With all the trials and tribulations of the EV transition and the green hydrogen chain, it would be the perfect moment for biology to step up and make sustainability happen.
But the industrial biotech industry has been a bit of serial offender of talking up a revolution when adoption rates and penetration have remained stubbornly low.
Novonesis firmly believes the era of biosolutions is finally upon us and that industrial biotech won’t be joining the long list of failed uprisings. There will be a few bumps in the road though.
The Danish company — formed by the merger of Novozymes and Chr Hansen five months ago — is a biotech powerhouse with a toolbox of bacteria, yeasts, probiotics, enzymes and proteins, precision-trained to make anything from cellulosic ethanol and Sustainable Aviation Fuels to ingredients for infant formula.
CEO Ester Baiget and executives made their case at a gathering of investors and analysts in London yesterday. They pointed out that, although many of their latest developments haven’t been around that long, already affordability, performance and penetration are on the up.
Baiget was able to point to concrete signs. Novonesis raised its outlook for 2024, with organic sales growth expected to be at the upper end of the 5-7% range, rising to 6-8% CAGR through 2025.
More importantly, 2025 onwards will be an inflection point for bio-specialty chemicals and ingredients market with growth far outpacing the typical GDP-style expansion rate in the traditional EU1 trillion. She wasn’t ready to put a number on it yet, but one chart showed a considerable uptick in the company’s addressable market from EU20 billion today.
But some analysts still struggle with some of the “what if” scenarios in other slides.
And as Novonesis pushes the boundaries further, to capture more of the EU1 trillion opportunity, markets may not develop as quickly as expected.
An example is alternative protein. The company (then Novozymes) committed to $316 million in investment to produce plant-based products in Blair, Nebraska, but management yesterday conceded the expected revenues of EU130 million will be slower to materialise due to a two- to three-year slowdown in the alt-meat market.
“It’s all about the market readiness. If we talk about plastic recycling, the technology is ready, the solutions and enzymes are ready. Well, now Indorama is building a plant in France and we’re going to see scaling up. That’s happening,” Baiget said. “In other cases, maybe we see technology getting a little bit slower. That’s okay, we pause.”
The fermentation tanks installed at Nebraska are still being put to good use and operating at 100% to manufacture other product lines.
Inevitably, there’s some excitement around quantum computing.
The Danish Novo foundation behind Novonesis is investing $200m in building a quantum research “powerhouse,” and this could enhance its toolkit further by taking the modelling of a protein in water or other substrates to another level, according to Chief Scientific Officer Claus Crone Fuglsang.
“We are looking at that of course,” Fuglsang said. “I’m just excited that this is happening. I would not have foreseen us being able 10 years ago to actually bring some of the solutions today to market. The innovation difficulty was simply not addressable 10 years ago. As we move forward, the cost to achieve the outcome will need to come down for some of the new applications, and this technology helps us do that.”
There’s still plenty of hands-on work to make the biotech transition happen, he added. Quantum would be just one of the tools needed.
“Yes, we can take out time on the early discovery but you still need physical samples, you still need to scale it, you still need to form the microorganisms so it’s stable for the application intended. As we get more learning, we can accelerate those things. But it’s still about developing the application.”
Even if the door to a biotech market is wide open, one challenge can be the regulatory environment. Take human milk oligosaccharides. Novozymes has five HMOs in the market today but it’s taken China five years and counting to register them. Only about 10% of infant formula contains just one HMO, so the opportunity is huge, Amy Byrick, EVP of Human Health, said at the investor gathering.
At the end of the day, habits can be hard to change…farmers still reach for proven chemical pesticides over biological alternatives and even Novonesis management accidentally reverted back to the old Novozymes name on occasion.
But Baiget, dressed in revolutionary red at yesterday’s event, insists “this is just the beginning.”