**Combinatorial Discovery of Catalysts:**

**An ATP Position Paper Developed from Industry Input**

**[Program Development Team:]{.underline}**

**Program Manager**

**Chemistry and Life Sciences Office**

**Linda Herring, M.B.A.**

**Chemistry and Life Sciences Office**

**Michael A. Schen, Ph.D.**

**Materials and Manufacturing Office**

**Barbara Cuthill, Ph.D.**

**Information Technology and Electronics Office**

**Robert Sienkiewicz, Ph.D.**

**Economics Assessment Office**

**Advanced Technology Program**

**National Institute of Standards and Technology**

**Gaithersburg, MD 20899-0473**

**November 16, 1998**

Also available at our web site:
http://www.atp.nist.gov/www/ccmr/ccmr_off.htm

**TABLE OF CONTENTS**

A. EXECUTIVE SUMMARY [2](#executive-summary)

B. The ATP Process [3](#the-atp-process)

C. Problem Statement: Combinatorial CHEMISTRY AND Catalysts
[3](#problem-statement-combinatorial-chemistry-and-catalysts)

D. Technology Challenge [5](#technology-challenge)

E. Market Needs and Scope of Applications
[9](#market-needs-and-scope-of-applications)

F. Program Objectives, Scope, and Targets
[12](#program-objectives-scope-and-targets)

G. Significance of ATP Funds [14](#significance-of-atp-funds)

H. Potential for U.S. Economic Benefit
[15](#potential-for-u.s.-economic-benefit)

I. Program Impact [16](#program-impact)

# EXECUTIVE SUMMARY

Global market pressures are driving the chemicals and advanced materials
industries to significantly reduce R&D cycle times yet provide higher
quality (e.g., at six sigma) and performance. A solution to these
industries is the recent development of high throughput research,
including "combinatorial chemistry" methodologies, where a parallel
approach to discovery and process development can deliver thousands of
target materials and produce "libraries" of new solid-state and soluble
materials in a matter of hours and days rather than months and years.
Discoveries have already occurred for materials with superconductive,
magnetoresistive, luminescent, ferroelectric, and dielectric properties.
Catalysis research is receiving attention in homogeneous organometallic
complexes, in heterogeneous inorganic oxides, and in biocatalysis.

There are substantial technical challenges in leveraging this technique
from the drug discovery methodologies to advanced materials. There is a
role for the ATP to play in bringing this capability to U.S. industry.
ATP can facilitate the emergence of new technologies through the
development of unique partnerships; it can spur the fusion of these new
technologies for subsequent diffusion to other areas; it can facilitate
the integration of complex systems; it can facilitate the integration of
otherwise diverse technologies; and it can reduce the cost of
combinatorial chemistry as a tool so that more R&D cost-sensitive
sectors will invest in this new capability.

This position paper encourages the development of a portfolio of
projects in the Advanced Technology Program for FY1999 in the area of
combinatorial discovery for new catalyst materials. This report is a
collection point for information gleaned from industry input, for
example as obtained at an Industry Probe Working Group Discussion held
in March, 1998. Additional input will be obtained from a public Workshop
to be held November 18, 1998 in Atlanta, GA.

ATP is responding to external input to consolidate information on:

-   market drivers

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-   market sizes, market factors, penetration potential

-   return on R&D investment

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-   economic advantage

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-   market failure, broad-based benefits, and cost/benefits

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-   technology challenges

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-   discontinuous innovation in different application areas

-   fusion of emerging technologies as future technology enablers

-   systems integration.

Technology fusion will occur in the domains of the hardware and software
industries, and will be directed toward solving specific problems in
various industries, such as polymers, catalysts, smart materials,
electronic materials, specialty & fine chemicals, biomaterials, optical
materials, glass formulations, structural materials. Many technological
problems are being solved in some application areas (for example,
electronic materials and catalysts) while other applications await
enabling technologies.

# The ATP Process

The goal of the ATP is economic growth and the good jobs and quality of
life that come with economic growth. ATP awards are made strictly on the
basis of rigorous peer-reviewed competitionsdesigned to select the
proposals that are best qualified in terms of the technological ideas,
the potential economic benefits to the nation (not just the applicant),
and the strength of the plan for eventual commercialization of the
results; ATP protects the confidentiality of documents submitted by
industry. The ATP does not fund basic research or product development.

