Steen Riisgaard, Enzyme Business
This is where we use our BioTech skills to solve industrial problems, rather than health problems.
1995 was a tough year for the Enzyme Business.
Slide 28 - Enzyme Business - Sales development 1991 - 1995
Sales decreased by 2% compared to 1994. A volume growth of 8% was more than offset by a negative impact of currencies and prices of 8% and 2%, respectively.
Slide 29 - Consolidation of the Industrial Enzyme Industry
But, 1995 became the year when the long awaited shake-out in the Industrial Enzyme industry finally took place.
Gist-brocades sold their technical enzyme business to Genencor International, and Solvay has published its intention to sell its total enzyme business also to Genencor. This has resulted in a completely new competitive scenario for what we used to call the industrial enzyme Market.
Slide 30 - Different potential for cross-industrial synergies in R&D and production
It now consists of three separate markets: the "technical" industrial enzyme market where Novo Nordisk and Genencor are the major players, the food enzyme market with Novo Nordisk and Gist-brocades as the major players, and the animal feed enzyme market with Novo Nordisk and Genencor through FinnFeed as the major players.
Novo Nordisk is now the only company that operates all the three markets, and we are thus the only company that has the possibility to leverage our core technologies over the total field of industrial enzymes.
Slide 31 - Global market for industrial enzymes 1995
Novo Nordisk estimates the world market for industrial enzymes in 1995 to be USD 1.3 billion which is an increase of 15% in value compared to 1994. In DKK, however, the increase is only 2%
Detergents are still by far the largest application for industrial enzymes. This industry constituted 37% of the total market in 1995.
The Textile Industry continues to grow and maintains its position as the second largest industry for industrial enzymes. In 1995, the Textile Industry encompassed 13% of the total market for industrial enzymes.
The third largest industry is the Starch Industry which covered around 11% of the total market.
Other industries led by, inter alia, animal feed, baking and brewing increased their combined proportion of the total market to 39%.
Slide 32 - Industrial enzyme producers 1995
After the restructure Novo Nordisk is still, by far, the largest global player in industrial enzymes with an overall market share of just under 50%.
On a pro-forma basis the situation in 1995 would have been a market share for Genencor of 18% and for Gist-brocades of around 4%.
The Novo Nordisk market share of 46% is a decrease of 2% points since last year and is explained by the fact that the Chinese market is significantly bigger than we previously estimated. We are now building up a strong presence in China and are already enjoying a strong sales development in that country.
The name of the game in the Enzymes Industry is new products, and to secure that we have focused our R&D resources on seven industrial market segments: detergents, textile, starch, protein, baking, animal feed, and personal care.
The increased focus has already given significant results in several areas.
In the Textile Industry alone Novo Nordisk will launch 8 new products in 1996, and in total we expect to launch 12 new products this year.
A very sound project portfolio will enable us to continue to bring innovations to our customers at this accelerated speed in the coming years.
Slide 33 - EB - Focus on productivity and profitability
Key words for the future are productivity, profitability and growth. Significant productivity improvements in production have been obtained during 1995 and are expected to be even larger in 1996. The first round of re-engineering projects is completed and the next round is about to start.
As earlier mentioned, the enzyme plant on Hokkaido, Japan, will be closed down by June 1996.
Slide 34 - EB - Focus on growth
In September,1995 we broke ground for our third strategic enzyme production site placed in Tianjin, China. We expect to start production in 1998 and with our strong commitment we will, also in China, become the major supplier of industrial enzymes.
China will, together with other developing countries, be a major growth market for industrial enzymes in the coming years. As the standard of living improves, the demand for consumer commodities such as powder detergent, beer and textiles will increase and thereby increase the market for our current palette of products. Other growth markets include the Pacific Rim and Latin America.
In summary, several developments make the future for Enzyme Business look promising. We have a pipeline full of new products as well as new applications for known enzymes. In production, productivity is continuously improving. And we are well ahead of competition in the regions where the major market growth is happening.
Based on these prospects, we believe that the volume growth of the industrial enzyme market will be in the range of 10-15% as an average over the next five years, and that our volume growth will at least match that.
Kurt Anker Nielsen, Financial performance and outlook for 1996
