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guide
NOVOZYMES THE BIOAG ALLIANCE
Trevor Thiessen, VP BioAg
Bank of America Merryll Lynch Global Agricultural Conference,
February 26-27, 2014
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guide 2
Safe Harbor Statement
This presentation and its related comments contain forward-looking statements, including financial expectations.
Forward-looking statements are by their very nature associated with risks and uncertainties that may cause actual results to differ materially from expectations.
The uncertainties may include unexpected developments in the international currency exchange and securities markets, market-driven price decreases for Novozymes’ products, and the launch of competing products in Novozymes’ core areas.
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guide 3
Novozymes – The World Leader in Bioinnovation
Household Care
Food & Beverages
Bioenergy Agriculture
& Feed Technical &
Pharma
Who are we?
*A+B shares Feb, 2014
Founded 1925
Listed 2000
Ticker NZYM B
Exchange Copenhagen
Market Cap* US$ 14.7bn
Long-term targets: > 10% organic sales growth from 2015 > 24% EBIT margin > 22% ROIC
Global: +6,000 employees, 700 products in 140 countries
R&D intensive: ~7,000 patents, 13-14% of sales spent on R&D
Profitable: $2.1bn in sales and 24.7% EBIT margin in 2013
Majority owner Novo A/S controls 25.9% of the capital and 70.5% of the votes
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Bioenergy
• Corn ethanol • Cellulosic biofuels
• Unique biotech-focused business with a strong legacy of delivering growth, earnings, and cash flow
• ~13-14% of annual sales invested in R&D
• Global provider of enzymes to all market segments creates global market leader position
• Leveraging competencies across segments accelerates pace of innovation, reduces competition and creates
high barriers to entry
Uniquely Diversified Group - Creates Synergies and New Opportunities
Household Care
• Laundry & Dishwasher detergents
• Cleaning products
Food & Beverages
• Baking • Starch to syrups • Brewing & Alcohol • Healthy concepts
Agriculture & Feed
• Animal feed • BioAgriculture
Technical & Pharma
• Textile & Leather • Pulp & Paper • Wastewater • Pharma ingredients
4
16% 36% 27% 14% 7%
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Crop farming Crop processing Animal farming Food production
Grains
Corn
Soy
Oilseeds
Pulses
Fruits
Cotton 5
Where are We in Agriculture? -More than 50% of Novozymes business is agriculture related!
Bio
ag
Ethanol & Alcohols
Starch
Textile milling
Animal Feed
Brewing & Baking
Oils & Fats
Wine & Juice
Bubble sizes do not denote relative business sizes, merely business presence
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Becker Underwood
USD 1bn
Pasteuria USD 110m
Prophyta USD Xm
Agradis USD Xm
IPO
Alliance
2012 2013 2007 2010 2011
BioAgriculture – Novozymes’ Position Built via Acquisitions at an Early Stage
PhilomBios USD ~25m
Turfal USD ~5m
EMD/Merck USD ~285m
Natural Industries USD ~10m
TJ Technologies
USD ~40m
AgraQuest USD 500m
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In 2012 and 2013, significantly higher interest from many major players:
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guide 7
Novozymes BioAg Is Early Part of Value Chain
Technology provider
BioAg manufacturer
Distributor
(wholesalers, seed
companies, etc.)
Retailer Farmer
Retailer: Plays the most important role in determining if a farmer will use seed treatment inoculants and what brand
Distributor: Most distributors have only a small amount of influence on farmers' decision process
Tech provider/BioAg manufacturer: Will in most cases be the same company within the BioAg space Buying criteria for farmer: *
1. Past experience 2. Retailer advice 3. Agronomist input 4. Peer recommendation 5. Brand
• Majority of sales go through distributor channels – some through seed companies
• Distributors (e.g. Cargill, Winfield, Agrium/Loveland)
• Seed companies (e.g. Bayer)
• Products sold through regional seed and crop input retailers
* Novozymes & markets 2010
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AG BIOLOGICALS MARKET1 Market Segmented by Product Class
MARKET ECONOMICS:
Microbial Pesticides
Microbial Innoculants
Beneficial Insects
Biochemical
Other
NOVOZYMES BIOAG’s SALES DEVELOPMENT2
2003 – 2012 HISTORICAL RESULTS: 2003 = 100
FACTORS:
• Novozymes BioAg 2012 annual revenue of approximately $120 million
• North America accounts for roughly 2/3 of sales
• Innoculants for nitrogen fixation for soy and other pulse crops account
for the single biggest application
0
50
100
150
200
250
300
350
400
450
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
1. Monsanto estimates of Ag Biologicals industry based on a combination of research data from DunhamTrimmer, Agrow, MarketsandMarkets, Frost & Sullivan, Boston Consulting Group, BCC Research
2. Novozymes Internal analysis. Combined sales development from the combined business of EMD/Merck Crop Bioscience, Philom Bios, EBS and Turfal. Does not include Natural Industries and TJ
Technology
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Ag Biologicals Market: Novozymes Has Developed a Significant Business in Fast Growth Market
NOVOZYMES BIOAG SALES GROWTH: Fast growth through key investments and core
competencies in Microbials
Industry growth driven by increasing
demand for green ag chemical options
Annual Growth Mid-Teens CAGR
IND
EX
ED
RE
VE
NU
E
2012
Estimated Sales $2.3B
2/3rd Microbials