The ATP is industry-driven. In the form of "white papers", position
papers submitted by industry, academia, and government facilities might
outline a specific technology area and describe the potential for U.S.
economic benefit, the technical ideas available to be exploited, the
strength of industry commitment to the work, and the reasons why ATP
funding is necessary to achieve well-defined research and business
goals. These position papers must contain no proprietary information and
should state as succinctly as possible the goals of a proposed
technology area. The FY 1999 Competition introduces a new mechanism for
developing Focused Programs: program areas will be developed in response
to confidential proposals submitted to the Competition, i.e., a
market-driven response to technology challenges seen by industry.

ATP project proposals submitted to a Competition are evaluated two
criteria, 1). the scientific and technical merit of the proposal; and
2). the potential for broad-based economic benefits to the United
States. A fifty percent weighting of the proposal applies to the
scientific and technological merits: innovations in the technology; high
technical risk and feasibility; and quality of the research plan. A 50%
weighting will be applied to the economic merits of the proposals:
economic benefits; need for ATP funding; and the pathway to economic
benefit.

Competitions are announced in late Autumn with proposal due dates
generally in early Spring. Proposal reviews are conducted through the
Summer, and awards are announced in the September-October time frame.
Applicants are strongly urged to initiate proposal preparations early
and to follow instructions carefully; Proposal Preparation Kits for each
new competition are distributed via the ATP Mailing List and on the ATP
internet world wide web site <http://www.atp.nist.gov/atp/apply.htm>,
following the announcement of a new competition.

# Problem Statement: Combinatorial CHEMISTRY AND Catalysts 

Major forces---globalization of markets and the pace of technology
change---continue to drive private sector R&D to narrower, shorter-term
investments to maximize returns to the company. Increased pressure on
manufacturers to produce "faster/lower cost/better" has increased the
demand for new products made from new materials and/or utilizing new
processes.

During the 1990's, the pharmaceutical industry responded to these market
pressures and significantly reduced the cycle time for the discovery of
new chemical targets by generating and analyzing large numbers of
possible chemical targets all at once by using massively parallel (also
known as "combinatorial" or "high-throughput\") research methods. This
semi-empirical method could therefore determine the relevance of 96
possible candidates (a "library") in a matter of hours or days as
compared to weeks or months using traditional synthesis techniques.
Recently the number of samples in a library has multiplied 100-fold with
increased purity and significantly expanded analytical output, and the
ability to screen upwards of 1 million distinct compounds per year has
been realized in the larger firms. The capability to conduct research on
this scale was the direct result of the fusion of several distinct
technologies in the areas of software (informatics, molecular modeling,
and statistics), more powerful computers, robotics, micro-technologies
(micro-fluidics, micro-machining), and sensors applied to a well-defined
market opportunity.

Industrial sectors beyond the pharmaceutical industry have described the
need for high throughput screening for new chemicals and advanced
materials. On March 24, 1998, the ATP held an Industry Probe Working
Group Discussion that brought together fourteen representatives as a
cross-section of the specialty chemicals and materials industries, as
well as leading suppliers of enabling hardware and software tools and
NIST Laboratories. The information gained from this Discussion has been
expanded by additional industry input in the form of position papers
submitted to the ATP. In addition to identifying key areas of technology
development and application market areas, these data described the
technical and commercial barriers to success of this methodology in U.S.
industry. Continued industry input will be collected, and a public
Workshop will be held on November 18, 1998 in Atlanta, Georgia.

Many, but not all, of the market factors that influenced drug discovery
are now driving a need for reducing the cycle time for the discovery of
new advanced materials and lower-cost chemical products compared to
high-value pharmaceuticals. The technology spill-over from drug
discovery has resulted in the embryonic development of combinatorial
methodologies and technologies for inorganic materials and
non-pharmaceutical organic compounds and materials. Combinatorial
techniques are especially suited to complex mixtures containing many
different elements. This methodology, therefore, lends itself to new
advanced materials that are gaining performance through the use of 3,
4-, or 5-component mixtures or small quantities of additives, for
example as dopants. In addition, rapid screening permits research into
compositions containing elements that would not otherwise be attempted.

