Whitespace Opportunities in Biobased Chemicals Velson... · Nexant’sBiorenewable Insights ......

Whitespace Opportunities in Biobased Chemicals

July 2015

BIO World Congress on Industrial Biotechnology

Prepared for:

Contents

Section

1 A Brief Introduction to Nexant

2 The Move to Specialty Chemicals

3 Addressing Opportunities in the “Whitespace”

4 Case Studies from Nexant’s Upcoming Report

July 2015BIO World Congress on Industrial Biotechnology

A Brief Introduction to Nexant


Nexant provides expertise across the energy and chemicals value chain, in traditional and renewable sectors


Energy Chemicals and Clean-tech

Electric Power

Grid Management

Software

Energy Efficiency

Demand Side Management

Gas Market Analysis and Forecasts

Gas Monetization

Gas Regulation

LNG & Gas Pipeline Projects

Petroleum Refining

Product Market Forecasts

Coal to Liquids

Gas to Liquids

POWER GAS CHEMICALSDOWNSTREAM OIL GREEN CHEMICALS RENEWABLE ENERGY

Syngas

Biopolymers

Olefins

Alcohols

Aromatics

Sourced from Biomass, Algae, Wastes, and

Biomass

Gasification

Solar (Thermal & PV)

Wind Power

Clean Coal

Capture and Sequestration

Fuel Cells &

C1 Chemicals & Fertilizers

Olefins

Aromatics

Polymers

Inorganics

SpecialtyChemicals

Advanced Materials

Nexant has completed over 3,000 client assignments in over 100 countries, and has over 600 employees

NexantThinking™ reports and subscription programs provide comprehensive analysis and planning tools


See www.nexantthinking.com for more information

Nexant’s Biorenewable Insights offerings provide regular coverage of the sector

Reports are written on a 3-year rotating basis, with updates every quarter


C1-C2 C3C4, Aromatics &

Other

Fuels and Refining

IntermediatesBio-Feedstocks

Biomass Gasification Propylene BDO Jet Fuel Cellulosic Feedstocks

Ethylene Acrylic Acid Butadiene Naphtha Cellulosic Sugars

Methanol/DME n-Butanol Isobutylene Ethanol Starchy Feedstocks

Alpha Olefins and

LAOsIsobutanol Succinic Acid Biodiesel

Natural Oil

Feedstocks

Lactic Acid/PLA Polypropylene Adipic Acid Isooctene/Isooctane Biomass Pretreatment

Biogas and LFG PDO and PTTIsoprene and

Isoprenoids

Gasoline and

ReformateMSW

Hydrogen Propylene Glycol BTX and PX Bio-Lubes Algae Technologies

Syngas Fermentation Epichlorohydrin PEF to Replace PET Bio-Crudes Lignin

Ammonia SAPs Caprolactam Pyrolysis OilSources for Natural

Rubbers

See www.nexantthinking.com for more information

The Move to Specialty Chemicals


Bio-Based Product Relative Value Technology Status

Ethanol Low Established; Cellulosic Ethanol

Emerging

L-Lactic Acid Low Established

1,4-BDO Medium Early-Stage Commercial

Succinic Acid Medium Early-Stage Commercial

Adipic Acid High In Development

Para-Xylene High In Development

The industrial biotechnology field is moving towards higher value molecules


Higher value molecules are attractive on a margin over feedstock basis –currently

primarily first-generation feedstocks for reasons of technical risk and immaturity of

cellulosic sugars technology

Avoids market development efforts for commodity functional replacements like FDCA,

PHAs or PLA

Higher-value products are consumer facing and more likely to have a bio-based

premium, such as with para-Xylene

The strategic focus on high value drop-in molecules is driven by many different factors


Moving into higher value chemicals, however, also means looking at smaller markets


Interferon, diamonds, monoclonal antibodies

Soil, sand

The most valuable and potentially exciting opportunities most resemble specialty chemicals


As a company moves into these smaller markets, several characteristics become

apparent:

Markets are less transparent

Number of possible product targets proliferates

Significant barriers to entry may exist

Product value may depend on macroscopic properties rather than molecular

composition

Branding, biodegradability, traceability and bio-based product premiums are more likely

to be significant than in commodity chemicals

Many players have started in commodities and then moved into higher-value markets


Addressing Opportunities in the “Whitespace”


Nexant has observed the major trend of biotechnology companies moving into the

specialty sector and is looking in depth at potential targets that have not been

announced by any major player.

This ongoing research is part of Nexant’s upcoming Special Report, Whitespace

Opportunities in Biobased Chemicals

Nexant’s research has included leveraging industry contacts and primary research

among formulators, buyers and producers in various sectors

Nexant is covering a variety of application areas, including:

– Cosmetics

– Flavors and Fragrances

– Agricultural Chemicals (including specialty pesticides, micronutrients, and livestock

feed additives)

– Lubricants, Surfactants, and Fuel Additives

– Nutraceuticals

Nexant is looking beyond what current players are pursing

What are the biotechnology products of the future?

How does one decide which products to pursue?


