Markets & Companies

A Difficult Path Ahead

After the Final Reach Deadline has Passed Some Specialty Chemicals Could Vanish from the Market

27.04.2017 -

It is nearly 10 years since Europe’s chemical legislation REACh was established. The regulation -described as the most complex in the EU’s history – came into effect on Jun 1, 2007 with implementation split into three phases. Now the third and final phase deadline of May 31, 2018 is looming.

This last phase governs low-volume registrations, requiring companies to register if they manufacture or import chemicals in quantities of less than 100 t/y. As a result, many specialty chemicals will need registering for the first time and experts estimate that the total number of registrations in this phase could be three to 10 times greater than the number of substances registered in the previous two stages combined.

To put this into figures, the European Chemicals Agency (ECHA) – the administration authority for REACh – predicts that between 25,000 and 50,000 substances will be registered, which would mean that 40,000 to 70,000 dossiers will require reviewing. According to US compliance management company Euphor, 25,000 dossiers were submitted in the first phase and just 9,400 dossiers in phase two.

More substance registrations inevitably mean that more testing will be required. However, anecdotal evidence from laboratories and contract research organizations (CROs) reveals that availability is already limited at a time when demand is set to rise because of the high number of small-volume registrants and their increasing reliance on external services.

Dangers Facing the Industry

Phase three registrants are facing several challenges. Because of the small volumes involved, the chemicals that are affected are likely to have less existing data available and, given that many specialty chemicals are included for the first time in this phase, many companies that manufacture or import have little or no experience in preparing for REACh registration. Indeed, the proportion of small- and medium-sized enterprises (SMEs) affected by the 2018 deadline is much higher than in previous REACh phases.

“The main challenge for SMEs is the costs related to registration, especially if they need to become lead registrants,” says Carlos Miguel Fazendeiro, director regulatory affairs & regional head Portugal at German consultancy REACh ChemAdvice. He highlights too the lack of knowledge at small companies as another concern and says service providers have seen a rise in requests from SMEs needing registration support as most of them do not know where to start.

The areas where SMEs need help, explains Fazendeiro, include defining the type of registration and testing that is required, performing risk assessments and preparing chemical safety reports as well as assistance in using IT tools such as REACh-IT, Chesar and IUCLID.

The particular danger facing the specialty chemicals industry is the possibility that, once the deadline has passed, a number of substances will vanish from the market. “It is very likely that a large number of chemicals will disappear from the market as many companies, especially SMEs, will not finally register some substances due to the costs of registration, particularly in cases where the margin is not high and difficulties in obtaining financing do not allow them to continue,” Fazendeiro notes. He adds this will also affect formulators as they may be unable to source the ingredients they need after Jun. 1, 2018. “In such cases, the only option will be for these companies to import from outside the EU and register themselves,” says Fazendeiro.

One German consultant says many mixtures and compounds used in the global antimony market had not been registered as of early 2017 because of the lack of critical mass to form a Substance Information Exchange Forum (SIEF).  As a result, he is predicting there will very likely be shortages in specialist applications, such as electronics.

Registration Delays on Purpose?

In a white paper published in November 2016, UK-based CRO Envigo says some companies may be purposefully choosing to delay their registration programs as long as possible. This could, it notes, be due to a variety of factors including a lack of knowledge or resources to get started or assume the role of lead registrant.

Alternatively, a delay could be for business reasons, such as uncertainty around the commercial viability of a particular chemical. The organization says companies that are not currently marketing their chemical in the EU and have no plans to do so before the 2018 deadline may be unwilling to incur the expense of committing to co-registration before having full knowledge of the concluded toxicity.

In addition, given the low margins for some chemicals, Envigo says it would not be surprising to see some companies opting to continue selling their product up until the 2018 deadline and then simply waiting to see what happens at a later date. Smaller companies may also be lying in wait, expecting a flux of larger companies to initiate the process, at which point they could join forces to split costs, it notes.

The CRO warns, however, that although having co-registrants can ease the burden, other challenges can arise including the need for complex legal agreements and cost-sharing mechanisms as well as audit-proof financial accounts that need to be created and paid for, often before receiving any fiscal contribution from other pre-registrants. “Unlike the other phases, phase 3 is clearly lacking when it comes to companies taking a proactive role in registration,” Envigo says.

The potential loss of business  and how to maintain some chemicals on the market for longer was also the focus of a two-day meeting in March 2017 between the European Association of Craft, Small and Medium-sized Enterprises (UEAPME) and ECHA. Speaking at the event, UEAPME president Ulrike Rabmer-Koller said: “Already now, many companies may start to think about giving up their business because of too high regulatory burdens. This is why small companies especially need as much support as possible in this crucial phase.” Rabmer-Koller urged that more must be done for SMEs in relation to chemical legislation. “Once REACh registration has ended, the game is not over. For example, REACh authorization is an even more resource intensive process. We simply need more hands-on possibilities for financial support,” she said at the meeting.

Fazendeiro says those companies that seize the opportunity to register and become one of the few suppliers of a specific chemical may well see an uptick in demand after the 2018 deadline.

While the outlook after the 2018 deadline is unclear as to whether certain chemicals will be available or not, what is clear is that time to register is running out. Smart and speedy planning will help, but the risks of missing the deadline are high, whether by accident or design.