June 2017 - McIlvaine Insights 20

The pharmaceutical industry is challenged with the need for extensive documentation and control of each step in the production process. As a result the adoption of automated monitoring and control is starting to reap big benefits in terms of quality control and cost reduction. The webinar will review automation by specialists such as Emerson, Rockwell, Siemens, and Mitsubishi, but also component suppliers such as Alfa Laval with Thinktop, Thermo Fisher Finesse, Rockwell, and Mitsubishi Electric. Chemtreat is used as an example of a treatment chemicals company with a monitoring and solutions program. Chemtreat is a sister company to Hach and Pall. The ability for the the divisions to work together on processes such as single use filters is explored

The unique role of valves and pumps as the foot soldiers of IIoT will be analyzed. Schuf has a valve with multiple sensors including IR for PAT analysis. Suppliers of diaphragm valves such as Saunders and ITT have programs to provide the lowest total cost of ownership. The same is true for diaphragm pump suppliers such as Lewa .

This industry is under pressure to reduce costs. One of the chosen options has been to build generic drug manufacturing facilities in India and China. Many of the manufacturing processes are complex and require lots of domain expertise. IIoT and Remote O&M allow the major U.S. and European companies to utilize their existing experts for facility management on all continents. A marketing program using the new digital tools and focused on the top 20 pharmaceutical companies will be outlined.

Novartis is the top IIoT purchaser. They have a robust OSIsoft program which is discussed. Details are provided on some of their plants wth examples such as the toxic release of specific chemicals from each plant. A program on how to reach decision makers at Novartis and the other top chemical companies will be discussed.

Flow & Treat Marketing Programs Built Around the Top Purchasers in each Industry and the New Instant Communication Systems

Fewer purchasers are buying more Flow and Treat products. This is a result of mergers and acquisitions e.g., Dow and DuPont. Another factor of change is the move away from personal periodic to instant digital communications. Even email is playing a secondary role as users rely on more user-friendly mobile communications such as LinkedIn where the recipient can control those with whom he connects.

McIlvaine is identifying the major purchasers of each type of flow control and treatment equipment. There is a big concentration in coal-fired power (see below) where 15 companies buy more than 50 percent of the pumps. Oil and gas, mining, iron and steel, pulp and paper and certain other industries are also concentrated. Chemical companies are less dominant. Nevertheless the top 200 companies buy 39 percent of the pumps.

Top 200 Companies Purchased 39 Percent of the World's Chemical Pumps in 2016

Rank	Pump Purchases 2015 ($ millions)	Percent of Total Pump Purchases	Cumulative Total
1-10	$348	10	10
11-20	$155	4.5	14.5
21-30	$140	4.0	18.5
31-40	$106	3.0	21.5
41-50	$77	2.0	23.5
51-100	$250	7.1	30.6
101-200	$300	8.6	39.2

Some of the companies such as Sinopec are in multiple industries. As a result the top 500 flow and treat purchasers buy more than 40 percent of all the flow and treat products. McIlvaine offers several services to help companies take advantage of the purchasing concentration.

15 Coal-fired Plant Operators will Buy 50 Percent of the Flow and Treat Products and Services

Fifteen coal-fired plant operators will spend $75 billion/yr for flow and treat products and services. The top five operators will purchase over 36 percent of the total $153 billion/yr. This is the latest analysis from the McIlvaine Company based on aggregation of forecasts in a number of McIlvaine reports and databases. The products and services analyzed include those used to treat or control any gas, air, or liquid.

The No. 4 purchaser NTPC and the No. 8 purchaser Vietnam Power will be purchasing mostly for new facilities. Those utilities in China and Africa will have a mix of purchases for new and existing facilities whereas the operators in the U.S. and Europe will be spending mostly on repair and upgrades.

Company	Country	Rank	Average Annual % of Total Coal-fired Flow & Treat in the Next 5 Years	Average Annual Flow & Treat Revenues Next 5 Years ($ Billions)
AEP	U.S.	9	1.1	1.68
BWE	U.S.	14	0.6	0.92
Datang	China	3	7	10.71
Duke	U.S.	10	1	1.53
Enel	Italy	13	1	1.53
Eskom	South Africa	5	6	9.18
Guodian	China	2	7.5	11.48
Huaneng	China	1	9	13.77
Huadian	China	6	6	9.18
J-Power	Japan	16	0.5	0.76
National Thermal Power Corporation (NTPC)	India	4	7	10.71
NRG	U.S.	11	1	1.53
Shenhua	China	7	4.5	6.88
Southern	U.S.	12	1	1.53
Uniper	Germany	15	0.6	0.92
Vietnam Power (EVN)	Vietnam	8	2	3.06
Sub Total			55.8	85.37
Other			44.2	67.63
TOTAL				153

The biggest expenditures will be made for cooling, heat exchange and combustion. The air pollution control investment will be more than $36 billion/yr in a large part due to the demand in Asia. There is a very large potential to completely automate coal-fired boiler operations. The advantages are not only decreased labor costs, but much higher efficiency while at the same time meeting environmental goals. The relatively fast adoption of IIoT and Remote O&M will radically change the marketing environment and create a $42 billion/yr sales opportunity.

Flow and Treat Average Annual Coal-fired Boiler Market 2017-22
Products	$ Billions
Acid Gas (Flue Gas Desulfurization and NOx Control)	16
Particulate Control (Fabric Filters, Precipitators, Mercury)	20
Water and Wastewater Treatment including Ultrapure Water for Steam and Cooling Water	10
Fans, Pumps, and Valves, Compressors	5
Cooling, Heat Exchange and Combustion	60
Instrumentation, Automation and Third Party Remote Monitoring and O&M	42
Total	153

McIlvaine has determined that less than 300 companies purchase half the flow and treat products and services. This small number of companies and the ability to reach key decision makers at these companies is addressed in