While the methodologies developed for drug discovery can be leveraged
for other applications, the complexities of chemicals and materials
discovery far out-weigh the current capabilities developed for drug
discovery. New drug candidates ("leads") are tested by chemical means
such as gas chromatography, nuclear magnetic resonance spectrometry,
mass spectroscopy, and incremental biological activity; biological
activity to a single component of a lead mixture is adequate in many
cases. Advanced materials, on the other hand, need to characterized
according to their ***performance***, and these analytical techniques
are often peculiar to the targeted application area. For example,
selectivity and conversion analysis for a new heterogeneous catalyst
formulation will require the development of novel microscopic sensors
for sampling the complex product/reactant mixtures, possibly in the gas
phase, for a large number of (microscopic) metal oxide "samples". While
organic chemical leads are being successfully analyzed at purity levels
of 80% or less, typically advanced materials require very high purities
to differentiate their performance. Industrial chemistry typically
utilizes more energetic reaction environments than pharmaceuticals, with
processes with temperature and pressure requirements of several hundred
degrees and thousands of p.s.i. pressure, respectively. Finally, while
drug discovery can utilize traditional chemical scale-up processes,
advanced materials have been dealt significant challenges in
"scalability" from microscopic to lab- or pilot-scale preparation while
retaining the discovered properties.

In order to understand the technological hurdles, industry
representatives have described the key steps of a combinatorial
methodology:

1.  Target Definition utilizing expert opinion and hypothesis;

2.  Library Design using computational inputs such as molecular modeling
    and statistics;

3.  Library Validation, which determines the quality of the library
    design using robotics, hardware manipulation of materials, and
    statistics;

4.  Library Construction and Processing involves the automated
    deposition or synthesis of an n-dimensional matrix of physical
    samples;

5.  High Throughput Screening (HTS) involves the use of robotics and
    sensors to rapidly and automatically analyze the library of chemical
    targets for desired properties;

6.  Data Collection/Searching and Decision Making using the data-basing
    tools developed originally for genomics---informatics---expanded
    into the more complex realm of materials properties.

The widespread implementation of combinatorial methodologies for the
discovery of new materials and chemicals represents a significant
technical challenge for U.S. industry. The development of new
technologies to meet the demand for combinatorial methods will
amalgamate otherwise diverse industries, and diverse market
opportunities will present themselves to otherwise focused enterprises.
Tangible revenues will develop from the application of combinatorial
discovery in a variety of industries and intangible returns, for example
licensing and service revenues, will develop in industries that
traditionally avoid them.

# Technology Challenge

The application of combinatorial discovery and innovation for new
materials will drive the integration of a hardware- and software-based
infrastructure toward specific product applications. The long-term
vision is to have high-throughput research become part of expanded
enterprise-wide systems that include tools for hardware interfaces,
technology assessment/decision, and logistics. Because combinatorial
discovery currently is capital intensive, with start-up costs in the
\$1-5 million range, discontinuous innovation in ***generic*** hardware
and software technologies will be necessary to drive down costs and
facilitate its implementation in the industrial sectors that have lower
returns on R&D investment and highly capitalized, amortized
manufacturing assets (*vide infra*).

-   *Software.* The basic underlying software technology is the ability
    to chemically represent the material in a manner suitable for
    data-basing. Due to the sheer number of potential candidates
    available on a statistical basis to combinatorial techniques,
    library design will also require chemical synthesis expertise
    integrated with experimental design tools and statistics to reduce
    the number of samples and experiments. New tools will have to be
    developed to enable the input of this information into modeling
    engines; the increased number of data that can be input into
    computational engines will increase their power in iterative cycles.
    The overall view of software integration is shown in Figure 1.

**Figure 1*.* The Integration of Software Systems**

-   *Hardware:* The basic underlying hardware technologies are in
    improving computer throughput, and in micro-scale sensors and
    micro-machines (MEMS) for the synthesis, processing, and analysis of
    libraries. Automated library construction requires that
    n-dimensional libraries are made by machines, for example using ink
    jet deposition, laser ablation, or chemical vapor deposition (CVD).
    Homogeneous reaction systems will require fluid handling
    capabilities. Library screening ("high throughput screening" or HTS)
    will drive the development of advanced sensors and sensor arrays;
    robotics, next-generation "titer plates", "lab-on-a-chip" designs,
    and rapid scanning devices will require development along specific
    application areas with physical properties that can be analyzed at
    microscopic levels. Automated library processing is especially
    challenging for new materials development since samples within a
    library may require different or non-equilibrium processing
    parameters across the matrix.

Broad technical needs have been identified by industry (Table 1 below).

