Influence of Biotechnology

                    FESTEL CAPITAL

The Influence of Biotechnology on Industrial Production Processes

Background

Whereas co-operations with biotech start-ups have become significant in the pharma industry, such co-operations are less extensive in the chemical industry.

The commercialisation of R&D activities in the chemical industry causes problems in some cases, so that new organisation and co-operation forms are necessary to increase R&D performance.

In the second half of 2003, FESTEL CAPITAL carried out an interview-based market study to obtain a better overview of co-operations between chemical companies and start-ups.

The market study focused on the comparison of chemical and bio-technological production processes in industrial production  ("white" or "grey" biotechnology).

Summary of the results of the market study

Core Messages

  • Biotechnology is economically attractive through the introduction of new processes and the development of new products.
  • In the year 2010 about 20% of the chemical products with a sales volume of approx. 300 billion USD will be produced using biotechnology.
  • In many cases the implementation of biotechnological processes have quickly lead to a market dominating position.
  • The commercialisation of R&D results is sometimes problematic in established companies (bureaucratic structures, fear of cannibalism, not invented here syndrome).
  • In some companies there still exists a conflict between chemical and biotechnological  point of view; since many chemists are in executive positions, it is sometimes more difficult to enforce a biotechnological variant (however the tendency is strongly declining).
  • Apart from the use of company internal resources, the incorporation of external know how within co-operations is a suitable alternative.
  • The transfer of R&D activities into an independent start-up company as R&D spin-off is a possibility to commercialise R&D activities.
  • Corporate venturing is an interesting model to gain access to external know how and to flexibilise R&D structures.
  • In virtual structures a large part of the R&D activities are performed outside the own company and only the comprehensive project management remains in-house.
  • Possibilities to replace existing chemical production processes with biotechnological processes will increase due to advances in biotechnological R&D.
  • The decisive driving force for the change towards biotechnological production processes is clearly the cost factor.
  • The restrictions of biotechnological production processes are predominantly viewed on the side of economics (operative costs, R&D costs, investments).

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