Bayer has been one of the legacy players in plastics technology, but its interest has been waning.
The future of plastics as part of the future of Bayer AG has been in question since 2003, when it was announced that the company’s business would be divided into independent entities called Bayer CropScience, Bayer HealthCare, and Bayer MaterialScience. Most of the company’s low margin chemicals and polymers (including some engineering plastics) were bundled into a new company called Lanxess, which went through significant restructuring after being spun off in 2005.
In a pre-K press conference in New York in 2004, Bayer said that innovation was a key to the future of Bayer MaterialScience, which held market-leading positions in plastics built around phosgene chemistry: polyurethane and polycarbonate. Specific developments mentioned at that press conference were luminescent films, weight-saving composites, self-cleaning plastics, nanoscale functional additives, smart polymer surfaces and mass customization.
Ten years later and the focus at BMS is still very much on the slow-growth and moderately profitable polycarbonate and polyurethane businesses. Plastics, considered wonder materials in the 1960s, are now boring to the global investment community despite their solid and increasing role in lightweighting transportation, improving medical care, enabling miniaturization in the electrical/electronic marketplace, and so on.
One notable stumble at Bayer MaterialScience was its effort to take a leadership position in the nano field. In 2007, Bayer said that nanotechnology and carbon nanotubes specifically were the future of materials science. Significant investments were made. Last May, Bayer announced its exit from the carbon nanotube field as it became clear that significantly more investment and patience would be needed for a potential major commercial payoff. Plus it appeared that BMS was being outflanked by competitors in Belgium, Japan and China.
At that moment, I wonder if Bayer AG also decided it was time to move on from the plastics business and focus more on the pharmaceutical business.
The New York financial media (Bloomberg especially) have been widely reporting today that Bayer pitched BMS to Evonik, which is reported to have taken a close look and then backed off. Other matches are under investigation, according to the reports.
Of course, nothing really new here. The biggest development in this area in North America came when General Electric decided to sell its engineering plastics portfolio in 2007. Dow offloaded much of its plastics business as well.