Monday, 31 January 2011

DuPont's Kullman talks biotech at Davos

With DuPont in the throes of acquiring Danish biotechnology concern Danisco in its first big ($6.3bn) M&A deal for many years (in fact since it bought the Pioneer seeds business for $7.7bn in 1999), it was no surprise to see it promoting white (industrial) biotech at the just-ended Davos World Economic Forum. DuPont chairman and CEO Ellen Kullman told attendees that bio-based technologies can expand economic opportunities in rural areas while reducing the burden on the environment.

Ellen Kullman - raising
DuPont's biotech game
“Bio-based technologies are an evolution, not a revolution,” Ellen said. “Modern uses of biotechnology, including industrial biotechnology, are just starting and there are vast opportunities to use these tools in new and valuable ways.”

Kullman was serving as a WEF annual meeting co-chair and participated in a forum panel on delivering bio-driven development”. This discussed how bio-based technologies can change the future of development in rural areas.

DuPont is staking a lot on the Danisco purchase but is following the strategy of addressing mega-trends on which this blog has already shed some light. Acquisition is one way to accelerate the move into new technology areas for DuPont. But as with all M&A deals, post-merger delivery is the critical step.

But as Nigel Davis, Insight editor at ICIS, commented recently: "The bid, welcomed as a good fit  and a good price  by Danisco management, puts DuPont in an extremely strong position as it strives to develop the enzymes that will create second-generation biofuels as well as other bio-based products."

Thursday, 27 January 2011

SABIC boosts innovation spend

Saudi Arabia's petrochemicals and polymers giant SABIC is looking to move further into downstream products in the Kingdom as access to cheap ethane feedstock wanes. To support the drive, which includes it looking at investments in polyurethanes, polyamide and other new materials, it will be stepping up its spend on inhouse innovation.

al_Ubaid is driving innovation harder at SABIC
Over the next few years, spending on R&D will grow to more than 2% of sales from the 1% level currently budgeted, according to Abdulrahman al-Ubaid, executive vice president of technology and innovation, speaking to a Bloomberg reporter recently. The story notes that SABIC is building large R&D centres in India, China and Saudi Arabia.

SABIC reported sales of Riyal150bn ($40bn) last year, suggesting innovation spend will rise to over $800m shortly. In its latest report the company indicated it spent $140m on technology and innovation in 2009.

To put that spend into proportion, here are the 2009 R&D spend figures for the top chemical companies, as listed in ICIS's Top 100 companies:

Company            Spend, $m         As % of sales
BASF                  2,004                 2.76
Dow Chemical     1,492                  3.32
LyondellBasell        145                  0.47
SABIC                   140                  0.51
Mitsubishi Chem  1,477                  5.44
DuPont                1,378                  5.27
INEOS                    85                   0.34
Bayer                  1,289                  5.92

SABIC has indicated its plans to move downstream several times to me recently, first at the 2010 K plastics show in Dusseldorf, where I interviewed vice president and CEO Mohamed al-Mady, and again at the ICIS/Booz & Company petrochemicals roundtable in Frankfurt, in which SABIC's executive vice president for corporate strategy and planning, Abdulla Bazid took part.

In 2009, in recognition of innovation’s key role in driving rapid growth, boosting market share and enhancing corporate positioning, SABIC created its Technology and Innovation (T&I) unit as a single, unified global organization, fully aligned with its research and development plans. Technology departments were created within strategic business units and all SABIC technology centers were linked via a virtual network.

Wednesday, 26 January 2011

Unleashing Chinese innovation

Two factors are currently spurring Western chemical companies to commit ever-increasing innovation investment to China. One, the country is now the world's largest market for chemicals (according to Cefic figures), and two, the government is shifting the focus to domestic demand to drive growth, rather than it being export-led.

Dow Corning's new China Business and Technology
Center in Zhangjiang Hi-Tech Park, Pudong, Shanghai,
illustrates the company's faith in innovation to support
market growth in Greater China.
Also, as I pointed out in an earlier post on this blog, Chinese innovation as measured by patent filings is maturing rapidly. To win a share of the still-fast growing Chinese market - GDP was around the 10% mark yet again last year - companies are having to bite the bullet on how they can innovate for the local market.

But before investing in research and technical centres in China, fears about intellectual property theft and copy-cat plants and issues surrounding recruitment and retention of talented researchers all need to be assessed and overcome.

Many of these issues were debated in a recent ICIS Roundtable on specialty chemicals and China, held in Frankfurt in association with Booz & Company.

