Strategy

    Novozymes works toward a future where its biosolutions create the necessary balance between better business, cleaner environment and better lives.

    Novozymes drives innovation, expands opportunities and improves productivity to achieve sustainable long-term earnings growth. By adhering closely to these three strategic principles, the company works to change the world together with its customers.

    Drive innovation

    As the world’s leading developer and producer of industrial enzymes, Novozymes drives industries forward by rethinking where and how biosolutions can be used. Innovation and sustainability are integral parts of our business model and vital elements in building long-term customer relationships. The company’s biosolutions improve industrial processes and products and sustainable value chains in industry, thereby enabling our customers to produce more with less. Research and development is key to providing these solutions, and the company invests around 13-14% of annual sales and employs over 20% of its global workforce in this area. Additionally, Novozymes is one of the world’s most active patent filers in the field of biotechnology with a portfolio of more than 7,000 granted or pending patents. The company’s innovations drive its top-line, enabling it to grow in existing markets as well as succeed in new markets.

    “In 2013, Novozymes focused its efforts on finding new opportunities by seeking closer working relationships with customers and expanding its reach through new partnerships.”

    A number of ongoing activities aim to sharpen Novozymes’ ability to act on innovation opportunities and drive growth, ensuring that the organization delivers significant innovation to the market and reaches its long-term growth targets. These activities include:

    • Innovation pipeline prioritization: targeting the innovation portfolio to ensure more growth by delivering significant innovation to the market faster
    • Collaboration: discovering new opportunities by increasingly working with customers and other stakeholders
    • New organization structure: operating with a market-oriented structure from April 2013, with increased focus on customers as well as on internal leadership development to cultivate knowledge and drive results through innovation
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    BUSINESS STRATEGY

    By driving innovation, expanding opportunities, and improving our own and our customers’ productivity, we aim to establish profitable new business areas while making the best use of our own and nature’s resources.

    Expand opportunities

    Novozymes aims to build on its foundation in enzyme technology and explore biological business opportunities in other areas as well. Biological solutions, such as microorganisms and proteins other than enzymes, can also address the need for safe and cost-effective solutions, improving industrial processes and reducing the consumption of raw materials, water and energy.

    In 2013, Novozymes focused its efforts on finding new opportunities by seeking closer working relationships with customers and expanding its reach through new partnerships, such as The BioAg Alliance with Monsanto, M&G Chemicals and Raízen. Novozymes has also set a long-term target to champion the inclusion of biofuels as a High Impact Opportunity in the U.N.-led Sustainable Energy for All initiative. The aim is to identify needs and provide biosolutions in new industries and to nurture Novozymes’ four key growth platforms: Biomass Conversion, BioAg, Animal Health & Nutrition and Biopharma. The company consistently seeks to turn opportunities into significant business that can sustain growth and returns over time.

    “Novozymes’ innovations drive its top-line, enabling it to grow in existing markets as well as succeed in new markets.”

    Improve productivity

    Novozymes aims to achieve its ambitions by constantly improving the use of both its own and nature’s resources throughout its business, especially in production processes. The company uses sophisticated technologies to improve the efficiency of its fermentation production processes, its enzyme and microbe production strains, and the performance of the enzymes and microbes themselves. This enables Novozymes to increase output from existing facilities and reduce consumption of raw materials, water and energy, making for a flexible production setup that improves financial margins and returns, as well as its environmental footprint.

    The R&D and Supply Operations departments continuously strive to find ways to improve production strains, increase product efficacy and optimize production processes. These improvements allow Novozymes to deliver better and more sustainable innovation to customers faster. At the same time, the company is cost-conscious, enhancing its ability to deliver earnings growth.

    Interview: R&D innovating for customers

    A robust research and development (R&D) pipeline is the backbone of Novozymes’ business. Protein engineering, bioinformatics, assaying and fermentation technology are deployed in close collaboration with customers to come up with innovative solutions that they actually want and need.

    In 2013, a project prioritization process was initiated to focus the pipeline and create a leaner, more efficient R&D process in order to bring more significant innovation to the market. At the same time, sustainability measures such as life cycle assessments remain embedded in the pipeline, helping Novozymes identify the solutions that best promote sustainable value chains in industry.

    Per Falholt, Executive Vice President for R&D, explains how the company is refocusing to capture growth by reorganizing the pipeline and keeping customers squarely in focus:

    What changes have been made to the pipeline?

    By using the latest available technology to speed up time to market, we can deliver new molecules more quickly. We’ve organized R&D in a way that aims to give all of our industries a smoother path toward markets and partnerships. A more targeted approach is being taken to prioritizing the pipeline and determining when a project should move forward or be dismissed. Additionally, we have tried to make it easier for R&D employees to prioritize multiple projects. Hopefully, this will lead to a higher throughput in terms of the number of projects we open and close, which should translate into a higher hit rate. If we fail with our projects, R&D is just an expense, including for our customers. If we succeed, we add value for Novozymes and customers alike.

    How are we ensuring that we deliver relevant innovation to the market?

    We like to work in partnerships. So we align the pipeline to partners with compelling targets, where there is value for both the customer and Novozymes, and where there are technical possibilities and a chance to meet our common goals for the project within a reasonable timeframe.

    Does working with customers guarantee a market for our biosolutions?

    There is no guarantee, but it makes it much more likely. That is the eternal dilemma for R&D – you can have the most beautiful technology and fantastic results, but the market can change and suddenly there’s no need for this solution. There’s also an element of timing and luck involved. But I would argue that working closely with customers increases the chances of success tremendously.

    Big chemical companies such as BASF and DuPont have been moving steadily into the biotech space in recent years. How can Novozymes ensure its solutions do not become irrelevant and it does not lose customers?

    It’s not so much that there are new players who may have deep pockets. It’s more about who has the best technology, the best people and the best connections to bring this technology to the market. The rapid increase in new available technologies will make the biggest difference. If Novozymes has the best available technology, we’ll be first. If others develop a better technology than us, then we’re under pressure. That’s where the competition is going to be. I don’t actually mind having two or three very capable competitors out there, as that will keep us on our toes!

    What can we do better or differently to ensure our solutions get to the market faster?

    From an R&D perspective, the way we generate value is through new molecules. If we can deliver new molecules faster, with more hits on target, we create more value – and LEAN helps us do that. In the past year, we have implemented LEAN in our R&D organization and pipeline. If we get the best LEAN alignment between all the different functions involved in a project, we’ll shorten time to market.

    What will R&D focus on in 2014?

    Success for our growth platforms will be incredibly important, because they hold the potential to transform Novozymes.

    Secondly, making sure our existing markets get resources and innovation is important. Striking the right balance between these two things will be critical. For me, it’s very important that our existing customers remain very happy with the innovation Novozymes delivers.

    If they don’t, we’re not spending our resources on them in the right way.