the bioag alliance
TRANSCRIPT
NOVOZYMES BIOAG THE BIOAG ALLIANCE
Shawn Semones, R&D Director, Novozymes BioAg
BAML 2015 Global Agriculture Conference
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Forward-Looking Statements
This presentation and its related comments contain forward-looking statements, including statements about future events, future financial performance, plans, strategies and expectations. Forward-looking statements are associated with words such as, but not limited to, "believe," "anticipate," "expect," "estimate," "intend," "plan," "project," "could," "may," "might" and other words of similar meaning.
Forward-looking statements are by their very nature associated with risks and uncertainties that may cause actual results to differ materially from expectations, both positively and negatively. The risks and uncertainties may, among other things, include unexpected developments in i) the ability to develop and market new products; ii) the demand for Novozymes’ products, market-driven price decreases, industry consolidation, and launches of competing products or disruptive technologies in Novozymes’ core areas; iii) the ability to protect and enforce the company’s intellectual property rights; iv) significant litigation or breaches of contract; v) the materialization of the company’s growth platforms, notably the opportunity for marketing biomass conversion technologies or the development of microbial solutions for broad-acre crops; vi) the political conditions, such as acceptance of enzymes produced by genetically modified organisms; vii) the global economic and capital market conditions, including, but not limited to, currency exchange rates (USD/DKK & EUR/DKK in particular, but not exclusively), interest rates and inflation; viii) significant price decreases on input and materials that compete with Novozymes’ biological solutions. The company undertakes no duty to update any forward-looking statements as a result of future developments or new information.
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Novozymes – The World Leader in Bioinnovation
Household Care
Food & Beverages
Bioenergy Agriculture
& Feed Technical &
Pharma
Who are we?
*A+B shares Dec, 2014
Founded 1925
Listed 2000
Ticker NZYM B
Exchange Copenhagen
Market Cap* US$ ~15bn
Long-term targets
2015-2020:
8-10% organic sales ≥ 26% EBIT margin ≥ 25% ROIC
Global: ~6,500 employees, 700 products in 140 countries
R&D intensive: ~7,000 patents, ~14% of sales spent on R&D
Profitable: $2bn in sales and 27.2% EBIT margin in 2014
Majority owner Novo A/S controls 25.5% of the capital and 70.4% of the votes
Uniquely Diversified Group - Creates Synergies and New Opportunities
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18% 35% 26% 14% 7%
Household Care
Food & Beverages
Bioenergy
Agriculture & Feed
Technical & Pharma
• Laundry & Dishwasher detergents
• Cleaning products
• Baking • Starch to syrups • Brewing &
Alcohol • Healthy concepts
• Corn ethanol • Cellulosic
biofuels
• Animal feed • BioAgriculture
• Textile & Leather
• Pulp & Paper • Wastewater • Pharma
ingredients
• Strong legacy of delivering growth, earnings, and cash flow through innovation
• Leveraging competencies across segments accelerates pace of innovation, reduces competition and creates high barriers to entry
Novozymes
48%
Genencor
(DuPont) 20%
DSM
6%
Others and
captive 26%
Undisputed Market Leader Expanding Enzyme Application
Market potential*
Global enzyme market value 2014: USD ~ 4.0 bn
Current enzyme market USD ~ 4.0bn
Untapped market Multi-billion (US$)
2000: USD ~ 2.0bn
2014: USD ~ 4.0 bn
Novozymes 42%
Novozymes 48% Rest of
market
58%
Rest of market
52%
Rules of competition dictated by innovation
*Global markets for chemicals, food ingredients, feed additives, etc. 5
Global enzyme market value:
Novozymes’ Purpose
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What are BioAg and Microbials?
Microbials, notably bacteria and fungi, are types of agricultural biologicals that protect crops from pests and diseases and enhance plant productivity and fertility.
There are
approximately
50 billion microbes
in 1 tablespoon of soil
Crop Enhancement • New tool in the farmers
toolbox to increase yield
• Unlock nutrients in the soil
• Stronger, healthier plants
Crop Protection • Complements or potentially
replaces chemical pesticides
• Additional modes of action
In-furrow Seed Treatment Foliar
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HOW ARE MICROBIALS APPLIED?
