Chapter 6 in AOCS (American Oil Chemists Society) Monograph entitled “Paradigm for Successful Utilization of Renewable Resources” David J Sessa and J.L. Willett Eds; AOCS Press, Champaign, Illinois. Presented at the 88th. AOCS Annual Meeting & Expo, May, 1997

 

Commercializing Technology: From Laboratory to the Marketplace – A Case Study of Starch-based Biodegradable Plastics Technology

Ramani Narayan

Department of Chemical Engineering

Michigan State University, E. Lansing MI  48824

 

 

 

 

 

 

Abbreviated Title:

 

Commercializing Technology -- Starch-Based Biodegradable Plastics

 

 

 

 

Correspondence:

 

Ramani Narayan

Department of Chemical Engineering

A2527 Engineering Building

Michigan State University

E.Lansing MI  48824

 

Telephone: (517) 335-5135; Fax: (517) 432-1105


INTRODUCTION

Technology transfer and commercialization of university research and industry-university research programs leading to a commercial venture is a difficult and sometimes elusive pursuit. The typical technology transfer approach practiced by Universities involves licensing of the technology to a company. This is a passive approach and many promising technologies have fallen by the wayside because a) it does not meet the financial or market volume of large corporations who typically license university research b) the lack of applied research, engineering and economic demonstration data that is essential for the company to make an investment decision -- bringing the fundamental university technology to “investment-grade” c) the market risk and needed expertise to bring the technology to fruition -- no committed technical/business champion. These problems are magnified if the University research involves a completely new technology field and a new market. Biodegradable plastics from agricultural feedstocks falls into the new technology, new market category and is the subject of this paper.

MBI International is a not-for-profit Applied Research & Development Institute set up by the State of Michigan to identify, develop, and commercialize biobased product technologies. At MBI we practiced a pro-active technology commercialization model that ultimately results in effective technology transfer of research to a start-up or joint venture company through MBI and its business subsidiary Grand River Technologies (GRT). Ofcourse, the technology, has to meet certain specified business and market criteria before a business can be established. I have been involved in the development and commercialization of four bio-based product technologies using the above model (see Figures 1 and 4). Thetechnologies are:

1.      Poly(lactic acid) biodegradable plastics: Engineering, scale-up, and applications research for poly(lactic acid) biodegradable plastics technology were conducted at the university and at the Institute with collaboration and support of Cargill Inc., one of the worlds largest agribusiness. Cargill is currently commercializing this technology world-wide, and recently announced the creation of a joint venture company with Dow Chemical, Cargill-Dow LLC for the same.

2.      Modified Starch Biodegradable Thermoplastics: EverCorn, Inc., a joint venture between Grand River Technologies (GRT), the business subsidiary of Michigan Biotechnology Technology, and Japan Corn Starch Company, is involved in design, engineering & manufacture of thermoplastic, modified-starches which have water repellent properties, mechanical strength, and good processability, while being fully biodegradable in appropriate disposal systems like composting. A two year $2.0 MM R&D phase was completed in July 1995. Pilot scale operations are in place to sample customers with thousands pound quantities of resin.

3.      Starch-Polyester Biodegradable Plastics: BioPlastics Inc., a start-up company, is involved in manufacture of starch-polycaprolactone resins that is designed to have water resistance, good strength properties and ease of processability, while being fully biodegradable under composting conditions. The technology was developed by graduate students at the University and in-licensed through MBI to BioPlastics (four patents). The company launched in February 1995 and capitalized with $500,000. The initial target market is compost bags (lawn & leaf bags), retail & merchandise bags.

4.      Sugar based BioAdhesives: Lions Adhesives Inc., a start-up company, is commercialization a portfolio of environmentally friendly packaging and wood adhesives based on annually renewable resources. The adhesives are designed to be water resistant, have good adhesive bond strength, high application speed and machine stability. They are targeted to be non-interfering in recycling operations, and biodegradable in appropriate infrastructures. The company was launched in 1997, and capitalized with $600,000 from a private investor.

