GLOBAL BIOCIDES REPORT - 2017

OVERVIEW OF THE GLOBAL BIOCIDES MARKET

Biocides are used in a wide range of applications to control the growth of

microorganisms, which might otherwise have a negative effect on processes,
products and end users. Biocides are increasingly being used to control the
spread of microbes via incorporation into products such as door handles,
cleaning cloths, conveyor belts etc with the objective of reducing the spread
of microbes via human contact and improving hygiene levels.

Performance of the Biocides industry

The global market for Biocides is $ 6.8 Billion at active manufacture level. The
main factors affecting the Biocides industry are the substitution of
conventional Biocides by phenoxyethanol, organic acids and boosters, the
substitution of lower value biocides such as formaldehyde releasers by higher
value biocides, an increase in pricing due to higher raw material prices e.g.
iodine and the continual strong growth in the BRIC countries which is
extending to other developing nations.

Within the global marketplace, there has been a significant geographical

movement with markets such as Leather, Marine Paint, Paper, Plastic and
Textile production shifting from the mature economies of North America and
Western Europe to the more attractive emerging economies of Asia, Latin
America, Middle East and Eastern Europe. Growth will continue in Brazil,
China, India and Russia as well as emerging markets such as Chile,
Indonesia and Countries in the Mediterranean, Persian Gulf and Red Sea
Regions.

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 GLOBAL BIOCIDES REPORT - 2017

Biocide Consumption at Active Manufacture Level by

Application

The global market consumption for speciality Biocides was over $ 6.8 billion
at manufacture level. Antiseptics and Soaps, Disinfection and Surface Care,
Personal Care, Recreational Water and Wood Preservation are the leading
enduse applications for Biocides. The following table illustrates the main end-
user applications by geographical region for Biocides in $ million at active
manufacture level:

Table 1: Global Biocide Consumption in $ million by Application and Geography

INDUSTRY AMERICA ASIA EUROPE TOTAL
Adhesives 32 28 14 74
Antifouling Paint 51 270 76 397
Antiseptics and
228 206 202 636
Soaps
Disinfection &
299 301 298 898
Surface Care
Inks 17 20 15 52
Leather 28 37 22 87
Metalworking
44 42 33 119
Fluids
Oil & Gas 81 72 57 210
Paint 145 148 111 404
Paper 82 60 58 200
Personal Care 306 328 320 954
Plastics 67 81 49 197
Polymer
27 31 21 79
Emulsions
Mineral Slurries 21 19 13 53
Recreational
496 137 145 778
Water
Sterilants 34 37 39 110
Textile 113 106 90 309
Water (industrial) 139 92 100 331
Wood 471 211 202 884
TOTAL 2,681 2,226 1,865 6,772

America is the leading geographical region for Biocides accounting for 39 %

of global consumption as illustrated in the table above. America is followed by
Asia Pacific with 33 % of global consumption and Europe at 28%.

Our analysis for Biocide consumption includes speciality Biocides and

excludes commodity chemicals such as chlorine, hydrogen peroxide and

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GLOBAL BIOCIDES REPORT - 2017

hypochlorites which have many functions of which antimicrobial activity is

one. Speciality Biocides are derived from a variety of chemical groups, have a
precise biocidal role and are significantly more expensive than commodity
products.

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GLOBAL BIOCIDES REPORT - 2017

Mark-Up and Biocide Sales at Formulator Level

Sales at Formulator level is defined as total sales of ready to use

formulations. The value of Biocides used at formulator level was estimated at
$ 11.9 Billion or 74% more than the value of sales at the active manufacture
level.

Table 2: Consumption of Biocides at Manufacture and Formulator Level

SALES OF BIOCIDES AT MANUFACTURE LEVEL AND FORMULATOR
LEVEL
Sales of
Sales at
Distribution % Mark – Biocides at
manufacture
route in % Up formulator
level ($ B)
Level ($ B)
A. I.
6.8 30 60 3.3
Manufacturer
Formulator /
Service 70 80 8.6
Companies
Total 6.8 100 11.9

Active Biocide manufacturers have sales of $ 3.3 Bn at formulator level. The

A.I. manufacturers expect to receive marks-up of 60 % when they convert A.I.
biocides into ready to use formulations. The single biggest trend over the last
decade has been the growing sales of active manufacturers at the formulator
level and beyond. Lonza is an example of such a company. It is a leading
manufacturer of Biocide actives, a leading formulator of Biocides. It is also a
leading supplier of formulated products containing Biocides such as Wood
Preservatives and Recreational Water Products.

