Best Practices of Bio-Based Businesses

For whom, and what for?

Entrepreneurs looking for good examples of colleagues and competitors
Entrepreneurs looking for potential partners
Service providers for competitive analysis and better understanding
Information sources on specific nanotech topics
Best practices by both companies as well as governmental organization
Policy makers for governmental initiatives and public research partnerships

The best practices report illustrates a way-of-thinking that is combining results of the BIOCHEM
project as represented in the toolbox. The best practices mainly focus on aspects of intellectual
property management and business model developing. These aspects are the key strategic aspects of
a business that successfully commercializes bio-based applications. Both larger corporate, key
players active in the bio-based business as well as small and medium size enterprises from all over
the world are represented in this best practices report.

This report includes the following three sections:

1. Best Practices of Bio-Based Research Organizations
2. Best Practices of large multinational Bio-Based Businesses
3. Best Practices of small and medium size Bio-Based Businesses

Best Practices of Bio-Based Research Organizations

Centre of Excellence for Biocatalysis, Biotransformations and Biocatalytic Manufacture
(CoEBio3)
The CoEBio3 is the UKs organisation designed to provide a world-class scientific environment in
which the necessary research and development can be carried out to create new biocatalyst-based
processes to meet the changing needs of industry in the next 10-20 years. CoEBio3 trains graduate
and postdoctoral scientists such that they possess the necessary combination of skills in chemistry,
biology and engineering needed to support these changes. The centre is based at the University of
Manchester and has a dedicated pilot biomanufacturing facility in the North East of England (NIBF)
that is available to both academic and industrial groups. The centre aims to supply the research,
training and development services to enable the application of white biotechnology to produce
chemical entities with an applied genes to kilos philosophy.

National Institute of Advanced Industrial Science and Technology

National Institute of Advanced Industrial Science and Technology (AIST),
led by President Dr. Nomakuchi, is not a government institution, although
funded by Japanese government to a large extent. It has 6 research fields
among which Life Science and Biotechnology, Nanotechnology,
Materials and Manufacturing and Environment and Energy. AIST is
engaged in discovery and development by bringing together different
scientific fields leading to industrial applications contributing to, among
others, a sustainable society. AIST functions as an innovation hub for Japanese industries
technology. Research focus is based on understanding and analyzing of the industries technology
needs. The institute holds 8 patents, all priority filings in Japan. Two patents have been extended to
the US. Its co-filed patents with Lockheed Corp et Japan SCI Agency have been extended to the US,
China, Australia, Korea and Europe.

Northwestern University
Northwestern University is a private institution founded in 1851 to serve the Northwest Territory
(Ohio, Indiana, Illinois, Michigan, Wisconsin and parts of Minnesota). Total awards
and grants for R&D represent approximately $477 million. Northwestern
University has a long history of leadership in interdisciplinary research programs
and centers. 27 University Research Centers and three research centers at Medical
Affiliates support interdisciplinary research that spans a wide spectrum of areas.

Studiengesellschaft Kohle mbH

The Studiengesellschaft Kohle mbH (SGK) is acting exclusively as a trustee for the non-profit
organization Max-Planck-Institut fr Kohlenforschung - and to some extent also for the Max-PlanckInstitut fr Bioanorganische Chemie - with the objective to exploit the research results of the
Institute. The Studiengesellschaft Kohle:
- establishes research co-operations of the Institute with industrial partners
- applies for and owns patents based on research results of the institutes
- grants licenses to industrial partners, prosecutes infringers of patents.

Paul Scherrer Institute

The Paul Scherrer Institute, PSI, is the largest research centre for natural and
engineering sciences within Switzerland. They perform world-class research in three
main subject areas: Structure of Matter; Energy and the Environment; and Human
Health. By conducting fundamental and applied research, they work on long-term
solutions for major challenges facing society, industry and science.

National Renewable Energy Lab

The National Renewable Energy Laboratory (NREL) is U.S. primary laboratory for renewable energy
and energy efficiency research and development (R&D). NREL's mission and strategy are focused on
advancing the U.S. Department of Energy's and our nation's energy goals. The laboratory's scientists
and researchers support critical market objectives to accelerate research from scientific innovations
to market viable alternative energy solutions. At the core of this strategic direction are NREL's
research and technology development competencies. These areas span from understanding
renewable resources for energy, to the conversion of these resources to renewable electricity and
fuels, and ultimately to the use of renewable electricity and fuels in
homes, commercial buildings, and vehicles. The laboratory thereby
directly contributes to the goal for finding new renewable ways to
power homes, businesses, and cars.

