Publications

The Value of Chemical Research

Phase I, Phase II and Phase III Summaries

Phase I Study

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.

Phase II Study

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.

Phase III Study