Publications
The Value of Chemical Research
Phase I, Phase II and Phase III Summaries
In 2001, the Council for Chemical Research (CCR) released its study, “Measuring Up: Research & Development Counts for the Chemical Industry”. This study, termed Phase I, addressed the void in quantitative assessments of the value of research by applying proven econometric and bibliometric methodologies in new ways to a particular sector – the U.S. chemical industry. The study’s findings, based on data from more than 80 chemical companies over a twenty-year period, concluded:
- Every dollar invested in chemical R&D produces, on average, $2 in corporate operating income over six years – an average annual return of 17% after taxes. This return compares favorably to the weighted average cost of capital of roughly 8% for the chemical industry over the same timeframe.
- Research funded by the federal government and other public sources makes significant contributions to new technologies in the chemical industry, based on citations in patent filings.
- The linkage of public funded science to chemical patents is higher than in most industries, at roughly six citations per patent, and is increasing.
This study was funded by 27 chemical industry corporations, laboratories, and government agencies.
In 2005, CCR released a second study titled “Measure for Measure: Chemical R&D Powers the U.S. Innovation Engine”. This follow-up study termed Phase II, addressed three specific questions: Does the quality of a chemical company’s patent portfolio correlate with its financial success?; Is chemical research and technology an enabling technology for other industries?; What is the time required from initial funding of scientific research to the first commercialization of new technology? The findings, based on a detailed bibliometric analysis of patents and scientific literature, concluded:
- Shareholder value is significantly higher (35-60%, on average) for chemical companies with high quality patent portfolios, based on citation impact, innovation speed and links to scientific literature.
- Chemistry is the most enabling science/technology; it underpins technology development in every industry. Chemical technology is unrivaled in its reach and enabling capability for other manufacturing industries.
- The time frame from initial public-funded basic research in chemistry to commercial scale utilization is roughly twenty years.
On the cusp of the nanotechnology revolution, chemical science and technology can be expected to expand its influence as an enabling force throughout the economy. Already, findings from phase I of this study show that funds invested in R&D sooner rather than later enhance profitability. However, the chemical industry, as well as other industries, still faces the seemingly intractable time lag from fundamental research to commercial fruition. The challenge to reduce this time-span is imperative in order for the chemical industry to enhance its competitive and prosperous posture in the global marketplace.
In 2009 a workshop—“Assessing and Enhancing the Impact of Science R&D in the United States: Chemical Sciences”—was convened at the National Science Foundation. Academic scholars and industry experts were invited to discuss the state of knowledge about the impact of science R&D in the United States, focusing on chemical sciences and related industries.
The workshop participants were charged to advance the scientific basis for thinking about and beginning to answer the following four questions:
- How can we measure the broad (economic, social and scientific) impact of scientific research?
- What is the nexus between industrial and federal investments in science R&D?
- How can an optimal portfolio of (public and private) science R&D investments be characterized?
- How can economics inform the accountability process related to federal R&D investments?
An intended output of this workshop was the identification of useful and important directions for relevant future scholarship.
The Phase III report is organized around the four questions listed above. Relevant to each of these important questions is that R&D in the chemical sciences occurs throughout the economy, including in:
- private-sector companies in the chemical industry
- private-sector companies in industries for which advancements in technology are related to advances in chemistry
- university research laboratories, and
- national laboratories.
To generalize, chemistry R&D that is performed within private-sector firms is mostly applied research and development. Chemistry R&D that is performed within universities is mostly basic research and applied research. And, chemistry R&D that is performed within our national laboratories includes basic research, applied research, demonstration projects, and research leading to infrastructure technology.
With respect to each of the above questions, the Phase III report both summarizes the discussions at the workshop relevant to each question and points out a number of important issues that were neither fully discussed nor resolved.
CCR's Strategic Framework for the 21st Century
