WASHINGTON, March 9 (UPI) -- Governments and corporations increased their investment in nanotech R&D by double-digits last year and several countries, including China, are beginning to gain on the top nations of the United States and Japan, according to a report released this week.
This could have repercussions on the pharmaceutical and biomedical sector, which is one of the major areas of focus of nanotech research.
"China is moving up very rapidly in nanotech activity, almost to a point of being a peer of the United States and some of the top countries," Michael Holman, a senior analyst at Lux Research and author of the report, told United Press International.
However, China still lags behind in translating the nano research into commercial applications.
"There's been a lot of activity in nanotech, but it hasn't been converted into a commercial impact as thoroughly as in the United States or Japan," Holman said.
Russia and India also stepped up their nano activity.
Although China is largely ignoring life sciences, focusing instead on material science and electronics, it could have an impact on companies pursuing nano products in the biomedical field.
"China could present a headache for companies in life sciences in terms of patent protection," Holman said.
This is because patent protections are not nearly as strong in developing countries, especially in China, as in other regions of the world. "So concerns about intellectual property will limit the willingness of companies to work in areas like China," he said. But this means they'll have to forego the huge market opportunity the country presents.
According to the Lux Research report, government spending on nanotech grew 10 percent to $6.4 billion in 2006. The United States came out on top, with $1.78 billion, followed by Japan and Germany.
But China actually ranks second when purchasing power parity -- a factor that corrects for lower costs of goods and services -- is considered. The nation's funding is the equivalent of $906 million.
Corporate funding of nanotech research jumped 19 percent to $5.3 billion in 2006. The United States also leads this category with $1.93 billion, followed by Japan's $1.70 billion.
China's corporate funding ranks significantly lower at $165 million, but this represents a 68-percent increase from 2005 levels.
Holman noted that growth in government spending is starting to level off, while corporate spending tends to be increasing, catching up and even surpassing government funding.
"This is a reflection that the field of nanotech in general is kind of at the point where it's shifting from R&D and increasingly into commercialization," he said.
Pharma is one of the biggest focus areas, with over $1 billion worth of drugs being sold today that use the technology, including different formulations of existing drugs and diagnostics.
Big pharma has more or less adopted a wait and see approach, with smaller startup companies relying on business strategies that mirror biotech's strategy, Holman said. This involves developing a product into later-stage clinical trials and then trying to license it to big pharma for royalties and milestone payments.
Dave Rejeski, director of the Project on Emerging Nanotechnologies, told UPI the Food and Drug Administration is not keeping up with industry's rapid development of drugs and other products that utilize nanotech.
In addition to the products already on the market, there's well over 100 drugs and 100 biomedical devices that utilize nanotech in preclinical or clinical studies, an increase of 70 percent, compared to 2005.
If the FDA does not receive more funding for this area, there could be a bottleneck for approval of new products.
"The FDA -- just generally, forget about nano -- is under-resourced," Rejeski said.
The agency lacks the staff with the necessary expertise to review nano products and they may have a hard time competing with the private sector, which can afford to pay these sought-after personnel top dollar, he said.
"The potential is obviously there for a bottleneck," Rejeski said, noting that the number of filings at the U.S. Patent and Trademark Office for this area indicates a coming wave of products on the horizon.
The solution might have to involve Congress to provide the FDA with the resources they need.
"Congress will have to play a big role here," Rejeski said.
