MANAGEMENT
Joint Research Programs Save Time and Money New Dow-Westinghouse program on nuclear fuels typifies some of the why's and how's of cooperative research "The cost of research is getting so high that it makes a lot of sense not to duplicate the other guy's work." "It was the only way we could get the depth and breadth we need in research." These are some of the reasons Dow and Westinghouse Electric executives give for setting up a joint research program. The companies' new program covers the reprocessing of nuclear fuels and the fabrication of nuclear fuel elements. A $1.7 million laboratory will be built at a yet undecided site. It will be staffed by both Dow and Westinghouse scientists. The total expenditure on the program, which is tentatively set up to run several years, could reach $20 million. Dow and Westinghouse are far from being the only companies that have established joint research programs. Eli Lilly, for example, has had a research program with Syntex Corp. since 1959. Upjohn is cooperating with Cutter Laboratories. Monsanto
has several irons in the fire including agreements with several smaller laboratories. Union Carbide has a joint agreement with Aerojet-General for research in fissiochemistry. Companies thinking of doing joint research can approach the Justice Department's antitrust division before committing themselves. The department judges each case separately for possible violation of U.S. antitrust laws. There is no flat policy. Drug Industry. Perhaps one of the better known joint research programs is that between Syntex and Lilly. The program is largely a financial arrangement. Lilly has been footing the bill for half of the cost of Syntex's steroid research. Syntex retains full control of its research but Lilly shares the results. Both companies are free to develop and market any of the steroids that come from the research. The financial help has been important to Syntex, a relatively small company which spends a great deal of
RODS. Robert Nemitz checks surface finish of atomic fuel rods at a Westinghouse plant. Dow and Westinghouse see clear commercial advantages from joining Westinghouse's nuclear engineering experience with Dow's chemical background 34
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money on research—17% of sales in 1963. Lilly has had the advantage of quick entry into steroids. Lilly has three products on the market as a result of the program and the fourth, an oral contraceptive, is well on the way. The program has been renewed and will run at least into 1965. Cutter's arrangement with Upjohn has been under way since 1961. Cutter, at its discretion, can submit drugs it has been developing to Upjohn. The two companies can then conduct independent research if they desire. Any information developed at this stage is exchanged. Either company can use the information as it sees fit and either can market the drugs. Cutter says that the program cuts the cost of the necessary clinical work. Upjohn presumably gets the advantage of a flying start on the development of drugs it might otherwise never have worked on—but Upjohn is very shy about talking about the program. Chemical Industry. There is no lack of joint research in the chemical industry. Monsanto, for example, is working with CBS Laboratories on the use of Monsanto's silicon wafers in semiconductors. The program is designed to find out how Monsanto's customers will use the products in the future. Dr. Richard S. Gordon, director of Monsanto's central research department, explains that the company generally only enters such agreements with small companies or individual inventors. Monsanto likes to take charge and makes no agreements for the joint exploitation of such research. If a program is successful, Monsanto either negotiates a cash settlement or takes out a license. Another example of joint research in the chemical industry is the program set up earlier this year by Union Carbide and General Tire & Rubber Co., together with General's subsidiary Aerojet-General Corp. Under this
joint research program, the companies will study fissiochemistry for the possible production of chemicals. Aerojet-General has an extensive background in nuclear engineering and Union Carbide is contributing its experience in nuclear research. Both companies feel that the joint effort will greatly speed their progress in this relatively undeveloped area of the chemical industry. Mutual Benefits. In all of these programs one thing is sure. The participants have good, sound reasons for entering joint programs as opposed to doing the research alone. Perhaps the Dow-Westinghouse hookup best explains some of the why's of joint research efforts. The details of this program go a long way to pinpointing the type of benefits that the partners in such deals hope to gain. Both companies see clear commercial advantages from joining Westinghouse's nuclear engineering experience with Dow's chemical background. Dow sees the need for a privately owned fuel reprocessing and fabricating plant in the western U.S. in the next few years. I. B. Venable, manager of nuclear materials for Dow, predicts a $20 to $30 million per-year market for this business in the West by the late 1970's. (The East will be covered by a plant now being built near Buffalo, N.Y., by Nuclear Fuels Services, Inc.) Westinghouse wants to improve its know-how in the chemical end of the nuclear business to back Up its current reactor technology. Ray L. Witzke, consulting engineer in Westinghouse's atomic power division, says that his company has to stay right on top of the complete process for making power from nuclear sources. Fuel handling is a vital part of this process and could well affect both the economics and design of future reactors. Westinghouse cannot afford to be left out of such developments, especially since General Electric, its arch rival, is well experienced in this area. Both Dow and Westinghouse are already well into the nuclear business —Westinghouse up to its ears, Dow up to its ankles. Westinghouse has supplied the reactors for almost all of the U.S. Navy's atomic submarines. With GE, it is one of the two major suppliers for commercial nuclear power plants. The company is also working on space applications for nuclear power and it runs AEC's Bettis atomic power lab.
Westinghouse's Ray Witzke Can't buy a chemical background that exists in a company like Dow
Need for more background in reactor technology helped spur project
Dow's current U.S. activity is limited to operating the Rocky Flats nuclear weapon operation for AEC. This has given the company experience in the chemistry and handling of plutonium and enriched uranium—the vital experience which Westinghouse lacks. Why Joint? With such big current commitments in the business and with such big benefits at stake, why isn't either Dow or Westinghouse going it alone in this research? Both companies point out that some things cannot be bought—or at least bought within a reasonable time. Mr. Witzke believes that even with time and money, you just cannot buy the depth of chemical background that develops over the years in a research organization like Dow's. Dr. Ray Boundy, Dow vice president and director of research, points out that last year it cost Dow $34,000 to keep one scientist working in its l a b s just about twice what it cost 10 years ago. This figure includes the scientist's salary, the salary of his technical assistants, the cost of his equipment, overhead, and other costs. Dr. Boundy predicts that the cost will continue to double about every 10 years. He believes that the joint program with Westinghouse is particularly attractive because of the very different interests and backgrounds of the two companies. Dr. Boundy explains that at one time Dow thought about doing this research on its own. But the need for more background in reactor technology swayed the company toward accepting a partner. Charter. The Dow-Westinghouse agreement has some of the features of a boiled down United Nations charter. It has committees, quorums,
methods for the impeachment of officers, and much of the other political paraphernalia usually associated with agreements between two or more independent and powerful parties. It covers how the research will be done, how it will be controlled, how it will be financed, and the like. Some of the work is being done in the companies' present labs. Most of it, however, will be centered in the new recycle fuel laboratory when it is built. Dr. James F. Willging, formerly Dow's metallurgical research director at Rocky Flats, is manager of the project. The over-all direction of the project, however, is in the hands of a committee of eight m e m b e r s three technical and one administrative man from each company. The main function of this group is to get money for the project and guide its progress. A quorum consists of six members. Decisions are by a simple majority but the majority vote must include at least one member from each company. On paper at least, the committee can impeach the project manager if it wishes to replace him. All research from the project is available to each company to do with as it likes. There are no commercial agreements for joint exploitation of the research. Patents will be shared by the companies, as will all expenses. The new laboratory and equipment will be jointly owned. In spite of the impressiveness of the agreement both companies realize that the success of the project depends completely on the trust and understanding between them. "You can't write everything into a contract," Mr. Venable explains, ". . . you have to have confidence in one another." Mr. Witzke agrees completely.
Dow's Dr. Ray Boundy
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