Marketing

of enzymes and metabolites

Dissertation report

Submitted for the fulfillment of MBA (Biotechnology Management) Degree of Amity Unversity, Uttar Pradesh

Submitted by Nitish Malik A0500110026 Submitted to Ms. Divya Christopher Assistant Professor and Centre Head MBA Biotechnology Management & IPR Amity Institute of Biotechnology, Amity University, Uttar P

TABLE OF CONTENTS

Chapter No. CHAPTERS 1 2 3 4 5 Introduction Literature Review Industrial marketing strategies Results Suggestions & Recommendations

Page No.

References

Annexure

CHAPTER:1 INTRODUCTION

INTRODUCTION The Indian economy since 1990 is risingsharply. Today, Indian is the fourth largest in the world if measured by purchasing power parity (PPP). With a GDP(gross domestic product) of US $ 4.0 trillionupon measuring in USD exchange rate terms1

. India is the second fastest growingmajor economy in the world after China,with

a GDP growth rate of 8.5 per cent atthe end of the second quarter of 2010 20112

.The

main

driving

forces

behind

thisunprecedented

success

are

informationtechnology (IT) and biotechnology (BT). Information Technology and Bio-technology constitute approximately 5 percent of the countrys GDP, showing 23 and40 per-cent growth, respectively, during theyear 1999 2000. Biotechhas covered a very broadrange of specialized areas includingmainly bio-

pharmaceutical, bio-industrial, bio-services,bio-agriculture and bioinformatics. Ofthese, the bio-industrial sector, whichincludes the harnessing of microorganismsfor the production of value-added bio-activeingredients (industrial enzymes, organicacids, bulk chemicals, single-cell proteins,etc.), is playing a predominant role in theoverall development of BT afterbio-pharmaceuticals. Both bio-pharmaceuticaland bioindustrial industries generated almostRs. 35,700 and 4,250m revenue duringthe year 2004 2005, respectively.In recent years, BT has shown a slow butsteady growth and has emerged as animportant contributor to world economy.According to eight annual survey by the Association of Biotechnology-led enterprise (ABLE) and a monthly journal, Bio-Spectrum, the sector grew threefold in five years and reported a revenue of US$ 3 billion during 2009-2011 with a 17 per cent rise as compared to the previous year4. Recent biotechnological innovations are paving the way for the successful production ofvarious bio-commodities at a commercial levelwhich not only improving the product economics but also the environment by replacing the conventional

chemical conversion routes. In the country, the role of Government-funded research institutes, universities and private sector is highly remarkable to make Bio-Technology a success at a commercial level. India isemerging as a major hub for cutting-edge R & D bio-industrial projects for global MNCs such as Novozymes (Denmark), Quest International (Irish Republic) andGenencore and Dyadic International (USA). The Danish company CHR-Hansen had been launched in India for marketing the enzymes applied in food and feed products in 20045, while Novozymes recently opened its R & D centre at Bangalore on 21st November 20106. These industrial giants are aiming towards the development of potent and designercellulases for the cheapand efficient production of bioethanol, the future renewable energy source. Apart from industrial enzyme manufacturers, bio-services and biopharmaceutical companies have shown an excellent turnover in India. the net turnover of the top 15 Indian BT industries during the year 2004 2005. Worldwide, Europe has considerable assets in the field of industrial biotechnology.

Total revenue generated by IndianBiotechnology industries Biotechnological innovations are paving the way for the successful production of various bio-products at a commercial level which has not only improved the product economics but also our environment by replacing the conventional chemical conversion routes.

Adopted from: Entrepreneurship in biotechnology Sector (IUP publications)

In India, the role of Government-funded research institutes, Universities and private sector is highly remarkable in making BT successful commercially. India has emerged as a major hub for cutting-edge R&D bio-industrial projects for global multinationals such as Novozymes (Denmark), International (Irish Republic) and Genencore and Dyadic International (USA) and Quest). The Danish

company CHR-Hansen had been launched in India for marketing the enzymes applied in food and feed products, while Novozymes recently opened its R&D centre at Bangalore. These industrial giants have aimed towards the development of potent and 'designer' cellulases for the cheap and efficient production of bioethanol and other more industry usable enzymes-the future renewable energy source. Except this, industrial enzyme manufacturers, bio-services and

biopharmaceutical companies are showing a great turnover in India.

