The use of adhesives has long been intertwined with our everyday lives, with one of the earliest use cases dating to circa 200,000 years ago in the form of tar-hafted stone tools. Today, adhesives are ubiquitous – found in packaging, automobile, aerospace, construction, medical, and consumer industries – and dominated by companies like Henkel, 3M, Huntsman, DowDuPont, Sika, H.B. Fuller, BASF, and Pidilite. Continue reading
Rob van Leen, DSM’s Chief Innovation Officer, has played a key role in DSM’s business transition over the past decade. As the company has moved from being very execution-focused to having a balance with longer term emerging business areas and projects, the make-up of the portfolio has migrated, the willingness to look outside the company for ideas has evolved and advanced, and the capability of the company to perform in higher risk areas has improved.
Of course, there has been a lot of learning for Rob and for DSM overall during this journey. The biggest failures came from not checking early and often enough that proposed technologies and solutions were actually solving a customer problem. Often, this was caused by failing to bring in true expertise to contribute to or direct the emerging business areas. The key, in Rob’s view, is to introduce expertise that is ahead of the business by a couple of years and will know that a given idea might be off the mark, or could be better if pivoted. In many instances, internal people are assigned to a given project on the basis of performance in other roles, but in the assigned new business area their knowledge is only a couple of weeks ahead of the company, and that’s just not enough. Rob’s emphases on hiring outside expertise to mix with internal high performers, balancing inside and outside R&D in the innovation portfolio, and integrating business unit attitudes with innovation activities are all worth a listen.
We’ve noticed the importance of these more broadly in Lux Research’s interactions with multinational corporations around the globe. Stagnancy in leadership and reliance on existing talent whether in R&D, new business development, venturing, or innovation teams leads to stagnancy of ideas, a lack of creativity in approach, and business units holding far too much power over horizons in which metrics don’t align with a long term view.
Significant improvements in luminous efficacies in light-emitting diodes (LEDs) and current densities in power electronics necessitate efficient and cost-effective thermal management solutions. Where incumbent secondary heat sinks like aluminum and thermal interface materials like thermal grease, pads, and fillers have been traditionally used, conductive polymers look to substitute these traditional materials in different applications. The question is, how much will these emerging materials solutions displace the incumbents over the coming decade?
The overall thermal management materials market will reach $4.8 billion in 2020, with LED lighting being the primary driver. The LED lighting thermal management market for secondary heat sinks and Thermal Interface Materials (TIMs) combined will grow from $1.5 billion in 2013 to $3.8 billion in 2020. The smart phone and tablet thermal materials market will triple from about $100 million in 2013 to more than $300 million in 2020, while the thermal materials market for solar micro inverters as well as the HEV/EV power module market will grow from about $28 million in 2013 to over $170 million in 2020, a CAGR of 29%. Importantly for polymer materials developers, conductive polymer developers are set for a major move over this same time period. The total conductive polymer addressable market will grow from $280 million in 2013 to $1.9 billion in 2020, a CAGR of over 31%. Polymer secondary heat sinks in general lighting will account for a majority of this market share, reaching $1.1 billion in 2020, due mostly to replacement of bulky aluminum secondary heat sinks in the residential market near term and commercial market medium to longer term. This growth is mainly driven by the sheer volumes in the general LED lighting industry. The auto LED secondary heat sink market will account for only about $92 million in 2020. The volumes in the auto LED market are substantially lower compared to the general LED lighting industry, although will allow for potentially higher priced products due to specificity. The total polymer TIM market will grow from $280 million in 2013 to $785 million in 2020, a CAGR of 16% largely due to adoption in smart phones and tablets as well as in general LED lighting as TIM.
The consumer electronics segment offers additional value for companies looking for opportunities for materials-enabled innovation. Rather than be restricted by size (area) and shape, as is the case of TIMs for LEDs, microinverters and HEV/EV power modules, polymers for electronics such as tablets and smart phones will migrate to encompass the entire body of the smart phone or tablet – making heat dissipation more effective and in the process lowering the bar for polymer thermal conductivity. This will push the boundaries of innovation in conductive polymers where aesthetics such as color and texture will become important metrics for adoption.
