Deloitte: Advanced Digital Technologies Are Key To Chemical Industry Innovation

According to a new study by Deloitte, “Innovation in chemicals - Choosing to create long-term value,” digital technologies are rapidly changing the basis of competition, as well as the rate of and approach to R&D for chemical companies. The report explores how new material informatics startups – combining material science with computer science – are exploring open digital platforms and advanced digital technologies, like AI and machine learning, to accelerate and scale new products and processes brought to market. This ability of digital technologies to rapidly re-engineer products to reduce costs has become increasingly crucial in light of changing supply chains impacted by COVID-19, according to Deloitte.

To create long-term value, according to Deloitte, chemical companies need to focus on realigning their innovation strategies and efforts to embrace advanced digital technologies. The report emphasizes:

• AI can make chemical companies’ existing knowledge more productive and cost effective.
• Machine learning (ML) applications have increased over the years, rising to 8,000 in 2019—a significant increase of 35% per year in just a decade.
• ML algorithms are being used to find new formulations, reducing the time-to-market for products, and improving catalyst design.
• Digital technologies are changing the basis of competition by unlocking potential value and making markets more accessible.
• Advances in digital technologies are creating new opportunities and are driving materials companies to introduce innovative products.
• Advanced data analytics and biochemical analysis have paved the way for numerous smaller players to enter the chemical industry.

Collaboration and partnerships are a key to unlocking innovation, according to Deloitte:

• Companies that are relatively successful in innovation effectively leverage strategic alliances to secure a steady supply of feedstock or jointly develop new chemicals and materials.
• Strategic partnerships with pharma/biotech and consumer products/retail companies give chemical companies exposure to high-growth, consumer-facing end-markets and with research organizations to develop new products.
• Many chemical companies are also leveraging venture capital (VC) to foster and bring new ideas to market. In fact, VC investments in chemicals and materials start-ups have increased over the years, with more than 200 deals in 2018 worth $3.68 billion.
• Many independent VC funds, along with corporate venture capital (CVC) funds, have invested in start-ups focused on solving sustainability-related issues
• CVC funds have been very active, investing in futuristic products and technologies related to strategic areas that are, in general, not developed internally.

For more information, visit: www.deloitte.com