                nanomagnetic materials and devices                                                                        4 300 (9)                                                             12 000 (9)
                                                                                                micronised substances (vitamines, pharmaceuticals)                            1 000 (21)
                                                                                                aerogels                                                                                                                10 000 (18)
                                                                                                dendrimers                                                                                                                             5-15 (10)

                                                                                                nanobiotechnologies                                                           3 300 (23)    4 000 (23)   5 300 (23)      6 200 (23)   7 600 (23)
                                                                                                nano enabled drug delivery                                                                                                 260 (24)     421 (24)      731 (24)    1 146 (24)    1 728 (24)    2 633 (24)    3 578 (24)     4 814 (24)
                                                                                                DNA Chips                                                                      1000 (23)                                              1 900 (23)
                                                                                                Protein Chips                                                                   100 (23)                                                400 (23)
                                                                                                Coronary Stents                                                               2 100 (23)                                              5 300 (23)

                                                                                                                                                                                                         180 (9)                        100 (6)                    1 000 (6)
                                                                                                nanotools                                                                    24 700 (23) 39 900 (23) 45 900 (23)        53 000 (23) 61 000 (23)                    1 200 (9)                                                                                     22 000 (5)
                                                                                                                                                                                                                                      3 000 (6)




34/34
                                                                                                nanodevices                                                                  26 600 (23) 28 600 (23) 30 800 (23)        33 600 (23) 37 300 (23)                    6 000 (6)
                                                                                                measurement and analysis of nanostructures                      2 000 (12)                                                                                                                    9 000 (12)
                                                                                                nanoanalytics                                                    3000 (22)
                                                                                                semiconductor tools and instruments                                                                                                                                                                                        5 500 (13)
                                                                                                nanotools, nanodevices, nanobiotec                                                          73 000 (7)

                                                                                                nanoelectronics                                                                                                                                                                12 000 (15)                                40 000 (15)             76 000 (15) 300 000 (5)
                                                                                                nanobased semiconductors                                                                                                                                                                     300 000 (3)                                                      500 000 (3)
                                                                                                organic semiconductors                                                                                                      500 (2)
                                                                                                nano-based ultra capacitors                                                        38 (2)                                                              355 (2)
                                                                                                nanostorage                                                                                                                                                      18 000 (19)                               65 700 (19)
                                                                                                sensors                                                                                                       9 (2)                                                                                            340 (2)
                                                                                                nanointermediates                                                                                           851 (4)                    7 888 (4)                  37 890 (4)                 160 750 (4)                  442 020 (4)             741 864 (4)

                                                                                                nano enabled products                                                                                    12 001 (4)                   43 455 (4)                 110 944 (4)                 344 204 (4)                  962 511 (4)           1 818 126 (4)
                                                                                                nano enabled products in auto and aerospace                                                               8 500 (4)
                                                                                                automotive                                                                                                1 110 (2)                                                                                                                                               6 500 (2)
                                                                                                aerospace                                                                                                                                                                                                                                                        70 000 (5)
                                                                                                sales in food and beverages sector                                              150 (16)                   860 (16)                                                                          24 000 (16)




        Table A1: World market forecasts for different nanotechnology subareas and
                                                                                                textiles                                                                                                                                           13 600 (25)                                                           115 000 (25)
                                                                                                pharmaceuticals                                      100 (9)                                                140 (9)                                                                                                                                           180 000 (5)
                                                                                                chemical processing                                                                                                                                                                                                                                           100 000 (5)
                                                                                                healthcare                                                                                                                                                                                                                                         30 000 (4) 30 000 (5)
                                                                                                sustainable processes                                                                                                                                                                                                                                          45 000 (5)
                                                                                                ultra precise surface processing                                3 000 (12)                                                                                                                   20 000 (12)




        applications in US$ million. Note that some figures are given in EUR. Diverse sources
                                                                                                (1) http://freedonia.ecnext.com/coms2/summary_0285-21108_ITM                 (7) Deutsche Bank 2003                    (13) UPI                                                (19) NanoMarkets report                                         (25) Cientifica, 2006
                                                                                                (2) Frost&Sullivan 2002                                                      (8) VDI company survey                    (14) III-Vs Review                                      (20) Reuters 2002
                                                                                                (3) Alexander E. Braun, cited by AllianzGroup report                         (9) BCC 2002                              (15) FTM consulting                                     (21) BASF 2002 (data are in EUR)
                                                                                                (4) Lux Research 2004                                                        (10) SRI 2002                             (16) Helmut Kaiser Consultancy, 2004                    (22) VDI-TZ 1998 (data are in EUR)
                                                                                                (5) NSF, 2001                                                                (11) Mitsubishi Research Institute 2002   (17) Stevenson, 2003                                    (23) Fecht et al., 2003
                                                                                                (6) data mine technology review                                              (12) DG Bank, 2002 (data are in EUR)      (18) Aspen systems                                      (24) NanoMarkets, Venture Development Associates, 2005

								
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