Plunkett Research Reports 10 Major Trends Affecting the Engineering and Research Industry
Houston, TX. June 11, 2009 –
Plunkett Research reports 10 of the biggest trends happening in the engineering and research industry. These trends explain the impact this industry has on the global economy, as well as how it merges with several other industries such as biotechnology, nanotechnology, energy and more.
"On a global basis, spending on R&D has increased rapidly in recent years", says Jack Plunkett, CEO and Editor of Plunkett Research. "Large numbers of university students around the globe are enrolled in engineering and scientific disciplines—many of them dreaming about potential rewards if their future research efforts become commercialized. Global research collaboration is booming, as is patenting; in fact, it is difficult for patent authorities in the U.S. and elsewhere to keep up with demand. Globalization and cross-national collaboration have such a dramatic effect on research and design that nearly one-half of all patents granted in America list at least one non-U.S. citizen as a co-inventor."
Plunkett’s 10 major trends affecting the engineering and research industry:
1) R&D in China Becomes a Major Factor - There are three trends at work in the growth of R&D in China. First, the Chinese government has an aggressive goal for the nation’s R&D investment, with plans to foster growth to 2.5% of GDP by 2020, up from about 1.5% in 2008. Second, many Chinese companies are enjoying escalating success in the global marketplace. Telecommunications equipment makers such as Huawei Technologies; computer hardware makers such as Lenovo Group (owner of the IBM laptop brand) and a host of growing companies like them are finding increased investments in research to be key to their continued growth. At the same time, Chinese firms are increasing their investments in quality research, design and production in order to create products suitable for the rapidly growing number of middle-class Chinese consumers. Lastly, hundreds of non-Chinese companies of varying types have set up serious research labs in China. This includes companies such as Microsoft, Nokia, Nortel, GE and Roche.
2) The State of the Biotechnology Industry Today – Prescription drug purchases in the U.S. totaled approximately $247 billion during 2008, up from $40 billion in 1990. Biotech-related drugs accounted for about $44 billion of the U.S. market in 2007, or a bit more than 20%. Plunkett Research estimates that in 2008, public biotech company revenues reached $86.4 billion. Also, global trends are affecting the biotech industry in a big way. Post 9/11, an emphasis was placed by government agencies on the prevention of bioterror risks, such as attacks by the spread of anthrax. This factor, combined with global concern about the possible spread of avian flu, has been a significant boost to vaccine research and production. At the same time, the rapid rise of offshoring and globalization is contributing to the movement of research, development and clinical trials away from the U.S., U.K. and France into lower cost technology centers in India and elsewhere. In fact, biotech firms are rising rapidly in India, China, Singapore and South Korea that will provide serious future competition to older companies in the West.
3) U.S. Government Reverses Ban on Funding for New Stem Cell Research- Shortly after taking office, U.S. President Barack Obama reversed an eight-year ban on the use of federal funding for embryonic stem cell research. This executive order, dated March 9, 2009, charged the National Institutes of Health (NIH) with issuing new guidelines for stem cell research within 120 days. Also worthy of note, the NIH received $10 billion in new funds from recent economic stimulus legislation. It is possible, but not required, that NIH could use a part of that funding to boost stem cell efforts. Corporate investment in stem cells was also strong. AstraZeneca Pharmaceuticals invested $77 million in a startup firm in San Diego called BrainCells, Inc. to study how antidepressants might be used to spur brain cell growth. GlaxoSmithkline agreed to pay OncoMed Pharmaceuticals up to $1.4 billion in late 2007 for four radical new drugs that target cancer stem cells. In 2009, Geron Corporation began an FDA-approved trial of embryonic stem cells in recent spinal cord injuries in eight to ten patients.
4) Emphasis on R&D in Nanotechnology -Nanotechnology is the science of designing, building or utilizing unique structures that are smaller than 100 nanometers. In practical terms, nanotechnology will ultimately allow scientists and engineers to piece tiny structures together to build all manner of objects, from miniscule semiconductors to medical treatments that work on the molecular level, to the clothes we wear and the structures in which we live. All associated U.S. departments and agencies plan to focus on nanotech manufacturing processes, uses of nanotechnology for chemical-biological-radioactive-explosive detection and protection and also on instrumentation and metrology (the science of measurement). Nanotechnology continues to attract a reasonable flow of new money from the venture capital community. Professional investors see great potential in firms that may become early leaders and patent-holders in this field. Much of the future of technology in general will be based on miniaturization, and nanotechnology, the smallest possible level of product development, will play a key role in this miniaturization trend.