## **TABLE 1: TECHNOLOGY CHALLENGES**  {#table-1-technology-challenges .unnumbered}

######## Base Technologies {#base-technologies .unnumbered}

> Robotics
>
> Micro-fluidics
>
> Micro-machining

######## Decision Tools {#decision-tools .unnumbered}

> QSAR/QSPR
>
> Prioritization
>
> Promotion analysis & tools

######## Database/Informatics  {#databaseinformatics .unnumbered}

> Patent and prior art reviews
>
> Search engines/Inferential Engines
>
> Indexing
>
> Entity Inventory
>
> Electronic Laboratory Notebook (ELN)

######## Screening {#screening .unnumbered}

> Thermal properties (e.g., conductivity)
>
> Polymer architecture/morphology
>
> Optical characterization
>
> Molecular Speciation (mass spec.)
>
> Molecular Weight
>
> Mechanical Properties
>
> Interfacial Properties
>
> Luminescent properties (e.g., XRD)
>
> Electrical properties
>
> Electrochemical properties Degradation
>
> Catalyst Turn-over
>
> Catalytic Selectivity, Conversion

######## Processing {#processing .unnumbered}

> Control of physical environment Mechanical: extrusion, etc.
>
> Sample size\--control of interfacial diffusion, mass transport
> properties, etc.

######## Library Validation {#library-validation .unnumbered}

> Molecular Modeling, QSAR. QSPR Micro-Inspection/Error Identification
> On-line

######## Deposition {#deposition .unnumbered}

> Thermally-driven (e-beam, laser, etc.)
>
> Laser ablation
>
> Ink jet
>
> Chemical Vapor Deposition

######## Library Design {#library-design .unnumbered}

> Statistics, modeling Reagent Building Block Analysis
>
> Literature/Patent Databases
>
> Diversity analysis/clustering/analysis
>
> Computational (Molecular Modeling, Atomistic Simulations, QSAR, QSPR)

Assessment of the commercialization time frame, and hence technical
risk, for these technologies was based on industry input. Participants
in the March Working Group Discussion developed a list of
market-specific technology needs and their approximate commercial usage.
The responses are summarized into a radar map (Figure 2) where the
radial axes represent time to commercial use (1 = 0 --1 years; 3 = 2-4
years; 9 = 5 or more years) plotted against individual technology needs.
These data indicate that most of the technology challenges are at least
three years from commercial use. The highest technology risk is in
deposition, determination of catalyst selectivity and yield, and in the
analysis for thermal and mechanical properties. More recently, scanning
mass spectrometers have been employed for the analysis of solid
inorganic oxides and metal alloys.

The most significant technical challenge is the determination of bulk
properties based on microscopic sample sizes. It is well known in the
heterogeneous catalyst arena that the support system, whether surface
interactions or three-dimensional crystallite morphology, plays an
important role in catalyst activity. Therefore, screening for ultimate
catalyst activity using microscopic samples deposited on an essentially
non-porous inorganic oxide wafer shall require the prediction of bulk
properties from microscopic thin films or pixels. The solution to this
problem lies principally in the software arena; interestingly, the
combinatorial approach will accelerate this research due to the large
number of sample that can be used to validate the software model.

![](media/image1.wmf)FIGURE 2: TIME TO USE\--TECHNOLOGY CHALLENGES

(1 = 0-1 years out; 3 = 2-4 years out; 9= 5 or more years out)

# Market Needs and Scope of Applications

A broad spectrum of applications, as identified by industry
representatives, would benefit from the implementation of combinatorial
discovery and process optimization methodologies, particularly any
application that derives results from formulations and empirical mixture
designs.

Various market factors (installed asset sensitivity, operating margin, %
return on R&D investment, etc.) control the implementation of
combinatorial discovery in the different markets. Industry developed a
preliminary list of applications in various industries having
substantial market sizes (Table 2, below) The preliminary list included
all potential industry sectors except the pharmaceutical/drug discovery
arena. The application areas that, in the view of industry
representatives, have the longest time-to-use of combinatorial
methodologies (Figure 3) are in bio-compatible materials, polymers
(blends/alloys, fibers, optoelectronic), catalysts, and specialty
formulations such as polymer additives. In general, these are
applications that are awaiting an enabling technology, such as
electro-mechanical or catalytic sensors, as indicated above.

