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BUSINESS SENSITIVE 1 1 Battelle Technology Partnership Practice August 29, 2011 Ohio Third Frontier: Targeting Growth Opportunities for the Next 3 to 5.

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Presentation on theme: "BUSINESS SENSITIVE 1 1 Battelle Technology Partnership Practice August 29, 2011 Ohio Third Frontier: Targeting Growth Opportunities for the Next 3 to 5."— Presentation transcript:

1 BUSINESS SENSITIVE 1 1 Battelle Technology Partnership Practice August 29, 2011 Ohio Third Frontier: Targeting Growth Opportunities for the Next 3 to 5 Years

2 BUSINESS SENSITIVE 2 2 Project Goal and Focus Identify Ohio’s changing economy and technology industry focus areas to enable key stakeholders to understand the opportunities and how best to seize them. Emphasize industry growth opportunities in technology development over the next 3 to 5 years.

3 BUSINESS SENSITIVE 3 3 Overview of Project Steps Identify from Recent Detailed Industry and Technology Innovation Trends Likely Focus Areas for Growth Opportunities Integrate Guidance from Industry Forum Discussions and Validate Market Opportunities Step 2Step 3 Assess Changing Ohio Economy and Identify Leading Industry Sectors for Tech-Based Growth Step 1

4 BUSINESS SENSITIVE 4 4 Methodology for Identifying Growth Opportunities: Line of Sight Analysis Focus Areas of Growth in Ohio’s Technology Industry Sectors and Technology Innovation Drivers Growth Prospects Within Technology Industry Sectors and Likely Niches for Ohio Where the Puck is Today Where the Puck is Going Differentiation, Specialization and Global Leadership for Ohio Growth Opportunities

5 BUSINESS SENSITIVE 5 5 Details for Line of Sight Analysis Detailed industry-level analysis of leading industries –Current industry strength –Emerging industry strength –Specialized industry strength Technology innovation focus areas in leading technology industry sectors based on recent activities in: –Patents by Ohio inventors –Venture capital funding and SBIR awards –Company presence in specific technology product markets –Scholarly excellence in publication fields –Trends in university research funding Held a series of industry forums for the leading technology industry sectors Key questions posed were: –What are Ohio’s key selling points? –What are the key market and technology drivers? –In what specific technology development niches is Ohio well positioned for industry growth in the next 3 to 5 years? –What are the key strategic development directions that Ohio must address? Integrated the intelligence gathered and validated to identify specific technology development niches –Reviewed market research studies Where the Puck is Today Where the Puck is Going

6 BUSINESS SENSITIVE 6 6 Overview of Project Steps: Highlights from Assessments Leading Industry Sectors Materials Aerospace Biomedical Energy Information Technology Instruments and Controls Potential Focus Areas Advanced Polymer Materials Composites and Ceramics Specialty Metals and Alloys Unmanned Systems Sensors Advanced Materials Propulsion Power Management Human Effectiveness Medical Imaging Molecular and Other In-Vitro Diagnostics Advanced Surgical Instruments and Equipment Implant Medical Devices Contract Research and Manufacturing Resource Services Drug Delivery and Development Regenerative Medicine Health Informatics and Logistics Solar Photovoltaics Wind Energy Smart Grids Biofuels and Biobased Energy Fuel Cells Energy Storage/Batteries Business Software and Enterprise Computing Test and Measurement Sensors Automation/Robotics Electronics/Embedded Systems Leading and Emerging Areas Advanced Materials Business Software and Enterprise Computing Energy Storage Fuel Cells Health Information Technology Medical Technology Propulsion Power Management Sensing and Automation Technologies Situational Awareness and Surveillance Systems Solar Photovoltaics Step 2: Identify Step 3: Validate Step 1: Assess RESULTS

7 BUSINESS SENSITIVE 7 7 Advanced Materials GROWTH OPPORTUNITY FOCUS AREA: ADVANCED MATERIALS WHAT IS IT? Unconventional materials that outperform conventional materials allowing them to play a large role in product development. Typically this class of materials refers to sophisticated technologies in metals & alloys, ceramics, polymers and composites. Advanced materials are focused on enabling the creation of lighter, cheaper, smaller and higher quality products across many end-user markets, and are widely used in biomedical, aerospace, transportation, and advanced energy market applications. OUTLOOK  Global consumption of nanocomposites to increase at a CAGR of 27% to $1.4B by 2014  Advanced ceramics to grow from $9.1B in 2009 to $12.2B by 2014  Composite materials market was valued at $17.7B in 2010 and will reach $27.4B by 2015  Carbon fibers and nanotubes will grow by 13% annually through 2015 to reach $2.3B  The metal coatings, engraving and heat treating industry has annual revenue estimated at $22B  Conductive and electronic polymers to grow 3% annually between 2009 and 2014 HOW IT BUILDS ON OHIO STRENGHTS  Research Centers and Institutes  Strong presence in academic publications  Significant corporate R&D operations  Robust patent activity MARKETS THAT OHIO CAN SERVE  Advanced Energy  Aerospace & Defense  Biomedical  Building & Construction Products  Transportation