Formulator / service companies have sales of $ 8.6 Billion. Formulator /

Service companies include such companies as EcolabNalco, Diversey, GE,
Microban and Solenis. The Formulators / Service companies expect to
receive average mark-ups of 80% after they purchase Biocide active
ingredient and convert into Biocide formulations. The mark-ups are higher
than for active manufacturers and this reflects the costs of analytical support,
comprehensive technical support, formulation support, hygiene audits and
equipment monitoring which formulators / service companies provide at
customer’s sites by highly trained technical personnel.

Formulators / service companies are the most popular group in the supply
chain and they have achieved high market penetration, by taking the best of

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GLOBAL BIOCIDES REPORT - 2017

different actives and combining them to increase their effectiveness via

synergistic effects. They are also regarded very highly in terms of customer
service as they provide a complete product portfolio along with
comprehensive technical and regulatory support. Some formulators license
their tradenames to end-users for incorporation on their products.
Companies to have achieved the greatest success in this area are AgIon,
Biocote, MicrobanAegis, Sanitized and Thomson Research with Ultra-Fresh.

Excluded from Biocide sales at formulator level, are Biocide companies who
sell disinfection formulations at consumer level. Examples of such companies
are Lonza who sell recreational water and wood treatment products via retail
units, ICL with recreational water brands, Lanxess with disinfectant brands
such as Virkon. The mark-ups for suppliers of ‘complete ready to use
products e.g. Disinfectants’ are between 500% and 1,000%. The mark-ups
are the highest level in the supply chain and reflects the costs of supporting
brands, extensive distribution costs, regulatory compliance and a broader
range of packaging etc.

For the future, Biocide manufacturers will develop brands for their biocide
formulations and continue to acquire companies or create joint ventures along
the supply chain so as to increase their total sales and optimise value. Also
Biocide manufacturers are continuing to source in active ingredients
especially the natural type, so as to provide a complete portfolio of
formulations.

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GLOBAL BIOCIDES REPORT - 2017

Biocide Manufacturer and Supplier Sales

The top 10 biocide companies have 41 % of the global Biocides market at

active manufacture level. The leading Biocide manufacturer and supplier is
Lonza. The sales at active manufacture level are illustrated in the following
table:

Table 3: Biocide Sales at Active Manufacturer Level in $ Million

Biocide $ Million at
Manufacturer active
manufacture
level
BASF 177
KIKChemtura 159
DowDupont 444
Ecolab 164
Lanxess 216
Lonza 838
Koppers 169
OxyChem 166
Thor 233
Troy 191
TOTAL 2,757

Lonza is the leading Biocide manufacturer with sales of $ 838 million at

manufacture level. The company has leading positions in the supply of
Biocides to Marine Antifouling, Disinfection, Personal Care, Polymer
Emulsions, Recreational Water and Wood Preservatives.

DowDupont is the second leading supplier with sales of $ 444 at manufacture

level. DowDupont has acquired many Biocide businesses such as Angus,
Dupont, Union Carbide, IPBC from Sostram and Rohm & Haas. The net
result is that DowDupont biocides has moved up the value chain, broadened
its biocide business and competes in all the applications.

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GLOBAL BIOCIDES REPORT - 2017

Pricing of Biocides

The prices used in this report are for registered Biocides at active
manufacture level. There is up to 100 % difference in Biocide pricing across
the globe. The US and Japan were areas with the highest pricing whereas
South America and Asia Pacific (outside Japan) had the lowest pricing. The
main reason for the price difference is due to the higher regulatory
requirements in Japan and the US which restricts the usage of generic
biocides with limited dossiers. The following table summarises the average
price for popular Biocides globally:

Table 4: Average Price for Leading Biocides (100 %ai)

Biocide $ per kg (100 % ai)

BIT $ 3 / kg (20 % A.I.)