## **TABLE 2: MARKET NEEDS---APPLICATION AREAS** {#table-2-market-needsapplication-areas .unnumbered}

## [Polymers]{.underline}  {#polymers .unnumbered}

> Commodity
>
> Engineering and Specialty Resins
>
> Adhesives

######### Catalysts {#catalysts .unnumbered}

> Heterogeneous
>
> Homogeneous
>
> Supports

######### Smart Materials {#smart-materials .unnumbered}

> Solids
>
> Fluids

######### Electronic materials {#electronic-materials .unnumbered}

> Polymers-optical
>
> Polymers-conducting
>
> Display Materials
>
> Magnetic materials
>
> Ceramics
>
> Semi-conductors
>
> Encapsulants/packaging
>
> [Specialty & fine chemicals]{.underline}
>
> Coatings
>
> Anti-oxidants
>
> Impact modifiers
>
> Pigments/dispersants
>
> Refrigerants
>
> Surfactants

######### Biomaterials  {#biomaterials .unnumbered}

> Bio-sourced polymers
>
> Bio-compatible materials
>
> Bio-degradable polymers

######### Optical materials {#optical-materials .unnumbered}

> Photo-refractives
>
> Opto-electronics
>
> Non-Linear Optical materials

######### Glass formulations {#glass-formulations .unnumbered}

> Electronic/Magnetic/Optical

######### Structural materials {#structural-materials .unnumbered}

> Metals and alloys
>
> Ceramics/metal-oxides

This broad spectrum of applications was reduced based on the level of
support the technology implementation would receive without Federal
support in view of the criteria for the Advanced Technology Program. The
Program Development Team determined that industrial risk sensitivity
might best be ranked according to industry\'s ability to implement
combinatorial methodologies into their research efforts. Such
sensitivity would include the return on R&D investment, funding levels
for R&D, return on installed manufacturing assets, and profit margins
reflecting new product sales. The role of ATP, therefore, is to develop
lower-cost methodologies and tools based on new, generic technology to
permit entry of combinatorial methodologies into industries that would
a). not otherwise be able to implement them, and b). require an the
development of one or more enabling technologies prior to implementing
the integration of the systems mandated by successful implementation of
a combinatorial approach.

![](media/image2.wmf)FIGURE 3: TIME TO COMMERCIALIZATION\--APPLICATION
AREAS

(1 = 0-1 years out; 3 = 2-4 years out; 9= 5 or more years out)

![](media/image3.wmf)R&D spending against sales revenues was utilized to
rank industries (source *R&D Magazine*, October, 1998) according to
their spending habits for innovation as an indirect measure of their
sensitivity to implement a significant program in combinatorial
methodologies.

Figure 4. Technology Industry Spending on Research

These data (Figure 4) indicate that chemical and materials companies
(excluding petrochemical, which average less than 1%) spent
approximately 3.2% of revenues on R&D activities in 1997, ranking near
the bottom of technology-oriented industries. Pharmaceutical companies,
which average 15% of revenues spent on R&D and have actively pursued
combinatorial methodologies to remain competitive, and are assumed to be
less sensitive to large expenditures in view of the significant revenues
gained from the sale of new drugs.

R&D spending in for large chemical and pharmaceutical industries were
evaluated on a company-wide basis (Table 4). Similar data on small
companies is being compiled.

Table 4. R&D Spending in the Chemical and Pharmaceutical Industries

  ------------------- ---------- ---------- ---------- ---------- ---------- ------------
  **CHEMICAL          **1990**   **1991**   **1992**   **1993**   **1994**   **1994 R&D
  COMPANIES**                                                                spending as
                                                                             % of sales**

  Dow Chemical        \$1,136    \$1,159    \$1,289    \$1,256    \$1,261    6.3%

  DuPont              1,428      1,298      1,277      1,132      1,047      2.7

  Monsanto            612        627        651        626        609        7.4

  Rohm and Haas       178        183        199        205        201        5.7

  Union Carbide       191        190        155        139        136        2.8

  W.R. Grace          148        150        151        135        132        2.6

  Air Products(a)     72         80         85         92         97         2.8

  Lubrizol            74         80         90         89         91         5.7

  International       57         62         71         75         81         6.2
  Flavors                                                                    

  Morton              48         59         61         69         66         2.3
  International(b)                                                           

  Hercules            92         86         70         76         65         2.3

  Praxair(c)          \-         \-         62         58         58         2.1

  Ethyl               65         69         73         76         50         4.9

  Nalco Chemical      45         47         48         50         46         3.4

  Olin                66         41         39         41         35         1.3

  Albemarle(d)        \-         \-         \-         \-         28         2.6

  Petrolite(e)        12         11         12         14         13         3.5

  TOTAL               \$4,224    \$4,142    \$4,333    \$4,133    \$4,016    3.9%

                                                                             

