Presentation that I gave on the impact of the gradual feedstock change. I focused on the perspectives for industrial biotechnology in a world with volatile crude oil prices.

1. The gradual feedstock change:
Perspectives for Industrial
Biotechnology in a world with
volatile crude oil prices
Thomas Schäfer, PhD
07/06/2010
Senior Director,
Innovation Office, Novozymes R&D
CIB Frankfurt
Tsch@novozymes.com

2. 2 NOVOZYMES PRESENTATION – May 2010 EMEA Chemicals Forum
Novozymes in brief 2009 Novozymes sales by industry
GLOBAL PRESENCE
• Global leader in Industrial Enzymes
& Microorganisms
• More than 700 products used in 130
countries within >30 different industries
• 5,200 employees worldwide
R&D
2009 market share of enzymes (industrial use)
• Market leader in all main industries
• 47% global market share within industrial
enzymes
• ~14% of sales invested in R&D
• >6,000 patents in place
PERFORMANCE
• 2009 global sales USD 1.6B (FY 2009)
• Operating profit margin 20% (FY2009)
• ROIC 20.3% (FY2009)

3. OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW • APPENDIX
Novozmes – a Sustainability-driven Organization
• Comprehensive set-up to support the organization in
integrating sustainability into everyday work
• Uniquely positioned to drive sustainable
development:
• Novozymes’ technology has significant potential to
reduce environmental impact
• Being responsible is part of the Company’s history
and values
Board of Directors
Executive Management
Sustainability
Development
department
Geographical Business
representatives representatives
3

4. 4
Can you imagine…

5. 5 6/7/2010 NOVOZYMES PRESENTATION
The Challenges
CONTENTS
Selected Examples:
• Selected Enzyme applications
• Fuel Ethanol
• Renewable Chemicals
Conclusion: The Biobased Economy

6. 6/7/2010 NOVOZYMES PRESENTATION
6
The Challenge
Continued strong growth in
China, India, Russia keeps
Population demand for petro derived
# (demographics) products high
from 6.7 billion people
in 2008 to 9 billion
Demand people in 2042-2050
new middle classes
arising esp. in China,
India, LatAm: additional
1 Bio consumers
“times of cheap crude oil are
over”
Energy supply security
consequence
Fossile Growing environmental
Feedstocks concerns
Green house gas emissions
and global warming
time

7. 7 6/7/2010 NOVOZYMES PRESENTATION
2000-2010:
Strong increase of crude oil prices…
http://www.mongabay.com/images/commodities/charts/crude_oil.html

8. 8 6/7/2010 NOVOZYMES PRESENTATION
…with strong volatility
Tuesday 26.05.2010
http://www.wtrg.com/daily/crudeoilprice.html

9. 9
Sustainability drives Industrial Biotechnology
Increasing support from scientific
groups supporting governments “Thus we face the consequences
of burning of high sulfur coal,
Bioeconomy Council depletion of petroleum reserves
Germany for transportation, and excess CO2
US Academy of Sciences being produced as stored
OECD hydrocarbon reserves are
depleted.
Increasing support from NGO´s
…Sustainable, efficient and clean
WWF sources of energy are crucial to
reducing our dependence on and
the depletion of fossil fuels. The
New Biology can help propel the
sustainable production of biofuels”

10. 10 6/7/2010 NOVOZYMES PRESENTATION
Enzymes reduce CO2 emissions
Corporate target for 2015:
Enable indirect CO2 emission reductions of
75 million tons by 2015
NZ helped saving 28 Mio tons in
2008
3,800 KG
CO2 SAVINGS USING 1 KG ENZYME 3,400 KG
IN THE MANUFACTURING OF
CONSUMER PRODUCTS :
1,300 KG
MINUS : UP TO
600 KG
CEREAL FOOD
BIOCATALYSIS
100 KG 150 KG 150 KG 200 KG
30 KG 40 KG
OILS & FATS
PAPER
BIOETHANOL DETERGENT FOOD
TEXTILES
ANIMAL FEED LEATHER

11. 11 6/7/2010 NOVOZYMES PRESENTATION
The Challenges
CONTENTS
Selected Examples:
• Selected Enzyme applications
• Fuel Ethanol
• Renewable Chemicals
Conclusion: The Biobased Economy

12. 12
The basis for the gradual feedstock change
Biotechnology as key
enabling technology
to link feedstocks to
products
• Green Biotech
• Industrial Biotech
• In combination with
chemical engineering/
downstream processing

13. 13
Fermentation is a central part of Industrial
Biotechnology
Traditional:
Enzymes
Vitamines
Aminoacids
Ethanol
Glucose
from
starch Bacteria
Fungi
Non-GMO and GMO

