Corona pandemic, supply bottlenecks, skyrocketing prices for energy and raw materials – despite these challenges, the chemical and life sciences industry can look back on a successful 2021. But material shortages and supply chain volatility continue to increase. find out how chemical and pharmaceutical companies will still be on track for success in 2022.
In almost all product areas, the chemical and pharmaceutical industry in germany was able to shine last year with a strong balance sheet – not only with the vaccines against the corona virus and other biotechnology preparations developed in record time. According to the German chemical industry association (VCI), production in 2021 increased by 4.5 percent compared to the previous year, while sales rose by 15.5 percent to around 220 billion euros.
industry expects sales to increase by 5 percent in 2022
"our industry has withstood many headwinds and achieved a remarkable result," says VCI president christian kullmann, rightly pleased. The main reason for this, he says, was the growing global demand for chemicals, but also for vaccines and medicines produced in Germany. That’s why the umbrella organization expects the industry to continue to develop positively in the coming months, with sales up by a further 5 percent.
In the life science sector, rapid research and development of new vaccines and drugs was just the first step. Now more than 7 billion people worldwide need to be vaccinated. This can easily push manufacturers’ production capacities and logistics chains to their limits.
It’s good that data-intensive industries like pharmaceuticals are already well on the way to digital transformation. Today, 18 of the world’s 20 largest vaccine manufacturers already manage their production facilities with SAP solutions that cover all processes from manufacturing and controlled distribution to vaccination and vaccine follow-up.
shortage of raw materials is becoming a stress test for the industry
But in other areas, the challenges are also growing in 2022: although there is no shortage of orders for chemical and pharmaceutical companies, bottlenecks in precursors and logistics are increasingly causing them trouble. As a result, 35 percent of companies have already had to cut production, and 10 percent have even temporarily shut down their plants.
There are various reasons why the procurement of raw materials is becoming an ever greater task for chemical and pharmaceutical companies, despite sophisticated logistics, worldwide networking and a largely globalized economy. Increasing protectionism, politically unstable situations in the producing countries, a growing concentration of suppliers and, most recently, the pandemic effects on world market trade are the reasons for this development.
In addition, the issue of sustainability is becoming increasingly important in the procurement of raw materials. In the future, the packaging, clothing, and automotive industries, for example, will select their suppliers from the chemical sector not only on the basis of quality and price, but also on the basis of the carbon footprint of their products.
consider the carbon footprint of products from the outset
This depends on the one hand on the greenhouse gas emissions that occur directly during production, use and disposal, and on the other hand on the climate effects of purchased raw materials and services. Accordingly, the industry is still struggling to determine the full carbon footprint of its products.
This doesn’t have to be the case: with the help of powerful development and analysis solutions from the cloud, all sustainability information can be reliably determined. And already at an early stage of product development. The advantage: using simulations, CO2 emissions can be predicted and optimized throughout the entire manufacturing and transport chain under various conditions. An important aspect of scoring points in competition.
Another aspect is ensuring the global marketability of chemical and pharmaceutical products as early as the development stage. This requires, for example, full transparency on approved ingredients in individual countries. i am firmly convinced that chemical and pharmaceutical companies will no longer be able to operate successfully in the future without incorporating the various sustainability dimensions into their processes.
Agile production as the key to business success
Cloud-based planning solutions pave the way to greater transparency in sales, production and financial planning. With the help of business intelligence (BI), chemical and life sciences companies can optimize their inventory levels, create highly accurate forecasts, and prioritize requirements quickly and on an order-by-order basis in the event of supply bottlenecks. This also allows short-term shortfalls to be compensated for ad hoc.
In addition, external partners such as suppliers, contract manufacturers or logistics service providers can be seamlessly integrated into internal planning and purchasing processes with the help of industry networks. This is another trend that will gain momentum in 2022. Companies that are closely networked with their suppliers not only have an overview of their own processes, but also know what is happening at their suppliers’ sites. This enables them to produce more agilely and at lower cost.
This is one of the reasons why the automotive industry has taken the initiative catena-X which will rapidly gain in importance in the coming years, especially for the chemical industry as an important supplier to the automotive industry. The pan-european industry network enables participants in the automotive value chain to collaborate efficiently across companies via their own powerful, secure and trusted data infrastructure for europe (GAIA-X).
SAP NOW: recipes for success in the chemical and pharmaceutical industry
I will be discussing the recipes that will enable the next steps in the digital transformation of the chemical and pharmaceutical industry, how SAP customers are already benefiting from this today, and what will be important in 2022 at the 08.02.2022 at this year’s SAP NOW with various industry experts.
At the digital industry talk chemicals& life sciences at 3 p.m., the main challenges and IT trends for the chemical and life sciences industry will be discussed. Don’t miss out and get your free ticket now! To register
Already on 7. February 2022 at 10 a.m. alex klager, SAP’s head of central and eastern europe, and germany’s best-known tech investor frank thelen will talk about cross-industry transformation challenges and revolutionary technology trends in the special opening talk. You should not miss this either.
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