  **PHARMACEUTICAL    **1990**   **1991**   **1992**   **1993**   **1994**   **1994 R&D
  COMPANIES**                                                                spending as
                                                                             % of sales**

  Merck & Co.         \$854      \$998      \$1,112    \$1,173    \$1,231    8.2%

  Pfizer              640        757        863        974        1,139      13.8

  Bristol-Myers       881        993        1,083      1,128      1,108      9.2
  Squibb                                                                     

  Eli Lilly(f)        703        767        925        955        839        14.7

  Schering-Plough     380        426        522        578        620        13.3

  Upjohn              432        497        553        613        607        18.5

  TOTAL               \$3,890    \$4,438    \$5,058    \$5,421    \$5,544    11.3%
  ------------------- ---------- ---------- ---------- ---------- ---------- ------------

Note: Prior years are not restated to reflect company revisions. a For
fiscal year ending Sept. 30. b For fiscal year ending June 30; data for
Morton Thiokol prior to 1985. c Spun off from Union Carbide in 1992. d
Spun off from Ethyl in early 1994. e For fiscal year ending Oct. 31. f
Spun off and sold off medical devices businesses in 1994. Source:
Chemical & Engineering News, August 28, 1995
(http://pubs.acs.org/hotartcl/cenear/950828/art04a.html)

Based on these data, it is apparent that both large and small chemical
and materials industries would benefit from ATP funding in the area of
combinatorial methodologies. Until data reflecting return on R&D
investment (R&D ROI) and return on assets (ROA) can be accumulated,
these data on R&D spending will be used to estimate need levels on an
industry basis.

There is a significant role for both small and large companies to
participate in this activity. In general, small companies, provide a
focused, fast-response invention/innovation process, and large companies
provide capital assets, innovation needs, and access to large markets.

# Program Objectives, Scope, and Targets

The opportunity will develop the fusion of technological advances in
software (database administration, machine control, artificial
intelligence, structure-activity and structure-function relationships,
modeling, etc.) and hardware (robotics, reactor design, semi-conductor
development, sensors, process control, MEMS etc.). It will *leverage*,
not duplicate, the knowledge- and technology bases that have been
developed for discovery in the pharmaceutical and agricultural chemical
industries. Development of generic tools will be encouraged in order to
facilitate the diffusion of technologies.

The goal of establishing a project portfolio on combinatorial
methodologies is to facilitate the widespread utilization in the U.S.
chemicals and materials industry of high throughput research
specifically in the area of catalysis and biocatalysis discovery and
process development. This project portfolio encourages the development
of a technology infrastructure via integration of software and hardware
tools focused toward specific application areas and recognizes that
systems integration entails high risk. This \"fused\" technology base
therefore would be applied to a specific market opportunity via a
manufacturer in the chemical or materials industries. Therefore, the
portfolio strategy is to utilize the power of the value chain to bring
end-user needs to the infrastructure development companies and focus the
technology base to a specific market need. There is a significant role
for small businesses to contribute to this strategy: in general, it was
observed that smaller companies will contribute to the infrastructure by
inventing and presenting products of discontinuous innovation to the
(possibly larger) manufacturing sectors. The Advanced Technology Program
encourages small companies to participate in building the technological
infrastructure to support combinatorial methodologies. For example, a
NIST Small Business Innovation and Research Program (SBIR) was announced
in October to address ![](media/image4.png){width="5.8in"
height="2.545138888888889in"}software issues.

Figure 5. ATP Strategy Focuses Infrastructure Onto Markets

Three project scenarios have been developed to indicate the spectrum of
risk and technology diffusion that would result from proposers. The
three scenarios indicate three degrees of risk and, consequently,
differing amounts of technology diffusion and economic benefits that
might develop from a given project structure.

![](media/image5.wmf){width="0.8791338582677165in"
height="0.5673228346456692in"}

Figure 6. Project Strategy Technology Diffusion and Broad-Based Economic
Benefits

## ATP funding is required for five key reasons: {#atp-funding-is-required-for-five-key-reasons .unnumbered}

1.  [To develop new generic technologies]{.underline} in the high-risk
    areas of robotics, sensors, informatics, computers, and software
    control. In addition, the fusion of advanced technologies would be
    facilitated by bringing together multi-disciplinary teams from
    industry, academia, and government laboratories. The integration of
    these different systems will be a major challenge.

