Broad and diversified growth platform

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Enzyme Business, which accounted for 94% of sales in 2010, is expected to be the strongest absolute growth contributor, with the detergent, technical, food, and feed enzyme segments all having the potential to support the long-term target of double-digit yearly sales growth. Sales of enzymes for cellulosic ethanol are not included in this target as it is too early to estimate the sales.

BioBusiness accounted for 6% of sales in 2010. Our ambition is to grow BioBusiness into a DKK 6 billion business by 2018. This requires the successful development and commercialization of products in our pipeline, as well as success for our customers’ biopharmaceutical products currently in different phases of development. To reach this goal, we also need to pursue further acquisitions in areas where we see a good match.

The agreement to acquire EMD/Merck Crop BioScience signed in December 2010 is an example of such an acquisition. As a consequence, BioBusiness will become more sizable and the acquisition will support the ambition for BioBusiness.

The project portfolio in BioBusiness is constantly under review to ensure that we allocate and optimize available resources in the best way possible. As a result, after unsuccessfully exploring the market for a potential new partner for plectasin, Novozymes is pursuing a divestment or spin-off of the AMP (antimicrobial peptide) activities as these are not deemed optimally developed within Novozymes.

We expect growth in all geographical markets, developed as well as developing. There are numerous growth opportunities around the world, some unique to each geographical area and some of more global significance, such as saving water and energy and replacing chemicals. Enzyme consumption per capita in the developing world is significantly lower than in developed markets, which means that enzyme penetration rates in countries like China and India are well below those in the US and Europe. Novozymes views this as an opportunity for future growth in the developing world. However, we also regard the developed countries as growth areas, as our technology can improve the efficiency of existing processes and further enhance quality.

Besides growth in sales, continuous improvements in productivity and enzyme performance will help achieve our long-term financial targets.

Investing in growth

Historically, annual organic sales growth of 8–9% has been achieved with an investment level of around 6–7% of sales, as productivity improvements have enabled us to continuously increase throughput in existing production facilities. However, the higher annual sales target of organic growth of more than 10% has required a period of time when our investment level relative to sales has been high, which is also the case for 2011. Once the new production capacity is established, we estimate an investment level of less than 8% of sales to be sufficient to achieve long-term sales growth of around 10%.

With additional funds allocated to new growth initiatives, for the next couple of years the R&D-to-sales ratio is expected to be somewhat higher than the figure of approximately 14% of sales we have spent on R&D historically. This reflects the strategic decision to explore the many growth opportunities in our various business segments that have the potential not only to add growth in the short term but particularly to support annual organic growth of more than 10% on a 5–10 year horizon.

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MyReport Videos
The new enzyme, Cellic® CTec2, enables the production of cellulosic ethanol from agricultural residues.
Launch of Cellic®CTec2 for cellulosic ethanol
Launch of Cellic®CTec2 for cellulosic ethanol
Acquisition of EMD/Merck Crop BioScience
Peder Holk Nielsen, Enzyme Business

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A platform for growth in agriculture
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