Chemical manufacturers are running out of new molecules to invent and sell, according to a new report from Deloitte.
As a result, companies should shift their focus from churning out bulk commercial chemicals to creating ambitious combinations of existing material innovations that fit anticipated future market needs, says Duane Dixon, Deloitte’s Global Chemicals Sector Leader and author of the report.
Deloitte analyzed financial performance from 2003 to 2012 of more than 6,000 publicly-traded companies across various manufacturing sectors. The results revealed that companies integrating functional solutions had one-and-a-half times greater return on net assets versus that of the companies that just provide materials.
According to Dixon, such functional solutions needed by future markets include:
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Sensors designed to be worn on the skin like temporary tattoos, undetectable to the user and ideal for health care, athletics, and defense.
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Bio-absorbable composites to create stents for arterial disease.
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Energy-capturing solar technology that can be used in home and commercial windows.
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Materials that allow airplanes to fly faster, farther and with less fuel.
It all adds up to big business, according to Deloitte, which believes the market for these kinds of “functional solutions” is almost $21 trillion.
The operative question, says Dixon, is whether chemical companies will re-focus their efforts on new “functional solutions,” as a leading few have already begun to do, or whether they will eschew stretching their boundaries for fear of diluting their focus on core bulk molecules.”
The report, called Reigniting Growth: Advanced Materials Systems, is available online.