2.  [To improve U.S. competitive position relative to foreign
    entities]{.underline}. Foreign competitors are assembling the
    capability to conduct high-throughput materials discovery and
    development. A first-to-market position could advance many global
    industrial sectors for many years.

3.  [To significantly increase the development of
    alliances.]{.underline} Development of a competitive infrastructure
    will require the assembly of strategic alliances with partners
    having diverse competencies. ATP support is uniquely positioned to
    reduce the risk of collaboration, which can be expensive without
    appropriate returns, particularly for small, focused vendors of
    software and hardware tools, and will facilitate investment to gain
    non-core competencies.

4.  [To facilitate application of the infrastructure technology
    challenges toward industries in need of competitive
    advancement]{.underline}. Technology development using combinatorial
    approaches is considered too risky for many industries to tackle
    alone. Small applications companies will be impacted by the costs of
    entry and larger companies do not want to invest in capabilities
    away from their core business areas. The development of advanced
    integrated technologies will require a high degree of cooperation
    between companies, especially small, \"inventive\" companies working
    with larger applications companies in partnerships. The chemical
    industry can effectively leverage advances in catalysts into huge
    increases in benefits to society when downstream benefits are
    accounted for.

5.  [To facilitate recognition of revenue streams from intangible
    products.]{.underline} This is especially important for companies
    that would not otherwise recognize their ability to develop service
    capabilities that can generate revenue from similar, but
    non-competitive, companies.

A competitive project funded by the ATP would develop a horizontal
partnership among the "infrastructural" industries (hardware and
software) directed to the emergence of one or more technically
challenging application areas in catalysis or biocatalysis discovery or
process development. This horizontal-vertical partnership structure
would enable the technology base to focus on the needs of a specific
application and its downstream customer(s).

Competitive project proposals would indicate why a combinatorial
approach needs to be applied to a specific application area and what
high-risk aspects could be targeted to significantly advance tools
and/or methodology. The underlying criteria for ATP
involvement---broad-based economic benefits and technology
diffusion---will have to be addressed in view of an application's
inability to fund these developments privately.

# Significance of ATP Funds

In sharing the relatively high development risks of technologies that
potentially enable a broad range of new commercial opportunities,
possibly across several industries, the ATP fosters projects with a high
payoff for the nation as a whole---in addition to strong corporate rates
of return. ATP projects are expected to make significant contributions
to scientific and technical knowledge between the proof-of-concept stage
and product development stage. The goal of the ATP is economic growth.
The ATP benefits companies of all sizes.

Therefore, the opportunity for ATP in the area of combinatorial chemical
and materials discovery is in enabling the implementation of
high-throughput experimentation into industries that would otherwise
find the investment too risky technically and in capturing large
benefits for the tool investment. Through investment in combinatorial
methods, ATP has the opportunity to drive many of the chemical/materials
markets (currently perceived as mature or commodity-based) into a second
generation stage, well ahead of foreign competition. The opportunity to
achieve "first-to-market" status will be exceptionally large for many
industries implementing combinatorial methodologies. The spill-over
benefits will cascade back into basic research as new phenomena are
discovered and explanations are sought.

# Potential for U.S. Economic Benefit

ATP can significantly reduce the risk of entry into combinatorial
research in industries where the return on investment would not
otherwise be favorable. *This impact will have significant broad-based
benefits* by facilitating broader use of technologically advanced
methods; by enabling the growth of hardware and software to applications
that would not otherwise be considered; by spreading the resulting
intellectual property over more applications and materials; and by
producing more research to explain newly-observed phenomena. Benefits
beyond the proposers would include technology advancements and
methodologies that would cross application areas.

The ATP has estimated, with industry input, the market sizes of several
application areas that will be directly impacted by combinatorial
discovery methodologies. In an effort to estimate the economic impact of
implementing combinatorial discovery in catalysis, shown below is a
comparison of the 1997 North American sales of catalysts for polyolefin
production and for polyolefins produced. The 100-fold difference in
sales indicates that a relatively small improvement in the productivity
of polyolefin manufacture via improved catalysts can result in
relatively large changes in the economy. This leveraging of the value
chain can be extended to other catalysis or biocatalysis applications.
Incorporation of these materials into systems and components will create
benefits removed from the actual discovery of new materials, however the
size of these terminal markets is large.