As with many materials-to-device integrations, partnerships will be critical to success. Already, alliances such as Philips-DSM not only reinstated Philips as a leader in innovation in LEDs but DSM’s polycarbonate solution became commercially validated as a dependable thermal management solution for MR16 bulbs made by Philips. Across LED lighting, automotive lighting, consumer electronics and larger format power electronics, device manufacturers and materials developers can mutually enable the other’s success.
Source: Lux Research report “Cooling Heats Up: Sizing the Opportunity for Conductive Polymers in Thermal Management” — client registration required.
Droughts have plagued North America cutting corn output to a 16-year low, while monsoon rainfall has been 12% lighter in areas of India and even more in other regions. But in Brazil, even though excessive rains pushed harvesting back, the 2012 yield still rose to 571 million metric tons. Estimates peg next year’s crops as being bigger than ever, due to the same unusually rainy conditions. The harvest season ending in 2010 saw yields of 541 million, and in 2011 yields grew slightly, to 557 million metric tons. But next year’s yield is being forecast to be even larger – 5.4% larger – at 602 million metric tons.
Also in Brazil, Coca-Cola contracted JBF Industries to produce ethylene glycol in Araraquara, Sao Paulo, for partially bio-based PlantBottle PET. JBF will build a new plant starting at the end of 2012 and will produce 500,000 metric tons/year; it will take two years to complete.
But aside from the feedstock and materials developments, there’s money flowing, too, in Brazil. Brazilian national development bank, BNDES, and research-financing agency, Finep, have earmarked $988 million for bio-based chemicals and biofuels investment to be placed this year ($148 million), 2013 ($345 million), and 2014 ($493 million). They emphasize only “several projects” will be pursued. Dow Chemical, Braskem, and DuPont each passed the initial selection phase for their proposals to build projects collectively worth more than $1.5 billion. DSM has already been approved to receive funding for succinic acid from sugarcane. Previously, the two organizations contributed $493 million to research on cellulosic ethanol production, gasification, and other value-added derivatives of sugarcane.
For any that doubt, Brazil’s sugarcane continues to put it on the map of bio-based chemicals and biofuels production hotspots, although a recent conversation highlighted that, ironically, corn was less exposed to food price increases than sugarcane, since sugarcane prices track with sugar, a commodity more tightly linked to food price trends than corn, which is largely used for feed and ethanol. Brazilian government support for sugarcane production and downstream conversion activities is strong, and the Brazilian bio-chemical industry has a reputation for translating technology into commercial successes well. Whether it be to keep tabs on a formidable competitor or to understand the landscape in Brazil to explore forming a valuable partnership to secure feedstock or to access sugarcane-derived material, clients are advised to monitor Brazil’s sugarcane harvest and consider it when making decisions about feedstock supply. Though this year’s droughts are not expected to repeat next year, contingency plans for less likely – and even more unlikely events – are advised, as volatility in weather yields volatility in crop yields.
Like U.S. consumers celebrating holidays and post-holiday sales, chemical giants have been in the mood to shop lately, and biotech is on their lists. Earlier this month, DuPont announced that it is buying Danisco for about $6 billion. DuPont is, of course, an iconic chemicals and materials company, while Danisco is an industrial biotech company, making chemical “parts” for products as diverse as biofuels, foods, and detergents.
This big news came close on the heels of DSM’s bid of $1.1B for Martek, an algae company (the biggest one, actually) that makes food ingredients and nutrition products, but dabbles in biofuels, as well (BP has a biofuels JDA and $10M investment with Martek). Also, just a few months earlier, DSM bought another nutrition/biofuels company, Microbia.
Why are these transactions important? Because they provide further evidence that traditional chemicals and materials companies are expanding beyond petroleum-based materials and industrial chemicals to get into biotechnology – but they’re not just using small investments in small start-ups to do so. There are two huge strategic drivers behind the trend (see the January 5, 2010 LRBJ – client registration required). First, there’s the erosion of the basic petrochemicals commodity business by new entrants from oil-producing nations, like SABIC; and, second, there’s the opportunity to leverage biotechnology to produce new chemicals and materials at the high-performance edge of the spectrum (see the September 15, 2009 LRBJ – client registration required). With the stakes now in the billions, expect more M&A activity targeting larger biospecialists like Novozymes as the agriculture, chemicals, and energy industries pursue the same opportunities in biomaterials and biofuels.
