At Retech Conference in September 2011, I gave a presentation on the potential of renewable chemicals , the vision of Novozymes in that field and the major global drivers

1. Renewable Chemicals:
– chemical building
blocks from renewable
feedstocks
Thomas Schäfer
Head of Innovation Office, R&D

2. Sugar & Biomass will be the New Oil
Fuel
Chemicals
Energy
…
2

3. Content – as promised
I will discuss the…
• thinking and role of Novozymes as the leading industrial biotechnology
company
• in times of feedstock change
• concrete projects in a portfolio of options where biorefining can
gradually replace oil refining for the manufacture of bulk
chemicals.
• As basis I will describe relevant key technologies, our strategy and
" untraditional partnerships".
3

4. 4 8/6/2012 NOVOZYMES PRESENTATION
Fact I:
The World Is Flat,
Hot & Crowded

5. 5 8/6/2012 NOVOZYMES PRESENTATION
The World Is Hot
 http://www.google.com/search?q=melting+poles&hl=en&prmd=ivns&source=lnms&tbm=isch&ei=VD9vTsa
1KYftsgaRvtn9Bg&sa=X&oi=mode_link&ct=mode&cd=2&ved=0CAsQ_AUoAQ&biw=1280&bih=603

6. 6 8/6/2012 NOVOZYMES PRESENTATION
The World Is
Crowded
 http://www.economist.com/node/1
8200618

7. 7 8/6/2012 NOVOZYMES PRESENTATION
The World Is Crowded
 http://www.google.com/imgres?q=crowded+world&hl=en&sa=X&tbm=isch&prmd=ivns&tbnid=vJ9
J_e7_zQHXnM:&imgrefurl=http://www.oddee.com/item_96926.aspx&docid=cQXm77cqhDCl8M&w=
450&h=299&ei=5T5vTs_dK4PCtAaB9dn5Bg&zoom=1&iact=hc&vpx=712&vpy=99&dur=62&hovh=1
83&hovw=276&tx=140&ty=109&page=1&tbnh=120&tbnw=180&start=0&ndsp=18&ved=1t:429,r:
3,s:0&biw=1280&bih=603

8. 8 8/6/2012 NOVOZYMES PRESENTATION
The World Is Crowded: Urban Life
http://www.google.com/imgres?q=traffic+jam&hl=en&sa=X&tbm=isch&prmd=ivns&tbnid=JXdbTFvvAX4lqM:&img
refurl=http://www.dailymail.co.uk/news/article-426647/Forget-motorway-congestion--em-em-traffic-
jam.html&docid=AfN9oveglsYcNM&w=468&h=312&ei=FENvTuYLxouzBvLp6LEH&zoom=1&biw=1280&bih=603&iac
t=rc&dur=453&page=1&tbnh=135&tbnw=170&start=0&ndsp=19&ved=1t:429,r:3,s:0&tx=58&ty=104

9. 9 8/6/2012 NOVOZYMES PRESENTATION
And The World Is Flat
Demography:
1-2 Bio People additional
in new arising middle
classes esp. in BRIC
countries

10. 10
Consequences I: Pollution
Biotechnologies are expected to contribute
Demography:
1-2 Bio People
additional in new
arising middle classes
esp. in BRIC countries

11. 11 8/6/2012 NOVOZYMES PRESENTATION
Fact II:
The Era Of Cheap Oil
& Gas Is Over

12. 12 8/6/2012 NOVOZYMES PRESENTATION
Source:
Technology
Review, MIT,
Oct 2010
 http://bigpeace.com/pmaffitt/2010/08/23/the-era-of-cheap-crude-oil-is-over/

13. 13
…And We Witness Strong Volatilities
http://www.wtrg.com/daily/crudeoilprice.html

14. 14
Consequences II: Dilemmas
Population Security of Energy Supply
# (demographics)
Demand
Fossile
Feedstocks
time

15. 15
Solution:
Re-Think Tomorrow & Innovate

16. 16 August 6, 2012
Novozymes in brief
 Leading-edge biotechnology expertise
 World leader in industrial enzymes & microorganisms and market leader in all industries
where present.
 Novozymes Biologicals: a dedicated group of experts for whole cell microbial systems
 > 25 accumulated experience with gene- technology for protein optimisation and
production
 Commitment to innovation
 ~14% of revenue invested in R&D
 More than 6,000 patents, granted or pending
 New products represented around 25% of total sales in 2009
Enzymes for industrial use
 39 new products launched during the last 5 years
Market size ~ USD 2.6 billion
 PERFORMANCE 2010
 global sales USD 1.83 B USD
 Operating profit margin 21,3%
 ROIC 22,2%
Source:
Novozymes' 2008 estimates

17. Using Nature’s own Resources Enable Sustainable
Solutions and Acknowledgement
Top 1% of Environmental Investment Organization carbon
reporting
Best in Class Storebrand SRI
Member of Global100 by Innovest
Member of FTSE4Good Global and Europe
Member of SB20 by SustainableBusiness.com
Member of Cleantech Index
Member of OMX GES Sustainability Index
Dow Jones Sustainbility index
Biotechnology sector leader
17