Center for Biological and Environmental Nanotechnology (CBEN)

The CBEN is part of Rice University and its mission is to discover and develop nanomaterials that
enable new medical and environmental technologies. The Center's research focuses on investigating
and developing nanoscience at the "wet/dry" interface. Water, the most abundant solvent present
on Earth, is of unique importance as the medium of life. The Center's research activities explore this
interface between nanomaterials and aqueous systems at multiple length scales, including
interactions with solvents, biomolecules, cells, whole-organisms, and the environment.
These explorations form the basis for understanding the natural interactions that nanomaterial will
experience outside the laboratory, and also serve as foundational knowledge for designing
biomolecular/nanomaterial interactions, solving bioengineering problems with nanoscale materials,
and constructing nanoscale materials useful in
solving environmental engineering problems.

Best Practices of large multinational Bio-Based Businesses

Bio-Based Energy Businesses
Umicore
Umicore is a Belgian-based multinational materials technology company, headquartered in Brussels.
Umicores pMembrain Membrane Electrode Assemblies offer fuel cell system OEMs the ability to
realize the conversion of hydrogen into electrical energy as well as the conversion of water into
hydrogen. When hydrogen generation and purification from fossil fuels are needed, Umicores
protonics fuel processing catalysts enable fuel cells to operate with a wide range of available
energy sources. Umicore is a recognized leader in catalysis, metal and precious metal compounds
and materials.
Umicores businesses are the result of continuous innovation based
on their R&D expertise as well as market developments. Their
current markets therefore reach out to various clients with
sustainability as the key. Umicores products are the materials for
these diverse applications. Umicore has the ability to process
nanomaterials into components that can be applied as the basic
materials for batteries, fuel cells, solar cells, and so on.
So their business model is closely linked to their core expertise; material science. It is not so much
linked to other expertise fields such as solar cells and rechargeable batteries as a completed endproduct. Thereby Umicore optimally places itself in their value chain by taking advantage of the key
characteristics of their technology for these energy production & storage products by providing the
components for products such as batteries. These components enable the manufactures to lower the
production costs or improve the performance of their products. By selling the components instead of
the end-products, Umicore placed itself there where the highest added value currently is within
these markets.

Bio-Based Life Science Businesses

Philips
Philips Research is one of the world's largest corporate research organizations.
Philips Research investigates new biosensor technologies for bio-molecular
diagnostics, aiming at reliable detection of extremely low concentrations (at the
nano to femtomolar level), high speed (diagnostic result in minutes), and
detection of biochemicals in raw biological samples (e.g. blood, saliva).
Philips innovation is diverse; from open innovation to rupture innovation, through global demands.
Philips is also the main worldwide industrial patent applicant and the main European applicant.

Bio-Based Food Businesses

Danisco
Danisco is a world leader in food ingredients, enzymes and bio-based solutions. In 2005 Danisco
bought Genencor to complete its enzymes and biochemicals division. Daniscos approach is to use
natures materials and through sound science, design and deliver bio-based ingredients for healthier
and safer products. Typically they build large collaborations with major customers to develop
biotechnological solutions to help their customers increase their competitiveness through innovative,
healthy, cost-effective and sustainable solutions. A recent example is the development agreement
with Goodyear to produce bio-isoprene for car tyres.

Bio-Based Chemical Businesses

Croda
Croda is a world leader in natural based speciality chemicals which are sold to virtually every type of
industry. The company has approximately 3500 employees, working in 35 countries.
Activities can be broadly classified into two sectors:
Consumer Care which consists of global businesses in personal care, health care and crop
care all markets with an increasing need for innovation and sustainable ingredients.
Industrial Specialities which comprises home care, base oleochemicals, additives for
polymers, polymers and coatings, lubricants and lubricant additives, and processed vegetable
oils.

In addition, the group has an Enterprise Technology function which identifies and integrates new
technology into Crodas global business structure which has a strong track record in renewable raw
materials and biomanufacturing.