The distance between food, cosmetics, chemicals, and medicine keeps shrinking, as evidenced by several recent commercial announcements. In May, food giant Kraft and its partner Medisyn, which specializes in discovery of novel active ingredients, announced an expansion of their collaboration. Specifically, in addition to developing health and wellness actives, they’ll be developing additional compounds aimed at improving food quality, food safety, and product performance. Delivering functional actives in food products is meant to keep the company growing in the face of a general stagnation in conventional food and beverages.
Meanwhile, BASF recently said it would spend $3.8 billion to acquire Cognis, which supplies raw materials for pharmaceuticals, food and beverages, dietary supplements, and cosmetics – new markets that the chemicals firm wants to enter. Now comes word that GlaxoSmithKline’s (GSK’s) consumer products division is close to launching sports nutrition drink Lucozade in the U.S. The company’s consumer business offers a more predictable revenue stream than the larger but more volatile pharmaceutical unit.
What’s behind the convergence of these ostensibly separate industries? It’s the growing understanding that chronic, lifestyle-associated diseases like obesity and diabetes (and their opposites of lifelong health and wellness) require lifestyle products – not simply medicines, procedures, or healthy habits, but a combination of them all.
DSM’s CEO recently bemoaned the pharma-grade scrutiny that European regulators are applying to foods. But foods are increasingly part of a larger strategy (among individuals as well as corporations) for addressing aging, increasing affluence, and chronic conditions (see the November 18, 2008 LRBJ*). Specifically, that strategy combines food with over-the-counter medicines, nutritional supplements, oral care, and skin care. Moreover, established players in these fields are looking to escape competition from generic drugmakers like Teva and lower-cost petrochemicals from rising Middle East rivals (see the January 5, 2010 LRBJ*). As such, these aren’t opportunistic moves by GSK, BASF, and Kraft – they’re a harbinger of the companies’ and the industries’ futures. Rivals like Pfizer, Bayer, DSM, and Unilever should take note.
*Client registration required.
Amidst an uncertain economic climate, top corporate executives, entrepreneurs, investors, and academic luminaries traveled to Boston last month to share the ideas, insights and innovations that helped establish them as today’s business and technology leaders.
The event was the fifth annual Lux Executive Summit, where leading innovators – from IBM to Mitsui to DSM – meet, discuss and learn about the technologies that will drive growth and profits for years to come. This week, Lux Populi highlights some of the insights and observations from the Lux Executive Summit by analysts from each of Lux Research’s Intelligence services.
Biosciences: Pulp/paper producers protest penetration into biofuels
Amidst a lively debate about ethanol’s potential to displace petroleum in the U.S., Samhitha Udupa pointed out to Robert Gelman, a researcher at Ashland, that several of the technology developers that Lux has briefed were struggling with pretreatment processes to breakdown and separate components of lignocellulosic biomass (comprising lignin, hemicellulose, and cellulose). Pretreatment is widely recognized as the most expensive step in cellulosic fermentation, and enzyme giants like Novozymes spent many years designing cheaper enzymes. Interestingly, Gelman vehemently asserted that firms, like Ashland, with experience in pulp and paper have long been experts at separating components of wood, an abundant lignocellulosic feedstock.
So why aren’t more pulp and paper players stepping up to take advantage of a huge unmet need in a soon-to-be high-volume industry?
According to Robert, he had the same thought years ago, and pursued the idea with “many” (emphatically) of his higher-ups, but was met with great skepticism. He asserted that pulp and paper producers are “dinosaurs more interested in reliving ‘Blazing Saddles’ than in exploring adjacent applications for their valuable technologies.” While the cellulosic ethanol industry continues reinventing the wheel – or parts of the wheel – in an effort to bring down costs, pulp and paper producers continue to… produce paper and pulp.
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Green Buildings: Dow says many buildings are actually getting less efficient
Mike Kontranowski, Strategic Marketing Manager of Dow Building Solution’ Thermax brand of rigid insulating board, presented a sobering analysis of the direction of building efficiency during the Summit. Although buildings of all types have become more energy efficient on a per square foot basis for the past 50 years, many buildings constructed over the past decade have bucked the trend and have begun regressing on energy efficiency. This reversal comes despite newfound interest in “green building” among governments, occupants, and the building owners themselves, and despite the plethora of insulation, window, equipment, and other devices that yield far greater efficiencies. More surprisingly, many of the buildings are LEED (Leadership in Energy & Environmental Design) certified, because energy efficiency is only one of many metrics that accrue points needed for certification.