18. 18 8/6/2012 NOVOZYMES PRESENTATION
Our Vision
Our Technologies RENEWABLE
CHEMICALS
Our Strategy and Business model IN 30
MINUTES
Selected Examples

19. 19 NOVOZYMES PRESENTATION
Novozymes Vision is to deliver
Bio-Innovations in the coming Biobased Society
We will deliver biotech solutions from renewable feedstock to consumer & industrial markets

20. 20
Sustainability drives Industrial Biotechnology
 Increasing support from scientific “Thus we face the consequences
groups supporting governments of burning of high sulfur coal,
 Bioeconomy Council depletion of petroleum reserves
Germany for transportation, and excess
 US Academy of Sciences CO2 being produced as stored
hydrocarbon reserves are
 OECD
depleted.
 Increasing support from NGO s …Sustainable, efficient and clean
 WWF sources of energy are crucial to
reducing our dependence on and
the depletion of fossil fuels. The
New Biology can help propel
the sustainable production of
biofuels”

21. 8/6/2012 NOVOZYMES PRESENTATION
Renewable Chemicals: from tech push to market pull !
Illustrative examples
21

22. 22 NOVOZYMES PRESENTATION
The Biorefinery concept

23. 23 8/6/2012 NOVOZYMES PRESENTATION
But in the end it s all about cost, cost, costs…
2000-2010:
Strong increase of crude oil prices…
http://www.mongabay.com/images/commodities/charts/crude_oil.html

24. 24 8/6/2012 NOVOZYMES PRESENTATION
…and supply chains security: unseen volatility
http://www.wtrg.com/daily/crudeoilprice.html

25. Traditional Chemicals Come from an Optimized Industry
Petroleum-based
chemistry
Optimization:
• Scale
• Energy efficiency
Level of optimization
• Fixed cost reduction
• Improved maintenance
• Sourcing/supply chains
• Value engineering
• Plant reliability
• On-stream time
• …
Foundation Development Expansion Diversification Maturity
Time
25

26. …while Renewable Chemicals are in their Infancy…
Petroleum-based
chemistry
Level of optimization
Challenge
• Renewable chemicals
have to compete on price
and performance
• No subsidies
• New infrastructure
Renewable chemicals industry
Time
26

27. 27 8/6/2012 NOVOZYMES PRESENTATION
To make it happen:
 Technology – key questions:
 can we commercialise i.e. earn money with the technology we develop?
 NOT: ”can we make it”
 BUT: ”can we make it cost-competitive to current technology”
 Which R&D success factors do we need to reach like…
 Yields: g product/g glucose….no CO2 production
 Titres: g product/litre broth
 Productivity: g/l/hr
 Side products
 Which feedstocks
 Recovery methods
 Chemical transformation
 Robustness of process – demo! Selection:
 LCA
Many “interesting”
molecules don´t make
 Cost of production plants – CapEx
it on the short list
 On-par or better with current technology

28. Novozymes’ Entry Technology: The Sugar Platform
• Cellulosic bioethanol drives our technology development
Starch Enzyme
process
Fermentable
sugars
Yeast Bio-
Fermentation ethanol
Waste Pre- Enzyme
treatment Cellulose
biomass process
process
Platform Technology:
enables production of a broad spectrum
of products
28

29. Feb 2010: Novozymes Launches Cellic® CTec2
Allows production of
fuel ethanol from
biomass @ USD 2.00
to USD 2.50 per
gallon, depending on
process
29

30. M&G Breaks Ground for First Commercial Plant
• Novozymes’ partner M&G begins
construction of the world’s first
commercial-scale cellulosic ethanol plant
• The plant will produce 13 million gallons
of ethanol per year from biomass, and is
competitive with 60-70 USD/barrel
oil
• The biofuels plant will be ready in 2012,
and is located in Crescentino, Northern
Italy
Pictures courtesy of M&G
30

31. Novozymes’ Entry Technology: The Sugar Platform
• Cellulosic bioethanol drives our technology development
Starch Enzyme
process
Fermentable
sugars
Yeast Bio-
Fermentation ethanol
Waste Pre- Enzyme
treatment Cellulose
biomass process
process
Platform Technology:
enables production of a broad spectrum
of products
31

32. Production of Renewable Chemicals
– a Good Fit to our Technology and our Vision
Yeast Bio-
Fermentation ethanol
Fermentable
sugars
32

33. Production of Renewable Chemicals
– a Good Fit to our Technology and our Vision
Yeast Bio- Renewable
Fermentation ethanol chemicals
Fermentable
sugars
33

34. Production of Renewable Chemicals
– a Good Fit to our Technology and our Vision
Yeast Bio- Renewable
Fermentation ethanol chemicals
Fermentable
sugars
Heterogenous Renewable
catalysis chemicals
34

