The past five years has seen the introduction of the highest number of environmental regulations in the chemical industry’s history and, with new legislation coming into effect, many companies across the sector are expected to develop alternatives for chemicals which are no longer permitted. Innovation and R&D is increasingly focused on developing alternative raw materials as a result of the rising oil prices which has spurred oil companies to invest in natural gas installations. Alternative materials are starting to include bio-based feed-stocks such as corn and many biotech companies are investigating more environmentally friendly processes to turn these into chemical platforms.

While this sector has not been traditionally overly concerned with consumer and market trends, increasingly several leading chemical companies have started to recognise the benefits to be gained from looking across the entire value chain and understand where and how to focus their attention. This is most apparent around such global trends as health and fitness where chemicals companies supplying the food and pharmaceutical sectors have risen to this challenge. With this realisation, like many others, the sector has been looking more externally for new ideas and technologies and some of the key players have adopted a more open system of innovation and are starting to see the results. However, in reality, in many companies most of the internal processes required to support driving a customer-centric perspective are not in place, so many of the potential benefits that lie there remain underexploited.

At a macro talent-supply level, a major challenge in Europe and the US has been the declining attractiveness of the chemical sector as a career choice: the number of graduates in chemistry has been in decline since the 1990s as the next generation are choosing alternative careers. In addition, there has also been a considerable ‘brain drain’ as experienced workers have left for other sectors. As China and India face the opposite trend, this is driving more and more companies to recognise that the future for innovation in terms of market opportunity and capability location lies outside Western markets.