The subject has also recently been discussed by Gordon Orr, a director in McKinsey’s Shanghai office in an article entitled "Unleashing innovation in China". He argues that China's success in innovation has been at best patchy to date but adds that: "There is no reason China shouldn’t aspire to... innovation... The evidence to date shows that, given the right incentives, Chinese scientists, engineers and entrepreneurs are eager to rise to the challenge of developing products for the global market." The challenge will be unleashing this innovation through changes in state policy.

In the meantime, it puts Western players in a strong position to innovate for the local Chinese market as well as using their research base in China as part of their overall global innovation network. Collaborating with the huge Chinese institutes and universities is a good way to tap into the Chinese capacity for innovation. It is no wonder we are seeing major investments now going forward.

Tuesday, 25 January 2011

EU cuts FP7 red tape

The European Commission has adopted measures to make participation in the EU's Seventh Framework Programme for Research (FP7) easier and more attactive, especially for small and medium-sized enterprises (SMEs). Which is to be applauded.

The chemical industry has long grappled with extracting funding from this huge but bureaucratic public initiative, but until the creation of the SusChem, the EU's Technology Platform or Sustainable Chemistry, did not have much luck.

Announcing the cuts in red tape, research, innovation and science commissioner Maire Geoghegan-Quinn said the move was only the first step. There will, she said, be more radical simplifications in the successor programme to FP7.  You can read more on the SusChem blog. And the full details are here on the European Commission website

Thai group goes green

Innovation involving green chemistry is getting plenty of investment and coverage these days, but it's not so usual to see non-Western companies making big commitments. But just the other day Thailand's PTT Chemical, a major producer of petrochemicals, made a $60m investment in US-based Myriant Technologies, which specialises in enzymatic production of speciality chemicals from low-cost cellulosic feedstocks.

Source: PTT Chemical
PTT Chemical, which was shortlisted last year in the ICIS Innovation Awards, for its development of green ABS polymer using natural rubber rather than synthetic, has a stated agenda of sustainable growth. It will form a joint venture with Myriant to drive the development of more green chemicals using the abundant bio-based materials available in Thailand. Myriant will in 2012 start up a 14,000 tonnes/year bio-succinic acid plant in Louisiana, US.

You can read more on my colleague Doris de Guzman's ICIS Green Chemicals blog.

Monday, 24 January 2011

"Killer paper" holds promise, and danger?

Source: ACS
The march of nanotech silver particles in the fight against bacteria seems relentless.

Readers of this blog may recall the technology lies at the heart of the Tata Chemicals' Swach water filter which won the ICIS Innovation Awards in 2010. And the chances are your socks also contain silver nanoparticles to fight odour-creating bugs.

Now, researchers in Israel's Bar-Ilan University have come up with a way of depositing silver nanoparticles on the surface of paper, holding out the prospect of antibacterial food packaging materials. The trick, outlined in a recent paper in the American Chemical Society's journal Langmuir, is to use high-frequency sound waves to make sure the silver coats the paper and stays there.

The coated paper has shown potent activity against E coli and S aureus, two frequent causes of food poisoning.

The news is bound to raise alarm bells amongst those concerned over the proliferation of nanotechnology, especially when it comes to the matter of food contact and potential oral ingestion. The fate of nanoparticles entering in the human body is a fertile area for speculation. National bodies are conducting research and preparing guidelines for such cases, and the chemical industry is very keen to be seen to be taking a responsible role in developments.

As I reported in ICIS news on this issue, in this respect the industry has to get it right. It is no longer appropriate to bring new technologies to the table and hope the public will simply wave them through. Risks and benefits have to be quantified and openly discussed in a way the public can understand and react to.

When that debate includes health and food safety – two concerns close to everyone’s hearts – then the communication needs to be spot-on and the industry needs to ensure it is in the ring as a trusted participant, not as a partial provider of partial information.

Friday, 21 January 2011

Key patent activity rises in 2010

Patent activity is often taken as a proxy to measure innovation, at the company, sector or country level. So the recent findings from Thomson Reuters Derwent in its World Patents Index for 2010 makes interesting reading.

Not only does the report show who is most active in 12 key technology areas, but it offers an insight to chemical producers as to where development is fastest in key end use sectors, such as aerospace and automotive. In the automotive industry, for instance, although patent filings were flat in 2010 compared with 2009, at around 89,000, the number of patents filed for alternative powered vehicles leaped 21%, to nearly 16,000, while all other sub-categories in the report showed a slight decline.

