Chemical industry product innovation

Anonymous (1958) New direction of development for the Chiai (Taiwan) solvents works (in Chinese) Petroleum Communications China Petroleum Corporation, Taiwan China May, Issue 83, pp 6-7 Anonymous (1996a) Chemical profile propylene glycol. Chem Mark Rep 249 37 Anonymous (1996b) Facts and figures for the chemical industry production by the US chemical industry. Chem Eng News June 24, 41 Anonymous (1997) Facts and figures for the chemical industry — production mixed in 1996. Chem Eng News June 23, 41 Anonymous (1999a) Shell Chemicals Research Team wins ACS 2000 award for innovation. Chem Mark Rep 256... 

Product innovation absorbs considerable resources in the fine chemicals industry, in part because of the shorter life cycles of fine chemicals as compared to commodities. Consequently, research and development (R D) plays an important role. The main task of R D in fine chemicals is scaling-up lab processes, as described, eg, in the ORAC data bank or as provided by the customers, so that the processes can be transferred to pilot plants (see Pilot PLANTS AND microplants) and subsequently to industrial-scale production. Thus the R D department of a fine chemicals manufacturer typically is divided into a laboratory or process research section and a development section, the latter absorbing the Hon s share of the R D budget, which typically accounts for 5 to 10% of sales. Support functions include the analytical services, engineering, maintenance, and Hbrary. 

The chemical industry represents a 455-billion-dollar-a-year business, with products ranging from cosmetics, to fuel products, to plastics, to pharmaceuticals, health care products, food additives, and many others. It is diverse and dynamic, with market sectors rapidly expanding, and in turmoil in many parts of the world. Across these varied industry sectors, basic unit operations and equipment are applied on a daily basis, and indeed although there have been major technological innovations to processes, many pieces of equipment are based upon a foundation of engineering principles developed more than 50 years ago. 

Within the chemical industry, micro-organisms and enzymes are often used as catalysts. It is possible for a unit operation in an essentially chemical production process to be a biochemically catalysed step giving rise to a mixed chemical/biochemical production process. The products of these reactions include organic chemicals, solvents, polymers, pharmaceuticals, and purfumes. Mixed chemical/biochemical production processes are continuously innovated and optimised, mainly for economical reasons. 

The Toxic Substances Control Act (TSCA) refers to "new chemicals" as those not on the TSCA Inventory of Chemical Substances which lists about 55,000 existing commercial chemicals. All new chemicals must enter EPA s premanufacture notification program (PMN) for review before manufacture. This program is the most complete record of development of new chemicals by U.S. industry over the past 2 1/2 years. To date over 1,000 notices have been submitted, many including confidential business information (CBI). Despite the CBI, it is possible to summarize EPA s experience with new chemical substances and to evaluate the PMN program and its impact on product innovation. That is essentially the aim of this paper. 

Experience to date reveals the great majority of PMNs to be submitted by large companies, those with annual sales in excess of 100 million dollars. These data alone do not permit either a conclusion that small companies develop very few chemical products nor a conclusion that the PMN requirements of TSCA have severely hindered small chemical companies in their new product innovation efforts. Reference was made to a published study by the Chemical Specialties Manufacturers Association (CSMA) which found that a misperception by industry of PMN testing requirements was a principal reason for the apparent decline in introduction of new products by small ingredient manufacturing firms. 

Neverthless, it is possible to analyze the information supplied by industry on new chemicals and summarize it in a way which does not breach CBI. This is what I have done in preparing this paper and it is the work of many of my cohorts within the Office of Toxic Substances. I intend to summarize the experience of EPA in dealing with these notices including an analysis of the classes and types of new chemicals, market areas, company size and other data. From this I will draw some conclusions about the impact of this requirement of TSCA on new product innovation and will describe what EPA is doing about it. 

Table VI. Program to Minimize Negative Impact of TSCA on New Product Innovation by the Chemical Industry...

The chemical industry is linked to virtually every segment of the American economy as shown in Figure 1. Chemicals are used by other industries as feedstocks, cleaners, additives, and processing aids for a wide range of products and industrial processes. The chemical industry also provides consumer products directly. These range from soaps and detergents to ink and paint. The effects of chemical innovations, then, are felt far beyond the chemical industry. 

A 25,000-pound per year production rate is not a demarcation between large and small ventures. Such a point would be at a far higher scale of production. Instead, the proposed 25,000-pound exemption represents an economically-justified and virtually risk-free means of aiding innovation in the chemical industry, particularly when coupled with appropriate chronic hazard control language as for intermediates. 

With such exemptions, innovative chemicals can be produced to explore the commercial market and to test product viability. Knowledge of their economics and potential for different applications can be expanded. These exemptions will lessen the cost of market failures. Successful chemicals will not have to bear the additional PMN cost of unsuccessful market tests. As new substances demonstrate their value to society and find a secure place in the market, they can then begin to absorb some of the costs associated with the PMN requirements. There would indeed be a chance for regaining much of the strength of an innovative chemical industry with all of its attendant benefits to society within the context of TSCA and the intent of Congress expression of the will of the American public when it it was passed with the support of the chemical industry in 1976. 

The chemical industry s concern for confidentiality of innovative chemical products is a world-wide problem, with a variety of responses by governments, interest groups and companies. 

EPA s D.G. Bannerman reviewed these impacts on the market introduction of new chemicals. He summarized EPA s experience and analyzed the classes and types of new chemicals, company size, market areas, and, among other data, the number of notified chemicals actually reported to be commercialized. He stressed a new joint industry-EPA program to assist the smaller chemical companies to comply with TSCA, especially with premanufacturing notification. This will minimize negative impacts on product innovation without reducing the effectiveness of EPA s assessment of risks of new chemicals. 

Customer orientation and initial solution-free formulation of customers wishes, as an orientation for product development, appear to be promising approaches for innovations with regard to the application safety of chemicals-based products. However, the initiative for this is not mainly due to substance manufacturers, but rather to the chemicals users being close to the consumers. To what extent the commercial/industrial chemicals end-users (users of production auxiliary materials that are not included in the product) also transform the latent desire for application-safe products into effective demand behaviour, depends on other constellations of motives than those of private end-consumers. The employers liabihty insurance, chambers of commerce and industry, branch associations, trade unions and management boards of large-scale companies play a key role in making quality and competition effective as drivers for innovation here too. 

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