![](media/image9.wmf)FIGURE 7. CATALYST TO POLYMERS SALES RATIO (LOG
SCALE)

This analysis focuses on sales revenues, however it does not account for
the benefits obtained from increasing the national R&D budget with ATP
funds. These estimates have not assumed significantly reduced innovation
cycle times available using combinatorial research methodologies because
this data is not directly available to the ATP. Actual penetration of
high throughput screening into industrial research may reach 2-5% by the
year 2003, with estimated impact in the end-use markets not readily
described, however estimates by the industry indicates that the value
chain following catalysts through commodity polymers into end-user
markets may approach hundreds of billions of dollars.

The ATP Economics Assessment Office is currently studying the influence
of an increase in the total industrial research budget through federal
funding and the downstream benefits to society can be estimated.
Preliminary estimates of the downstream benefits to society range from
\$3-\$10B. These estimates assume that the Advanced Technology
Program\'s monetary contribution to the focused program in combinatorial
chemistry is valued at \$30 million over the life of the program and
addresses the polymer and catalyst markets.

# Program Impact

## Industry Commitment  {#industry-commitment .unnumbered}

Strong interest by industry was shown in the Working Group Discussion
attendance and industry position papaers. There was a strong signal from
industry that federal assistance would accelerate their own efforts,
provide tools to industries that would otherwise be available only in
the distant future, and, finally, improve global competitiveness. The
ATP has received industry position papers ("white papers") describing
the need for federal assistance in this area. These views are reflected
in this Working White Paper. Verbal support for an ATP project portfolio
has been expressed in national catalysis meetings.

Another (perhaps stronger) indicator of industry commitment to work in
this area is existing or proposed efforts in this area. Over a
half-dozen ATP awards made through previous competitions have been
identified as having strong overlap with the agenda of the proposed
project portfolio. Additional projects have proposed using combinatorial
methods.

## Market Impact: Synergies {#market-impact-synergies .unnumbered}

The fusion of technologies to meet new market needs has been identified
as a major component in the emergence of combinatorial research
methodologies. The biotechnology arena has seen substantial growth in
new industries that have sprung up to fill market needs. For example,
the bridging of database software and genetics research has yielded the
fast-growing field of informatics. Now, significant developments in
sensors, micro-machines (MEMS), smart materials, and massively parallel
computers bring new capabilities to industries selling into the
chemicals and advanced materials marketplaces. By bringing together the
high-tech infrastructural industries with the more conservative
manufacturing sectors, ATP can accelerate co-development of new
technologies. ATP has a vital role to play in stimulating the
development of new technologies that will place competitive capabilities
into the hands of those industries that would not otherwise be able to
invest in these areas.

##  {#section .unnumbered}

## Technology Impact: Technology Diffusion {#technology-impact-technology-diffusion .unnumbered}

##### Efforts outside of the NIST ATP arena are just now yielding a wide range of results that are being widely publicized and published through various channels. The strongly pro-collaborative climates in Asia and Europe will pick these developments up first if the U.S. does not, giving early access to offshore manufacturers and granting a foothold to offshore vendors. ATP funding can make it happen here first, leveraging existing U.S. strengths to ensure continued leadership in the targeted markets. {#efforts-outside-of-the-nist-atp-arena-are-just-now-yielding-a-wide-range-of-results-that-are-being-widely-publicized-and-published-through-various-channels.-the-strongly-pro-collaborative-climates-in-asia-and-europe-will-pick-these-developments-up-first-if-the-u.s.-does-not-giving-early-access-to-offshore-manufacturers-and-granting-a-foothold-to-offshore-vendors.-atp-funding-can-make-it-happen-here-first-leveraging-existing-u.s.-strengths-to-ensure-continued-leadership-in-the-targeted-markets. .unnumbered}

There is a strong need in industry for work in the area of
high-throughput research and development. As mentioned above, it is
known in the drug discovery applications of combinatorial chemistry that
significant reductions in time and cost can be achieved. Due to the high
profit margins anticipated for the introduction and sale of
pharmaceuticals, the expected return on investment is favorable. ATP can
help to make the economics as favorable for high-valued specialty
chemicals or engineered materials.

## Impact on Employment {#impact-on-employment .unnumbered}

Implementation of high-throughput research is expected to increase the
number of jobs in the target industries. Combinatorial methods have
supplemented research facilities, not replaced them, as observed in the
pharmaceutical and agricultural chemical industries. Additional
employment is expected in the infrastructure industries due to increased
need for software and hardware development. U.S. competitiveness was
indicated by a number of industries as being a primary reason to
implement combinatorial techniques in their discovery and innovation
efforts.