In terms of where this innovation is taking place, Japan is by far and away the power house driving the advance. The table shows this clearly:

Patents filed in 2010 for alternative powered vehicles, by company
1 Toyota              Japan         2179
2 Nissan              Japan           639
3 Honda              Japan           467
4 Nippon Denso  Japan           340
5 Matsushita        Japan           287
6 Hyundai           S Korea       284
7 General Motors US              243
8 Robert Bosch  Germany       217
9 Daimler            Germany      209
10 Aisin              Japan           166

Source: Thomson Reuters Derwent

In aerospace, patent filing were up 25% in 2010, with one sector in particular leading the way: space vehicles and satellite technologies, which saw patent numbers double to close to 10,500. Again, Japanese companies lead the way, with South Korean and the US firms running a distant second.

In terms of innovation in the chemicals sector, the report singles out four key areas: agrochemicals and agriculture, with filings up 11%; petroleum and chemical engineering, up 9%; pharmaceuticals (flat); and cosmetics, down 3% in terms of patents filed in 2010 over 2009. 

Thursday, 20 January 2011

Five innovation mistakes

Companies have been wrestling with getting the most out of their innovation spend for many years. Most have developed tactics and strategies for dealing with ideas generation, incubation, pipeline filling and project assessment and culling. But none of these answers the question: why are some companies, or individuals come to that, more successful than others?

Richard Watson, who blogs for the Fast Company, tries to answer this conundrum. He identifies five reasons why some ideas make it and some don't.  I think they are worth sharing here on the blog - what's your reaction?

He concludes that there are five ways to stop ideas going bad:

1. Be pragmatic: 90% right and in market is better than 100% and not.
2. Think like an upstart start-up. Apply half the time and half the money rule.
3. Walk in the shoes of the final customer. Do the shoes hurt?
4. Say to yourself, maybe the other person is right.
5. Seek out the opinions of disinterested outsiders. Is it still a good idea?

Richard is the publisher of What's Next, a website that documents global trends, and is co-founder of Strategy Insight, a specialist scenario planning consultancy.

Wednesday, 19 January 2011

Mega-trend focus grows

Recent news from Clariant that it is investing Euro50m in a new global innovation centre in Frankfurt, Germany, came with the statement that "our product innovations will also address current mega-trends such as renewable energies, energy efficiency and renewable resources with a view to opening up new business opportunities beyond current markets."

The new centre in Frankfurt will support
mega-trend-driven  innovation
Now, I've watched the rise of the mega-trend concept amongst leading chemical producers for a year or so now, as first one then another and then many companies jumped on this particular innovation bandwagon. Not that there is anything wrong with the concept of aiming your R&D spend in markets that will provide large markets for new technology platforms, rather than purely incremental growth. Dow Corning has been a particular leader in this respect.

But there is a sense that a herd mentality has set in here now - with some proponents really not up to exploiting the mega-trends they have identified, given lack of core expertise in some vital areas. I discussed this idea with Alasdair Nisbet of Lazard bank not so long ago - you can see his views in this ICIS article.

A quick search over the strategy pronouncements of the the leading innovation-centred chemical producers shows that many are focusing on the same mega-trends - not so much room there to carve out a competitive edge.

Take AkzoNobel - it is focusing its longer-term strategic thinking around population growth, climate change, scarcity of natural resources and improvement in quality of life in high growth markets. Or BASF - urbanisation, demographic change, growing energy and mobility needs and world population growth. And Dow - energy, transportation and infrastructure, health and nutrition and consumerism... see what I mean - I could go on with another half a dozen companies. Well why not: Lanxess - mobility, agriculture, urbanisation and water; DSM - global shifts, climate and energy, health and wellness...

ICIS Innovation Award winners celebrate

As this innovation blog is brand new, I thought I'd take the chance to bring everyone up to date with the results of the ICIS Innovation Awards for 2010.

These Awards are sponsored overall by silicone specialist Dow Corning and with category sponsorship by consultancy CRA International and distributor U.S. Chemicals. Full details are on the Awards website.

A strong emphasis on sustainability and the environment was evident in many of the better entries for this year's ICIS Innovation Awards

The overall winner was India's Tata Chemicals for its innovative Swach domestic water filter using silver nano-scale technology and recycled rice husk ash. In the seven years that the ICIS Innovation Awards have been running, no entry has generated as much admiration and acclaim among the judges as the Tata Chemicals' water purifier.