Bio-Based Businesses active in several BB sectors

Novozymes
Novozymes was founded in 2000 when a Novo Nordisk separated their pharmaceutical and industrial
enzyme businesses. Although industrial enzymes for detergents and textiles were the first to be
developed back in the 1950s, cereal food enzymes have been profitable and successful. Identifying
the market opportunities and the needs in the baking industry Novozymes developed new successful
enzyme products for the industry.
Lipopan F, a lipase enzyme that increases dough strengthening potential and replaces partly or
completely the chemical emulsifiers usually used for strengthening the dough, is Novozymes
innovation and they succeeded in the innovation via:
Strong technological background: Novozymes had a long experience in the lipase technology.
Knowledge of the underlying mechanisms of action: Understanding the mechanisms and products
that enable changes in the industry helps creating success.
Market knowledge: Understanding baking industrys needs, habits and operational environment.
Articulation of marketing and research: Identifying market opportunities where you can develop and
offer a solution.
Product robustness: Assuring a robust and reproducible product to get satisfying final characteristics.

Best Practices of small and medium size Bio-Based Businesses

Bio-Based Energy Businesses
Konarka
Konarka Technologies, Inc. is a solar energy company based in Lowell, Massachusetts, founded in
2001 as a spin-off from University of Massachusetts. Konarka is recognized throughout the world as a
leader in OPV (organic photovoltaic) technology a 3rd generation solar
technology that is rapidly emerging to compete with silicon based 1st and
2nd generation solar technologies. The company holds over 350 patents and
filings covering every aspect of proprietary chemistry and processes. Most
priority applications are filed in the US. In terms of the number of patent
application filings in 2007 and 2008, emerging countries are China and Korea.
Visit their website to find out how this university spin-off became a world player in the solar energy
market. This company shows once again one of the most important added value aspects of
nanotechnology for several industries; the technological opportunities for a sustainable and green
world.

TMO Renewables
TMOs approach has been to focus on developing a bio-process that can tolerate a wide range of
feedstocks in conversion to ethanol. They decided this would allow them to develop the most robust
technology for biofuel production. They developed a thermophilic bacterium technology that
allowed a bolt on solution to an existing corn ethanol plant with large savings in energy. The
process requires a wet feedstock, which eliminates the cost of drying the feedstock. They develop
the technology and demonstrate in on scale and aim to sell the licenses. In Sept 2010 they
announced a $500m contract with a US company. The bacteria break down cellulose based material
more quickly than existing processes.

Bio-Based Life Science Businesses

Illustration of a BB-sector without a visible value chain: Regenerative
Medicines (RegMeds)
RegMeds are not commercially available yet; their value chains are therefore not visible yet. The
times to market are also significantly longer than for instance the times to market of most electronic
applications. Many companies, like the early biotechnology companies, adopted a royalty business
model. This means that the SMEs found large partners that could carry out the very expensive latestage clinical development, sales and marketing, as well as building of the very expensive
manufacturing facilities, while the SME was rewarded with a royalty and milestone payments. This
business model especially generates a lot of money when the eventual therapeutic really pays of, and
thus the royalties are truly substantial.
Disadvantages are clear; often only very small proportions of sales come as a royalty to the SME, and
the SME itself is still disconnected from the sales and markets, blocking business development.
Since RegMeds often have very limited shelf life times, and are for relatively short treatment periods,
small scale production facilities can also be sufficient. And compared to many other drug
development periods, RegMed development often takes significantly less time to develop (9 years
compared to 16 years).
Therefore most RegMed companies adopt a different business model nowadays, instead of the early
licensing deals with large partners (corporate venturing). The adopted model allows rapid approval of
commercially attractive applications, but requires high margin markets (blockbustermarkets),
market without adequate therapeutics available yet, and/ or markets neglected by the traditional
(bio)pharmaceutical companies. These markets also represent the opportunities and the added
value, nanotechnology can bring to life sciences markets; New therapeutic approaches leading to
treatments for illnesses that require new, unique opportunities for therapeutics.

