3 Ways to Boost R&D in the Chemical Industry

Author, Ayla Kremb

In the years 1950 through to 1970, innovation in the chemical industry was a leading contributor to the global economy. However, when chemical manufacturing companies discovered that a higher ROI could be achieved by focusing on emerging marketing expansion and relocation of production, the level of innovation dropped significantly.


Once the financial crisis stalled globalisation due to a reduction in inexpensive investment capital, growth in the chemical industry was achieved through the acquisition of smaller companies in complimentary product fields. This resulted in large, inflexible businesses that were unable to deploy their R&D dollars effectively to achieve any effective results.


A few noteworthy innovations have been brought to light in recent years in the materials world. For example, the nanoscale revolution, led by the remarkable discoveries of two-dimensional, single atom materials such as graphene from carbon or silicene from silicon, has resulted in the creation of new materials that are lighter, stronger, more malleable, and more temperature-resistant than any chemical products in history.


What will drive this innovation trend forward to save the stalling chemical industry?


The solution to this issue lies in three key trends in chemical production:


  1. Portfolio Coherence: Too many products under one helm is counter-productive to unlocking the full potential of each player. Breaking up conglomerate companies into independent entities will allow each business to build a cohesive product portfolio that can grow with a considerate R&D investment.
  1. Digital Technologies: To get a clear picture of whether a chemical company’s product is effective, they can now leverage sensors to track performance in their customer’s operations directly. This will allow a greater degree of customisation, which in turn results in growth both in the commercialisation and R&D investment side.
  2. Business Model Innovation: Moving from product to outcome-based pricing is made possible with technology innovation practiced at the customer level. Joint ventures and creative profit borrowed from other industries may also be a route to innovate the business’ ability to succeed.


With the next wave of innovation heading our way in the chemical industry, it is evident that a shift from large conglomerates to nimble, R&D and outcome focused entities will lead this industry into the next century.
Since new product creation in this sector is expensive, ping us at ayla@catalystsolutions.com.au to discuss what funding options are available for pioneers in the chemical development field.