The four category winners were: Best Product Innovation - Tata Chemicals Tata Swach nanotech water purifier; Best Innovation by an SME - NiTech Solutions Use of innovative NiTech reactor by Genzyme; Best Business Innovation - Huntsman Advanced Materials New generation of rapid manufacturing equipment and resins; and Innovation with Best Environmental Benefit - Teijin Fibers
ECO CIRCLE innovative closed-loop recycling system for polyester.

Winners and sponsors enjoy the award
presentation and lunch in London
Tata Chemicals' winning innovation was judged to cover all bases. It includes a novel use for a readily available natural waste stream - rice husk ash; it exploits hi-tech nanotechnology in the active biocidal ingredient - silver; and it addresses a huge social problem at an economic cost - the provision of safe drinking water in developing areas of the globe.

Judge Alfred Oberholz, formerly of board member for innovation at Evonik Degussa, commented that the Tata Swach addresses global problems with great social impact. Dow Corning's CTO Gregg Zank added that clearly the Tata Swach shows how chemicals and
chemical innovation are helping people everywhere. The innovation , he said, "resonates" with the needs of today and "tells a compelling story."

Tuesday, 18 January 2011

SusChem head reveals aims

SusChem, the European Technology Platform for Sustainable Chemistry, continues to evolve as a force to stimulate innovation in chemicals and biotechnology in Europe. It was good to see its new chairman Paul-Joel Derian from French speciality chemical company Rhodia championing its efforts in an interview published by International Innovation.

Paul-Joel Derian now heads up
SusChem - Photo: Research Media
Derian, who succeeded Professor Rodney Townsend of the UK's Royal Society of Chemistry in the SusChem chair last year, outlined his ambitions for SusChem, a joint initiative of Cefic and EuropaBio with backing from European Commission.
Says Derian: "SusChem’s number one motivation is to trigger mindset change as well as demonstrate the value of chemistry through concrete projects. If we consider the need to speed up innovation in response to societal challenges such as global warming, water and energy consumption, then the chemical industry clearly stands out – not just as a big part of the sustainability challenge but definitely at its roots, since it provides key innovations for so many sectors."

Chemicals innovation spend holds up

Some positive news on innovation spend came my way recently. Anecdotal reports that chemical companies protected spending on innovation through the downturn were confirmed by the annual Booz & Company survey of the Top 1,000 corporate spenders on R&D.

It found that, for 2009 compared to 2008, the top publicly-listed chemical and energy sector spenders on R&D increased spend by just over 1% to $36.6bn. Healthcare, the second largest spending sector, after computing and electronics, also saw R&D spend slightly increase by $1.6bn to $113bn. Note, however, that revenues in this sector increased by 6%.

In contrast, innovation spending by the top automotive, computing/electronics and broad industrial companies was down sharply.

The top chemical industry spenders were:

Rank 2010      Company                    R&D spend 2009, $m
29                    Bayer                          3,829.1
60                    BASF                         1,949.4
73                    Dow Chemical            1,492.0
75                    Mitsubishi Chemical    1,475.9
81                    DuPont                       1,378.0
86                    Sumitomo Chemical    1,264.9
96                    Monsanto                   1,098.0
108                  Syngenta                       960.0
136                  Solvay                           773.9
153                  Asahi Kasei                   678.6

Source: Booz & Company

Monday, 17 January 2011

Welcome to the Chemicals and Innovation blog

John Baker is a global editor
at ICIS and was for many years editor
of European Chemical News, now
ICIS Chemical Business 

Welcome to the Chemicals and Innovation blog. I'm John Baker, global editor at ICIS responsible for custom publishing and the ICIS Innovation Awards

My aim in this blog is to discuss a wide range of issues relating to innovation in the chemical arena - from corporate strategy, funding and investments through to ground-breaking innovations.

On the way I will add my voice to the debate to show that the chemical industry really can answer many of today's pressing global problems through properly focused and well executed innovation. 

ICIS is a leading provider of news and information on the chemical and energy industries. We have editorial resources in the UK, the US, Singapore, China, India and the Middle East - to bring up-to-the-minute news and analysis on the sector. I'll be tapping into this news stream, but also seeking out provoking and informative articles and examples of innovation from a whole range of sources.

My goal is to post around 3-4 items a week - watch out for my first ones any time soon. And please do comment where you have an opinion or knowledge to share with the blog's readers.