Quaternary Ammonium
$ 2 / kg (50 % A.I.)
Compounds
CMIT/MIT $ 1 / kg (1.5% A.I.)

IPBC $ 10 / kg (20 % A.I.)

Triclosan $ 30 / kg

Zinc Pyrithione (industrial) $ 40 / kg

The general pricing trend at active manufacture level in the last year has been
downwards and this reflects the increased competition among suppliers and
price decreases in raw materials e.g. Oil. For the future, pricing at active
manufacture level and end-user level will increase due to rising demand for
Biocides and increased regulatory requirements which will remove some of
the generics from the market.

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GLOBAL BIOCIDES REPORT - 2017

Distribution System

The dominant distribution channel for Biocides is via formulators and service
companies which account for 40 % of Biocide consumption at end-user level
as illustrated in the following diagram.

Table 5: Global Biocide Distribution by Channel

DISTRIBUTION OF BIOCIDES
Active Ingredient
Manufacturer
(32 %)

(30 %) (38 %)
Formulator / Service Co

Distributors
(40 %)
(30 %)

END-USER

The % of Biocide sales going direct to end-user is currently at 30 % and has

grown over the last few years due to acquisitions. The direct distribution for
Biocides will continue as Biocide manufacturers consolidate via acquisition of
manufacturers, Biocide distributors and Biocide formulators. The leading
acquirers in the last decade were BASF (Boots, Ciba, Cognis, Engelhard),
Clariant (Bactria, Johnson Matthey, Nipa), DowDupont (Angus, Rohm &
Haas, Union Carbide), Ecolab (Nalco), Janssen (Rutgers), Lanxess
(Chemours, Syngenta, Verichem), Lonza (Arch, Avecia, Hickson, Huntington
product lines), Solvay (Rhodia, Albright & Wilson, McIntyre), Stepan
(Pentagon) and Troy (Ashland Biochema, Bode, Creanova, ISP, Milker &
Gruning, Progiven),Micropel, Riedel de Haen)).

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GLOBAL BIOCIDES REPORT - 2017

Suppliers of Biocides to End-Users

The global biocide industry has a broad range of suppliers to end users which
can be categorised into three distinct groups as listed below:

- Biocide active ingredient manufacturers

- Formulators / Service companies

- Distributors

Biocide active ingredient manufacturers sell direct to end users and also use
the ‘other’ routes e.g. formulators (including service companies), distributors
and retail outlets. DowDupont, Evonik, Lanxess, Lonza, Thor and Troy are
the leading Biocide manufacturers.

Formulators / Service Companies are defined as companies whose majority

of sales comes from purchasing Biocides which they formulate into their own
products. They have achieved high market penetration by providing superior
customer service and formulating blends of actives which provide a broader
spectrum of control. The leading formulators are Buckman, Diversey, Ecolab,
GE, IPEL, Lamirsa, Katayama, Koppers (Osmose), Kurita, Rentokil, Schülke
& Mayr and Solenis. The structure of the Formulator / Service Companies
sector has also being changing due to mergers and acquisitions.

Distributors act as agents for both active manufacturers and formulators.

They are the most popular choice of supplier for small end users. Distributors
sell a range of chemical additives and so will be making deliveries to end
users and therefore biocides tend to be combined with other products which
allows the distributor to be competitive. The leading distributors for Biocides
are Ashland, Brenntag, Biesterfeld, Ellis & Everard, Helm, Kloeckner, Lambert
Rivière, Quimidroga, Royal Pakhoed and Univar.

