By definition, fine chemicals are complex, pure substances produced under exacting specifications. These chemicals stand as a middle-man between the other two subdivisions of the wider chemical industry, with commodity chemical manufacturers serving as supplier on one side, and specialty chemical manufacturers serving as customer on the other. The differences between commodity, fine, and specialty chemicals can be likened to the differences between commodity crops like rice, delicacies like caviar, and Michelin star dishes: commodity chemicals are produced on a large scale for low prices, fine chemicals are manufactured in much smaller amounts sold for much higher prices, and specialty chemicals are compounds of fine and commodity chemical “ingredients” mixed together in specific proportions to serve one specific purpose.

The majority share of the fine chemicals industry is devoted to the life sciences, with pharmaceutical active ingredients comprising approximately 60% of the total market share and agrochemicals accounting for another 20%. The final 20% of the market is widely diversified, including food and beverage ingredients and electronic chemicals. Companies in this industry must be diversified and flexible; when products are manufactured in very limited quantities, a large portfolio of offerings is necessary to remain competitive. Partially because of the rigor in the FDA’s approval process, innovation in fine chemicals looks primarily at operating procedures and developing new formulations of existing products to decrease expenses.