14. 14
Fermentation is a central part of Industrial
Biotechnology
NEW: Traditional:
Glucose Enzymes
from
Biomass, Vitamines
agricultural Aminoacids
waste Ethanol
Emerging:
Bio-polymers
Bio-chemicals
Chemical
Intermediates
”Advanced
The sugar platform fuels”

15. 15
15 07-06-2010
Novozymes delivers enzymes for the 1st generation
bioefineries: “cheap sugar platform” as future feedstocks
Largest supplier of enzymes to the existing fuel ethanol industry
~17% of total Novozymes sales in 2008
Predominantly a US business
Yeast Bio-
Enzyme Fermentation ethanol
Starch process

16. 16 07-06-2010
Novozymes technology leads the way to
2nd generation biofuels: sugars from biomass
Leading the way in development of cellulosic bioethanol in collaboration with
industry leaders around the globe
Starch Enzyme
process
Yeast Bio-
Fermentation ethanol
Waste Pre- Enzyme
treatment Cellulose
biomass process
process
• New Enzymes • Ca. 150 people working on this
• Improved Enzymes project
• New, more profitable production • Across all regions
strains • Using many technologies

17. 17 07-06-2010
Cellic® 2010 launch
Cellic CTEC2:
The new product is
launched in Feb
2010
The first
commercially viable
enzyme for
cellulosic ethanol

18. 20X ENZYME COST REDUCTION
OVER 3 YEARS
GreenField ethanol
•Largest fuel ethanol producer
in Canada
•R&D facility in Chatham, Ontario
•1 ton/day pilot plant running for
3 years with repeatable results
at multiple scales
•Focus on corn cob and screening
other feedstocks
Novozymes Cellic® CTec2
•20x reduction in enzyme cost
in three years
•Validated in 5-T hydrolysis reactor
•Two 50% reduction step changes
from enzyme improvement
18

19. 19 07-06-2010
Renewable Chemicals
CONTENT

20. 20 8/9/2009 NOVOZYMES' CAPITAL MARKETS DAY
Conversion of renewables
– Renewable chemicals fit well with Novozymes
Leveraging central technology from Novozymes
Leveraging partnerships with grain processors and chemical companies
Yeast Bio-
Fermentation ethanol

21. 21 8/9/2009 NOVOZYMES' CAPITAL MARKETS DAY
Conversion of renewables
– Renewable chemicals fit well with Novozymes
Leveraging central technology from Novozymes
Leveraging partnerships with grain processors and chemical companies
Yeast Bio- Renewable
Fermentation ethanol chemicals
Heterogenous Renewable
catalysis chemicals
Novel
Engineered
pathway Renewable
-- chemicals
Novel
bioprocess

22. 22 8/9/2009 NOVOZYMES' CAPITAL MARKETS DAY
Conversion of renewables
– Renewable chemicals fit well with Novozymes
Leveraging central technology from Novozymes
Leveraging partnerships with grain processors and chemical companies
Yeast Bio- Renewable
Fermentation ethanol chemicals
Heterogenous Renewable
catalysis chemicals
Novel
Engineered
pathway Renewable
-- chemicals
Novel
bioprocess

23. 23 07-06-2010
Renewable Chemicals
Renewable chemicals are in their infancy
Dedicated pioneers have shown
”it can be done” – even with new molecules
tio n
ro duc tio n
In p ro duc
In p
Branched Poly-
hydroxy-alkanoates
Poly-hydroxy-
9
butyrate (PHB)
on 12/0
oducti
I n pr

24. 07-06-
2010 Biorefineries at ATV
24
Existing bulk chemicals like PE can be made (Braskem):
Ethanol as platform chemical

25. 07-06-
2010 Biorefineries at ATV
25
Bio-PE has positive impact on GHG emissions

26. 26 NOVOZYMES PRESENTATION – May 2010 EMEA Chemicals Forum
Renewable Chemicals is a strategic focus area
for Novozymes
“Sugar platform” as basis
We strive to execute and build a pipeline to create a new business with
committed partners who share our strategic intent
Committed team including business development and R&D
Four ongoing project with dedicated partners
Bio-Acrylic acid Cargill
Renewable
Renewable Bio-Polypropylene Braskem
Chemicals
Chemicals
Platform
Platform Glycol Dacheng
Not disclosed Not disclosed

