NANOTECHNOLOGY: Major market breakthroughs ahead?

I am writing this entry from COMS2012 in Tønsberg Norway, one of the leading nanotechnology conferences in the world being held in one of the oldest cities in Northern Europe.

COMS2012 is the 17th annual conference on commercializing micro- and nanotechnology. The conference brings “leaders from all over the world and every sector of industry, from high tech companies, national labs, regional development and government agencies, investment and consulting groups, market researchers, educators and students, all sharing, learning and creating partnerships in an open interactive setting.” A conference focusing on accelerating commercialization activity among established and emerging micro and nano-based businesses is an effort worth applauding and repeating—often.

Nanotechnology (the study, application and manipulation of atomic, molecular and macromolecular matter) is not new, but only since we’ve gained the ability to understand and apply knowledge about the molecular make-up of matter has anyone been able to appreciate the commercial value of nanotechnology. Primary industry sectors that utilize nanotechnology include food, medicine, pharma, cosmetics, energy, aquaculture, defense and metallurgy.

Nanotechnology hit the U.S. stage in a major way in July of 2000 when Congress authorized over $400 million into the National Nanotechnology Initiative to encourage R&D. The underlying premise was to advance billions of dollars of federally-funded research into commercially viable products and companies, initiating another “semi-conductor” like wave of innovation and advancements utilizing nano-particles and nano-engineering. What followed was a gradual increase in private sector participation in the development and production of nanotechnology products. This happened at the same time that market for public companies, including nanotechnology companies, was shrinking to its own “nano-like” stature.

At its height, the nanotechnology field saw an estimated $1.8 billion of private sector investment (the entire value of nanotechnology investment cannot be fully known as large corporations and even the U.S. government do not necessarily track or report spending and investment on projects where nanotechnology may be only a part, even if a significant one, of expenditures). However, the number has been falling since, in part due to a dearth of funding for most sectors. Because of this, the ratio of government (federal and state) investment into nanotechnology compared to private investment is problematic. Public markets for nanotechnology companies, although commendable, remain small. Moreover, the dearth of any “traditionally understood” exit has the venture community concerned.

Also, the ability to utilize nanotechnology, particularly in the health and food sectors is not without controversy and regulatory uncertainty. In April 2012, the U.S. Food and Drug Administration issued draft guidance on nanotechnology. The draft guidance describes the factors that manufacturers should consider when determining whether changes in manufacturing processes, including those involving nanotechnology, create a significant change that may:

•   affect the identity of the food substance;

•   affect the safety of the use of the food substance;

•   affect the regulatory status of the use of the food substance; or

•   warrant a regulatory submission to FDA.

The cosmetic product draft guidance discusses the FDA’s current thinking on the safety assessment of nano-materials when used in cosmetic products. Key points include:

•   Legal requirements for cosmetics manufactured using nano-materials are the same as those for any other cosmetics. While cosmetics are not subject to premarket approval, companies and individuals who market cosmetics are legally responsible for the safety of their products and they must be properly labeled.

•   To conduct safety assessments for cosmetic products containing nano-materials, standard safety tests may need to be modified or new methods developed.

Both sets of guidance encourage manufacturers to consult with the agency before taking their products to market. Such consultation can help FDA experts address questions related to the safety or other attributes of nanotechnology products, or answer questions about whether their regulatory status warrants a regulatory submission to FDA. What this means is that the FDA is likely understaffed and underqualified to assess all of the potential uses of nanotechnology in optimizing the use of nano-particles to modify and enhance, food, drugs, devices and cosmetics. Ironically, the technology to do this exists now, but companies are reluctant to use the available tools because of concerns about potential legal liability, regardless of the utility, safety, and efficacy that may exist. This uncertainty puts a chill on investors and large companies that might otherwise fund potentially life-changing technologies.

Look for public sector centers with more market-friendly approaches to developing and commercializing innovation. If this occurs, we may see a floodgate of new investment into the nanotechnology sector. Also, public and private forces need to collaborate to promotion the adoption by regulatory bodies of more streamlined and predictable regulation. Conferences like COMS2012 are a welcome example showcasing how the private and public sector can work together to bring valuable science to the marketplace.