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guide 9
The BioAg Alliance with Monsanto - Aiming to Build Next Important Yield Platform for Farmers
BIOTECHNOLOGY BREEDING AGRONOMICS CHEMISTRY
INTEGRATED SYSTEM EMERGING TRENDS
• Plant health & bionutrients
• Extended disease protection
• In-season insect control
• Improved biofertility
BIOLOGICALS
• Multiple components converging to drive yield and productivity with more platforms coming together in more ways than ever
• Biologicals offer farmers another tool to improve yield
• Replacing agricultural inputs with sustainable, cost-effective solutions that can increase yield using less input
• Increasing pressure to bring market solutions with faster development cycles compared with other Ag innovations
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guide 10
Combined Leadership: Combination of Novozymes and Monsanto Establishes Industry's Most Advanced Microbials Platform
The BioAg
Alliance
ELEVATES MICROBIALS AS NEXT MAJOR “BEYOND-THE-SEED” OPPORTUNITY TO DRIVE YIELD AND SUSTAINABILITY
PLATFORM Industry’s only integrated platform with established capability in discovery, development and commercialization of microbial solutions
PRODUCTS Current commercial product portfolio that generated ~$120M in 2012 revenue
PIPELINE Complementary organizations to co-fund significant R&D effort and leverage existing microbials from both companies for industry’s most advanced microbials pipeline
ESTABLISHED MICROBIAL LEADERSHIP
• World leader in microbial technology; discovery, development and production
• Existing microbial business including stand-alone pipeline, extensive microbial libraries and intellectual property
• Current commercial portfolio including products and infrastructure
INDUSTRY-LEADING R&D CAPABILITY
AND COMMERCIAL FOOTPRINT
• Industry-leading R&D network that allows for scaled testing and development
• Complementary microbial assets including extensive microbial libraries and intellectual property
• Global commercial reach across crops, brands and geographies to drive commercial opportunity
+
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guide 11
Power of Microbial Technology: Novozymes’ Proven Microbials portfolio
Nitrogen fixation
Biofertility products
Bioyield enhancers
Biocontrol products
Biofungicides Bioinsecticides Phosphate
solubilization
• A phosphate inoculant that grows along the roots, making more soil and fertilizer phosphate available to the plant
• Nitrogen-fixating inoculants
• Combined products utilize a combination of traditional nitrogen inoculant with LCO (lipochitooligo-saccharide) & JumpStart
• Unique LCO molecule enhances nutritional capabilities, driving natural growth processes, which enhances plant health and crop performance
• Microbial seed inoculant for increased yield
• Slows down the resistance of current spray chemicals, thereby extending the life of those chemicals, within high-value fruits and vegetables
• Bacterial-based biofungicide for disease control
• Wide mode of action to help break resistance in current chemical products within high-value fruits and vegetables as well as turf and ornamentals
Taegro®, Actinovate®
MET52® Torque®, Proventus®, Ratchet®, QuickRoots®
JumpStart® TagTeam®, Cell-Tech®, Optimize®
3 2 1
Plant growth & health
CURRENT PRODUCT PORTFOLIO CASE: JUMPSTART ®
1. Microorganism applied to the seed
before planting
2.
The active ingredient, a soil fungus,
grows on the roots and solubilizes the
residual soil phosphate, unavailable for
plant use
3. Yield increases due to superior nutrient
uptake in plant’s early life stage
Microorganism applied to the seed
before planting
The active ingredient, a soil fungus,
grows on the roots and solubilizes the
residual soil phosphate, unavailable for
plant use
Yield increases due to superior nutrient
uptake in plant’s early life stage
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2
5
%
2
5
%
2
5
%
n/a n/a n/a n/a
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Our Current Biologicals Offer Ample Opportunities for Growth
Biofertility
Bioyield enhancers
Biocontrol
Phosphate solubilization
Nitrogen fixation
Biofungicide
Plant growth promoters
Bioinsecticides
Soy Pulses Fruit & veg. Canola Corn Wheat Novozymes' relative market penetration
Just launched
Just launched
= Market close to full penetration
= Market less penetrated – still significant potential
= Unpursued market opportunity with existing products and technololgies
JumpStart®
TagTeam®, Cell-Tech® & Optimize®
Torque®, Proventus®, Ratchet® & QuickRoots®
Taegro® & Actinovate®
MET52®
BioAg Alliance Roadmap: Opportunity Begins in 2014, With Commercial Products and Expanded R&D
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PRIORITY AREA: Focus on seed-treatment deployment in core crops: • Corn and Soybeans in Americas • Cotton, Canola • Fruits and Vegetables in key
markets
MARKET R
EACH
PRIORITY AREA: Expand offerings to broader commercial set: • Fruits and Vegetables in
expanded markets • Improved Core Crop Products • Wheat, rice and other row crops • Expanded geographical reach
NEAR-TERM
Leveraging Alliance Capabilities and Establishing Microbial Platform
MID-TERM
Expanding Market Opportunity
LONG-TERM
Building synergy with “Beyond-the-Seed” technology like precision agriculture
PRIORITY AREA: Focus on advanced microbial solutions with significant product offerings and applied on-farm synergy with platforms like precision agriculture
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guide 14