8 BUSINESS SENSITIVE 8 8 Business Software & Enterprise Computing GROWTH OPPORTUNITY FOCUS AREA: BUSINESS SOFTWARE & ENTERPRISE COMPUTING WHAT IS IT? Business software and enterprise computing are technologies that enable organizations to reduce costs and increase productivity and as a result achieve greater profitability. These technologies have become ubiquitous among industries and are constantly evolving to adapt in order to maintain relevance in a rapidly evolving global economy. OUTLOOK  North American business software market will grow at a CAGR of 7.7% through 2015 to reach $165B  Global enterprise software market increased 8.5% in 2010 reaching $245B  Enterprise cloud-based services will grow at a CAGR of 24% increasing from $12B in 2010 to nearly $36B in 2015  Business Intelligence (BI) software is projected to grow nearly 10% in 2011 to reach $10.8B  Global e-commerce (including travel and auto purchases) to grow 13.5% annually to reach $1.4T in 2015  Business process management (BPM) market will grow at 13.3% CAGR to reach $5.5B by 2017 HOW IT BUILDS ON OHIO STRENGHTS  Strong employment growth in recent years  Software manufacturing industry presence  Rich talent base  Robust VC activity  Substantial patent activity MARKETS THAT OHIO CAN SERVE  Diversified industry focus  Open source platforms to advance customized, modular applications  Cloud computing-enabled software as a service for delivering on- demand software

9 BUSINESS SENSITIVE 9 9 Energy Storage GROWTH OPPORTUNITY FOCUS AREA: ENERGY STORAGE WHAT IS IT? Energy storage is a term used to describe various types of technologies that store energy in order to allow us to use it at a later time. Energy storage technologies include utility battery storage, flywheel storage, superconducting magnetic energy storage, compressed air energy storage, pumped hydropower, and super- capacitors. Batteries are an important solution to energy storage needs. Batteries store energy in the form of chemical energy; when connected in a circuit the battery can produce electricity. OUTLOOK  U.S. battery market to grow from $9.6B in 2011 to nearly $12B in 2016  Still an emerging market, energy harvest technology is expected to grow from $13.75M in 2011to $4.4B 2021  Thin-film batteries may increase from $90M in 2010 to $600M in 2015 with average annual growth rates ranging from 38%-68%  Rechargeable batteries account for 56% of the battery market and could reach $16.4B by 2015 HOW IT BUILDS ON OHIO STRENGHTS  Large share of U.S. battery and energy storage employment and establishments  Strong industry presence  Significant share of U.S. peer- reviewed publications MARKETS THAT OHIO CAN SERVE  Automotive

10 BUSINESS SENSITIVE 10 Fuel Cells GROWTH OPPORTUNITY FOCUS AREA: FUEL CELLS WHAT IS IT? Similar to battery technology, fuel cells convert chemical energy into electrical energy through electrochemical reaction. Fuel cells differ from batteries though in that the fuel feeding the electrochemical reaction is supplied outside of the cell. Many different fuels can be used to generate energy including hydrogen, methanol, biogas, natural gas and hydrocarbons. OUTLOOK  The total fuel cell market (consisting of portable, stationary, and transport) is still emerging, but was less than $500M in 2009  Growth will primarily come from stationary applications – accounting for 50% or more of all shipments currently and reaching $9.5B by 2017  Portable applications will also see dramatic growth reaching $2.8B by 2017  The big “wild card” in the outlook for fuel cells is whether the automotive industry goal of 2015 for large scale roll-out of commercial fuel cell vehicles can be reached HOW IT BUILDS ON OHIO STRENGHTS  Large share of U.S. establishments and employment  Strong industry presence  Wide base of suppliers  Substantial number of peer-reviewed publications  Several specialized consortiums in fuel cell development MARKETS THAT OHIO CAN SERVE  Military needs in aerospace and base operations  Stationary power more broadly for facilities  Niche areas of transportation equipment, such as forklifts

11 BUSINESS SENSITIVE 11 Health Information Technologies GROWTH OPPORTUNITY FOCUS AREA: HEALTH INFORMATION TECHNOLOGIES WHAT IS IT? Health IT utilizes hardware and software to store, retrieve, share and use healthcare information data and knowledge for improved communication and decision making. Widespread and consistent use of Health IT improves healthcare quality, prevents medical errors, reduces healthcare costs, streamlines administrative procedures, and expands access to affordable care. OUTLOOK  Significant growth in Health IT with the overall market increasing from $99.6B in 2010 to $162.2B in 2015  Software applications to increase from $4.5B in 2010 to $11B in 2016 – a 17% CAGR  Clinical healthcare IT will grow at 19% CAGR increasing from $7.4B in 2011 to $17.5B in 2016  Mobile healthcare IT will grow at 22% CAGR through 2014 from its $2.1B base in 2011 HOW IT BUILDS ON OHIO STRENGHTS  Large employment gains in larger IT industry  Industry presence in health services software  Significant VC investment  World-renowned academic medical centers  Substantial number of peer-reviewed publications  Existing statewide health information exchange through non-profit Ohio Health Information Partnership MARKETS THAT OHIO CAN SERVE  Healthcare Informatics focused on advanced electronic health records, improved health systems management, patient-physician communications, smart phone health applications, etc.  Integration of Health IT and medical devices

12 BUSINESS SENSITIVE 12 Medical Technology GROWTH OPPORTUNITY FOCUS AREA: MEDICAL TECHNOLOGY WHAT IS IT? Medical technology encompasses a wide range of health care products used to diagnose, monitor or treat diseases or condition that affects humans. These innovative technologies include imaging, surgical instruments and equipment, implant devices and regenerative medicine. Advances in medical technology are often based on a “systems” approach in which a range of innovative technologies are integrated to provide more functional medical products. OUTLOOK  Global medical imaging market to increase from $22.6B in 2009 to $29B in 2014  Surgical instruments & equipment to grow 5.2% CAGR through 2015  The market for regenerative medicine technologies stood at $1.6B 2010 and could reach $15-20B over the next 15 years  In cardiovascular implants, the market is sizable at $85B, but maturing-only 2.8% CAGR through 2015  Neuromodulation is fast emerging- stood at $3B in 2008 and will grow at 26% CAGR through 2014 HOW IT BUILDS ON OHIO STRENGHTS  Experienced and growing employment base  Presence of leading medical companies  Robust VC activity  Strong patent activity  High level of peer-reviewed publications MARKETS THAT OHIO CAN SERVE  Healthcare