Basically, after the initial period with royalty business models, the RegMed companies all refocused
to other financial resources allowing an integrated business model with R&D, in-house
manufacturing, sales, and marketing, all done by the SME itself. This requires financial resources like
Business Angels, Venture capitalists, and perhaps longer times of public funding. All instead of the
coprporate venturing approach adopted by early RegMed companies (based on early biotech
companies).
Often life science companies, like the RegMed companies, in the beginning sell their knowledge,
their research expertise, their lab to bigger companies, generating an income stream that then
enables the initial R&D of their own company.
The companies described below all focus on applications with blockbuster potential. All applications
developed, manufactured, sold and marketed via their own resources.

Histogen
Histogen, Inc. is a regenerative medicine company based on naturally-produced products from
newborn fibroblasts grown in a proprietary bioreactor that mimics the embryonic environment.
Histogen has developed a rich product portfolio from one core technology process that fulfills market
needs without the use of embryonic stem cells or animal products, thereby not being subject to
regulative barriers as much as many other RegMed companies.
The purpose and focus of the company is on the research, development,
manufacturing and sales of products derived from the company's core
technology. Using this proprietary tissue-engineering platform, the company has created products
that offer unique commercialization opportunities ranging from research tools to biological products
in various markets and segments of the biomedical industry. The product portfolio is also aimed at
large markets instead of niche markets for which RegMed developments also offer unique
opportunities.

EpiStem
EpiStem is an epithelial stem cell company focusing on gastrointestinal disorders, oncology, and
dermatology applications. The Company also provides preclinical contract research services and is
not involved with embryonic stem cells or stem cell transplants. These latter two, mean that EpiStem
generates revenue via their research instead actual physical products that are not
yet commercially available, and that EpiStem is circumvents regulative barriers by
not using embryonic cells or stem cell transplants. Other ways of revenue

generation, besides contract research services (fee on service basis), is via their other business
divisions; Biomarkers and Novel Therapies. The company exploits its combined business model to
advance its own therapeutic candidates to late preclinical stage development.

NanoDel Technologies
NanoDel develops and produces drug-carrier systems based on polymeric
nanoparticles, and also offer solutions for diseases of the Central Nervous System.
End of 2008 NanoDel merged their business with Capsulation to form Capsulation
Pharma, deepening their drug delivery expertise based on nanoparticles.
NanoDels technology platform was initially (during commercialization process) patent-protected for
the preparation methods of the particles, the type of application (gene therapy), the administration
method (oral application using nanoparticles), and the targeted delivery into the central nervous
system. All patents issues in big relevant markets, but especially in the most relevant R&D countries.
With this protected technology platform NanoDel designed their business model, which was based
on two pillars;
1) The formulation of compounds owned by partners and eventually leading to out-licensing
the nanoparticle technology to the (bio)pharmaceutical industry. This pillar generates early
revenue streams (during feasibility studies already).
2) Developing a NanoDel product pipeline via using patent-free compounds with proven
efficacy but inherent bioavailability, licensed-in products, and co-developments with
industrial partners.

The success of this business model is off course dependent on the technologys added value. In this
case drug delivery with - due to nanotechnology unique drug delivery characteristics. The ability of
NanoDels nanoparticles to make drugs available to the brain potentially adds significant value to
compounds.

Other BB Life Sciences SMEs

Ingenza
Ingenza are a biotechnology provider with a business model focused on going from gene to white
powders. They develop scalable bio-processes based on identified needs for customers in
chemistry-using companies. They span out of the University of Edinburgh to exploit technology
developed there in enzyme catalysed re-racemisation, which remains a core-competency, and have
built up related expertise since to offer a wider range of solutions. Initially they operated from the
University labs but with investment and revenue they moved to the Roslin Centre a few years later.
They merged with Richmond Chemical Corporation to be part of a wider, more global portfolio of
companies servicing the chemicals market offering process solutions. A large portion of their
development is funded through collaborative R&D projects using public funds.