27. 27 07-06-2010
The technology – Engineered pathways
A microbial cell is highly optimized by gene technology to produce a desired
compound from a given feedstock in the highest amounts possible
Here: not secreted enzymes, but intracellular pathways that consist of many
different enzymes
Novozymes example: Hyaluronic acid
product 1
product 2
product 3
Starch
Ferment-
able
sugars
Waste
biomass
Renewable
chemicals

28. 28 07-06-2010
Case 1: Bioacrylic acid, market
Existing market = USD 11 billion
Annual production = 3.1 million tons (2005)
Annual growth = 4%
Upside: 3-HPA is a building block by itself
Serving many different applications, including high-end industries such as
diapers, hygiene products, flocculants, coatings, dispersions, and adhesives
New applications

29. 29 07-06-2010
Case 1: Bioacrylic acid, partnership with Cargill
Current petro route for production of acrylic acid
Propylene Acrylic acid
Propylene 2000: USD 430/metric ton
Propylene 2008: USD 1,450/metric ton
New fermentation-enabled route to acrylic acid
Chemical
Enzymatic Engineered
downstream
process pathway
process

30. 30 6/7/2010
Case 2: Novozymes Green Polypropylene
project with Braskem
Goal: Development of large-scale production of
polypropylene from sugarcane.
Use: in plastic used in e.g. food containers,
drinking straws, and water bottles to washing
machines, furniture, and car bumpers.
Market: second most widely used thermoplastic
with a global consumption in 2008 of 44 million
metric tons. The market is estimated to be USD
66 billion, with an annual growth rate of 4%.
Partner: Braskem is the largest petrochemical
company in Latin America with ongoing interests
in a bio-based economy: Braskem is currently
building a 200,000-tons-per-year green
polyethylene plant in Brazil with ethanol from
sugarcane as the raw material.
Timing: Initial development will run for at least
five years (from end 2009)

31. 31 07-06-2010
The challenges are enormous
– Traditional chemicals are from an optimized industry
Petroleum-based
chemistry
Optimization:
Scale
Level of optimization
Energy efficiency
Fixed cost reduction
Improved maintenance
Sourcing/supply chains
Value engineering
Plant reliability
On-stream time
…
Foundation Development Expansion Diversification Maturity
Time

32. 32 07-06-2010
…while renewable chemicals are in their infancy
Petroleum-based
chemistry
Level of optimization
Renewable chemicals
have to compete on price
and performance
No subsidies
New infrastructure
Renewable chemicals industry
Time

33. 33 07-06-2010 Biorefineries at ATV
So why pursue this?
The market is gigantic
Total value of chemical market in 2003 ~ USD 1.24 trillion
Commodity chemical market in 2005 ~ USD 360 billion
Virtually all bulk chemicals are produced from oil and gas today
Trends are in place
Sustained high oil prices suggest that it is
possible to substitute many bulk chemicals
at a lower and less volatile cost using a
biological alternative
Further drivers (customer request for
renewable products and population
growth) suggest a role for biotech
* Excluding pharmaceutical and consumer products Technological advances
SOURCE: Modified from Value Creation, chapter 1
Ed. Budde, Felcht, Frankemölle, 2006.

34. 34
Selected other projects:
”untraditional partnerships”
DuPont/BP: Butanol
Danisco/Goodyear: Isoprene
Amyris Biotechnologies: Isoprene, alternative fuel
LS-9: alternative fuels
Roquette/DSM: Bio-Succinic
Metabolics Explorer: L-Methionine, 1,2-Propanediol,
1,3-Propanediol, N-Butanol, Glycolic acid
Genomatica: 1,4-Butanediol

35. Rethink Detergents: a traditional industry
Replace
Chemicals
- Bioinnovate
your detergent
It started as a
dream!

36. The Basis
Enzymes are becoming increasingly competitive
Detergent raw material prices 1993-2007
Enzymes - independent of oil prizes
170
160 159%
150
140 133%
130
126%
120
110
100
90
80
70
60
50
40 39%
30
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
LAS AEO Zeolite Enzyme
Savinase 12 T to UL

37. 37
Conclusion: Biobased Economy
Less energy
Less water
Less chemicals
Better utilisation of raw
materials
Less CO2
Ability to convert
agricultural feedstocks
Ability to produce food,
feed, fibres, fuels &
materials

38. 38 07-06-2010 Biorefineries at ATV
Future perspectives and implementation
– The way forward will be in phases
Biorefineries based
on cellulosic input,
multiple feedstocks
=> multiple products
Biorefineries based
on starch input,
specific feedstocks
=> specific products

39. 39
The time is ripe for sustainable solutions
Climate change
Growing population
Scarce resources
For questions and comments please contact
me under
Tsch@novozymes.com
or: ++45 3077 6444