The Poly(lactic acid) technology development and commercialization represents the standard approach wherein the University and the Institute performs R&D under contract with the company (Cargill, in this instance). The other three technologies represents the pro-active commercialization model, wherein the technology is being commercialized through the creation of a start-up company or joint venture with a large corporation.

In this paper, I will discuss the elements of a technology commercialization process model, and its use in commercializing Starch-based biodegradable plastics.

TECHNOLOGY COMMERCIALIZATION MODEL

Figure 1 shows the steps involved in the technology commercialization model. It recognizes that the only true measure of successful technology transfer is market acceptance of the technology resulting in a profitable business. The first step in the process is the generation of an idea or an invention by University faculty, or researchers at non-profit Institutes and National laboratories. Next, the technical feasibility and proof-of-concept of the new idea is established. At this stage intellectual property is being created, and needs to be protected by patents. Unfortunately, many researchers and faculty seek publication of results before protecting the intellectual property and considerably diminish the value and commercialization potential of the technology. The second step in the commercialization process involves assessment of the technology for its business and market potential. This is best done by persons with commercial or business expertise in that technology area. Typically, such expertise does not reside at the University or research institutes. Therefore, the standard approach is to seek the opinion and support of a company working in that technology area to further develop the technology. If the company is interested, it licenses the technology (if patents have been filed) and evaluates the commercialization of the technology using its own criteria and measures. If the technology is not protected, then the company is much less likely to pursue commercialization. This is because of the fear that another company can easily enter the same market after they have spent considerable money and time on developing the market and technology,. As discussed in the Introductory section, companies may, also, choose not to commercialize the technology because it does not meet their market volumes or hurdle rate or business reasons. Typically, at this stage technology commercialization efforts die. However, the technology may be perfectly viable for a start-up small business operation. Therefore, there is need for a business development infrastructure/expertise to assess the business and market potential of the technology. If there is limited or no business/market potential for the technology, then the technology goes back to the first step to be modified to address the identified technical or market issue. Cost is the single most important issue that drives commercialization forward. Preliminary costing, especially materials costs should be calculated to establish that material costs are in the target range of the materials to be substituted. If the potential is high, then the project moves on to step 3. The technology is refined, product specifications and process parameters developed. Preliminary engineering economics is completed. Detailed market analysis, product sampling and demonstration is conducted. A Business Plan is developed. A start-up business can be established to commercialize the technology if the initial capital requirements for starting the business is around $2-5 million. However, if the capital requirements are much higher, and/or the process is complex, then a joint venture or out-licensing the technology to an established corporation doing business in the technology area is appropriate. Out-licensing at this stage of the technology development as opposed to after step 1 (Figure1) significantly enhances the success of technology commercialization and adds considerable value to the technology.

APPLICATION OF TECHNOLOGY COMMERCIALIZATION MODEL

Step 1 of the commercialization model involves generation of the technology idea, and creation of a research project to generate the data necessary to establish proof-of-concept for the technology. This is standard procedure at Universities, research institutes, National labs etc. As discussed in the earlier section, step 2 requires a business development infrastructure or expertise to move the technology forward towards commercialization. MBI International, a non-profit Institute, provides the business infrastructure through its Biobusiness Incubator, and its for-profit subsidiary Grand River Technologies (GRT). The incubator facility allows a start-up company to locate there and develop the business before graduating to full-scale commercial operations. Such business incubators and infrastructures are developing near Universities to provide the link to the next steps in commercializing technology. Figure 2 provides an overview of the structure at MBI that provides the link to commercialize technologies. Figure 3 outlines the process with a list of start-ups and joint ventures created. It follows the technology commercialization model illustrated earlier.

Starch-based Biodegradable Plastics – Commercialization Case Studies

As presented earlier and shown in Figure 1 technology commercialization begins with the generation of an idea, followed by structuring of a R&D project that would establish proof-of-concept. We initiated four R&D projects in the general area of Biodegradable Plastics from agricultural feedstocks with the ultimate goal of commercializing the technologies that would result from it.