Top ten biotechnology companies in India7 The top Indian biotech companies are contributing a lot to the overall biotech sector of the country. The top 30 companies contribute more than 50% of the total revenue of the BT industry. Top 10 biotech companies in India are1. Biocon Ltd 2. Serum Institute of India Ltd. 3. Panacea Biotec 4. Nicholas Piramal 5. Novo Nordisk 6. GlaxoSmithKline 7. Bharat Biotech 8. Krebs Biochemicals and Industries Limited 9. ZydusCadila 10.Indian Immunologicals

Biocon Ltd Name Year of Establishment Biocon Ltd 1978 Bio-pharma services (2009-10) (in US$ / Bio-industrial / Bio-

Segment

Revenue million)

533.91

Serum Institute of India Ltd Name Year of Establishment Segment Revenue (2009-10) (in INR) Serum Institute of India Ltd 1966 Bio-pharma 850 crore

Panacea Biotec Name Year of Establishment Segment Revenue (2009-10) (in INR) Panacea Biotec 1984 Bio-pharma 292.81

Nicholas Piramal Name Year of Establishment Segment Revenue (2009-10) (in US$ million) Nicholas Piramal 1988 Bio- pharma 106.95

Novo Nordisk Name Year of Establishment Segment Revenue (2009-10) (in US$ million) Novo Nordisk 1973 Bio-agri 80.07

GlaxoSmithKline Name Year of Establishment Segment Revenue (2009-10) (in INR) GlaxoSmithKline 1924 Bio-pharma 648.4 crore

Bharat Biotech Name Year of Establishment Segment Revenue (2008-09) (in US$ million) Bharat Biotech 1996 Bio-pharma 51.51

Krebs Biochemicals and Industries Limited Name Year of Establishment Segment Revenue (2009-10) (in INR) Krebs Bio-chemicals and Industries Limited 1960 Bio-pharma 19.65 crore

ZydusCadila Name Year of Establishment Segment Revenue (2009-10) (in US$ billion) ZydusCadila 1994 Bio-services 39

Indian Immunologicals Ltd Name Year of Establishment Segment Revenue (2008-09) (in US$ million) Indian Immunologicals Ltd 1983 Bio-pharma 50.92

Enzyme Industry worldwide The global market for industrial enzymes is estimated at $3.3 billion in 2010. Worldwide, Europe is the largest global industrial enzymes market, with the United States trailing Europe in terms of sales of industrial enzymes. Both these industrial enzymes markets dominate the global market, although Asia Pacific is set to register rapid growth of more than 8% CAGR to 2015. In Europe, amount of the world enzyme industries existed with a high level of knowledge in the field of food-technology and fine-chemistry.8 Due to an ever-increasing labor, energy and raw material costs, more bulk manufacturing companies are, however, moving to the Far East. In the present time of increased industrial development, the drift of industrial biotechnology in the improvement of any nation's economy is proving to be important. A study has shown that models like joint research, collaborative research and complete outsourcing have given the BT sector a successful boost worldwide.Although India is not in the top 10 list of worlds market. But India is

having a considerable share in the world industrial enzyme manufacturing market and will be amongst the worlds top 5 by 2015. The Department of Biotechnology (DBT) of the Ministry of Science and Technology has proved to be the main driving force for commercialization of BT in India. DBT is playing a vital role in the commercialization of R&D activities for biotechnology, human resource development and bioinformatics programmes and it has declared a new development strategy in the Indian biotechnology sector could cross the US $ 2 billion mark during 2006-07. Although this is for only a little more than 1% share of the global biotech pie, but the encouraging sign is that the sector has been riding on a healthy growth rate of over 35% annually over the last five years. The forecast is good and consensus among industry leaders and policy makers is that, with proper fiscal and policy initiatives, the sector could easily increase upto the US $ 25 billion figure by 2015. Enzymes are the centre of attraction for researchers/industrialists the world wide because of their wide range of application in analytical, physiological and industrial applications. Although enzymes have been isolated, purified and studied from microbial, animal and plant sources, microorganisms represent the most common source of enzymes due to their broad biochemical diversity and feasibility of large-level production by exploiting cheap carbohydrate sources. This report presents an overview of the current status of the bio-industrial sector in India. Particular emphasis is placed on the Indian enzyme industry.