Frutarom

Established in 1933, Frutarom is a rapidly growing global flavor and fine ingredients company and is
numbered among the ten leading companies in the world, in the field of flavours & fragrances.
Frutarom creates, develops, manufactures and markets an extensive variety of high quality flavours
and fine ingredients for customers in tehf ood, beverage, functional food, flavor, fragrance,
pharmaceutical, nutraceutical, and cosmetic industries. Frutarom markets and sells over 20,000
products to more than 10,000 customers in 120 countries, has 25 R&D labs and 45 sales and
marketing offices throughout the world and operates 19 production facilities in Europe, North
America, Israel and Asia. Frutarom employs 1,500 employees worldwide. Frutarom Industries Ltd is
a public company whose stock is listed on the Tel Aviv and London Stock Exchanges. As of January 1,
2003 Frutarom was included in the Tel Aviv 100 Index. Frutaroms major shareholder (approximately
37%) is ICC Industries Inc., a New York-based holding company that operates mainly in the chemical,
pharmaceutical and plastic industries.
Frutarom operates through two divisions:
Flavours Division (constituting some two thirds of the companys sales volume) which
develops, produces and markets flavours, savoury solutions, seasonings and food systems.
Fine Ingredients Division, which develops, produces and markets natural flavor extracts,
functional food ingredients, natural pharmaceutical/nutraceutical extracts, specialty
essential oils, citrus products and aroma chemicals.

Frutarom has strongly developed its bio-based products technology as it seeks to comply with EU
legislation regarding the labeling of natural food ingredients. This legislation limits such substances
to those obtained via physical or biotechnological processes from renewable raw materials.

Bio-Based Environment & Water Businesses

Nano Iron
Nano Iron is engaged in production and technical support in the applications of nanoparticles of
elementary iron (Fe(0), nZVI = nanoscale Zero Valent Iron). The company disposes of a unique,
environmentally friendly and wasteless technology enabling production of Fe(0) nanoparticles at the
industrial scale with almost unlimited production capacity.
Nano Iron is a Science and Technology company, which also focuses on the
development of new environmental applications of Fe(0) nanoparticles,
study of their effective stabilization and reactivity with selected pollutants.
The produced iron nanoparticles are delivered in the form of long-term stable aqueous dispersions
(Nanofer 25, Nanofer 25S) suitable e.g. in ground water remediation and waste water treatment. As
a special product the company also offers pure nanopowder of zero valent iron in the dry state
preserved in the inert atmosphere (Nanofer 25N) suitable for further processing and modification.
Known imperfection of nZVI slurries is their degradation behavior. Nano Iron is aware of product
stability, reactivity and persistence requirements. Therefore the Laboratory dispersing unit LD 05 is
placed on the market for nZVI slurry manufacturing from the dry nano-powder Nanofer 25N. The
identification of active agents, represented by ZVI nanoparticles in delivered slurries, is made by the
nZVI TESTER measuring the quality of product.
Nanofer products are highly applicable in the reduction technologies of ground water remediation,
hutch water, industrial water and waste water treatment and many other applications due to the
extraordinary reduction capabilities, small size of particles in the range of several tens of nanometers
and high reactivity with a broad spectrum of toxic substances.
Nano Irons in situ technology is ideally placed within the value chain of waste water treatment and
ground water remediation. The highest added value their technology can bring to these application
areas currently is cost reduction, and an in situ application reduces costs significantly. Due to the lack
of knowledge on free particles in the environment, it is very important to include strong service and
consultancy practices in the companys business model. Nano Iron actively participates in scientific
discussion related to this subject and sees service & consultancy as one of the main attributes to
make their business work.

Bio-Based Food Businesses

Mumtaz
Two British companies closing a gap in the prepared foods markethalal baby food. Certified halal
meat-based baby foods werent available up untill Mumtaz opened for business. Because of this,
Muslim mothers often delayed the switch from milk to solids, leading to babies developing iron and
protein deficiencies. This isn't just a problem in non-Muslim countries, where halal food is often less
readily available. According to a report by the Nutrition Unit of the World Health Organization, the
prevalence of iron deficiency anaemia in Middle Eastern infants is high up to 70% in some parts of
the region.
Aimed at Muslim parents who want the convenience of prepared baby food without compromising
their religious beliefs, halal baby foods should do well both in Muslim and non-Muslim countries.
With an estimated 1.4 billion Muslims world-wide, this is hardly a niche market.

Frutarom
See Other BB Life Sciences SMEs.

Bio-Based Material Businesses

NatureWorks LLC
NatureWorks produces a family of commercially available polymers based on agricultural resources
bioplastics, with costs and performance competitive with petroleum-based packaging materials.
NatureWorks was born in 1997 as a joint venture of Cargill and Dow chemicals. Before the
foundation of NatureWorks, Cargill had developed new, more efficient and cheaper processes of
producing PLA. To obtain good knowledge of final markets, Cargill decided to partner with Dow
Chemicals and form a joint company Cargill Dow to ensure that bio-based PLA production would
become a success. Cargill Dow then later became NatureWorks with annual PLA production of
140,000 tons.
Why have they succeeded in innovation?
Strong strategic partnership: Partnership of two different players can result in a successful transfer of
knowledge.
Environmental awareness of consumers: Market pickup, increasing sales and retailers interest show
how increasing environmental awareness has created a whole new market for the bio-based PLA.