13 BUSINESS SENSITIVE 13 Propulsion Power Management GROWTH OPPORTUNITY FOCUS AREA: RENEWABLE ENERGY APPLICATIONS WHAT IS IT? Propulsion systems are machines that produce power required to push or pull a vehicle into motion, and enables the vehicle to accelerate, decelerate and maneuver while already in motion. In aircraft, turbine engines provide the propulsion required to operate reliably for extended periods. Propulsion requirements differ depending on the use requirements of the aircraft. Globally, the aircraft engine market is dominated by three companies: GE Aviation, Pratt & Whitney and Rolls-Royce. OUTLOOK  Global market for aircraft engines valued at $8.7B 2009 and will grow 5.5% annually to reach $11.2B in 2015  Technologies driving the market will reduce environmental impacts, increase efficiency and cut operating costs HOW IT BUILDS ON OHIO STRENGHTS  Highly specialized employment in aircraft engines and engine parts manufacturing  Strong presence of military, commercial and academic research centers focused on propulsion MARKETS THAT OHIO CAN SERVE  Military, Business and Commercial Aviation  Unmanned Aerial Vehicles

14 BUSINESS SENSITIVE 14 Sensing & Automation Technologies GROWTH OPPORTUNITY FOCUS AREA: SENSING & AUTOMATION TECHNOLOGIES WHAT IS IT? Automation technologies reduce the need for human labor in the production of goods and services through the use of control systems. Sensors, which receive and respond to external signals or stimuli, are critical to the process of automation. Combined, sensing and automation technologies comprise the “nervous system” for manufacturing plants, unmanned vehicles, logistics systems, and many other advanced applications. OUTLOOK Global sensors market to grow at CAGR of 7.8% to reach $91.5B by 2016 MEMS is will experience robust growth doubling from its 2009 value of $2.2B to $4.5B in 2014 Large growth for machine vision systems -$11.2B in 2010 to $18B by 2015 Process control instruments will increase from $6.5B in 2009 to $8B in 2014 U.S. market for advanced industrial controls will grow 5.4% per year to reach $8.8B in 2014 HOW IT BUILDS ON OHIO STRENGHTS  Strong presence of corporate R&D and manufacturing  Substantial industry presence  Robust patent activity  Significant academic publications MARKETS THAT OHIO CAN SERVE  Automotive  Aerospace & Defense  Industrial Manufacturing  Energy Production & Distribution  Processing

15 BUSINESS SENSITIVE 15 Situational Awareness & Surveillance Systems GROWTH OPPORTUNITY FOCUS AREA: SITUATIONAL AWARENESS & SURVEILLANCE SYSTEMS WHAT IS IT? Situational awareness and surveillance encompass a comprehensive set of technologies that allow users to perceive information about their environment with respect to time and space, and anticipate how those environmental factors may affect circumstances in the near future. Enhanced situational awareness improves decision-making in dynamic environments and helps reduce accidents based on human error making it invaluable in situations with high levels of information flow and where poor decision-making can have disastrous effect. OUTLOOK Surveillance equipment market $78B in 2009 to $139.2B in 2015 Remote sensing products market to witness robust growth- $8.2B in 2009 to $11B by 2014 Unattended ground sensor systems- emerging technology that is difficult to measure but enabler of enhanced situational awareness and surveillance HOW IT BUILDS ON OHIO STRENGHTS Strong employment growth search, detection, navigation guidance system and instruments Presence of AFRL’s Sensor Directorate at Wright-Patterson Air Force Base High level of remote sensing peer- reviewed publications MARKETS THAT OHIO CAN SERVE Aerospace & DefenseHomeland Security & Law Enforcement

16 BUSINESS SENSITIVE 16 Solar Photovoltaics GROWTH OPPORTUNITY FOCUS AREA: SOLAR PHOTOVOLTAICS WHAT IS IT? Solar power harnesses the energy of the sun and converts it to electricity or heat. Innovations in solar technology are enabling a wide spectrum of uses from concentrated solar power plants and building-integrated PV to powering electronic devices. There are many types of solar power approaches, such as concentrated solar, silicon photovoltaics and thin film photovoltaics. OUTLOOK  North American PV market will grow at a CAGR of 28% from 2010-2017 to reach nearly $17B  Cadmium telluride (CdTe) solar cell market to increase from $2.8B in 2009 to $4.6B by 2015  Concentrator PV market is emerging and could grow from $64M in 2009 to $266M in 2014 – a CAGR of 33%  Building-integrated PV (BIPV) market will increase from $740M to $4B between 2009 and 2016 HOW IT BUILDS ON OHIO STRENGHTS  Large share of U.S. establishments  Strong job growth in recent years  Strong industry presence  Skilled workforce  VC investment  Research assets in The Center for Photovoltaic Innovation and Commercialization and The Photovoltaics and Power Technology Branch at NASA Glenn MARKETS THAT OHIO CAN SERVE  Development of solar power plants  Building-integrated solar applications

17 BUSINESS SENSITIVE 17 Next Steps Address input from today’s meeting Work to complete overall report by end of September

18 BUSINESS SENSITIVE 18 Appendices on Line of Sight Analysis for Leading Technology Industry Sectors

19 BUSINESS SENSITIVE 19 Aerospace: Where the Puck is Today Industry Focus Areas Ohio Bioscience Industry: Employment Size, Growth, & Relative Concentration, 2009 Source: Battelle analysis of Bureau of Labor Statistics, QCEW data, enhanced file from the Minnesota IMPLAN Group, Inc.

