‘Internal Company Culture’ Biggest Barrier To Innovation, Says VCI

2015-09-14-vci-innovationsstuide-podium-01-sps1937-482x322-bild-grossWhat strengthens, what hinders innovation in the chemical industry? – From the right: Marijn Dekkers, President of VCI, Utz Tillmann, director-general of VCI and Juan Rigall (Santiago) presented the new study « Pave the Way for Innovation ».

Complexity of regulation also important

“The innovation culture inside companies is the “largest hindrance” to innovation, according to a study by the German chemical industry association (VCI).
The study is based on a survey of nearly 200 VCI member companies and 70 interviews with “experts, customers and cooperation partners from science”.

It found that such firms suffer from:

• an overly large number of projects;
• company internal bureaucracy; and
• long decision paths.

But there are external hurdles “more or less to the same degree”, says the VCI. Most of the companies said regulations are more complex in Germany than in other countries. In particular, resource-intensive licensing and approval procedures for chemical products put an excessive strain on SMEs and on the pharmaceutical and pesticide sectors.

The VCI says that of the external barriers facing German firms, “regulation and bureaucracy weigh considerably more than other issues, such as labour bottlenecks, financing, and public acceptance.

« In terms of significance, REACH ranks second behind the burden posed by notification, licensing and authorisation procedures in general.”
This, it says, is because all chemical companies are affected by REACH, with smaller firms affected the most.

The association says REACH also makes innovation more difficult. Just under half of the respondents experienced « impairments » because of the associated costs and staffing burden.

Asked if the study also considered whether REACH provides any positive drivers for innovation – such as the way it sets equally detailed information requirements for existing substances as well as for new ones – the VCI told Chemical Watch it is too early to judge whether the Regulation contributes positively to innovation and the competitiveness of the European chemical industry.

But “up to now, not many positive effects on innovation were observed stemming from REACH. It is more of the opposite … for SMEs, the development of new substances is severely impeded by the high costs and the considerable need to allocate expert time for filing a REACH dossier.”

Speaking at the study’s launch last month, VCI president Marijn Dekkers said many people see the chemical-pharmaceutical industry as a sector that creates problems instead of solving them. Therefore the industry must convince people that it creates innovative products for solving problems. One way to help build a culture of trust, he said, would be to appoint a chief scientific adviser to the federal government and parliament. Dr Dekkers did not, however, mention REACH in his speech.

The association says the 2012 European Commission study on the impact of REACH on the chemical industry’s ability to innovate « demonstrated some concerning developments ».

These, it says, include:

• shift of personnel from R&D units to regulatory/compliance units;
• lack of sound business planning due to uncertainties in the authorisation procedure;
• an increased time to market; and
• insufficient protection of CBI.

The interim report, published earlier this year, on a Commission follow-up study, says the VCI, “highlights that REACH has increased the time to market and that at least temporarily R&D personnel is allocated to regulatory work”. These findings were confirmed, it said, by its own study.

However, the European Environmental Bureau questioned the validity of the Commission’s study on the grounds that it was based only on a survey of chemical companies.”

Article by Geraint Roberts
VCI press release : https://www.vci.de/vci-online/presse/pressemitteilungen/strengthen-the-innovation-culture-in-chemical-companies-and-reduce-bureaucracy-new-study-by-iw-consult-and-santiago.jsp

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