The competitive structure of the global polyethylene glycol market is analyzed on the basis of Porter’s Five Force analysis model. Impact of each of the forces or factors on the global market competition is studied by taking two perspectives into consideration. Firstly, the presence of well-established players and their influence on the market and secondly entrepreneurs or start-up firms that aim at strengthening their positions at the regional and country levels.

1. Bargaining power of suppliers

The bargaining power of raw material or ethylene glycol suppliers has been low over the recent years, owing to various factors. High level of backward integration of PEG manufacturers has resulted in reducing the dependency on precursor or raw material procurement. Commercially viable raw material alternatives for the production of PEG do not exist at present. The combined effect of backward integrated operations and unavailability of alternatives is expected to result in a lowering the profit margin for existing suppliers in the future. This, however, is likely to favor the recently established suppliers to sustain the competition. The situation is currently favorable for new suppliers, owing to low differentiation of raw materials.

1. Bargaining power of buyers

The buyer bargaining power has been mainly influenced by forward integrated business operations of prominent PEG manufacturers such as BASF SE and Dow-DuPont. The degree of forward integration has been moderate over the recent years. However, in order to strengthen market positions across the value chain more number of players are expected to penetrate or become a part of the end-user verticals, over the years ahead. For instance, the recent Dow-DuPont merger has managed to create a stir across the entire value chain, as this strategic move has benefited the merged firms in amalgamating their manufacturing and distribution expertise and has led to product portfolio diversification from raw materials to end products. This has minimized the buyer bargaining ability to a certain extent.

1. Threat of new entrants

The degree of threat of new entrants is considered to be minimal for consolidated market players while it may increase the competition for recently established players to a certain extent. However, significant barriers to entry for new players currently exist. The extensive initial investment is required to achieve economies of scale. Furthermore, brand name and value play a major role in increasing the competition for existing players, thus making it more difficult for entry. However, new entrants have an opportunity to enter the PEG market via distribution channels.

1. Threat of substitutes

Threat from substitutes has been moderate since the past few years, owing to the significant usage of ethylene glycol in the production of other derivatives. This is expected to remain low during the forecast period, owing to the higher growth of polyethylene glycol (PEG) over other ethylene glycol derivatives including tri-ethylene glycol (TEG), polyesters, and others. However, the presence of internal substitutes can increase market competition among key players to a certain extent.

1. Intensity of rivalry

The intensity of rivalry among global and regional players is expected to change from moderate to high over the forecast period. Forward and backward integration of business operations has maintained the rivalry intensity over recent years. However, business growth strategies or initiatives are taken by major players such as Dow Chemical, DuPont, BASF SE, and Lotte Chemical has resulted in market consolidation on the global platform. The recent Dow-DuPont merger is expected to further increase the competition at the creamy level. Furthermore, encouragement of such mergers is capable of shifting the trend from consolidation to monopolization.

On the basis of segmentation analysis of the polyethylene glycol market, the market is categorized into medical, personal care, industrial among others. The global market was dominated by the medical segment with a market share of more than 40% in 2018. The segment is also projected to continue its dominance primarily owing to current growth trends and increased investments in the pharmaceutical industry. Emerging economies such as China, India, Brazil among others are projected to witness incremental growth in consumption owing to several economic factors that are boosting the healthcare investments among individuals.

Polyethylene glycol, owing to its colorless, odorless, non-toxic and inert properties, makes them one of the ideal compounds to be used in several organic solvents. Polyethylene glycol has a vast number of applications in the pharmaceutical industry. It is used as a solvent base, lubricating agent, ointments, dispersing agents and delivery liquids for medication purpose. They are also extensively used as excipients for tablet binding and coating. They are used as active pharmaceutical ingredients (APIs) in cologne solutions and laxatives. Polyethylene glycol is used in toothpaste as a binding agent to keep xanthan gum uniformly distributed in the gel. Polyethylene glycol is also used as a suppository base for ophthalmic solutions and is among the primary ingredient for the treatment of constipation. PEG is also used in veterinary products where it is used to make tubes for endoscopy.

Thus, polyethylene glycol finds a wide number of applications in the pharmaceutical and medical industry. Current growth scenario of the pharmaceutical industry is emerging economies such as China will augment the demand for the product in the near future. Also, increasing demand for specialized medicines for rare disease drugs and adoption for biologics for control of diseases such as diabetes, cancer among others is projected to propel the demand for polyethylene glycol over the forecast period.

On the basis of regional analysis of the polyethylene glycol market, the market is categorized into major geographical regions Asia Pacific, Europe, North America, and rest of the world. Asia Pacific dominated the global polyethylene glycol market with a market share of >47% in 2018. Growth in healthcare expenditure in the region is expected to boost the demand over the forecast period. Current growth scenario of the food and pharmaceutical industry is further projected to augment the demand over the forecast period. Apart from Asia Pacific, Latin America and Middle East are projected to emerge as a promising market owing to rapid growth scenario of the automotive and construction sector in these regions.

Asia Pacific is home to the world’s 60% of the population, with the world’s most populous countries such as China and India. With such a varied demographic landscape, the region possesses high growth opportunities for the healthcare industry. Pharmaceutical industry alone contributes sizeable GDP share of GDP in Asia Pacific. For instance, the industry contributes to around 2% to the GDP in India. In terms of consumption, the region possesses the highest opportunities owing to several factors such as high population ratio, growing disposable income and strengthening economies of the countries. With time, as disposable income has increased in the region, consumers are willing to spend on healthcare related products.

Also, growth in the number of elder population combined health disorders due to the shift in lifestyle has also led to growth in the number of diseases. For instance, ASEAN countries such as Singapore, Malaysia, Indonesia, Vietnam, Philippines, and Thailand are facing an unprecedented rise in healthcare cost owing to an alarming increase in the rate of lifestyle disorders such as obesity. Apart from these factors, increased government spending on healthcare and subsidies on health insurance is also a key factor to drive the healthcare and pharmaceutical industry in the region. Overall, Asia Pacific region is projected to showcase a high potential for polyethylene glycol market over the forecast period rising with CAGR of 6.4% over the forecast period.