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Business

Chemical industry innovation is unevenly distributed

Dow-DuPont merger may result in bidding for stranded R&D capability

by Melody M. Bomgardner
March 7, 2016 | APPEARED IN VOLUME 94, ISSUE 10

A two-way analysis of innovation and business acumen at leading specialty chemical and materials firms shows considerable variation in companies’ abilities to create—and profit from—new and differentiated products.

The competitive benchmark, developed by market research firm Lux Research, also illuminates the landscape for future deals that may spring from the merger of Dow Chemical and DuPont.

Within the Lux matrix, DuPont scored significantly higher than Dow on the innovation scale. Accordingly, says Lux analyst Brent Giles, Dow’s agriculture business will be strengthened by DuPont’s ag research abilities when the two businesses come together.

In contrast, DuPont’s industry-leading industrial biotech know-how will likely be a poor fit for the DowDuPont specialty products company. This “stranded” innovation capacity will be a ripe target for acquisition by other companies, Giles suggests.

Competitive Benchmark
Note: Area of circle indicates relative annual revenue.
Source: Lux Research
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