Nanomaterials Producers React To Criticism Of Their Business Models

I don’t like nanomaterials companies very much. In fact they are usually nothing but trouble. If they are not squandering huge amounts of investors money chasing non existent markets then they are having messy legal spats with competitors and suppliers, or even prancing around bringing hugely expensive but ultimately pointless libel suits against anyone who questions their business model. Anyway, not to worry, most of them have either gone bust or found something more useful to do with their nanotech expertise than trying to put carts before horses and good riddance.

I’ll be doing my best to avoid a lynching at tomorrow’s Nanomaterials 2010 conference where I will be talking about “Trends and opportunities in the nanomaterials marketplace” – something I’m pretty sure that I will be able to manage without jumping up and down yelling “nanomaterials are the new gold so give me all your money” (actually as we and the World Gold Council proved a while ago, Gold is the new Gold).

However we do need to make use of nanomaterials to address a number of pressing issues caused by rising populations and declining resources unless we all want to go back to the Dark Ages, and this is where I think the opportunities lie, and perhaps this time it won’t be just large chemical producers who can take advantage.

If we look at most of our current crop of ‘sustainable’ technologies, from hybrid vehicles to wind turbines and solar arrays they are rubbish. There is absolutely no comparison with the elegance of nature’s solutions, almost all of which are built from the bottom up and which I often refer to as ‘materials by design’, a subject of eternal debate with my nanoclastic colleague Dexter Johnson. We need to start thinking seriously about how we can use our new found control over the properties of materials to address resource issues, create clean water and of course double food production in the next forty years, not producing tons of stuff that no one will ever want just because we can.

Yesterdays announcement that the only bit of the company that ever looked like making any money – before a dispute about royalties erupted – has been sold to the company that they spent two years and several million pounds fighting is particularly ironic.

There’s a tale of hubris, greed and huge egos behind this, and one that will no doubt emerge in time.

Well, companies go bust all the time, and it is usually confined to the courts and the financial press, so it was surprising to se how personal this fight had become, with the dispute migrating from the Court of Appeal to the Daily Mail!

Where do we go from here, to the House of Lords and the News of the World?

There’s a nice contrast between the two litigants here, and one that illustrates the problems involved in getting a technology to market. In the case of the troubled companies, Oxonica and Evident, the strategy was based on first figuring out how to produce a nanomaterial and then trying to find a market for it. While both companies have made sales, neither has ever had quite enough volume to cross the chasm and become a sustainable business. Life Technologies, in contrast, pursued an acquisition strategy that netted them entry to other markets, and nanotechnology is just a part of their business rather than the whole of it.

There is a valuable lesson here, which is to start with the market, not the technology. In the early stages of a technology when investors are bullish a technology led strategy may work, but diversifying as quickly as possible is the key to survival.

Having developed product offerings in all of its businesses, Oxonica is now focusing on partnering the Group’s businesses to secure profitable platforms for growth. In 2008, Oxonica’s Diagnostics business was partnered with BD and the Company is currently in partnering discussions for its remaining three businesses. The structure and value of the resulting partnerships will be announced on completion of the negotiations.

An interesting statement which could be read as the code for flogging off all remaining assets and hoping to get a few quid from licence fees and royalties but not attempting any further business development, something the company describes as a “sustainable, relatively low?-?risk business model”

Flu is a very comon virus, and as word of a potential pandemic spreads doctors and hospitals tend to become overwhelmed by everyone feeling slightly off colour suspecting that they have the killer version of the flu and demanding urgent attention. So one of the major problems in preventing the spread of pandemics is in distinguishing between the pandemic strain, SARS, H5N1 avian flu or recently the H1N1 strain of swine flu. Making the distinction isn’t a problem, many pathology labs can do this within twenty four hours or overnight if needed, but someone working in a city and commuting on crowded transport can spread a lot of virus around in twenty four hours, so the ability to rapidly distinguish between Swine Flu and any other kind is of the highest importance.

Earlier in the year, through our investment company Envision ALR, we acquired a company working on plastic electronics for lab on a chip applications. We have been developing the technology, and were planning to enter a number of markets early in 2010 with a rapid an portable diagnostic system.