20 BUSINESS SENSITIVE 20 TECHNOLOGY IDENTIFICATION NICHES PATENT AREAS (Top areas of Ohio invented patents with at least 25 patents from January 2007 to September 2010)  Power sources/plants  Rotary kinetic fluid motors  Material composites  Fluid reaction surfaces  Metal working CORPTECH TECHNOLOGY PRODUCT MARKETS (4% or higher share of firms with HQ and independent operating units based in Ohio, and at least 5 firms)  Major aircraft systems  Ground support equipment  Air/spacecraft propulsion PRESENCE OF VENTURE FUNDING & SBIR AWARDS (January 2006 to December 2010)  1 Venture Capital Financing o $2.6 million & 31 SBIR awards totaling $9 m  Focused broadly on aerospace components Aircraft Hydraulic Components AREAS of EXCELLENCE in SCHOLARLY ACTIVITY (Excellence measured by share of U.S. publications in field or quality based on citations per publication)  Aerospace Engineering  Mechanical Engineering  Composites  Remote Sensing Aerospace: Where the Puck is Today Innovation Focus Areas

21 BUSINESS SENSITIVE 21 Existing aircraft engine manufacturing and development industry Strong presence in military aeronautics acquisition and R&D –WPAFB; AFRL; AFMC Broad, deep presence of firms in aerospace supply chain Extensive base of federal R&D Facilities –NASA, AFRL Materials and Sensor Directorate; aerospace and human performance research facilities; propulsion testing facilities Business Aviation Industry Presence –NetJets, Flight Options, GE Aviation Aerospace: Where the Puck is Going Why Ohio?

22 BUSINESS SENSITIVE 22 Aerospace: Where the Puck is Going Market and Technology Drivers NextGen air traffic management system Implementation to occur between 2012 and 2025 Potential to disrupt distribution of U.S. passenger and air cargo business Large growth in Unmanned Systems market Growing demand for advanced aerospace materials such as composites and titanium Higher payloads, more effective propulsion and lighter aircraft Exports to increase as global demand increases and low value of the dollar benefits manufacturers Federal defense budget cuts may limit growth opportunities

23 BUSINESS SENSITIVE 23 Aerospace: Where the Puck is Going Recommended Growth Opportunities NichesInsights from Ohio Aerospace & Business Aviation Advisory Council Unmanned Systems View as a core area of focus – see need to strengthen R&D via OTF … build up defense applications and be a first mover on commercial developments (NextGen Air Traffic Mgt Systems) Propulsion Current keystone of Ohio aerospace mfg with GE Aviation. Advanced Materials Viewed as a core area of focus … note need to promote transition of scalable advanced materials to industry & its supply chain Sensors Emerging area … key OH development drivers are AFRL’s Sensor Directorate and NASA Glenn

24 BUSINESS SENSITIVE 24 Aerospace: Where the Puck is Going Other Potential Growth Opportunities NichesInsights from Ohio Aerospace & Business Aviation Advisory Council Human Effectiveness Emerging area … relocation of Human Performance Wing at WPAFB key driver Power Management Emerging area … GE Aviation’s Electrical Power Integrated Systems R&D Center viewed as key driver

25 BUSINESS SENSITIVE 25 Aerospace: Where the Puck is Going Strategic Directions for Ohio OTF-Related Strategic Technology Development Approaches –Need for improved tech transfer, involving federal labs and universities, particularly in: sensors, propulsion, platforms, human factors –Talent is a concern with aging engineering and technical workforce in aerospace industry. Broader Strategic Economic Development Approaches –Negative perception of labor- management relations –Maintaining global competitiveness in aerospace manufacturing costs

26 BUSINESS SENSITIVE 26 Biomedical: Where the Puck is Today Industry Focus Areas Ohio Bioscience Industry: Employment Size, Growth, & Relative Concentration, 2009 Source: Battelle analysis of Bureau of Labor Statistics, QCEW data, enhanced file from the Minnesota IMPLAN Group, Inc.

27 BUSINESS SENSITIVE 27 TECHNOLOGY IDENTIFICATION NICHES PATENT AREAS (Top areas of Ohio invented patents with at least 25 patents from January 2007 to September 2010)  Surgical instruments: 162 patents  Medical imaging: ___ patents  Diagnostic/therapy testing, techniques and devices: 87 patents  Elongated-member driving apparatus: 84 patents  Beds used in medical settings: 64 patents  Multicellular living organisms: 55 patents  Surgical blood/fluid devices: 47 patents  Drug bio-affecting compositions: 43 patents CORPTECH TECHNOLOGY PRODUCT MARKETS (4% or higher share of firms with HQ and independent operating units based in Ohio, and at least 5 firms)  Pharmaceutical packaging  Home health care products  Rehabilitation devices  Over the counter drugs  Medical therapeutic equipment  Medical monitoring equipment  Medical diagnostic/imaging equipment  Health services software PRESENCE OF VENTURE FUNDING AWARDS (January 2006 to December 2010)  VC falls into several broad categories  Medical imaging  Diagnostics  Surgical instruments and equipment  Implant medical devices  Drug development and delivery  Health informatics and logistics AREAS of EXCELLENCE in SCHOLARLY ACTIVITY (Excellence measured by share of U.S. publications in field or quality based on citations per publication) Extensive statewide strengths with 41 publications fields recording a high share of U.S. publications and/or high quality.  30 clinical medicine publication fields stood out as strengths. Among the fields that stand out in both share and quality of publications are cardiac and cardiovascular system, transplantation, urology and nephrology, surgery, pediatrics and oncology.  11 basic biomedical research publication fields stood out as strengths. Biomedical engineering stands out in both share and quality of publications. Biomedical: Where the Puck is Today Innovation Focus Areas

