Research, development and innovation

The roads to solutions often start as needs. The need for safer, more fuel-efficient cars. The need to protect crops. The basic needs that sustain us: clean drinking water, an adequate food supply and decent housing. Our aim is to find better solutions through science and technology, combining the power of chemistry with the Human Element in a way that delivers long-term value to our stockholders.

For example, during 2007, we signed a corn technology cross-licensing agreement with Monsanto aimed at launching SmartStax™. SmartStax will provide the broadest spectrum insect protection and weed control technology available to farmers, through the first-ever eight-gene stack offering from Dow AgroSciences and Monsanto.

Dow AgroSciences also announced Dow Herbicide Tolerance technology, an innovative new family of traits that provides tolerance to multiple classes of herbicides in different crops and offers farmers a wider choice of weed-fighting products.

Also in 2007, we launched Dow’s RENUVA™ Renewable Resource Technology, which uses soybeans to make natural oil-based polyols that can be used to manufacture foams for furniture, carpet and bedding applications that are virtually odor-free. The technology consumes around 60 percent less fossil fuel resources than conventional polyol technology and is greenhouse gas neutral.

And Dow Building Solutions unveiled a next-generation foaming technology, enabling it to manufacture STYROFOAM™ insulation products with a zero ozone-depletion factor and to significantly reduce Dow’s greenhouse gas emissions for North America.

During the past decade, our research and development (R&D) spending has increased by around 30 percent in real dollar terms. It is an investment that is paying dividends: in those same 10 years our project pipeline has doubled from a net present value of $5 billion to about $10 billion; in 2007, 34 percent of Dow’s sales were from products introduced in the past five years; since 2004, patent disclosures have more than doubled (from 411 in 2004 to almost 1,100 in 2007); and last year Dow was ranked one of the 10 best global R&D companies by R&D magazine.

With more than 350 large projects currently in the development pipeline, and with major new R&D facilities now being built in Shanghai, China, and Pune, India, that in-house success is set to continue. But innovation doesn’t just occur in our own labs.

Taking the philosophy of the Human Element beyond the boundaries of our Company, we also partner with universities, government institutions and members of the scientific community around the world to develop new ideas and technologies. In 2007, for example, Dow issued a challenge to researchers to develop an effective way to convert methane into chemical feedstocks without using costly synthesis gas processes. To encourage this research, Dow will award grants of approximately $1 million to $2 million annually, for three years.

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™Smartstax is a trademark of Monsanto Company.