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AG BIOLOGICALS MARKET1
MARKET SEGMENTED BY PRODUCT CLASS
2/3rd Microbials
Microbial Pesticides
Microbial Inoculants
Beneficial Insects
Biochemical
Other
AG MICROBIALS OPPORTUNITY
EXAMPLE: TRADITIONAL CHEMICALS & PESTICIDES2
VS. AG MICROBIALS MARKET1
AG MICROBIALS MARKET1
MARKET SEGMENTED BY CROP
Fruits and Vegetables
Soybeans
Cotton
Corn
Rice
Other Crops
Annual Growth Mid-Teens CAGR
2013 Estimated Sales $2.6B
SALES (
USD
) There’s significant opportunity for ag Microbial market expansion:
Pesticides ($54 billion)
Nitrogen
Phosphate
Potassium
Biopesticides
Inoculants
~$1.8 billion
~$240 billion
Fert
iliz
ers
($
183 b
illion) • Microbials can be a range of products that can be
complementary to, or replace, traditional chemistry options • Today the ag microbial market is approximately $1.8 billion
in sales, while traditional fertilizers and pesticides total approximately $240 billion
Today, majority of ag microbials are used in the fruits and vegetables market, we see significant opportunity in broad acre field crops like corn, soy, cotton and canola
Opportunity: Core Crops
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, Philips McDougall, Global Industry Analysts 2. MarketLine and Phillips McDougal market data
TRADITIONAL CHEMICALS & PESTICIDES AG MICROBIALS
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BioAg; Niche Market with Significant Opportunities
BASIC LAYOUT
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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
The BioAg Alliance • A unique opportunity to combine the key strengths of Novozymes and Monsanto
• Ambition to break the science code in BioAg and develop new game changing solutions
Combination of Novozymes and Monsanto Capabilities Establishes Industry's Most Advanced Microbial Platform
How the BioAg Alliance works in practice
Roles and Responsibilities
Discovery Collaborations In-Licensing Products & Complementatary Technologies
Out-Licensing Opportunities
Priorities
NEAR-TERM MID-TERM LONG-TERM
• Leveraging alliance capabilities and
establishing microbial platform
• Expanding market opportunity
geographically and into new crops
• Advancements in microbial solutions
with significant product offerings
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Power of Microbial Technology: Novozymes’ Proven Microbial Portfolio
Nutrient efficiency
BioYield products
Biofungicides Bioinsecticides Nitrogen fixation
Enhances nutrient efficiency of key nutrients and plant health incl. phosphate
Nitrogen-fixating inoculants
Provides disease control for fruits and vegetables
Provides insect control for fruits and vegetables as well as turf and ornamentals
Actinovate® MET52® JumpStart® Torque®, QuickRoots® Ratchet®
TagTeam®, Cell-Tech®, Optimize®
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CURRENT PRODUCT PORTFOLIO
Biocontrol products
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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
CASE: JUMPSTART® CASE: MET52® - mites on strawberry
TREATED UNTREATED
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New R&D Facility established in 2014
We’ve hit the ground running..
• February: BioAg Alliance approved
• May: New site selected in RTP, NC
(leased buildings, previously fitted
for bio-tech lab work)
• June: Hiring of staff initiated
(More than 2,700 applications from
all over the US for 30 jobs)
• December: ~90 full-time
employees hired, organized, and
producing samples for field trials
BioAg Microbial Discovery
DNA SEQUENCING
RISK ASSESSMENT
NOVEL ASSAYS
Microbe collection
Field trials
Sample production
Isolation and cultivation
Growth in microtiter plates Isolation Test in shake flasks
Test in lab/pilot scale Production
Example of fermentation scale up by a factor of 200.000.000 by volume
World leading fermentation and up-scaling of microbes to support research and discovery testing
55 60 65 70
Top hits
Untreated
Select Field Trial Results From 2014
Soy
200 205 210 215 220
Top hits
Untreated
YIELD (BU/Acre)
Corn
Yield Advantage
~2 bu/ac
Yield Advantage
~4 bu/acre
YIELD (BU/Acre)
15
100
120
140
160
180
U.S. Corn bushels/acre*
30
35
40
45
50
U.S. Soy bushels/acre*
• Promising yield increases were recorded, against a backdrop of record average yields
• Top 50 performing strains advance to next stage in pipeline (25 on corn & 25 on soy)
*Source: USDA annual statistics, average yield data
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Key to understand the science of BioAg through extensive field trial testing
• The BioAg Alliance conducted over 170,000 trials across hundreds of microbial strains in 2014
• On track for up to 500,000 trials on thousands of strains in 2015
• Yield is main screen criteria
• Massive data collection on strains and field results to spur knowledge leap
Klaus Sindahl
Mobile (DK): +45 5363 0134 E-mail: [email protected]
Thomas Steenbech Bomhoff
Mobile (DK):+45 3077 1226 E-mail: [email protected]
Martin Riise
Mobile (USA): +1 919 649 2565 Mobile (DK): +45 3077 0738
E-mail: [email protected]
Investor Relations Contacts
Further investor relations information is available from the company homepage at
www.novozymes.com/investor
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