28 BUSINESS SENSITIVE 28 Existing base of Ohio businesses with many leading firms, including Cardinal Health, Ethicon Endo-Surgery, Steris, and Abbott Labs. Outstanding clinical research infrastructure –Name “brand” academic health centers; 3 NIH supported centers for translational sciences Large and growing research base across Ohio regions –Ohio universities increased research base 87% from 2003-09 compared to 43% nationally Integration with advanced materials and manufacturing base –High density and high value supply chain for biomedical products Experienced technical workforce Biomedical: Where the Puck is Going Why Ohio?

29 BUSINESS SENSITIVE 29 Biomedical: Where the Puck is Going Market and Technology Drivers Rise of molecular diagnostics and personalized medicine approaches Growing focus on regenerative medicine approaches Shifting regulatory requirements Impact of healthcare reform Wireless-digital medical technology innovation Continued “push” for minimally invasive medical procedures Advent of disposable biologics manufacturing

30 BUSINESS SENSITIVE 30 Biomedical: Where the Puck is Going Recommended Growth Opportunities Medical Technology Products –Technologies include: medical imaging, sensing and remote monitoring, minimally invasive surgery and advanced implant medical devices –Highly integrative new “systems” approach combines Ohio’s core capabilities –Offers strong linkages to Ohio’s strengths in academic health centers –Large and growing markets Health Informatics –Ohio is among most active states on health information exchanges –Builds on strength of clinical infrastructure –Key focus of state’s three NIH funded Clinical and Translational Science Institutes –Leverage state’s IT strengths in business-to-business software expertise –Consider ways to connect with molecular and other in vitro diagnostics  focus on wireless digital medical devices

31 BUSINESS SENSITIVE 31 Biomedical: Where the Puck is Going Other Potential Growth Opportunities Molecular & Other In-Vitro Diagnostics –Possible opportunity to access university technologies on biomarkers/reagents –But Ohio does not stand out – not seen as having a competitive advantage Contract Research & Manufacturing Support –Contract research for clinical trials viewed as a commodity market – Ohio does not stand out  possible approach of creating stronger connections between CROs and universities -Note: Even if Ohio does not stand out, this is an area that can create jobs in short time frames –In Contract Manufacturing, Ohio not viewed as having base of biologics strengths to play in high growth opportunities Drug Delivery and Development –Ohio’s lack of sizable venture capital firms to lead deals is a major weakness  hard to overcome, limits growth potential –Potential for specialty pharmaceutical companies -Leverage advanced materials strength found in Ohio (both polymer and nano-related advances in drug delivery) Cell Therapeutics –Ohio’s primary focus is on the application of adult stem cell technologies to addressing diseases, which is closer to market than embryonic stem cells. –A few growing companies in Ohio, but still an emerging area and very competitive nationally

32 BUSINESS SENSITIVE 32 Biomedical: Where the Puck is Going Strategic Directions for Ohio OTF-Related Strategic Technology Development Approaches –Need for stronger connections between industry and the state’s strong clinical infrastructure to further market-driven product innovations as well as to test out new medical products. –Significant gap between NIH funding and having a commercially viable product. Calls for more focused funding on translational research infrastructure (prototyping centers, drug development centers, etc.) and support mechanisms to connect with emerging and established industry. –Talent gaps in Ohio for biomedical fields – lack depth in biologics, level of graduate students lagging other states and connection to engineering talent for biomedical firms lagging other states. Broader Strategic Economic Development Approaches –Accelerate reaching critical mass of biomedical companies in regions across the state. This calls for more pro-active marketing and increased focus on ensuring recent start-up firms have access to follow on venture financing. –Concern that venture capital in Ohio is not well positioned to support high growth biomedical start-ups, particularly in the biopharmaceutical area.

33 BUSINESS SENSITIVE 33 Energy: Where the Puck is Today Industry Focus Areas Ohio Bioscience Industry: Employment Size, Growth, & Relative Concentration, 2009 Source: Battelle analysis of Bureau of Labor Statistics, QCEW data, enhanced file from the Minnesota IMPLAN Group, Inc.

34 BUSINESS SENSITIVE 34 Ohio’s Share of Renewable Energy Industries Selected Niches OH Share of U.S. Establishments 2010 OH Share of U.S. Employment 2010 Smart Grid Systems/ Smart Metering8.6%5.2% Fuel Cells/Hydrogen8.4%9.8% Solar PV (includes installers)5.6%1.6% Energy Storage/Batteries5.3%5.7% Wind2.6%1.9% Biofuels/Biomass2.3%3.5% Source: Battelle analysis of D&B Selectory database The most comprehensive national database of renewable companies was recently produced by Brookings and Battelle in “Sizing the Clean Economy” and identifies the leading renewable industries in Ohio:

