Chemical Licensing Market size is forecast to reach $15.85 billion by 2025, after growing at a CAGR of 4.87% during 2020-2025. Chemical licensing includes supplying producers with patented technology for conducting any oil & gas-related production processes or activities. The Licensing of chemical products ensures equipment used in industrial processes is safe and environmentally friendly. Increasing the population, expanding the manufacturing sector, and rising regulatory requirements in the chemical industry are expected to be key factors driving growth in the demand for chemical licenses which will accelerate the growth of the chemical licenses industry in the forecast era.
By Type – Segment Analysis
C2 Derivative is widely used in Chemical Licensing Market. Polyethylene and EDC-PVC manufacturing technologies are in high demand such as the use of polyethylene in applications ranging for films, tubes, plastic parts, and laminates, and also the use of ethylene dichloride (EDC) as a solvent in the textile, metal cleaning, and adhesives industries. To reduce emissions and declining in the case of perchloroethylene, solvent markets tend to be mature due to environmental pressures. Hence, this will be reflected in driving the C2 derivatives segment. Also, C2 derivatives are widely used in different industrial sectors such as automotive, display, battery, detergent, bath-items, IT, fiber, and construction applications. Due to these advantages, C2 derivatives are anticipated to boost the market in the forecast period.
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By End Use- Segment Analysis
The chemical industry held the largest share in the Chemical Licensing Market in 2019 and is projected to grow at a CAGR of 5.22% during the forecast period 2020-2025. The chemical industry plays a crucial role in the manufacturing sector’s economic growth and development. In the chemical sector, the value-added is higher than most of the other industry sectors. Also, chemical companies are using licensing in bulk organic chemicals and petrochemicals as an important means of generating revenue from process innovations. Petrochemical products today permeate the entire spectrum of daily use items and cover almost every sphere of life such as clothing, housing, construction, furniture, automobiles, household goods, agriculture, horticulture, irrigation, packaging, medical appliances, electronics and electrical and many others. Due to the vast use of petrochemicals, the need for chemical licensing in the chemical industry will enhance in the forecast period.
Geography- Segment Analysis
Asia Pacific held the largest share with 31% in Chemical Licensing Market in 2019 due to the high refinery capacities of China, India, South Korea, and Japan and the need for advanced sustainable and eco-friendly production technologies. Owing to rapid industrialization and the growing number of manufacturing industries is also increasing in demand among the developing countries, such as India, China, and Thailand. The oil and gas sector is among the eight core industries in India and plays a major role in influencing decision making for all the other important sections of the economy. India’s economic growth is closely linked to the demand for energy; hence the need for oil and gas is projected to rise further, making the sector very conducive to investment. According to the India Brand Equity Foundation, India had 4.5 thousand million barrels of proven oil reserves at the end of 2018 and produced 39.5 million tons in 2018. As of Apr 01, 2019, India had a crude pipeline network of 10,419 km, with a capacity of 145.6 mmtpa. The Government of India has even adopted several policies to fulfill the increasing demand. Indian Government is also taking initiatives such as planning to set up around 5,000 compressed biogas (CBG) plants by 2023 which will drive the market in the forecast period. Also, according to the International Energy Administration, China had high oil and gas imports in 2018 and remains the world’s number one importer of crude oil since surpassing the United States in 2017 and is the number two importer of natural gas, behind Japan.
Drivers –Chemical Licensing Market
Increasing use of licensing in pharmaceuticals
The distinctly growing value of licensing in the pharmaceutical sector has been observed for more than 10 years. The number of licensing agreements signed each year covering pharmaceutical innovations has grown even more rapidly than the pharmaceutical industry’s global turnover; so that it seems worthwhile to look closely at the reasons for the licensing activities in the pharmaceutical sector, the more so because, in other areas of technology, perhaps except software-related innovations, the disparity between the growth of the respective industry’s overall worldwide turnover and the rise in the number of licensing agreements concluded annually seems to occur smaller. According to the India Brand Equity Foundation, India is the largest global manufacturer of generic drugs. Indian pharmaceutical industry provides more than 50 % of global demand for different vaccines, 40% of US generic demand, and 25% of all medicines in the UK. Owing to which the increasing use of licensing will increase in the forecast period.
The growing need for chemical licensing in the oil & gas industry
Due to the rising demand, continuous innovation in the oil & gas industry is one of the main factors driving the growth of the market for chemical licensing. Chemical licenses for new plant installations are necessary and are an integral part of the oil & gas industry. According to the Republic of Azerbaijan’s Law, “On Licenses and Permissions” of 15 March 2016 (“Law”), such oilfield operations carried out in potentially dangerous premises can require explicit authorization such as statutory permits and licenses. The aim of state control over oil and gas operations is to ensure that companies are technically eligible and trained to carry out oilfield services to the fullest.
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Challenges –Chemical Licensing Market
Risks of Licensing
A licensee may become a competitor to the licensor. The licensee can ‘cannibalize’ the licensor ‘s sales, resulting in the licensor gaining less from royalties than it loses from sales going to its new competitor. The licensee may be more competitive or come onto the market earlier than the licensor because it may have fewer production costs or maybe more effective. Also, the licensee can unexpectedly request contributions, such as technical assistance, personnel training, additional technical details, etc. All of this can just be too expensive for the licensor. It is important that the license agreement clearly defines the parties’ rights and responsibilities, so any future disagreements can be resolved quickly and effectively.
Technology launches, acquisitions, and R&D activities are key strategies adopted by players in the Chemical Licensing Market. In 2019, the market of Chemical Licensing Market has been consolidated by the top five players accounting for xx% of the share. Major players in the Chemical Licensing Market are Exxon Mobil Corporation, Chevron Phillips Chemical Company, Eastman Chemical Company, Huntsman Corporation, Johnson Matthey, Mitsubishi Chemical Corporation, Nova Chemicals Corporation, and Sumitomo Chemical among others.
In May 2018, ExxonMobil Catalysts and Licensing LLC and BASF Corporation had signed a partnership agreement to jointly develop new gas treating solvents and process technologies to be used in the production of natural gas and oil refining. Under this new arrangement, BASF, along with FLEXSORBTM and OASE technologies, developed market and license technologies developed out of this partnership.
The Asia Pacific dominates the agriculture lubricants market as the increasing use of agricultural lubricants has established comfort and convenience in the use of farm equipment and machinery.
Increasing demand for carbon by-products from various industries and the technical developments for their growth.
Continued R&D initiatives on the part of the industry are expected to fuel growth by raising their quality standards to achieve higher yields resulting in lower production costs and gaining a competitive edge in the international market.
Chemical permits are to be given according to risk, conventionally defined as hazard exposure, and are likely to be prohibited with low economic values, and most developed and developing countries are investing heavily in ensuring the quality of chemical production.
COVID-19’s effect and the battle over oil prices are proving to be a two-pronged challenge for oil, gas, and chemical firms. In the wake of this global pandemic, oil prices are dropping due to failed agreements on production cuts and the demand for chemicals and refined products is slowing down from industrial slowdowns and travel constraints.
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