Making clear headway in fight against terror

Business editor Kate Bowman reports on how decades of research is finally coming to fruition

TERRORISM, like cancer, has become one of those words that sends a shiver down the spine, but sadly nowadays is hard to avoid, with events such as the September 11, 2001, attack on the two towers of the World Trade Center, in New York City, etched in the memories of people around the globe.

The word throws up both religious and political connotations, and instils fear in even the bravest of men. While governments far and wide have pledged their commitment to the fight against terror, little is known of the damage it may cause in the future.

But among those hoping to help combat, or at least reduce the threat of, terror, is North-East university spin-out company Durham Scientific Crystals (DSC), which is in the process of commercialising revolutionary technology that it expects will dominate the multi-billion pound security industry.

Over the next few years, it aims to bring to the market modern screening equipment that will be able to accurately identify explosive materials and liquids in bags at airports, and hand-held devices that will be used by police to detect so-called "dirty bombs".

But DSC's technology has much wider applications in equally as big markets, including medical imaging, space exploration and non-destructive testing.

Managing director Arnab Basu believes the company will grow on a massive scale over the coming years, eventually turning over tens of millions of pounds and employing hundreds of staff worldwide.

DSC, based at NetPark, in Sedgefield, County Durham, was set up in April 2003 to commercialise technology developed during 30 years of research by physicists at Durham University.

Its primary activity is in the development of semiconductor crystals from vapour rather than liquid, at a fraction of the cost.

Not only is manufacturing cheaper and more efficient, but the end product is more reliable and can be used in a range of applications, including x-ray machines and military guidance systems.

The process has therefore put the company at the head of its field and led to breakthrough products for key markets such as security and healthcare.

Dr Basu said: "The technology concept was proven in the laboratory so we knew the technology would work, it was up to us to take the challenge on and make it a commercially-viable technology.

"It was still a long way from marketing itself. The concept was proven but it had to be commercial. That was a challenge that went on for two to three years."

Two years ago, DSC was introduced to US technology investor Amphion Innovations through the North-East Centre of Excellence for Nanotechnology, Micro and Photonic Systems (Cenamps) - one of regional development agency One NorthEast's five centres of excellence in the region.

Amphion creates, operates and finances life science and technology companies in partnership with corporations, governments, universities and entrepreneurs around the globe.

Over the past 24 months, the two companies have developed a strong relationship and Amphion now owns a 22 per cent stake in DSC.

Dr Basu says Amphion recognised the strong potential in DSC from the early stages.

"DSC was in a unique position. It had something you don't find that easily. We had set up with technology that had implications in multiple markets and could revolutionise the way things work in those multi-billion pound markets," he says.

"Amphion immediately spotted what we were up to.

"We had a material that everybody wanted to use in the world - we were sitting on technology that could create a step change in the industry.

"Amphion could see that potential and it recognised that at the nucleus of that we had a really good team working together. It had everything to build on - the right people, the right technology, and the right material."

DSC initially secured £1m funding through Amphion, and at the time took a hard look at its business model to establish exactly how the firm would commercialise its technology.

"We went through a six-month strategy exercise with experts from around the world looking at the potential of the technology, looking at where you could extend its usage," explained Dr Basu.

"We quickly realised that we could build a lot more value to the business, build added value by adding products into the portfolio instead of just selling materials to the market and sitting at the bottom of the ladder."

DSC subsequently changed its business model and raised a further £1.6m with Amphion to invest in product development and expand the firm's patent portfolio.

"We started off with one patent, we expanded that to five and we now have 11 patents.

"When you have got innovative people they come out with ideas all the time, but you can't patent everything. You have to patent the commercially important ideas. We are very careful in what we patent and our patent portfolio is very strong," said Dr Basu.

Earlier this summer, DSC raised a further £3.5m to take the company forward. It secured cash from existing shareholders, including Amphion, as well as venture capital firms and new, private investors.

"We were very happy," admitted Mr Basu.

"We could have raised a lot more money, which is a nice problem to have but a difficult choice to make because we want to keep everybody on our side."

The money, together with funds likely to be raised in the near future, will be used to expand the company's capabilities and enable it to start manufacturing products.

Mr Basu believes DSC will be ready to expand significantly by this time next year, and will look to relocate to larger premises within NetPark.

"NetPark is expanding and we very much hope to expand within NetPark and that has always been part of our overall plan," he said.

"NetPark is developing into a real hub in the North-East and we would like to see that continue and we want to be a part of it."

The company currently employs 15 people, but 12 months down the line, the figure is expected to swell to at least 50, and then into the hundreds, and turnover is predicted to grow on a massive scale.

"We are looking at a turnover of tens of millions of pounds in the next two to three years, and by then we will probably employ a couple of hundred people," said Dr Basu.

While DSC has in the past and will continue to recruit people from the region where possible, Dr Basu said some will undoubtedly come from overseas to fill highly-skilled roles.

"The region is quite fortunate in terms of having people with semiconductor skills.

"On one level we think, and we are finding, that we can easily recruit staff, but on a more specialised level people come to us from outside the region," he said.

"We have a couple from France and somebody from the US. We don't do regionalbased recruitment, we do skills-based recruitment."

DSC produces cadmium telluride single crystal wafers, which are used as semiconductors in a range of applications, including security screening systems and medical x-ray machines.

Security alone is a multi-billion pound market that Dr Basu hopes DSC technology will soon dominate.

"Security is something that everybody knows about, it's very topical and people experience it in their daily lives whenever they take a flight and go through screening,"

he said.

"Using cadmium telluride detectors, with the materials we make, we can add another level onto the capabilities of the existing scanners.

"Machines will be able to very reliably identify materials such as explosives or objects of threat by identifying the actual materials themselves rather than just detecting the shape.

"They will be able to actually say what liquid is in a bottle. Rather than just say a liquid', they will actually be able to make a distinction."

While there is not an actual product on the market yet, Dr Basu said it was just a matter of time.

"We expect to get a product out over the next two years," he said.

"We believe it's very important in today's world and its something we have to take very seriously, because of the threats that exist.

This is one way of combating the threats and adding to the capabilities that are already in place.

"It has the potential to speed up airport security."

DSC also hopes to forge links with the US Federal Agency to help in its work towards combating the threat of so-called "dirty bombs", which are explosives packaged with radioactive materials.

Dr Basu said: "Cadmium telluride can identify between different forms of radiation and the US Federal Agency is looking to equip first response firemen and policemen with hand-held cadmium telluride detectors that can locate so-called dirty bombs."

There is also a whole range of applications for DSC's technology within the medical imaging sector, helping with the early diagnosis of major conditions, such as Alzheimer's disease. The market is a £40m industry in the US alone.

Looking ahead, Dr Basu is keen to see DSC grow and develop in the region, but cannot rule out a move overseas in the future.

"We are very proud to be based in the North-East, but we always knew DSC would be a global company - our markets are global and the skills we need, we need to look out of the region and the UK in a lot of cases.

"Our investment comes from the US," he said.

"There is no incentive or reason for a move out of the region, but in the future DSC will have multiple operations because of the markets in which it operates."