Main industrial enzymes and their uses in brief What are enzymes? Naturally occurring proteins which are found in every living organism: man, animals, plants, or microorganisms such as bacteria and fungi Natures tools - enzymes cut and paste substances and speed up all vital biological processes The enzymes in the stomach, for instance, ensure that food is cut into tiny pieces that can be digested by the body Enzymes make better use of raw materials and create more from less Enzymes or Biocatalysts are most of the times proteins (enzymes) or, sometimes, they may be nucleic acids(ribozymes; some RNA molecules can catalyze the hydrolysis of RNA). These (ribozymes)were detected in the 1980s). The enzymes are necessary in all bio-systems, to catalyze bio-chemicalreactions, required for their reproduction and survival rapidly, selectively andefficiently i.e. smooth lifecycle. Isolated enzymes can also be used to catalyze such type of reactions. However in the case of enzymes, the question whether they can also act as catalysts outside living systems had been a point of controversy among biochemists in the beginning of 20th century. It shows at an early stage that however enzymes could indeed be used as catalysts outside living cells, and several processes in which theyare applied as biocatalysts have been patented9

In simple words enzymes are catalysts, organic compounds produced by living organisms which work by lowering the activation energy barrier thus accelerating the transformation rate of substrate to the end product. Although initially, all enzymes are intracellular (produced in the cell), some are secreted through the cell

wall(extracellular) and function in the cell's environment. Thus there are two types of enzymes on the basis of site of action: intracellular enzymes or endozymes (functioning in the cell), and extracellular enzymes or exoenzymes (functioning outside the cell). The enzyme first used commercially was diastase for the production of dextrin in bakeries, beer and wine production from fruits in France in 1830. The first company for the production of enzymes was started in 1874, in Denmark Christian Hansen's Laboratory(by Christian Hansen) for the marketing of standardized enzyme preparations, rennet for cheese making. In USA, in 1890s at Miles Laboratories, J. Takamine isolated bacterial amylases. In 1913, Otto Rohm's patent gave the idea of using pancreatic extract enzymes as washing aids for laundry cleaning and the product was marketed under the brand name Brunus and was sold in European markets for about 50 years. In the mid-1960s, alkaline protease was introduced by Novo Industry A/S introduced in the market produced by Bacillus licheniformis with the brand-name Alkalase.Furthermore, in 1985, Novo launched a new multi-enzyme preparation containing -cellulase, alkaline protease and other enzymes, which brought evolutionary changes in the market. In general, an ideal enzyme for detergent preparation should be effective at low levels (0.40.8 per cent) in the detergent solutions. Today, proteases are the leaders of the industrial enzyme market worldwide. Now enzymes have attained the status of a household commodity. Recent developments in the field of enzymology, such as genetic engineering development for recombinant enzymes, search for biodegradable carriers for immobilisation, extremozymes and now a days cross-linked enzyme crystals yielding stable enzymes, are more suitable for commercial organic synthesis and their resolution.

Today enzyme technology, in conjugation with multidisciplinary scientific knowledge and process technology, is important for the development of new, clean and cost-effective manufacturing concepts for food specialty (e.g., bread, cheese, alcoholic beverages, vinegar, fruit juice, etc.), fine-chemical (e.g., amino acids, vitamins), bulk chemical commodities (bioethanol, biodiesel, xylitol, 2, 3propanediol, etc.), and pharmaceutical and neutraceutical products.12 Enzymes also have an application for a wide range of analytical purposes especially in food diagnostics and as sensors in electrochemical reactions. Presents the major industrial enzymes and their broad-range applications.13, 14, 15, 16, 17,18

Table 3 - Major industrial enzymes and their applications Enzyme Alkaline protease Alpha amylases Applications In laundry, dish washing, textile washing, food and dairy industries, glass lens cleaning, etc. In food industries, detergent industries, paper industry and pharmaceutical industries Isomerise glucose to the sweetener molecule and high fructose, Starch liquefaction, glucosefructose sugar syrup making and ethanol making industries In beta-lactam semi-synthetic antibiotics intermediates production and racemic mixture isolation In food, feed and beverages, pulp and paper industries, detergent

Glucose isomerase

Penicillin acylases Cellulases

Enzyme

Applications industries and bioethanol production In pulp and paper industries, food and feed industries, textile and bioethanol production In food and feed production, fruit juice purification and

Xylanases

Pectinases

stabilization, textile industries, retting and de-gumming of fibre crops and quality paper production In dairy and other food processes, detergents, pharmaceuticals, cosmetics, leather processing and production of aliphatic acids In hydrolyzing of tannins, leather processing, wine making by

Lipases

Tannases

reducing the haze, preparation of cold water soluble instant tea, coffee, etc. In reducing phosphorus excretion of monogastric animals by

Phytases

replacing inorganic phosphates, animal nutrition, processing of human food and environmental protection Delignification of pulp and paper, fine paper making, fruit juice

Lactases

clarification and stabilization, bioremediation, xenobiotic substrate removal, detoxification of plant cell wall-derived sugar syrups.