The basic principle of most diagnostic systems is optical. You have an antigen which you bind to a surface and a solution containing a secondary antibody which contains an enzyme which fluoresces when it binds to the antibody you are trying to detect. When a binding event occurs, the enzyme lights up and you know you have detected the primary antibody, but the trouble is that the glow is very faint, so you need to wait a long time for enough binding to take place, or have a very concentrated solution, and both of those waste precious time.

Our trick is to print the entire device in one process – detectors, reaction cells, antigens. This not only cuts the size and cost down, but as the detector and reaction are in very close proximity the sensitivity over normal techniques, which involve an optical microscope at some stage, goes up by a couple of orders of magnitude.

Ergo, we can do on a sliver of plastic with a hand held reader in seconds what it takes twenty four hours to do in a path lab.

“The Government is committed to the responsible development of nanotechnologies. We will work with all interested parties – including the public – to develop a suitable strategy that addresses both the exploitation of technologies and the management of potential risks.”

Bilmey! Isn’t that what they said they were going to do back in 2004? To give the government credit, there does seem to have been some agreement about which government department is going to what, but most of the commitments amount to classic Whitehall obfuscation, committing the Government to develop dialogues, consult industry etc. rather than anything which could be construed as positive action.

In summary then

We didn’t have a clue what was going on with nanomaterials five years ago so we did loads of consultation and set up a number of working groups and discovered that most people didn’t understand either and weren’t too bothered, which made us even more confused.  So now, as we have plenty of cash to splash around, and in the absence of any better ideas we’ll do it all again, but bigger.

The thing that made me want to pack up and leave the country on the next boat to Shanghai or San Francisco is the involvement of the dreaded Ministry of Fun, notorious for scope creep and generally forcing up business costs by assuming that every atom in the Universe is hazardous and requiring appropriate procedures/committees/supervisors/training to be introduced and documented before it can be used. At a minimum you can expect anyone working with nanomaterials to have to wear a fluorescent jacket.

More Health and Safety lunacy is chronicled here.

Of course the fact that they have been involved in litigation over their production technology doesn’t make things any easier.

I don’t have anything against nanomaterials companies, but I can’t think of a single one that hasn’t been a resounding flop as far as investors are concerned – that’s nanomaterials companies as opposed to materials companies whose product lineup includes nanomaterials, such as BASF, Dow, etc

Warning! Contents May Dissapoint

The “International Risk Governance Council,” a Geneva based organisation “whose purpose is to help the understanding and management of global risks that impact on human health and safety, the environment, the economy and society at large” sent me their latest deep thoughts on Risk Governance of Nanotechnology Applications in Food and Cosmetics today, and it proved a rather interesting read.

Anyone following the various debates about the safety of nanotechnologies will be aware that since the seminal Royal Society report in 2004, all other reports have concluded that we either don’t know enough about the science/toxicology/applications/exposure routes yet to make an informed decision, or said to hell with rational science called for an outright ban on the use of nanotechnologies in food/water/industry/fun.

I took a look at the IRGC report and blow me if it wasn’t just as vapid and inconclusive as all the rest.I passed it to one of my colleagues in case I’d missed something and she commented “the report says the same as all the other “risk” reports since the first royal society one.  Seems like there is nothing else to say!”

What is particularly staggering is that in an area as important as health and safety no one seems able to commission any real research, and most of the information in the report seems to have come from a couple of weeks of googling, with the consequent lack of gravitas associated with any publication that merely collates other public domain data. Rather than actually doing any work, the IRGC report simply makes comments along the lines of “In the absence of reliable data, the Nanowerk internet portal provides an overview of current or future fields of applications in agriculture, food processing, food packaging and food supplements. Now Nanowerk is an excellent content aggregator, but it’s hardly Nature now is it? The next thing you know we’ll have people quoting TNTlog as an authoritative source!

Anyway to spare you wading through 42 pages of summarising what has already been summarised by other people let’s cut straight to the conclusion:

The food and cosmetics “industries should make a concerted effort to reflect on critical comments and use them constructively, as an incentive to assure the responsible production and use of nanomaterials.

Is that it?

According to the IRGC, the final recommendations will be published in an IRGC Policy Brief in spring 2009, we can hardly wait, and we hope they come up with a bit more insight in the meantime.