Industrial Gases R&D and Innovation Are we investing enough? Nigel Lewis – Spiritus Group gasworld...
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Transcript of Industrial Gases R&D and Innovation Are we investing enough? Nigel Lewis – Spiritus Group gasworld...
Industrial Gases R&D and InnovationAre we investing enough?
Nigel Lewis – Spiritus Group
gasworld Conference Budapest - May 2015
2
Profile
• 25 years with The BOC Group and The Linde Group– BOC
• Business Manager Packaged Gases, Benelux• Commercial Director, UK• Managing Director, Indonesia• Marketing Director, Global Bulk and Onsite gases• Group M&A Director
– Linde• Head of Strategic Marketing, Bulk Gases• Head of Product Management, Merchant & Packaged Gases
– Spiritus• Consulting projects
3
Spiritus consulting projects
For industrial gases clients
• Detailed review of global R&D programmes and expenditure
• Review of supply and demand for bulk gases across key European markets
• Global 5-year forecast for small onsites business by region and application
For suppliers to the industry
• Demand forecast for cryogenic tanks and tankers by region and customer
• Demand forecast for ASUs by region
• Demand model cylinders
4
R&D spending : a caveat
• Reported R&D spending by industrial gas companies is net of grants received from Government-backed programmes
• There is significant grant-funding in the USA and to some extent in the EU
• This will tend to understate actual levels of R&D spending and the impact may be greater for Praxair and Air Products than for Linde and Air Liquide
• Nonetheless the numbers reported are what shareholders and analysts see!
5
Industrial Gases R&D spendGlobal leaders
2010 2011 2012 2013 2014 -
100
200
300
400
500
174 186 188 186 187
94 98 101 92 106
60 65 76 74 72
87 85
98 101 106
€ million
415434
463 453471
6
Share of R&D expenditure vs share of sales 2010-2014
Air Liquide Linde Praxair Air Products
32% 33%
19%16%
41%
22%
16%
21%
% Sales 2010-2014
% R&D 2010-2014
7
R&D trend has been constant as % sales
2010 2011 2012 2013 2014
1.2%
0.6%
0.8%
1.4%
1.0% 1.0% 1.0%0.9% 1.0%
1.6%1.5%
1.6% 1.6%
R&D spend as % sales
Linde
Praxair
Air Liquide
Air Products
Industry average
CEFIC chemicals average
8
Why so low?
• Very few ‘breakthrough’ technologies
• Patent protection for applications hard to enforce
• Growth historically driven by M&A, geographic expansion and productivity
9
Advantages of global reach
• Can focus R&D where critical mass exists
• Where innovation is encouraged by local market conditions– Eg LNG/CNG Sweden and Australia
• Spending is amortised over a global market
10
Patent Filing Trend
2010 2011 2012 2013 20140
50
100
150
200
250
300
350
232 235
269 263 260
301332
316 321
287
LindeAir Liquide
Typically 50% of patents relate to
core business
11
Approaches towards R&D have shifted
Past Today
Resources deployed In-house Mix of in-house and broad networks of external collaborators
R&D centres Single major centre – perhaps split gases-engineering
Satellite centres closest to global experts
Collaboration Customers and suppliers Academics, government, research institutes as well
Funding Self funding + some gov’t grants
Multi-participant programmes ; venture capital
Description R&D Innovation; open innovation
12
Linde R&D trend – Gases vs Engineering
2010 2011 2012 2013 20140%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
EngineeringGases
13
Broader range of R&D activities
Gas app
s50%
Plant Eng.25%
Other25%
R&D spend past
Gas apps 25%
Plant Eng. 25%
Healthcare 15%
Hydrogen energy 15%
Other energy
10%
Other incl electron-ics 10%
R&D spend present
14
Innovation is the key theme
2010 2011 2012 2013 20140
50
100
150
200
250
300
Example: Air Liquide R&D and Total Innovation expenditure (€m)
Other InnovationR&D
Broader innovation networks
Major R&D centre gases
Major R&D centre
engineering
Satellite gas applications
centres
University researchers
Industrial Customers
Suppliers
Venture CapitalGovernment Programmes
Licensing in and out
Think tanks
Hospitals + Medical
Research Centres
Internal network
External network
Example: Air Liquide ‘more than 60% of R&D projects were conducted as part of public-private partnerships in 2014
Competitions
15
16
Current innovation themes
• Productivity
• Cylinders
• Energy
• Healthcare
17
Innovation - productivity
• Plant efficiencies– Turbomachinery– Cold box optimisation– Steam reformer process
• Supply chain– Dynamic scheduling– Tank optimisation– Asset tracking
18
Core innovation business themes merchant gases
• Customer-focused packages– Lightweight– Integrated valves and regulators– Smart displays and alarms– Connected– Ease of use
19
ENERGY
• CO2 use and capture from coal gasification / power station projects
• Energy from waste– Biogas– Electricity
• LNG• Enviro-friendly H2
production
• Hydrogen storage technologies
• Liquid Air for energy storage
Production Storage Distribution
• H2 refuelling• LNG and CNG
distribution– Fleets– Ships– Industrial
20
Healthcare
• Respiratory medicine– Sleep apnoea– Chronic respiratory disease– Neonates
• Mobile cylinders and smart cylinders• Remote monitoring of patient / telemetry• Centres for respiratory care• New applications for medical gases• Infusion therapies
21
Conclusion
• R&D is just one component of innovation• Internal R&D spending as % sales is stable and
likely to remain so• Innovation spend has shifted from gas
applications and engineering to include growth platforms – current and future
• Innovation networks are more broadly spread and complex – but potentially much more supportive of growth!
Thank You
www.spiritusgroup.com