Use in laundry Novozymes first enzyme was a protease used in hospitals to remove blood stains from linen Today, enzymes enable laundry to be washed at much lower temperatures by cutting up stains and grease. Enzymes are effective down to 15C Lowering washing temperature from 40 to 30C reduces electricity consumption by 30% - while keeping clothes clean Enzymes replace oil-based chemicals previously used in detergents. Use in animal feed Pigs and poultry stomachs not capable of breaking down plant cell walls. Nutrients, especially phosphates, pass right through the animals without being utilized Phosphates in animal dung pollute rivers and lakes and cause algae growth Farmers have to add expensive inorganic phosphates to animal feed By adding enzymes to the feed, almost all the nutrients are released This saves costs for the farmers and reduces pollution Food production Enzymes can replace artificial colorings, flavorings and preservatives Cheese, beer and wine cannot be made without enzymes Creates low-carb or light beer Makes sugar sweeter: glucose to fructose Removes harmful trans-fats from cooking oil Keeps bread fresher for longer less waste Produces more beer from less malt

Technical enzymes Technical enzymes are used, among other things, in the transformation of starch into different kinds of sugars. This functionality is used in the starch and fuel industries. However, technical enzymes are also used for many other applications in, for example, the leather, textile, and forest product industries. Enzymes Market This market is expected to reach $4.4 billion by 2015, a compound annual growth rate (CAGR) of 6% over the 5-year forecast period.19In India, the maximum demand of enzymes is in pharmaceutical industries, followed by food/feed and textiles. In India, the bio-industrial sector, which predominantly comprises the enzyme companies, is estimated to be Rs. 3,950m in 20062007 and registered 5.33 per cent growth in 20062007. India imports about 70 per cent of the total enzymes consumed in the country, the majority of which goes to the detergent, textile, starch and pharmaceutical industries. Based on available information, the estimated consumption of industrial enzymes in India in various sectors has been summarised in. The pharmaceutical segment is, however, still the leader in terms of enzyme demand and captures 50 per cent of the demand.

CHAPTER 2: LITERATURE REVIEW

Marketing of Industrial Enzymes Commercially important enzymes per se are utilized in various industries at a large scale. Therefore all the concepts of industrial marketing can be applied for the marketing of bio-enzymes. This study focuses on integrating the industrial marketing concepts within the biotech industry. Definition and meaning of an industrial product Definition: Its a physical thing (eg. enzymes) as well as a Complex set of economic, technical, legal and personal relationship between a buyer and a seller. Meaning of a Total Product Package: It includes basic properties (with fundamental benefits), enhanced properties (with tangible benefits), and augmented properties (with intangible benefits) e.g. In enzyme industry the product expected core use is different and they can be modified to generate more and more profits In a competitive market, (enzyme industry) business marketers must understand target customers (as in this case there are different segments in different eg. detergent industry and meat industry etc.) perceptions of a total product package as it can be a product package and offer the same better than competitors. Maintain / continue the product and its marketing strategy if the product is giving continuously the profits. Modify the product & change marketing strategy if the changing demands of the time can be met with some modifications.

 Drop / eliminate the product if there are almost no profits coming out of the selling of that product. Add new product as and when we have a product in our pipeline ready to launch in the market.

Changes in product strategy Business marketers of bio-enzymes must understand that a product strategy is dynamic and flexible as we know those previously chemicals were utilized but now they are being replaced by enzymes and metabolites. This shift has been observed lately and can be attributed to the following factors(i) Customer -needs as the chemicals are replaced by enzymes. (ii) Technology -more sophisticated and more value-added. (iii) Government Policies / Laws- as the policies in some industries are controlled by the government. (iv) Product Life Cycle every product has its own life cycle in terms of technology as well as the new replacing products. High tech marketing strategy 1. Target a niche market -in enzyme as there are different areas of consumption of enzymes so the targets can be easily met by focusing on niche market. 2. Plan whole product properties Only if we know our product then only well be able to launch it with its best presentation of attributes. 3. Develop partnerships- to get more loyal customers.

4. Unique positioning strategy- so that the threat from competitors can be met effectively whether or not to involve in the direct competition. 5. Effective Communication Strategy- designs the best possible advertising and integrated marketing communication strategy. 6. Multi Channel distribution strategy- to decrease the risk, and to ensure the proper supply or our product. 7. Skimming pricing strategy- where the market is most changing.