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GLOBAL BIOCIDES REPORT - 2017

Requirements of a New Biocide

The prevailing attitude among users of Biocides is the desire for more
environmentally safe materials driven by Regulatory, Environmental and
Health & Safety forces. In addition, they require an active ingredient with the
following features:

- Global regulatory approvals

- Effective against micro-organisms

- Cost effective in end product

- Compatibility with ingredients of the final product

- Can withstand high processing temperatures

- Effective over a wide pH range

- Low toxicity to humans

- Extensive supporting documentation

If it were possible to develop an active ingredient with the above

characteristics, the cost to bring a new molecule to the market is expensive.
Manufacturers of active ingredients estimate that the cost for global
registration is $5 million. It takes 2 years to conduct the toxicological testing
and another 2 to 3 years for the Regional Governments around the globe to
grant registration. End users will want to evaluate the biocide from 1 to a 5
year test period.

As a result of the above requirements and small potential market size, Biocide
manufacturers are extending product lines by turning to existing active
ingredients for new applications instead of developing new molecules.

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GLOBAL BIOCIDES REPORT - 2017

Expected Growth of the global Biocides industry

The Biocides industry is likely to experience an overall increase in sales of 2

%. The key drivers:

- The global economy is recovering and this will result in increased

demand for products which use Biocides.

- Technology change e.g. the shift from solvent to aqueous based

systems will increase biocide demand. This has occurred in Consumer
Paints and now happening within Industrial Paints.

- Geographical growth in developing regions such as Brazil, China, India

and South America will continue. This will result in increased demand
for products which use biocides.

- Regulatory pressures on traditional Biocides i.e. ban on CCA,

formaldehyde releasers, mercurials, OBPA, parabens, PCP, TBTO,
Triclosan and their replacement by more higher value biocides. In
addition, developing Countries are setting up regulatory bodies which
will have a positive affect on Biocide consumption via the withdrawal of
lower value biocides with an incomplete dossier.
- Growing use of Biocides as hygiene aids in ‘everyday products’, paints,
personal care, plastics and textiles

- Increasing use of Biocides in new applications i.e. Biofuels, Renders,

Wood Composites and Wood Plastics Composites etc.
- Increase in branding where the treated product is promoted to the final
enduser. This will have a positive effect on Biocides consumption.

- Improved methods for achieving a Biocidal effect. For example there is

a growing use of inks, masterbatches, microencapsulation and polymer
emulsions as carriers for Biocides. In addition, there has been a move
to more concentrated biocides and the increasing usage of synergistic
formulations which can reduce dosage rates.

- The increasing usage of nanotechnology will make Biocides easier to

use due to lower dosage rates.

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GLOBAL BIOCIDES REPORT - 2017

- INTRODUCTION & METHODOLOGY

Objectives

The key objectives of this study were:

1. To provide marketing data on biocides, major biocide applications,

suppliers and customers.

2. To identify and analyse the trends taking place within the biocides
industry.

3. To define the regulatory and distribution channels in the industry.

Methodology

The report is based on over 500 interviews conducted throughout the globe.
In each industry analysis, BI contacted end-users, biocide manufacturers,
suppliers, distributors and trade associations by telephone and conducted
unstructured interviews typical of the type used in industrial market research.
The number of interviews conducted in each application is given in the
following table:
Table 6: Number of Interviews completed per Application
SCHEDULE OF INTERVIEWS CONDUCTED PER INDUSTRY
Biocide Formulators Distributors Other (e.g.
Manufacturers end users)
Adhesive 2 2 9
Antifouling 2 5
Antiseptics & Liquid 5 8 6 13
Soaps
Disinfectants & Surface 12 18 10 15
Care Products
Inks 1 2 15
Leather 1 16
Metalworking Fluids 2 2 32
Oil & Gas 4 2 6 12
Paint 12 4 84
Paper 5 6 8
Personal Care 8 2 34
Plastics 4 5 2 36
Polymer Emulsions 2 2 8
Slurries 1 3 10
Sterilants 3 6 2
Swimming Pools 12 7 5 12
Textiles 3 28
Water Treatment 5 3 2 16
Wood 8 7 3 10
Total 92 58 49 360

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GLOBAL BIOCIDES REPORT - 2017

In addition to interviews, the report also summarises suppliers' product

literature, data from trade associations, BI databases and our monthly
information report.

