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Nov. 4, 2004 – During Nanophase’s transition from a science shop to a business focused on application development and revenue growth, we soon realized four rather important aspects of the nascent nanomaterials industry that guided development of the company’s business model.
First, nanomaterials were surprisingly difficult for potential customers to use, even those with sophisticated technology.
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Secondly, one size does not fit all; there are many modifiable physical parameters to control while producing nanoparticles that have dramatic effects on application performance. Application and market success are dependent on producing the nanomaterial that achieves the desired result and delivering it in a readily usable form.
Thirdly, to attract significant opportunities (read big potential customers), even a relatively small nanomaterials company had to have production capabilities that were viewed as “state of the manufacturing art” and compliant with environmental, health and safety regulations.
Lastly, since it was, and is, impractical to have the capability to test and qualify nanomaterials in processes and products for diverse industries and markets, the company had to partner, ideally with industry leaders, to co-develop engineered nanomaterial “solutions.”
To address the first two hindrances to revenue growth, Nanophase embarked on an aggressive technology expansion campaign to broaden its palate of nanomaterials and, equally as critical, customer delivery modes.
Over the next three years, the company developed three critical core competencies: a new nanoparticle manufacturing process; complete nanoparticle coating manufacturing, and nanoparticle dispersion capability for aqueous and solvent media. This integrated platform allows the company to deliver nanoparticles, coated nanoparticles, or nanoparticle dispersions as nanoengineered solutions to partners’ or customers’ application needs.
Similarly, Nanophase embarked on an aggressive path to mature its manufacturing capability, reduce manufacturing cost and implement highly refined environmental health and safety procedures.
As the requisite capabilities became increasingly effective, Nanophase still faced the daunting task of revenue growth. It became clear that partnering with a motivated market leader would greatly facilitate application testing and development, improve market penetration and provide both parties market advantages.
A partner offers Nanophase co-development capability and intimate customer and market knowledge, which reduces the time-to-market while offering a proven sales and distribution channel for the developed nanoproduct by a known market leader.
With a clearer view of product requirements, Nanophase is able to engineer solutions that accommodate end customers, new application opportunities and changing market needs.
During this time, Nanophase has been fortunate to form mutually exclusive global partnerships with BASF for sunscreens and personal care products, Rohm & Haas CMP Technologies for semiconductor polishing and, most recently, Altana Chemie AG for nanocomposites for coatings, paints, polymers, plastics and sealants.
Each of these partnerships with market leaders provides Nanophase with global sales and distribution, as well as organic growth as our partners expand product lines and grow market share. Conversely, we are able to tailor nanomaterial solutions for these new products and proactively assist our partners to introduce nanoproducts and grow market share.
Rohm & Haas CMP Technologies is a particularly good example of partnering since it employs a virtual company concept to service semiconductor manufacturers. Rohm & Haas CMP Technologies and Nanophase have co-developed an initial slurry for semiconductor polishing.
We have also pooled our collective technologies and technical staff to evolve and refine the initial offering to further tailor performance to exacting industry standards, as well as individual customer needs. The companies have made joint sales calls and presentations to potential customers and industry conferences to demonstrate the synergy and prowess of the joined technologies to fulfill market requirements.
While product introduction and customer ownership clearly lies with Rohm & Haas CMP Technologies, Nanophase has acted in a proactive marketing support role in the effort.
In parallel, Rohm & Haas CMP Technologies and Nanophase have constructed a roadmap to address current and future technology opportunities. Both companies manage the continuing co-development through coordinated joint technical efforts, frequent teleconferences and quarterly technology progress reviews.
Close communication throughout the respective organizations and quarterly business reviews help sustain the business relationship and partnership. Overall, the relationship is characterized by open communication, recognition of the synergies of the company’s respective technologies and a firm commitment to go forward together.
Nanophase’s business model of partnering to gain access to diverse markets has proven to be successful. While partnering between companies requires continual management, mutual flexibility and a good cultural fit, the benefits, especially for a nano company with finite resources in an emerging field, are probably vital to eventual success.