R Doshi, V Shelke (2001) discussed that the textile enzymes can replace the chemicals that were being used by the industry. The enzymes are very easy to use and control. Enzymes are very mild also to use so very easy to use. Another report on enzyme industry says that the enzymes industry has an oligopoly of a few players and the field has been restructuring for last few years as the R&D costs and marketing costs are proving to be the key decisive factor in order to gain the market. Another report onTechnological Innovations to Boost U.S. Industrial Enzymes Market says that this sector has to generate new and new products with new innovations from time to time and to lure the customers of this industry and to make up with the increasing demand of this field.

Manufacturers are unable to make equal investments in each segment. For instance, while bio ethanol and pharmaceuticals obtain significant funding, the paper and pulp and wastewater treatment segments have to make do with much less. This greatly hampers product development activities in the overall market. 'Manufacturers can circumvent this situation by strategically leveraging the

breakthrough achieved in bio ethanol and pharmaceutical enzymes in other segments,' says the analyst of this research. 'For example, the state-of-art technologies developed for increasing the specificity and efficiency of enzymes developed in the pharmaceutical arena can be leveraged for the development of enzymes for other applications also.'

There are many laws and rules that govern the production of bioethanol and biofuels but there is no such law in other areas. 'With respect to the pharmaceutical industry, enzymes remain a major mode of treatment for thrombolytics and cystic fibrosis and also play a major role as catalysts in the manufacturing of intermediaries.'

Despite the inadequate understanding of the chemistry of enzymes on different woods, the paper and pulp enzymes segment has the potential to grow to at least five times the present size. A typical chemicals supplier generates huge revenues and can easily afford to deploy sufficient manpower to handle customers better. However, insufficient revenue and expertise in other chemicals segments prevent enzyme manufacturers from deploying manpower exclusively for handling customers, which hinders new product development. The market shift toward developing nations such as China, reluctance of customers to modify their process to include enzymes, bio sensitization properties of enzymes on humans, and market maturity in certain segments are curtailing the market from achieving its true potential. However, market participants can still score over chemical companies by promoting their products significantly higher energy and cost savings. They could also position their products ability to reduce the consumption of chemicals and thereby, lower the waste generated by the products.

CHAPTER 3: CASE STUDY NOVOZYMES

INTRODUCTION

Novozymes is biotech-based world leader in Enzymes Global leader in industrial enzymes andmicroorganisms Leading-edge biotechnology expertise.More than 4,300 patents and patent applications Unlocking the magic of Nature is the mainobjective Enzymes are green/clean technology.

Strategies of Novozymes Built on unique technology platform in microbes, fungi and their enzymes, and microorganisms: Organic growth by market expanding products in existing or new markets Continued productivity gains. Using technology to liberate capacity for volume growth Growing into new, adjacent areas

World leader in bioinnovation

The road to become a multibillion business

Acquisitions and collaborations Leveraging Novozymes core capabilities of: Molecular biology, bioinformatics, and system biology Screening Industrial-scale fermentation Divestiture: Delivering technology to market These are required to-

 Have a strategic fit Operate B2B To digest the financial and organizational objective Add value for long term activities

Sales by region Sales in Europe, the Middle East, and Africa (Europe/MEA) increased by 11% in DKK and by 10% in LCY compared to2009. Detergent and food enzyme sales were the maingrowth contributors, while sales of biopharmaceuticalingredients decreased.Sales in North America were up by 18% in DKK and by 12%in LCY compared to 2009. Detergent, food, and technicalenzyme sales, in particular enzyme sales to the US ethanolindustry, were the main growth drivers.

Enzyme Business Development, production, and distribution of enzymes are a major part of our business. Enzymes are readily biodegradable proteins that are found in all living organisms and catalyse biochemical reaction. Enzyme technology can typically replace conventional chemicals, improving resource efficiency and generally reducing environmental impact. Enzymes Business accounts for more than 90% of sales. Enzymes Business is divided into four areas: Detergent enzymes (31%), Technical enzymes (30%), Food enzymes (22%) and Feed enzymes (9%)

Sales in Asia Pacific increased by 15% in DKK and by 7% inLCY compared to 2009. Detergent and technical enzymesales were the strongest growth drivers in absolute terms,while sales of feed enzymes decreased. All enzyme areas developed wellduring the year, especially food and detergent enzyme sales.

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18. Herrera, S. (2004). Industrial biotechnology- a chance at redemption. Nat. Biotechnol.22, 671675. 19. Bhosale, S. H., Rao, M. B. &Deshpande, V. V. (1996). Molecular and industrial aspects of glucose isomerase.Microbiol. Mol. Biol. Rev.60, 280300.