5) Globalization and Worldwide Collaboration Fuel the Research Efforts of Major Corporations - Globalization is deeply affecting the corporate world at all levels. This can be seen in everything from the inexpensive consumer goods flooding into the U.S. from manufacturers in China to the growing business that American software makers have found overseas. There are also legions of extremely well-educated scientists and engineers in areas such as India, China and Eastern Europe who can be hired for salaries that are significantly below those of their U.S.-based peers. These factors all combine to make globalized research efforts attractive for many reasons. One of the hottest spots for U.S. firms to open foreign research centers is the city of Bangalore in India. Initially a center for writing software code, Bangalore’s supply of highly educated, English-speaking residents has enabled the city to evolve into a truly world-class research and development center. The labor pool is not only high-quality but also low-cost.
6) Growth Continues in Research Partnerships Between Corporations and Universities- Corporations have long seen the benefit of tapping the intellectual powers of labs, graduate students and professors at universities that focus on technology intensive disciplines. At the same time, such universities have been anxious to receive corporate funding for their research projects. This has always been a win-win situation. Lately, however, universities have enhanced their position in such partnerships by negotiating research collaboration contracts that are potentially more lucrative than was the norm in years past. Cash-strapped universities are anxious to capitalize on commercial successes that stem from their research. At the same time, cash-strapped corporations are happy to utilize top grad students who work in university labs at nominal pay.
7) Number of Patent Applications Remains High - In 2007, the U.S. Patent & Trademark Office (PTO) received 484,955 patent applications (the latest available data), up from 452,633 in 2006. There were 315,015 applications in 2000 and only 109,359 in 1970. To some extent, patents tend to reflect the health of R&D budgets. The greater the funding, the more patents are filed. At the same time, however, the rapid growth in the number of patent applications reflects today’s increased focus on protection of intellectual property by corporations and universities along with the extremely high traffic from biotech firms attempting to patent gene expressions and other biological discoveries. The term of patent protection is currently defined as beginning on the date the patent is granted and ending 20 years from the earliest filing date of the application. Globally, there are 120 different national patent systems, and recent proposals to create a unified global patent system are creating buzz.
8) Governments Encourage Renewable Energy, Energy Conservation, Research and Investment - The U.S. government has earmarked $38.7 billion in economic stimulus funds in 2009 for the Department of Energy (DOE), up from $24.2 billion budget in 2008. The 2009 budget is further augmented by $27 billion in appropriations. Within that overall budget, the U.S. Congress approved $7.8 billion for energy-related research and development, up 18% from 2008. More than anytime in history, the U.S. government, as well as governments around the world, are committed to energy independence, conservation and climate change prevention. U.S. President Obama recently announced a new goal to cut emissions by 80% by 2050. Outside of the U.S., major initiatives in Germany, the United Kingdom, Japan, Spain and handful of other countries spur on technology research and implementation of renewable power.
9) Fuel Cell and Hydrogen Power Research Continues- The potential market for fuel cells encompasses diverse uses in fixed applications (such as providing an electric generating plant for a home or a neighborhood), portable systems (such as portable generators for construction sites) or completely mobile uses (powering anything from small hand-held devices to automobiles). The potential advantages of fuel cells as clean, efficient energy sources are enormous. The fuel cell itself is a proven technology—fuel cells are already in use, powering a U.S. Post Office in Alaska, for example. Shipments of fuel cell-equipped mobile devices could grow very rapidly if they can eliminate the need for frequent recharging of current battery-powered models. The "Medis 24/7 Power Pack" is a portable, disposable power source for small electronic devices such as cell phones and MP3 players. Manufactured by Medis Technologies, it is based on Direct Liquid Fuel cell technology, and may be of particular utility in military applications.
10) Electric Cars and Plug-in Hybrids (PHEVs) Will Quickly Gain Popularity/Major Research in Advanced Lithium Batteries - For the near term, electric cars may range from 100% electric power vehicles that have relatively short ranges and are plugged-in at home overnight to recharge—to cars like the proposed Chevrolet Volt that will run on electric motors only, but will include a small gasoline-powered generator engine that will recharge the batteries when needed. The Volt will be designed to go up to 40 miles without recharging, and it will have the capability to be recharged by plug-in at home. Meanwhile, other challenges face 100% electric cars. In addition to adequate battery life, engineers are wrestling with the fact that conveniences such as air conditioning, heating and stereos drain a lot of electricity. Plug-in hybrids (PHEVs) will be on the market soon. These will be similar to today’s hybrids, but will feature a larger battery with longer range. More importantly, they will enable the owner to plug-in at home overnight to recharge that battery. Today’s hybrids recharge by running the gasoline-powered side of the car, and by drawing on the drag produced by using the brakes.
Additional information is available in "Plunkett’s Engineering & Research Industry Almanac 2009," as well as on our web site, www.PlunkettResearch.com.
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