Fine Chemicals in Non-Pharma Markets

The extensive use of fine chemicals outside the pharmaceuticals industry is often overlooked, says Jan Ramakers of Jan Ramakers Fine Chemicals Consulting Group

Chemicals and chemistry are present in every area of modern society. As a result, the chemicals industry is large and its products serve a very wide range of very diverse market segments. Figure 1 shows the structure of the global industry. For the sake of clarity, only major product streams are shown.

Going from petrochemicals via organic commodities to fine chemicals, the average product value per kilo increases but the total market volume decreases at the same time. The market dynamics change also from purely financially driven commodity products to highly specialised fine chemical products, often purpose made for a single, low volume application.

Fine chemicals are low volume (usually <1,000 tonnes/year), high value (usually >$10-$15/kg) products. They are usually sold for what they are, rather than for what they do. The key specification of a fine chemical is always its precise chemical structure. Products that are sold for what they do are called performance chemicals, which are often referred to as specialty chemicals. Performance chemicals include products like surfactants, biocides, etc.

Structure of world chemicals industry

Figure 1 – Structure of world chemicals industry

Fine chemicals are used in a wide variety of applications and it is not too difficult to make a list of 40-50 market segments. They are used as active ingredients in biocides, cosmetics and toiletries, as additives for plastics and coatings, etc. Larger markets for fine chemicals include agrochemicals, flavours and fragrances and speciality dyes.

The market for performance chemicals consists of a large number of different segments. Quite a few of those only use commodity chemicals. The most important performance chemical market segments that use fine chemicals include:

  • Antioxidants
  • Biocides
  • Cosmeceuticals
  • Cosmetics & toiletries
  • Electronic chemicals
  • Flavours & fragrances
  • Food additives
  • Nutraceuticals
  • Photographic chemicals
  • Speciality pigments & dyes
  • Plastics additives
  • Rubber processing chemicals

The pharmaceuticals industry has been the main market for fine chemicals for many years. Because the average annual growth of pharma has always been significantly higher than that of any other fine chemicals market segment, the relative importance of pharma for fine chemicals has increased.

In 2011, the pharma segment was responsible for just over 68% of the fine chemicals market, up from 54% in 1999. Given the current growth rates of the various fine chemical market segments, it is anticipated that pharma will be responsible for some 72% of the fine chemicals market in 2016 (Figure 2).


 Fine chemicals market, 2011-2016

Source: Jan Ramakers Fine Chemical Consulting Group

Figure 2 – Fine chemicals market, 2011-2016


In the remainder of this article we will have a closer look at the status and key developments in some of the more important non-pharma market segments. Even though they are dwarfed by the pharma market, combined they offer significant opportunities to fine chemicals companies.


During the last few decades, the market for agrochemicals has seen periods of growth as well as periods of decline. To a large extent, these market fluctuations are due to fluctuations in the weather and pest incidence. In some years, farmers need more crop protection chemicals than they do in others.

The long-term trend, however, is growth. The growth of renewable energy requirements and improving crop yields are two drivers of this but undoubtedly the key one is the growth of the world’s population. As Figure 3 clearly shows, population growth has accelerated significantly since the mid-20th century.

In the 150 years between 1800 and 1950, world population increased by a factor of 2.5. It only took about 50 years for the population to increase by a factor 2.5 again. According to current UN predictions the world population will reach 9.3 billion in 2050, an increase by almost a factor of four in only 100 years.

The need for food is therefore increasing rapidly. In 13 years from now, the world will need food for 1.1 billion more people than there were in 2010, a 16% increase. In 2050, 2.4 billion more people will need to be fed, a 35% increase.

In order to be able to feed all these people, some have estimated that the world would need additional arable land the size of India. Clearly that is not available. The only other way to try to feed all those people is via the intensification of agriculture, specifically in those areas where agriculture is still done in a very traditional way.

Intensifying agriculture and improving yields is a major challenge and it seems very unlikely that this can be done without the use of crop protection chemicals. As a result, the general trend for the agrochemicals market is continued growth, although fluctuations round the trend line will occur, due to external factors like the weather.

World population growth, 1800-2050

Source: UN

Figure 3 – World population growth, 1800-2050

The long-term average annual growth rate of the agrochemicals market in the period 2000-2011 was around 3% As a result, the market is expected to grow from about $44 billion in 2011 to about $51 billion in 2016. The global market for agrochemical intermediates amounted to some $7.5 billion in 2011.


Biocides are used in a large number of applications, ranging from cosmetics to plastics, resins, paints, swimming pools, disinfectants and others. Some of the biological actives used in biocides are fine chemicals, whereas others are commodities.

Biocides are supplied to the market in the form of formulations containing one or more biologically active compounds as well as some non-active compounds that facilitate the use or application of a formulation. Examples of non-active compounds include surfactants used to improve contact between the biocide formulation and, for instance, a surface that needs to be cleaned.

In recent years, the growth of many market segments has been negatively affected by the economic downturn. Biocides have been less affected than many other segments. This is largely the result of the large-scale occurrence of new pathogenic micro-organisms in recent years, including H5N1 (bird flu) and H1N1 (swine flu) viruses. Recently H3N8, a new strain of influenza that could possibly affect humans was discovered in seals in New England and dubbed ‘seal flu’.

As a result of actions to counter the spread of those micro-organisms through increased cleaning and better hygiene regimens the consumption of biocides has hardly suffered from the economic downturn.

The value of the biocides market at end-user level is estimated at some $3.3 billion in 2011. The value of the fine chemicals used in this market is just over 60% of that total. The overall growth of the market for biocides is anticipated to be 3%/year, much the same as for agrochemicals. A key trend in this segment is the drive to reduce the number of actives in the market, which is triggered by ever stricter regulations, mainly in the EU and North America.


Cosmetics and toiletries form a large market. Its total value in 2011 amounted to an estimated $320 billion. Fine chemicals used in this market include UV-absorbers, bacteriostats, preservatives and cosmeceuticals, with an estimated combined value of about $630 million in 2011.

Fine chemicals also have many applications outside the life sciences

Fine chemicals also have many applications outside the life sciences

The higher value end of the cosmetics and toiletries segment has suffered from the effects of the recent economic downturn. The decrease in high value cosmetics has been partly offset by some additional growth in the lower value products. It should be noted, however, that this market also includes fairly basic hygiene products, which will be sold anyway and are independent of the economic cycle. Future growth is anticipated to be in line with GDP.

The total end user value of the flavours and fragrances market in 2011 was estimated at $22.5 billion. The products used in the market are normally formulations containing both commodity products and fine chemicals (usually called aroma chemicals). Some aroma chemicals are fairly simple, basic products, while others are highly complex chemical structures. The aroma chemicals market was valued at some $7.7 billion in 2011, similar to the value of agrochemical intermediates.

Food additives are very important for the production of many foodstuffs. Often foods cannot be produced or distributed in an economical way without using certain additives. Although food technology is being improved continuously, the use of additives is still essential for the production of high quality food with a satisfactory shelf life.

Food additives are strictly regulated and they cannot be used to deceive consumers about the actual character or freshness of food. Also, it is not permissible to use additives that have a negative effect on food quality.

The market is driven by developments in the food market and consumer preferences. It is hardly affected by the economic cycle. Consumption of fine chemicals in this market amounted to just over $4.5 billion in 2011.


Looking at the overall picture of the fine chemical market it is very clear that pharma is the key driver, being by far the largest segment. In addition to that however there are certainly good opportunities in other segments. Most non-pharma segments do not require products to be manufactured in (more expensive) cGMP plants. This means that those companies that have non-cGMP equipment available are in a better position to supply to those segments.