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.

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.

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.

"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.

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. 

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.