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Future-Proofing Your Portfolio: Why Chemical R&D Spending Matters

Avery Sinclair in Business & Economy December 2025 • 4 min read.

"Navigating economic uncertainty and political shifts: A closer look at chemical industry investments and innovation."

In 2016, capital investments and research and development (R&D) expenditures experienced a significant downturn. This decrease was largely attributed to widespread economic instability, ongoing political changes, and a concentrated effort to bolster earnings in response to sluggish global economic expansion.

Many chemical manufacturers opted to scale back their financial commitments to both research initiatives and the construction of new facilities and procurement of advanced equipment.

C&EN's annual survey of R&D spending reveals that a group of 19 major U.S. and European chemical companies collectively reduced their research investments by 5.2% in 2016, bringing the total down to $9.7 billion. This decline follows a slight increase of 0.4% in 2015, when these firms allocated $10.3 billion to R&D.

The Ups and Downs of R&D Investment: A Decade in Review

Futuristic lab with glowing beakers representing chemical industry innovation.

The long-term perspective on R&D spending reveals a nuanced picture. After accounting for inflation, the research spending of 18 companies (excluding Evonik Industries due to data limitations) saw a marginal increase of just over 1% over the past decade. Without adjusting for inflation, the increase was nearly 21%.

Despite an overall decrease in sales for the group in 2016, the proportion of company sales allocated to R&D actually rose to a decade-high of 3.5%. Historically, this figure tends to hover around 3%.

Capital spending cuts: Capital spending also took a hit in 2016, with the 19 firms reducing investments in new plants and equipment by 15.3%, to $18.6 billion. This followed a more modest 3.3% reduction in 2015.
Decade High: Capital outlays for the group had reached a decade-high of $22.7 billion in 2014 but plunged to a decade-low of $12.1 billion in 2009 during the Great Recession.
R&D Budgets Protected: Research budgets accounted for 34.5% of total future-oriented spending last year for the 18 companies tracked by C&EN. The decade high was 41.1% in 2009 during the economic slowdown, when managers slashed capital spending but protected R&D budgets.

It's worth noting that fewer companies are willing to provide R&D spending estimates, making projections challenging. Instead, C&EN is offering short profiles of the chemical industry's top five R&D investors, providing insights into their future-oriented spending plans and strategic decisions.

Strategies for Growth: Key Players in Chemical R&D

Despite the overall downturn, some companies are maintaining or even increasing their R&D investments, signaling a belief in the power of innovation to drive future growth.

BASF, for example, integrates digital technologies into its research process, using computer modeling to predict chemical properties and collaborating with tech giants to speed up research. 3M focuses on a steady stream of inventions in healthcare, electronics, and energy management.

Even amidst significant restructuring, DuPont continues to invest in agricultural research and technology, partnering with universities to shape the future of agriculture. These strategic investments highlight the critical role of R&D in navigating economic uncertainty and driving long-term success in the chemical industry.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: 10.1021/cen-09516-bus1, Alternate LINK

Title: A Down Year For Future-Oriented Spending

Subject: General Medicine

Journal: C&EN Global Enterprise

Publisher: American Chemical Society (ACS)

Authors: Marc S. Reisch

Published: 2017-04-17

Everything You Need To Know

How did economic conditions in 2016 affect research and development spending in the chemical industry?

In 2016, the collective research investments of 19 major U.S. and European chemical companies decreased by 5.2%, resulting in a total of $9.7 billion allocated to research and development. This downturn followed a slight increase of 0.4% in 2015, during which these firms invested $10.3 billion in research and development. This shift reflects an industry-wide reaction to economic headwinds and strategic realignments.

What happened to investments in new plants and equipment by major chemical companies in 2016, and how does this compare to previous years?

Capital spending experienced a significant decrease in 2016, with the 19 firms reducing their investments in new plants and equipment by 15.3%, amounting to $18.6 billion. This decline followed a more modest 3.3% reduction in 2015. It is worth noting that capital outlays for the group had reached a decade-high of $22.7 billion in 2014 but plunged to a decade-low of $12.1 billion in 2009 during the Great Recession. The trend of investment levels reflects the sensitivity of capital expenditure to broader economic cycles.

How did the proportion of company sales allocated to research and development change in 2016, and what does this reveal about industry priorities?

Even though there was a decrease in overall sales for the group in 2016, the proportion of company sales allocated to research and development actually increased, reaching a decade-high of 3.5%. Historically, this figure has tended to hover around 3%. This indicates that, despite revenue challenges, companies prioritized research and development, recognizing its long-term importance.

What percentage of future-oriented spending was allocated to research and development budgets, and how does it compare to spending during the 2009 economic slowdown?

Research and development budgets accounted for 34.5% of total future-oriented spending last year for the 18 companies tracked by C&EN. The decade high was 41.1% in 2009 during the economic slowdown, when managers slashed capital spending but protected research and development budgets. This demonstrates a strategic prioritization of research and development during times of economic uncertainty, with managers willing to cut capital spending to maintain research efforts.

Were there any chemical companies that defied the trend of reduced research and development spending, and what does this indicate about their strategies?

Despite the general trend of reduced spending in 2016, several chemical companies maintained or even increased their research and development investments. This decision reflects a strong belief in the power of innovation to drive future growth and highlights the varying strategic approaches within the industry.