News Release

Annual chemical industry report shows mixed results

Peer-Reviewed Publication

American Chemical Society

Findings show worldwide rebound from 1998

A snapshot of the worldwide chemical industry -- called the most globalized of all major manufacturing industries -- revealed a year of restructuring and recovery in 1999, according to a report that summarizes the field.

Chemical industry facts and figures are the subject of an annual special report in the June 26 issue of Chemical & Engineering News, the weekly newsmagazine of the American Chemical Society, the world's largest scientific society.

The trillion-dollar chemical industry showed mixed results last year, including an ongoing rebound from the 1998 Asian economic crisis, slow growth in chemical production and foreign trade of chemicals and decreased profitability among leading companies. Overall, chemical production registered a two percent increase in 1999, according to the U.S. Federal Reserve Board.

Sales figures for the top chemical companies showed modest growth, though sales grew faster than profits, according to the report. As a result, many chemical companies were not as profitable in the past year. Rising prices in energy and raw materials also hurt U.S. chemical producers, who saw oil costs more than double during the course of 1999. Total employment fell slightly in the industry after two years of increases. Productivity remained unchanged.

Domestic producers saw the second consecutive decline in the chemical trade surplus largely due to imports of foreign chemicals and strong overseas currency values. The $9.8 billion surplus among chemical manufacturers, one of the few U.S. industries to enjoy a surplus, was a 33 percent decline from 1998 and is the smallest figure in the previous four years, according to U.S. Department of Commerce statistics.

A bright spot was the pharmaceutical and biotechnology sector. Combined sales for the six leading biopharmaceutical firms increased 29 percent over the previous year, and overall earnings were up 43 percent for the industry. Pharmaceutical companies such as Merck and Pfizer had another year of double-digit sales and earning growth in 1999.

A growing gap in research and development spending between the pharmaceutical and chemical firms has emerged: in 1989 drug-producing pharmaceutical companies' R & D spending was about double that of chemical companies. In the past decade, the same pharmaceutical makers spent nearly five times as much as the chemical companies on R & D. In dollar figures during the same period, R & D spending by chemical companies grew 21 percent to $3.8 billion, while pharmaceutical makers spent nearly $17 billion, more than 174 percent of the 1989 amount.

Overall, the industry picture of 1999 was one of recovery and efforts to reclaim industry growth, which has still not equaled the levels of before the Asian crisis. The results from the eve of a new century were signs of slight improvement and of the changing corporate landscape as companies tried to cope with a new chemical environment.

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6/27/00
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A nonprofit organization with a membership of 161,000 chemists and chemical engineers, the American Chemical Society publishes scientific journals and databases, convenes major research conferences, and provides educational, science policy and career programs in chemistry. Its main offices are in Washington, D.C., and Columbus, Ohio.

The online version of the research paper cited below is available on the Chemical & Engineering News Online Web site, http://pubs.acs.org/cen/


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