Discovery of new opportunities is as much a matter of art as it of skill

Some companies are working to leverage their engineering and technical competences

with single platform organisms to produce specialty chemicals

Some companies consider their metabolic libraries to be their core technology and select

the appropriate organism for production

Some companies are solely interested in very high-value components (>$5/lb) while

others will consider those as low as $2/lb

Capturing significant market share is as important as price

Size may be a disadvantage in terms of addressable opportunities – smaller companies

can be more nimble in terms of being able to switch from different products and be more

willing to devote the effort to addressing smaller opportunities

Nexant primary research indicates companies are pursuing specialties via diverse strategies

There is no one formula that works


Case Studies from Nexant’sUpcoming Report


L-(+)-Tartaric Acid must be enantiomerically pure (i.e., no

racemate) and sourced from non-fossil feedstocks due to

its use in food

L-(+)-Tartaric Acid has a remarkably inelastic demand

Must be sold as a pure component

Current production depends on potassium tartrate crystals

extracted from wine residues

Highly cyclical market due to weather affecting grapes

Flavors and Fragrances: L-(+)-Tartaric Acid

L-(+)-Tartaric Acid is a natural product with large applications as an acidulant,

stabilizer, baking soda activator and flavor enhancer


Global Addressable

Market

$300-$500 million with

potential for additional

growth at lower prices

Approximate World

Market Price

$2/lb, with high levels

of volatility to up to $4-

$5/lb


This molecule occupies the lower end of the spectrum in terms of price but has

high potential revenues


Traditional production is high cost and

requires acids and bases for processing

Petrochemical competitors produce racemic

and off-spec product suitable only for

industrial uses

Biotechnology can potentially offer lower

cost, greater supply reliability and lower

impact while retaining advantages of

traditional production

Biotechnology is ideally suited towards

producing enantiomerically pure product

Potential responses from current market

incumbents are limited due to high fixed

costs

Low price and relatively small addressable

market

Lower value product than ascorbic acid

Production cost play – competitiveness

depends on achieving higher titer in output

No efforts currently underway

Pathway to L-(+)-tartaric acid is based on

cleavage of L-ascorbic acid, but has not

been fully characterized in literature – this

is truly a whitespace opportunity

Potential synergies between production of

L-(+)-tartaric acid and production of L-

ascorbic acid for nutritional

supplementation

– Process technology

– Platform organisms (e.g., A. niger)


Biotechnology may be able to offer a

functional, identical replacement

Current developments in biotechnology

suggest that the pathway is not yet

characterized


Beeswax products are composed of a mixture of various esters of long-chain fatty acids

and alcohols in the C24-C35 range (alcohol) and C15-C18 range (acid)

Beeswax is gaining popularity as a natural ingredient for cosmetics

Although there is an element of marketing in the source of beeswax, the primary criteria

for use as a beeswax substitute is functional properties

Cosmetics: Beeswax (Functional Substitute)

Beeswax is a natural, waxy substance produced by domesticated bees


Biotechnology can offer potential for lower

cost and consistently higher quality without

refining natural product

There may be potential marketing

advantages for environmental reasons

Biotechnology-based beeswax is a

potential vegan substitute for conventional

types


Beeswax is primarily used in cosmetics, with minor applications in food and as a

surface protectant


Global Addressable

Market

$80-$90 million

Approximate World

Market Price

Depends on color and

desired application,

from $1.50-$5/lb

Biotechnology-based beeswax would be a

functional substitute rather than a perfect

substitute for existing beeswax

Greater control over the composition of

beeswax fatty acid and alcohol chain

lengths could lead to better tailoring of

products for use

Long-chain fatty alcohols are a major

prerequisite for production, and may have

independent uses

There are additional markets for vegetal

waxes (jojoba, carnuba) that can extend

the market, and potentially also petrolatum

substitutes

Efforts at developing synthetic beeswax

have been made by Croda, Elevance and

Koster Keunen but have not been able to

match all properties or compositions

Primary difficulty in synthetic beeswax

production has been the consistent

production of very long chain length fatty

alcohols


Biotechnology-based beeswax would be

a functional substitute rather than a

perfect substitute for existing beeswax

Some synthetic beeswax products have

been made but, typically for functional

markets, have not replicated all

properties


Many of the opportunities for biotechnology entrants are already served by bio-based

products that are produced using traditional methods

At higher levels of value and smaller markets, functionality becomes more important than

the composition of a particular product, such that all new products become drop-in

replacements

Many opportunities are quite small and individually represent relatively minor revenue

sources

Especially for small companies, there is a significant opportunity cost associated with

pursuing a given opportunity – many larger opportunities may pass you by

Imperfect substitutes for many applications can still capture significant market share

As prices increase, production cost reduction becomes less and less essential

Partnership with formulators and distributors is essential for market entry

Nexant has found through its preliminary study that target markets share certain characteristics



Contact info:

Joshua Velson

Consultant

44 S. Broadway Fl. 4

White Plains, NY 10601

+1 914 609 0341

[email protected]

mailto:[email protected]

Nexant, Inc.

San Francisco

New York

Houston

Washington

London

Frankfurt

Bahrain

Singapore

Bangkok

Shanghai

Kuala Lumpur

44 South Broadway, 4th fl

White Plains, NY 10601

Telephone: +1 914 609 0300

Facsimile: +1 914 609 0399

www.nexant.com

“This presentation was prepared by Nexant Limited (“Nexant”). Except where specifically stated otherwise in the

presentation, the information contained herein was prepared on the basis of information that is publicly available

and has not been independently verified or otherwise examined to determine its accuracy, completeness or

financial feasibility. Neither NEXANT, nor any person acting on behalf of NEXANT assumes any liabilities with

respect to the use of or for damages resulting from the use of any information contained in this presentation.

NEXANT does not represent or warrant that any assumed conditions will come to pass.

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for internal use. The presentation should not be reproduced, distributed or used without first obtaining prior

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Whitespace Opportunities in Biobased Chemicals Velson... · Nexant’sBiorenewable Insights ......

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