Global analysis with local focus

BI provides a regional segmentation of the specialty Biocide active ingredient

market comprising of Asia-Pacific, Europe, and Americas. The following are
the countries in each of those regions:

AMERICA
Antigua & Barbuda, Argentina, Bahamas, Barbados, Belize, Bolivia, Brazil,
Canada, Chile, Colombia, Costa Rica, Cuba, Dominica, Dominican Republic,
Ecuador, El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras,
Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, St. Kitts & Nevis, St.
Lucia, St. Vincent & The Grenadines, Trinidad & Tobago, United States of
America

ASIA PACIFIC
Afghanistan, Algeria, Angola, Armenia, Australia, Azerbaijan, Bahrain,
Bangladesh, Benin, Bhutan, Botswana, Brunei, Burkina Faso, Burma,
Burundi, Cambodia, Cameroon, Cape Verde, Central African Republic, Chad,
China (PRC), Comoros, Congo Republic, Congo Democratic Republic, Cote
d'Ivoire (Ivory Coast), Djibouti, East Timor, Egypt, Equatorial Guinea, Eritrea,
Ethiopia, Gabon, The Gambia, Georgia, Ghana, Guinea, Guinea-Bissau,
Hong Kong, India, Indonesia, Iran, Iraq, Israel, Japan, Jordan, Kazakhstan,
Kenya, New Zealand, North Korea, South Korea, Kuwait, Kyrgyzstan, Laos,
Lebanon, Lesotho, Liberia, Libya, Macau, Madagascar, Malawi, Malaysia,
Maldives, Mali, Mauritania, Mauritius, Mongolia, Morocco, Mozambique,
Namibia, Nepal, Niger, Nigeria, Oman, Pakistan, Papua New Guinea,
Philippines, Qatar, Republic of China (Taiwan), Rwanda, Sao Tome and
Principe, Saudi Arabia, Senegal, Seychelles, Sierra Leone, Singapore,
Somalia, South Africa, Sri Lanka, Sudan, Swaziland, Syria, Tajikistan,
Tanzania, Thailand, Togo, Tunisia, Turkey, Turkmenistan, Uganda, United
Arab Emirates, Uzbekistan, Vietnam, Yemen, Zambia, Zimbabwe

EUROPE
Albania, Andorra, Armenia, Austria, Azerbaijan, Belarus, Belgium, Bosnia &
Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia,

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GLOBAL BIOCIDES REPORT - 2017

Finland, France, Georgia, Germany, Greece, Hungary, Iceland, Ireland, Italy,

Kosovo, Latvia, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malta,
Moldova, Monaco, Montenegro, The Netherlands, Norway, Poland, Portugal,
Romania, Russia, San Marino, Serbia, Slovakia, Slovenia, Spain, Sweden,
Switzerland, Ukraine, United Kingdom.

Accuracy of the information

BI believes our estimates to be within 20 % of the actual value. The accuracy

of the information is dependent on many factors such as the number of
interviews conducted per application, industry concentration and industry
usage patterns. In order to increase our accuracy, BI increases the number of
end-user interviews where an industry is fragmented and continued to
interview until there is similarity in responses. Also all conclusions and data
per industry were confirmed with the key manufacturers of biocides.

Definitions

Biocide manufacturers are defined as companies who manufacture biocide

active ingredients in-house. For example Albemarle, BASF, Buckman,
Clariant, DowDupont, ICL, Lanxess, Lonza, Thor and Troy.

Biocide Blenders / Service Companies are defined as companies whose

majority of sales comes from purchasing biocides which they blend into their
own products. For example Accepta, Agion, Diversey, Ecolab/Nalco, GE,
Intace, Koppers (Osmose), IPEL, Lamirsa, Lenntech, MicrobanAegis,
Sanitized, Schulke & Mayr and Solenis.

Distributors act as agents for both active manufacturers and biocide blenders.
They are the most popular choice of supplier for small end-users. Distributors
sell a range of industrial additives and so will be making deliveries to end
users and therefore biocides tend to be combined with other products which
allow the distributor to be competitive.

Prices are in U.S. dollars and are at active manufacturer level unless stated.

Volumes are reported in tonnes based on a 100 % active biocide basis. In the
case of formulated products, the data is reported with a typical percentage of
the formulated product.

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