35. Partnering is essential for us
Yeast Bio- Renewable
Fermentation ethanol chemicals
Fermentable
sugars
Chemical Renewable
Catalysis chemicals
Novel
engineered
pathway Renewable
-- chemicals
Novel
bioprocess
35

36. Novozymes renewable chemicals pipeline in more details
3-HP Bio-Acrylic acid
Propanol Bio-Polypropylene
Renewable
Chemicals sugars Glycols
Platform
Not disclosed Not disclosed
Fructose HMF/FDCA Non-exclusive
36

37. 37 06-08-2012
Case 1: Bioacrylic acid, market
 Existing market = USD 11 billion
 Annual production = 3.1 million tons (2005)
 Annual growth = 4%
 Serving many different applications, including high-end industries such as
diapers, hygiene products, flocculants, coatings, dispersions, and adhesives
Super
absorbers
Fibers
3-HPA Acrylic acid
Coatings,
adhesives
Polymers

38. 38 06-08-2012
Case 1: Bioacrylic acid, market
 Many applications
 Many players
 A “robust” business case
Super
absorbers
Fibers
3-HPA Acrylic acid
Coatings,
adhesives
Polymers

39. 39 06-08-2012
Case 1: Bioacrylic acid, partnership with Cargill
Current petro route for production of acrylic acid
Propylene Acrylic acid
Propylene 2000: USD 430/metric ton
Propylene 2008: USD 1,450/metric ton
New fermentation-enabled route to acrylic acid
Starch, 3-Hydroxy- Bioacrylic
Glucose
Biomass propionic acid acid
Chemical
Enzymatic Engineered
downstream
process pathway
process

40. 40 06-08-2012
Case 1: Bioacrylic acid, upsides
 3-HP is a new building block
3-HPA
New applications

41. Example: Green Polypropylene Project with
Braskem
Goal: Development of large-scale
production of polypropylene from
sugarcane
Use: Plastic used in, e.g. water bottles,
washing machines, furniture, and car
bumpers
Market: ~ USD 66bn market with annual
growth rate of 4%
Partner: Largest petrochemical company in
Latin America. Currently building
green polyethylene plant in Brazil
Timing: Initial development for at least five
years
41

42. Our business model – partnerships and royalties
• No one is fully integrated across the upcoming value chain
• Novozymes will not become a chemical company, but will create business
via partnering
• License approach, asset light
• Focus on gradual replacement of existing chemicals
New markets for Sustainable supply for
grain processors chemical companies
Enabler via Biosolutions
Combinationof different technologies
Combination of different technologies

43. 43 NOVOZYMES PRESENTATION – Special Chem Conference, Nov 2010
Selected other examples in biofuels and renewable
chemicals: ”untraditional” projects and partnerships
 DuPont/BP: Butanol
 Danisco/Goodyear: Isoprene
 Amyris Biotechnologies: Isoprene, alternative fuel
 LS-9: alternative fuels
 Roquette/DSM: Bio-Succinic
 Metabolics Explorer: L-Methionine, 1,2-Propanediol,
1,3-Propanediol, N-Butanol, Glycolic acid
 Genomatica: 1,4-Butanediol

44. 8/6/20
12 44 NOVOZYMES PRESENTATION
Enzymatic modifications relevant for the
chemical industry – single enzymes!
Esterification and ester • Application of lipases & cutinases in aqueous or non-aqueous
environment. Can be enantioselective. Also used for
hydrolysis polyester synthesis.
Nitrile hydrolysis • Hydrolysis to amide or carboxylic acid under mild conditions.
Can be enantioselective.
Free-radical polymerization • Polymerization of aromatic structures by hydrogen
abstraction using oxidoreductases
Side chain oxidation • Oxidation of aromatic side chains using oxidoreductases
Hydroxylation • Hydroxylation of aromatic or aliphatic carbon using
oxidoreductases. Can be enantioselective
Epoxidation • Epoxidation of double bonds using lipases or oxidoreductases

45. Replacing Petrochemicals with Enzymes:
Detergent Example
Our unique synergistic enzyme portfolio.. ..can replace chemicals, and enables..
• Proteins, e.g. blood,
Protease grass, meat, egg Cost stability
• Oil / greasy body and food
Lipase stains, butter, sweat
• Starch-based soils, e.g.
Amylase ice cream, gravy, potatoes Low temperature
wash & other
Cellulase • General cleaning, sustainability
especially dust and mud
claims
• Guar gum-based stains,
Mannanase e.g. ice cream, soup,
makeup
Pectinase • Juice-based stains
Compaction
45

46. 46
Conclusions:
• Renewable Chemicals are there (PLA) - despite all challenges
• Need for radical Innovation for the next generation
• Market pull - Consumer ask for it
• Untraditional partnerships - combine
biology & chemistry
• new growth markets for grain
processors, biotech companies and
consumer goods companies
• In tune with the environment

47. 47
Thank you!
tsch@novozymes.com