Biodegradable Plastics Rationale[[1],[2]]. New environmental regulations, societal concerns, and a growing environmental awareness throughout the world have triggered the search for new products and processes that are compatible with the environment. Thus, new products have to be designed and engineered from cradle to grave incorporating a holistic "life cycle thinking" approach.  The impact of raw material resources used in the manufacture of a product and the ultimate fate (disposal) of the product when it enters the waste stream have to be factored into the design of the product. The use of annually renewable resources and the biodegradability or recyclability of the product are becoming important design criteria. This has opened up new market opportunities for developing biodegradable products. Designing and engineering new materials that are biodegradable and ensuring that they end up in an appropriate disposal system is environmentally and ecologically sound.  For example, by composting our biodegradable plastic and paper waste along with other "organic" compostable materials like yard, food, and agricultural wastes, we can generate much-needed carbon-rich compost (humic material).  Compost amended soil has beneficial effects by increasing soil organic carbon, increasing water and nutrient retention, reducing chemical inputs, and suppressing plant disease. Composting  infrastructures, so important for the use and disposal of biodegradable plastics, are growing in the U.S. and are in part being regulatory driven at the state level.

Poly(Lactic Acid) based Biodegradable Plastics. Hydrolysis of corn starch or cellulosic materials yields simple sugars that can be readily fermented into lactic acid. L-Lactic acid is produced by the bacterial fermentation of corn sugar (D-glucose): C6H12O6 = 2C3H6O3, DGo(25oC) = -136kJ/mol. Purac Biochem BV (division of CSM) currently produces an estimated 80% of the worlds lactic acid.  Cargill and Purac have (5/96) a 50-50 joint venture to build and operate a 70 million lb/yr lactic acid facility in the US (startup in 1998); the current US consumption of lactic acid is 55 million lb/yr.

The conventional route to high molecular weight PLA is through the dilactone of lactic acid. Polylactide polymers are primarily used in biomedical applications. At Michigan State University and MBI, we initiated a R&D project on Design and Engineering of polylactide (PLA) polymers for industrial applications. Fundamental R&D and engineering was carried out to establish proof-of-concept of PLA polymers for industrial applications [[3],[4]] – Step 1 of the Technology Commercialization model. The project was supported by Cargill Inc., and done in collaboration with them on a contract basis. In this case, the technology commercialization followed the typical, standard, approach wherein a large corporation with interests in the area took over the technology commercialization efforts. Therefore, in this case the model is not appicable, especially steps 2 to 4.


Starch Ester based Biodegradable Thermoplastics. R&D was conducted at MBI to develop a family of biodegradable thermoplastic starch esters for injection molded products and coatings. .Modification of the starch -OH groups by esterification chemistry to form starch esters of appropriate degree of substitution (1.5 to 3.0 ds) imparts thermoplasticity – can be processed and shaped like current plastic products. Unmodified starch shows no plastic behavior and thermally degrade around 260 0C. Plasticizers like glycerol triacetate and diethyl succinate are completely miscible with starch esters and can be used to improve processability. Water resistance of the starch esters is greatly improved over the unmodified starch. The technology is protected by several patents [[5]-[6][7][8]]. Based on preliminary economics and process engineering studies, it was established that capital investment costs would be high, and the process complex. Therefore, it would be difficult for a start-up company to initiate commercialization of the technology. A joint venture with a large starch processing company would be needed to commercialize this technology. A joint venture company (EverCorn Inc.), was established between MBI/GRT and Japan Corn Starch (one of Japan’s leading starch based industrial products company) to commercialize this technology. Appropriately formulated starch esters with plasticizers and other additives provide resin compositions that can be used to make injection molded products and for direct lamination onto Kraft paper. These new, modified-starches have water repellent properties, mechanical strength, and good processability, while being fully biodegradable in appropriate disposal systems like composting. A two year $2.0 MM R&D phase was completed in July 1995. Pilot scale operations are in place to sample customers with thousands pound quantities of resin and a full-scale operational plant is under development.