Cost competitiveness: Development of a product which is able to compete both technically and cost
wise with petroleum based plastics.
Close market contact: The experience of Dow on plastics contributed to the success.
Communication: The attractive story of replacing fossil-based plastics with renewable and recyclable
products was utilised well from the beginning.
Clear leadership in the initial project phases in Cargill: In the early development phase there were
strong minded champions to carry out the project.

Tecnaro GmbH
Tecnaros innovation: ARBOFORM produces liquid wood from lignin. It is a thermoplastic
material that can be produced at a competitive price compared to conventional thermoplastic
materials.
Background: Plastics used to be the only economically feasible material for designing geometries.
Now wood can be used like a conventional thermoplastic material. Liquid wood is mainly used for
injection moulded wood applications.
Why have they succeeded in the innovation?
Superior functionalities: The product has a number of technological advantages over synthetic
plastics compounds as a strong engineering material.
Strong case in favour of sustainability: Lignin is a by-product of the cellulose industry, i.e. its use does
not compete with food production. The product is based on renewable resources and thus provides
independence from petroleum based materials. The product is also biodegradable and can be burnt
without the release of fossil CO2.
The product is easily applicable in various industries: Utilisation does not require investments in the
clients facilities as it can be processed by conventional plastic fabrication techniques. Products are
already applied e.g. in packaging, furniture, toys, shoes, music instruments and automotive industries
and there is significant potential in many other industries, too.
Strategic partnership: Tecnaro has formed a partnership with a plastics company.

Bio Based Agricultural Businesses

ILSA
ILSA valorizes waste of leather production processes. Italy is the European leader in leather market
(70%) and even in the world market (20%). In Italy the leather production concentrates in three
different areas. In Arzignano (province of Vicenza), where ILSA is located, there is the highest
concentration of leather producers in Europe. ILSA bio-transforms leather waste in valuable
nitrous/organic fertilizers, which are clearly preferred over the competing ammonia and urea,
especially with regard to their ability to slow-release the nitrous compounds etc.

The Business Model: leather companies operating within the district spend less bringing their organic
wastes to ILSA than by ordinarily land filling of their waste, therefore they save money by bringing
their waste to ILSA at a certain price (not for free). ILSA is therefore able to go to the market with the
nitrous-efficient fertilizer at a price economically viable. Payments for the leather waste or not
receiving any contribution by the leather companies would mean the prices of ILSAs fertilizers would
not be competitive to the non-biological fertilizers due to the otherwise high cost raw materials.

Bio-Based SMEs active in several BB sectors

Bioamber
Bioamber is a joint venture established between DNP Green Technology and ARD (Agro-Industrie
Recherches et Dvelopements). They commercialised biobased succinic acid by building an industrial
scale plant using technology that is cost competitive with the petrochemical processes.
Succinic acid and succinate esters can be used as building blocks in a multitude of markets including
biopolymers, plastics, polyesters, resins, runway deicers, non-toxic solvents and renewable fuels (as a
diesel additive). Much of the research into biobased succinic acid originates in government agencies,
particularly the US Department of Energy.
Why have they succeeded in the innovation?
Differentiation in technology: Bioamber has an exclusive licence for the technology of the US
Department of Energys proprietary E. Coli bacterium which Bioamber has optimised.
Case in favour of sustainability: the process consumes CO2 gas, which gives an additional advantage
over petrochemical processes.
Strategic partnerships in many areas: Development of new applications assisted by the work with
variety of industry partners. Partnerships also to support distribution, new plant building, and
scientific research. The strategy of Bioamber is to be more a partner rather than a competitor with
the main players in the chemical industry.
Value chain management: Bioamber also has made an acquisition of a plastic producer to move
down the value chain.
In the future actions to shape the market: Bioamber plans to build market demand by negotiating
the sale of technology platform licences for large scale succinic acid plants.