35 BUSINESS SENSITIVE 35 TECHNOLOGY IDENTIFICATION NICHES PATENT AREAS (Top areas of Ohio invented patents with at least 25 patents from January 2007 to September 2010)  No patent areas stand out among Ohio’s energy industry firms for Ohio-based inventions CORPTECH TECHNOLOGY PRODUCT MARKETS (4% or higher share of firms with HQ and independent operating units based in Ohio, and at least 5 firms)  Alternative energy systems  Electrical power sources  Fuels  HVAC equipment  Lighting systems  Electrical power transmission PRESENCE OF VENTURE FUNDING AWARDS (January 2006 to December 2010)  VC deals in fuel cells, batteries, biofuels, energy management and solar PV-but not concentrated in any area  7 companies with deals totaling $26.6M AREAS of EXCELLENCE in SCHOLARLY ACTIVITY (Excellence measured by share of U.S. publications in field or quality based on citations per publication across ALL Ohio universities)  Electrochemistry  Geochemistry and Geophysics  Energy and Fuels Energy: Where the Puck is Today Innovation Focus Areas

36 BUSINESS SENSITIVE 36 Presence of Ohio’s supply chain is a major selling point – allows for innovative solutions to be put together more quickly and at less cost Strength in materials research and development, which is critical to advancing innovative energy applications Forward thinking utility companies found in Ohio Leading companies in specific niche areas, such as Energizer Battery for batteries, Rolls Royce for fuel cells, Parker Hannifin for wind turbine controls, Timken for wind turbine bearings and Battelle in smart grid technologies. Energy: Where the Puck is Going Why Ohio?

37 BUSINESS SENSITIVE 37 Energy: Where the Puck is Going Market and Technology Drivers Continued growth in demand for energy drives market opportunities Disruptive technologies harder to find in advanced energy – much more of a focus in the near-term on incremental advances Importance of government incentives for driving demand of renewable technologies High capital costs for large power plant installations of alternative and renewable energy sources Regulatory issues impacting both traditional and new sources of energy generation Transmission and distribution issues considerable for bringing on renewable sources of energy

38 BUSINESS SENSITIVE 38 Energy: Where the Puck is Going Recommended Growth Opportunities Solar PV –Challenge of low cost Chinese poly-silicon cells hurts adoption of thin film solar cells -Makes it difficult for Ohio companies to compete in solar modules –Opportunities for Ohio: -Base load solar – First Solar moving in direction generating solar-based power plants – very capital intensive -Integrated solar solutions – highly customized to specific users linked with energy efficiencies + require specialized installation -Exports of advanced materials targeted to energy applications Fuel Cells –Significant OEM-supply base complex found in Ohio –Opportunities for Ohio: -Meeting military requirements (aerospace, military bases) -Stationary power more broadly, but requires state incentives like in California -Transportation – may take longer than 3-5 years, but still seen as coming. Right now in niches, such as fork lifts Energy Storage/Batteries –Big opportunity for energy storage systems, though hard to compete in lithium-ion technologies given base in Asia –Considerable R&D required -Cost advances needed in manufacturing processes to reduce scrap rates, improve inspection -Need for higher density materials –Opportunities for Ohio: -Focus on automotive sector – Rising auto efficiency standards; Ohio part of three state supply chain -Energy harvesting devices -Rechargeable batteries

39 BUSINESS SENSITIVE 39 Energy: Where the Puck is Going Other Potential Growth Opportunities Wind –Still needs to overcome performance issues, reliability, maintenance –Opportunities for Ohio viewed as more limited: -Specific companies are critical suppliers of components -Advanced materials Smart Grid –Value proposition still being defined -- whether smart metering, integration of distributed energy and other smart grid applications still being developed –Requirements for energy reliability seen as critical –Opportunities for Ohio: -Focus on small subsystems development – smart mini-grids Bio-Fuels –Waste is largest biomass feedstock in Ohio – wastewater, solid waste and farming wastes –Biggest challenge is having a reliable, long-term source of biomass –Opportunities for Ohio: -Focus on integrated solutions linked to environmental issues -Major plants -Waterway clean-up -Meeting military requirements (aerospace, ships, military bases)

40 BUSINESS SENSITIVE 40 Energy: Where the Puck is Going Strategic Directions for Ohio OTF-Related Strategic Technology Development Approaches –Leverage Ohio’s strengths in advanced materials and sensors and controls for advanced energy applications. –Key cross-cutting competency in power electronics is critical to success in many energy application areas. Ohio considered to be strong in the past, but not a leader today. Activities such as the new GE research center can have broader implications for advancing power electronics in Ohio that can reach Broader Strategic Economic Development Approaches –Address high capital requirements to advance innovative energy technologies with more high value infrastructure resources. -Development of shared use facilities to reduce costs, as well demonstration facilities to shorten development cycle. –Local markets are key. With no national standards, every state is its own market. –State incentives and regulatory approaches matter to whether Ohio is an early adopter of advanced energy applications. –Leveraging intersection of environmental and energy in state approaches. Through advanced energy solutions, innovative approaches to environmental issues can be advanced.

41 BUSINESS SENSITIVE 41 Info Tech: Where the Puck is Today Industry Focus Areas Ohio Bioscience Industry: Employment Size, Growth, & Relative Concentration, 2009 Source: Battelle analysis of Bureau of Labor Statistics, QCEW data, enhanced file from the Minnesota IMPLAN Group, Inc.

