THE FIRST 10 YEARS:

A remarkable sales story


Audited by PwC

Novozymes’ sales have almost doubled over the past decade. At the same time, the company has developed into a more robust business with a wider range of markets, a more diverse geographical footprint, and a broader customer base.

Novozymes was born as the world’s leading enzyme producer with the largest market share, the widest product portfolio, and a technology leadership position. However, the enzyme industry was very different a decade ago than it is today. Although enzyme technology was recognized, the range of applications was smaller.

The industry relied heavily on the detergent and food industries – in Novozymes’ case, these two accounted for more than 70% of sales. Detergent enzymes alone provided roughly half of our sales, the Group’s sales were concentrated in Europe, and our largest customers were a small number of leading detergent producers.

Today, Novozymes is still the market leader, and the detergent business is still our single largest segment, but many other aspects have changed.

Global market growth

The global enzyme market has expanded over the past decade from a total value of about DKK 12 billion to an estimated DKK 19 billion in 2010, even with the headwind from a lower USD. Growth has been global, but the North American market has grown particularly fast, due mainly to the emergence of the biofuel industry.

Novozymes has been at the forefront of the industry’s development, taking it into new areas and new markets. Today, Novozymes commands 47% of the global enzyme market, compared to 42% in 2000, and our sales are spread across more industries; the detergent industry accounted for 32% of our sales in 2010, technical and food industries 32% and 22% respectively, and feed enzymes 8%. Novozymes has also added activities within microorganisms and biopharmaceutical ingredients.

This increased diversity has also led to decreased customer and market concentration. Our top five customers accounted for 28% of sales in 2010, as opposed to 38% a decade earlier. In 2000, North America accounted for 28% of Novozymes’ sales; in 2010, this figure had increased to 37%. During the same period, sales in Europe, the Middle East & Africa went from 43% to 36% of sales. Emerging markets’ share of sales is unchanged overall, but China has been a strong growth engine and has been Novozymes’ second-largest national market after the US since 2005.

Innovation drives sales

Our customers turn to Novozymes for solutions that can help them improve their business. In many cases, we save them money by providing the tools to make better use of raw materials, energy, and water. In other cases, customers turn to us for technology that can help them develop a more differentiated product. As the marketplace is constantly evolving, the only way to compete as an enzyme producer is to stay at the forefront of technology and deliver groundbreaking solutions, which is exactly what Novozymes has done over the past decade, consolidating our position as innovation leader. We have brought more than 85 new products to market, and we have extended the range of applications and customers for enzymes through innovation. The technological advances we have made during the period help us do things today that we could only dream of a decade ago.

Regulation can create markets

Novozymes always strives to develop markets through innovation, but sometimes customer trends or regulatory changes lead the way. Enzymatic solutions have increasingly been favored by regulatory initiatives over the past decade.

In many cases, new regulations have forced customers to make significant changes. One example of this is the banning of bone meal in animal feed, where it was a key source of phosphate. This made our phytase enzymes competitive as an alternative technology with unique and safe characteristics. Phytase enzymes not only help animals make use of the phosphate in their feed, but also help the environment by reducing the amount of undigested phosphate in their manure.

The future is bright

We look forward to another decade of expansion in the global enzyme market. Rapid growth in emerging economies is expected to fuel demand for products made using enzyme technology, and we will continue to develop the larger, developed markets in Europe, North America, and Japan by building on our technology leadership position.

We also look forward to seeing how governments will shape future demand for our products. The increasing focus on the sustainable use of natural resources, environmental protection, and climate change has the potential to radically transform the marketplace in favor of biological solutions. It will be exciting to see how our technology and insight can help customers develop new and improved ways of making more from less and so help change the world.

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ENZYME MARKET AND NOVOZYMES' SHARE
DKK billion
FusionCharts.
Novozymes
Rest of market
DISTRIBUTION OF SALES BY INDUSTRY
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Detergent enzymes
Technical enzymes
Food enzymes
Feed enzymes
Microorganisms
Biopharmaceutical ingredients
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Europe/MEA
North America
Asia Pacific
Latin America
TOP 5 CUSTOMER CONCENTRATION AS % OF SALES
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Top 5 customer concentration
Rest