\ Innovation trend commentary /

In this series, we will introduce the themes and ventures that were taken up in each morning pitch, and send out information that contributes to Japanese innovation.

This issue features materials and chemistry, which was held on March 7th.

The combined sales of the world's top 50 chemical manufacturers are trending steadily

First, let us explain what the materials and chemical industry is. The materials and chemical industry provides the basic materials necessary for food, clothing, and shelter, through the creation of basic chemicals, intermediates, and derivatives from raw materials such as crude oil, minerals, and plants. For example, familiar products include food additives and pesticides in the food and agriculture sector, and textiles and detergents in daily necessities. The industry is the source of products that are indispensable in our lives, and is involved in a wide range of industries.

This time, we will introduce the sales trends of the world's top 50 chemical manufacturers. Although overall sales declined at one point due to rising crude oil prices and the impact of the COVID-19 pandemic, they have been growing steadily since 2020, with total sales expected to reach $1.2 trillion in 2022. The average annual growth rate over the past five years has been 6.6%. It is an industry that is expected to continue to grow in the future.

Japan's materials and chemical industries account for more than 20% of the country's gross domestic product (GDP), making it a very important industry. Looking at the positioning of Japanese chemical products in the global industry, we can see that functional chemicals such as semiconductor materials and organic electroluminescence materials occupy a high share of the market.

On average, it takes more than 10 years to mass-produce a product.

Japan's chemical industry maintains strong competitiveness in the functional chemicals field, but at the same time, it faces challenges such as "time to commercialize a product" and "large capital investment." On average, it takes more than 10 years to reach mass production, and capital investment ultimately reaches several billion to tens of billions of yen. For startups, the financial burden of emerging in the materials and chemicals industry is so great that there is an increasing trend to pursue growth strategies through collaboration with multiple companies.

Here is an example of a startup that expanded its business through collaboration with a major chemical manufacturer and achieved an IPO. The company, which develops processes using electromagnetic waves used in microwave ovens, overcame the characteristics of electromagnetic waves that make them difficult to control and a high hurdle for industrial use. The company expanded its business through projects and the establishment of joint ventures with multiple major companies.

Cosmetics made from non-edible biomass

Generally, edible materials such as corn and sugarcane are used as biomass, but a startup developing chemical products using biomass as a raw material is working on a joint project with a cosmetics manufacturer using non-edible raw materials. Specifically, they have succeeded in developing a new fermented ethanol using poplar wood chips as a raw material, which is being put to practical use as an environmentally friendly cosmetic ingredient. By implementing such projects, they have expanded their business and achieved an IPO.
As described above, for materials and chemical companies, it is extremely important not only to have customers who use the products they produce, but also to have companies that cooperate in building production technologies.
This time, we will introduce five companies from the fields of basic chemicals, intermediates, solutions, mobility/building materials, and daily necessities.

Earthquake-resistant reinforcement material that can withstand shaking equivalent to that of the Great Hanshin-Awaji Earthquake just by applying it.Aster Co., Ltd.)

Aster offers a water-based paint containing glass fiber that can be applied to reinforce earthquake resistance. Just apply a thickness of about 1 mm like regular paint to strengthen stone or brick walls, and tests by the Japan International Cooperation Agency (JICA) have shown that the paint can withstand shaking equivalent to that of the Great Hanshin-Awaji Earthquake. In addition, by combining knowledge of numerical analysis and earthquake engineering, it is possible to understand structural risks. Currently, the company is conducting business in the Philippines and Taiwan, but plans to expand to areas prone to earthquakes in the future.

Photocatalytic technology for air purification and food waste prevention (KaltechCorporation)

Kaltech Corporation is purifying the air and reducing food waste by decomposing organic matter using photocatalytic technology. For example, in a bread storage experiment, it was found that when a photocatalytic module was placed in the same container, mold did not grow even after three weeks. A demonstration in a mandarin orange warehouse also showed that freshness was maintained. There is a possibility that it can contribute to solving food waste. These achievements have been recognized and the module has been introduced in approximately 50,000 places, from hospitals, nursing homes, and restaurants to ordinary homes. In the future, the company will collaborate with manufacturers to develop modules and provide them for air purifiers and refrigerators.

A new material made from recycled composite plastics (esa Co., Ltd.)

esa uses its own technology to provide a new material called "Repla" made from recycled multi-layer plastic. It has achieved high added value, including a high processing capacity of 500-700 kg per hour with its mass production machines. It has already collaborated with Shimojima to develop plastic bags made from Repla, and it has been decided that Repla will be used as part of the components for a wheelchair manufacturer. In the future, after increasing production in preparation for full-scale operation of the model factory, it will establish a licensing business with industrial waste disposal companies and increase the number of Repla manufacturing plants nationwide. In the long term, it also aims to expand overseas.

Propylene (iPEACE223 Co., Ltd.)

iPEACE223 owns the technology to produce green propylene using bioethanol as a raw material. Propylene, a basic chemical, is used in many chemical industries, and because it is derived from petroleum resources, it emits a lot of CO2 during production. In contrast, iPEACE223's technology uses a zeolite catalyst to produce propylene at lower temperatures and normal pressure than existing reactions. This reduces CO2 emissions by 60-70% compared to conventional methods, and the company aims to enter the green LP gas market.

A materials data platform that dramatically improves business efficiency (Sotas Co., Ltd.)

Sotas provides a materials data platform that dramatically improves the operational efficiency of companies that handle chemical products. It has three platforms: an environmentally friendly production inventory management and ordering system, as well as a database and a research system, and is characterized by its easy-to-use UI and linkages between services. In the future, it will expand its services through introduction to major chemical manufacturers and alliances with trading companies and banks. Since there are no major digital services in the chemical industry, it will advance the digital transformation of the industry through its materials data platform.

Looking at the domestic industry by industry, the amount of CO2 emitted by the chemical industry is second only to the steel industry. In order to achieve carbon neutrality, which means virtually zero greenhouse gas emissions, it is important to promote efforts that do not rely on fossil resources and to actively use biomass and recycled materials. As global competition over decarbonization intensifies, the further rise of materials and chemical startups through accelerating collaboration with large companies is essential for Japan to gain an advantage in the competition.

▼Theme Leader Profile

Deloitte Tohmatsu Venture Support Co., Ltd.

Industry & Function Division

Kazuko Sato

After graduating from graduate school, he gained experience in research and development and business development at a Japanese manufacturer. After that, he worked at a materials and chemical venture capital firm and an in-house think tank, before working on business development and collaboration with large corporations at a cultured meat startup. In his current position, he is involved in projects such as supporting new business creation and building innovation ecosystems at large corporations, mainly in the deep tech field.

-For those who want to catch up on innovation trends on a regular basis-

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In Morning Pitch, we will explain the outline of each theme as described above.

We deliver materials and videos only to paying members.

　Explanatory material ...Morning Pitch paid member

Explainer video ...Morning Pitch Innovation Community (MPIC) member

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