42 BUSINESS SENSITIVE 42 TECHNOLOGY IDENTIFICATION NICHES PATENT AREAS (Top areas of Ohio invented patents with at least 25 patents from January 2007 to September 2010)  Multiplex communications  Data Processing  Support for electrical computers and digital processing CORPTECH TECHNOLOGY PRODUCT MARKETS (4% or higher share of firms with HQ and independent operating units based in Ohio, and at least 5 firms)  Insurance software  Health services software  Education and training software  Internet infrastructure services  Manufacturing software PRESENCE OF VENTURE FUNDING AWARDS (January 2006 to December 2010)  VC falls into four broad categories  Business software  Health IT  Internet and messaging services  Data related software and processing services AREAS of EXCELLENCE in SCHOLARLY ACTIVITY (Excellence measured by share of U.S. publications in field or quality based on citations per publication across ALL Ohio universities) No statewide strengths in information technology or computer sciences fields  Ohio State stands out in several computer science publication fields, including information systems, hardware and architecture, and theory and methods Info Tech: Where the Puck is Today Innovation Focus Areas

43 BUSINESS SENSITIVE 43 Presence of large and mid-sized corporate administrative offices and leading academic health centers based in the state. Lower cost of living compared to established leaders in information technology, largely found on the East and West coasts. Less staff turnover than found in IT hotspots around the nation. Ability of new IT start-ups to access seed and start-up capital with the presence of Ohio’s Entrepreneurial Signature Program. Ohio has one of the most active health information exchanges found among large states, which offers a platform and distribution network for health care software applications. Info Tech: Where the Puck is Going Why Ohio?

44 BUSINESS SENSITIVE 44 Info Tech: Where the Puck is Going Market and Technology Drivers Growth of software as a service and on-demand applications through cloud computing. Wireless applications driving real-time intelligence gathering and customer connectivity. Rise of open source platforms. Growing consumerism in health care. Rise of “accountable care organizations” as a new model for health care delivery.

45 BUSINESS SENSITIVE 45 Info Tech: Where the Puck is Going Recommended Growth Opportunities Business Process Related Software: Focus on serving enterprise computing needs of industry to automate, generate intelligence and add value to sales, financial management, supply chain management, human resource management, production systems and customer services. Health Information Technology. Emerging area primarily focused on software applications and services focused on cost cutting. This includes ways to use a variety of services from workflow management to medical coding to streamlined billing and claims processes to electronic health record systems. It is expected that in the next three to five years, the use of information technology in health care will begin to expand to include improving patient outcomes, and so become more integrated with monitoring patient health and delivering health services.

46 BUSINESS SENSITIVE 46 Info Tech: Where the Puck is Going Strategic Directions for Ohio OTF-Related Strategic Technology Development Approaches –Better facilitation and engagement mechanisms to network emerging information technology companies and well-established corporate and healthcare customer community in Ohio. –Ohio can become a market leader in health IT by addressing the integration of health care information technology with medical devices, which is proving to be a major hurdle to moving towards systems that can improve patient outcomes. –Talent base being generated in Ohio is not viewed as sufficient across the broad spectrum of information technology skills. Broader Strategic Economic Development Approaches –Power costs hurt opportunities to pursue the data centers that drive cloud computing. –Commercial banking in Ohio is not savvy about information technology businesses, and these companies often need to seek outside banks for financing of equipment, working capital and mobilization on contracts. –Lack of adequate later stage venture financing for emerging information technology companies in Ohio.

47 BUSINESS SENSITIVE 47 I&C: Where the Puck is Today Industry Focus Areas Ohio Bioscience Industry: Employment Size, Growth, & Relative Concentration, 2009 Source: Battelle analysis of Bureau of Labor Statistics, QCEW data, enhanced file from the Minnesota IMPLAN Group, Inc.

48 BUSINESS SENSITIVE 48 TECHNOLOGY IDENTIFICATION NICHES PATENT AREAS (Top areas of Ohio invented patents with at least 25 patents from January 2007 to September 2010)  Generic control systems  Measuring & testing  Electricity measuring & testing  Electrical communications  Optics measuring & testing CORPTECH TECHNOLOGY PRODUCT MARKETS (4% or higher share of firms with HQ and independent operating units based in Ohio, and at least 5 firms)  Assembly mfg systems  Automatic test equipment  Manufacturing control systems  Manufacturing measuring equip  Materials handling and shipping equip  Robots/robotic equipment  Automation services PRESENCE OF VENTURE FUNDING & SBIR AWARDS (January 2006 to December 2010)  17 VC deals and 276 SBIR Awards falling into two broad areas  Automation & Process Control  Sensors & Sensing Equipment AREAS of EXCELLENCE in SCHOLARLY ACTIVITY (Excellence measured by share of U.S. publications in field or quality based on citations per publication across ALL Ohio universities) Statewide strengths in:  Remote Sensing  Industrial Engineering Plus, Ohio State University stands out in automation and control systems. I&C: Where the Puck is Today Innovation Focus Areas

49 BUSINESS SENSITIVE 49 Strengths found in Ohio across all components of advanced instrument and control systems, including: –Sensors; Automation; Signal Processing; Information Processing; Distribution; Decision Support Presence of Air Force Research Lab Sensors Directorate at Wright-Patterson AFB University strengths, particularly in sensors and sensing systems I&C: Where the Puck is Going Why Ohio?

50 BUSINESS SENSITIVE 50 I&C: Where the Puck is Going Market and Technology Drivers Broad range of markets to be served from aerospace & defense, law enforcement and homeland security, industrial automation and manufacturing, energy and biomedical. Unmanned vehicles becoming an important platform for advanced automation and sensing technologies. Continued need for advances in sensor technologies, such as improved chemical sensors able to function in real world conditions, full motion video gigapixel class sensors and terahertz wave sensing. Market seeking linkage of wireless-based real time monitoring with advanced sensing technologies into a system.

