Companies that make chemicals1 have been searching for new sources of growth over the past decade. The quest has prompted some chemical conglomerates to spin off their traditional chemical businesses, such as commodity and specialty chemicals, to concentrate on more profitable, noncyclical life science enterprises. But the hopes these companies had of realizing synergies among their life science businesses—especially in biotechnology, which they all use—have been largely unfulfilled.
(Terms printed in italics are defined in the glossary)
This is not the moment, however, for chemical companies to give up on biotechnology. It still offers huge opportunities (Exhibit 1), and two trends suggest that they are worth exploring. During this century, science will continue to advance its understanding of living organisms and how to control them. At the same time, humanity’s search for sustainable resources will intensify. Using biotechnology to produce chemicals lies squarely at the intersection of these trends. Although the risks are substantial, they can be managed. Chemical companies should therefore revisit their biotechnology strategies now.
Risk management
Biotechnology was born in the late 1970s following the development of techniques for recombining genetic material. Today, pharmaceutical companies are the big users of biotechnology,...