Starch-Poly(e-caprolactone) (PCL) alloys – We developed a new technology at Michigan State University to produce biodegradable thermoplastic starch-polyester alloys for film applications. This technology involves reactive extrusion processing of plasticized starch with modified PCL in a twin screw co-rotating extruder with modified screw elements. By controlling the rheology in the extruder, one can obtain a morphology in which the plastic starch is dispersed in a continuous PCL matrix phase. Good adhesion and compatibilization is promoted between the plastic-starch phase and the modified PCL phase to obtain enhanced mechanical properties. Some of the advantage of using plasticized starch instead of granular starch are:

·        smaller domain size is possible by controlling rheological characteristics

·        improved strength and processing characteristics

·        reduced macroscopic dimensions in certain applications, like film thickness

All of the operations can be performed in the extruder, thereby eliminating the use of solvent, reducing the number of steps to making the final resin, and simplifying the process operations. On a Life-cycle basis, we not only engineered a biodegradable product, but also reduced waste generation, energy consumption, and conserved resources.

This technology was ideal for a start-up business because of the relatively small capital requirements ($2-3 million) and the simplicity of the process -- essentially a compounding operation. The technology is covered by four patents [[9]-[10][11][12][13]]. A strong intellectual property position is an important element for successful business operations.

A start-up company, BioPlastics Inc., was formed under the MBI/GRT umbrella and located at the MBI incubator facility to commercialize the technology. The technology was licensed by MSU to MBI. BioPlastics Inc., is manufacturing and sampling customers with this new starch-PCL resin that is being marketed under the name “ENVAR” for film applications like compost bags, trash and retail carry-out bags etc. Seed capital for the company came from a consortium of State Corn Grower Associations, the State of Michigan, and USDA SBIR (Small Business Innovation Research) programs.

This is a good example of technology transfer from an university and commercialization via a start-up business following the technology commercialization process model discussed earlier and outlined in Figure 1. This technology would have languished on the shelf if the standard practice of looking for a potential licensee from a large corporation would have been followed. There are several reasons for this (note comments in introductory section). The major one is that this represents a new technology in a new market, and not improvements to an existing technology or new technology to improve an existing market.

BioAdhesives. Lions Adhesives was founded in 1996 to develop and market a family of VOC(volatile organic content)-free waterborne adhesives that are biodegradable and non-interfering in repulping operations of paper and paperboard products. The technology involves incorporating “designer sugar molecules”, derived from annually renewable resources such as corn. The company is developing patents [[14],[15]] and proprietary know-how around these new technologies and positioning itself to become a $20 MM company in five years. It will explore the licensing of its patented technology and proprietary know-how as a part of its commercialization strategy

The commercialization of this technology followed a slightly different path than in the technology commercialization model. The generation of the Bioadhesives business or product (repulpable and biodegradable sugar-based waterborne adhesives) idea (Step 1 of the model) was followed by an analysis of the market and business potential for the technology which included, of course, product cost analysis – Step 2 of the commercialization model. Thus, the business analysis preceded detailed R&D work on the project with the establishment of intellectual property positions as envisioned in Step 1of the model. However, preliminary scoping research to show proof-of-concept was done prior to business and market analysis. This modified approach, blurs the boundary between Step 1 and Step 2 of our model. Basically it involves:

·        Idea generation, and “scoping research” to show technical feasibility (step 1 of the model),

·        Technology assessment, business and market analysis (Step 2),

·        Detailed R&D, proof-of-concept and intellectual property creation (Step 1).

An investor group, Lions Investments, put in the initial seed financing of $600,000 for the company, and GRT provided the costs for office, laboratory, and pilot plant space including equipment usage.

Figure 4 schematically illustrates the technology transfer and commercialization of the above technologies which are based on agricultural feedstocks.