51 BUSINESS SENSITIVE 51 I&C: Where the Puck is Going Recommended Growth Opportunities Two major technology niches stand out for Ohio that serve multiple markets: Sensors Bottom up, enabling technology Many types of sensors Electromagnetic; IR; Biological; Chemical; T-Rays; etc. Ohio seen as having many technology capabilities in sensor development, but no single area stands out Test & measurement markets seen as near- term Situational Awareness/ Surveillance Top down, systems approach Involves: Sensor technologies Processing (sensor data and information processing) Data storage Distribution Exploitation Ohio seen as strong across the components of these systems

52 BUSINESS SENSITIVE 52 I&C: Where the Puck is Going Strategic Directions for Ohio OTF-Related Strategic Technology Development Approaches –Need for test bed facilities that can allow emerging companies and consortiums to test and demonstrate solutions. –Talent is an area of concern, especially given high numbers of retirement eligible engineers working in sensors and automation at Wright-Patterson AFB. Also hard to attract both young graduates and experienced workers to Ohio. Broader Strategic Economic Development Approaches -Lack of prime integrators in Ohio holds back industry growth. With expansion of Wright-Patterson AFB, it is important to attract more prime integrators to Ohio. -Need for further capital in support of commercialization. SBIR funding particularly important in sensors and sensing technology systems. Ohio might want to consider providing matching funds to companies that are awarded Phase II SBIRs tied to commercialization within OH. -Improved contracting approaches for small and mid-sized Ohio companies with the Air Force Research Lab.

53 BUSINESS SENSITIVE 53 Materials: Where the Puck is Today Industry Focus Areas Ohio Bioscience Industry: Employment Size, Growth, & Relative Concentration, 2009 Source: Battelle analysis of Bureau of Labor Statistics, QCEW data, enhanced file from the Minnesota IMPLAN Group, Inc.

54 BUSINESS SENSITIVE 54 TECHNOLOGY IDENTIFICATION NICHES PATENT AREAS (Top areas of Ohio invented patents with at least 25 patents from January 2007 to September 2010)  Synthetic resins  Material Composites  Solid anti-friction materials  Coatings CORPTECH TECHNOLOGY PRODUCT MARKETS (4% or higher share of firms with HQ and independent operating units based in Ohio, and at least 5 firms)  Ceramics  Composites  Oils & lubricants  Polymers  Electronic materials  Construction Materials  Metals & alloys  Textiles/fibers  Abrasives  Adhesives  Additives/modifiers  Material services  Fillers/reinforcements  Nonmetalliferrous materials PRESENCE OF VENTURE FUNDING & SBIR AWARDS (January 2006 to December 2010)  30 VC deals and 301 SBIR awards falls into three broad categories  Ceramics & Composites  Chemicals & Materials  Specialty Metals & Alloys AREAS of EXCELLENCE in SCHOLARLY ACTIVITY (Excellence measured by share of U.S. publications in field or quality based on citations per publication across ALL Ohio universities)  Polymer Sciences  Composites  Metals and Metal Engineering  Material Sciences, Characterization and Testing  Biomaterials  Coatings and Films Materials: Where the Puck is Today Innovation Focus Areas

55 BUSINESS SENSITIVE 55 Supplier “value chain” is outstanding in Ohio across all materials industries Innovation base outstanding with significant strengths in development and materials analysis across multiple universities across the state. End use industries significant in Ohio Strong and engaged base of industry organizations creating “connective” fabric in Ohio Materials: Where the Puck is Going Why Ohio?

56 BUSINESS SENSITIVE 56 Materials: Where the Puck is Going Market and Technology Drivers A number of key attributes are driving the need for advanced materials including: –Demand for more multifunctional materials that can provide increased value to applications –“Light weighting” of materials that ensure strength and reliability but enable the use of less materials at lower costs. –Ability for materials to be environmentally friendly and recyclable Advances in material production processes also driving market: –Direct Digital (Additive) Manufacturing –Retooling –Modeling & simulation –Near net shape production

57 BUSINESS SENSITIVE 57 Materials: Where the Puck is Going Recommended Growth Opportunities Consider “advanced materials” from a broad technology and market application focus … do not focus from viewpoint of specific types of advanced materials Build Upon Broad Range of Advanced Materials Found in Ohio –Advanced Polymer Materials –Structural Composites –Advanced Ceramics –Specialty Metals & Alloys Focus on Specific Market Application Areas for Materials Found in Ohio and Beyond –Biomedical –Aerospace/ Defense/ Transportation –Advanced Energy –Green Products Address Requirements for Advanced Materials –Multifunctional materials –“Light weighting –Sustainable/ Recyclable –Advanced production processes

58 BUSINESS SENSITIVE 58 Materials: Where the Puck is Going Strategic Directions for Ohio OTF-Related Strategic Technology Development Approaches –OTF needs to be on a real-world business schedule  opportunities for capturing large company development projects being lost. Need for an open RFP process that is available as opportunities arise. –Need a targeted focus on entrepreneurial development in advanced materials. New ventures in advanced materials have specific requirements that need to be recognized in the state’s approach to entrepreneurial development. Focus on common services, SBIR support, business partnering, scale-up, etc. –Better connect Ohio innovations in advanced materials to Ohio industry customers. Calls for more scale up and demonstration facilities. Focus on “de- risking” adoption of advanced material solutions. –Diminishing industry support to universities because of difficulties with contracting/technology transfer processes. Companies are finding it easier to do business overseas given complexities of negotiating intellectual property rights and contract terms. Need for more “template” agreements. Broader Strategic Economic Development Approaches –Manufacturing costs relative to rest of the world. Consider ways to reward those who seek to pursue the manufacturing of innovations made in Ohio. –Place an emphasis on recruitment of emerging innovative advanced materials companies to Ohio. Ohio stands out in its support for advanced materials


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