CONCLUSION

The typical technology transfer and commercialization process involves licensing a patented technology to an interested company. This passive approach fails many times because the technology does not meet the company’s business and/or product portfolio criteria. However, the technology may be perfectly viable from a technical and business sense, especially for start-up business. In many cases, more detailed business, market, and engineering analysis is needed to bring the technology to “investment grade”, so a company can make an informed decision to pursue commercialization.

An integrated step by step technology commercialization process model is presented that seeks to add value to the technology by integrating business and market analysis, engineering, pilot scale-up, demonstration trials, and a good operational business plan. I believe that following such a process model would significantly enhance the commercialization of technologies – especially in areas like new industrial products from agricultural feedstocks.

Four case studies of technology commercialization using agricultural feedstocks have been discussed that encompasses out-licensing, joint venture, and start-up business creation.


Figure 2. Business Development Infrastructure at MBI

 

Figure 3. Technology Transfer and Commercialization at MBI

 

 



REFERENCES

[1]. Narayan R., Polymeric Materials from Agricultural Feedstocks, In Polymers from Agricultural Coproducts, Ed., M.L. Fishman, R.B. Friedman, and S.J. Huang, Am. Chem. Soc. Symp. Ser., 575, 2, 1994

[2]. Narayan R., Impact of Governmental Policies, Regulations, and Standards Activities on an Emerging Biodegradable Plastics Industry, In Biodegradable Plastics and Polymers, Eds., Y. Doi & K. Fukuda, Elsevier, New York, 1994, pg. 261

[3]. David R. Witzke, Ph.D Dissertation, Michigan State University, 1997

[4]. Witzke D. R., R. Narayan, and J. F. Kolstad, Macromolecules, 30, 7075, 1997

[5]. Narayan R., Steven Bloembergen and Amit Lathia, "A Method of Preparing Biodegradable Modified-Starch Moldable Products and Films", U.S.S.N. 08/097,550, U.S. Patent Application, July 1993.

[6]. Bloembergen S., and Ramani Narayan, "Biodegradable Moldable Products and Films Comprising Starches Esters and Polyesters", U.S. Patent 5,462,983, Oct. 31, 1995.

[7]. Narayan, R., "Microfiber Reinforced Biodegradable Starch Ester Composites with Enhanced Shock Absorbance and Processability."U.S. Patent allowed, 1997

[8]. Bloembergen S., J. David, D. Geyer, A. Gustafson, J. Snook, and R. Narayan, Biodegradation And Composting Studies of Polymeric Materials, In Biodegradable Plastics and Polymers, Eds., Y. Doi & K. Fukuda, Elsevier, New York, 1994, pg. 601.

[9]. Narayan, R., "Biodegradable Multi-Component Polymeric Materials Based on Unmodified Starch-Like Polysaccharides." U.S. Patent 5,500,465, October 31, 1995

[10]. Narayan, R., M. Krishnan, P. DuBois, "Polysaccharides Grafted With Aliphatic Polyesters Derived From Cyclic Esters." U.S. Patent 5, 540, 929, July 30, 1996

[11]. Narayan, R., M. Krishnan, P. DuBois, "Polysaccharides Grafted With Aliphatic Polyesters Derived From Cyclic Esters." U.S. Patent 5,578,691, November 26, 1996

[12]. Narayan, R., M. Krishnan, P. DuBois, "Polysaccharides Grafted With Aliphatic Polyesters Derived From Cyclic Esters." U.S. Patent 5, 616,671, April 1, 1997

[13]. Narayan, R., M. Krishnan, P. DuBois, and J. Snook, "Bulk Reactive Extrusion Polymerization Process Producing Aliphatic Ester Polymer Compositions. "U.S. Patent allowed, 1997

[14]. Oosterhoff, R. H., “Biodegradable Diacrylates and Adhesives Based Thereon”, U.S. Patent 5,580,940, 1996, Assigned to Lions Adhesives, Inc.

[15]. Bloembergen S., I. J. McLennan, and R. Narayan, “A Method of Preparing Sugar-based Environmentally Friendly Adhesives and Compositions Based Thereon, U.S. Patent pending.