The proximate cause of the backslide in efficiency is a switch to less expensive aluminum wall studs in place of wood or block in recent years. Because aluminum is such a good conductor of heat, walls that are otherwise well-insulated – with insulation batts installed between the studs – see an overall insulating R-value of the wall drop in half, from 11 or more to 5. Thermal images of walls are particularly poignant, showing relatively small amounts of heat escaping from between the studs, while the studs themselves were lit up like Christmas trees.
Fortunately solutions exist even for this problem, including new insulating sheathing technologies from Dow and Owens Corning that cover the exterior of the studs. In addition, aerogel companies, such as Aspen Aerogels and American Aerogel, are developing insulating tapes designed specifically to envelop the studs themselves and lend substantial insulating value. Although, adoption of these technologies isn’t likely to surge in the near term, expect renewed regulatory efforts and impending financial programs like the PACE bonds may accelerate their roll-out further on (see the May 3, 2010 LRGJ – client registration required), and may reverse the unfortunate regression in thermal insulation in modern structures.
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Nanomaterials: Best practices for building a business around nanotechnology
During a panel discussion at the Summit, CTO Seth Coe-Sullivan of QD Vision, President Donald Cho of Finetex EnE, and President Adrian Burden of Bilcare Technologies discussed best practices for building a business around nanotechnology. Common tips included:
- Secure funding early
- Protect intellectual property
- Integrate environmental, health, and safety (EHS) plans with business strategy
- Develop a strong team top-to-bottom
- Developing nanointermediates instead of just nanomaterials, and
- Focus on a small number of target markets
While the trio hit most of the best practices that we’ve touted before, one of the most critical steps for a start-up is forming partnerships early with large corporations (see “Open Innovation and Its Discontents: Solving the Emerging Technology Funding Problem”). With these tips in mind, clients should check each box when engaging start-ups and benchmark the potentials against strong players like QD Vision, Bilcare, and Finetex.
With regard to Finetex, its VP Donald Cho told Lux analyst Jurron Bradley that it supplies nanofiber filters to GE for its turbines to filter the incoming air. While gas turbines may not represent a large opportunity for filter companies, the partnership is a strong vote of confidence for the product and pushes Finetex further in front of its competition. Finetex’s revenues from nanofiber sales are still a modest $1.5 million, but it sports an extensive partner and customer list, which speaks well for its future. Clients looking for a nanofiber supplier, especially for textile and filtration applications, should engage Finetex, but those considering running their own production lines should look to Elmarco for equipment.
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Power: Toyota, Compact Power, and BYD offer contrasting views on the future of Li-ion
Three panel speakers in energy storage provided three very different visions for the future of lithium-ion (Li-ion) batteries and electric vehicles. The panel included Bill Reinert, National Manager for Toyota Motor Sales’ Advanced Technology Group, Prabhakar Patil, CEO of Compact Power (a subsidiary of LG Chem, and battery supplier for the Chevy Volt), and Micheal Austin, VP of BYD America.
Reinert, the most conservative of the three, lamented that at today’s Li-ion battery prices, even a plug-in hybrid vehicle (PHEV) with as little as a 10-mile all-electric range (AER) is still too expensive. While Patil agreed that Li-ion batteries were very expensive today, he felt that costs would drop by a factor of two to four in the next five years to 10 years. Austin, by far the most bullish of the three, claimed that BYD is already producing Li-ion batteries at $500/kWh, as well as the electric vehicles (both all-electric vehicles – EVs – and PHEVs) and grid-storage systems that use them.
Our view aligns most with that of Toyota’s Reinert. Our cost estimates for automotive Li-ion packs to the automaker range between $633/kWh and $686/kWh on the pack level, which is too expensive for any PHEV to compete with a NiMH-powered standard hybrid without serious subsidies (see the Lux Research report “Looking Inside Li-ion Batteries for Cost Reduction“). While we agree with the low end of Patil’s estimates – namely the claim that large-format Li-ion prices will drop by a factor of two over the next decade – we don’t see them dropping by a factor of four in the foreseeable future, due to high materials costs.
However, BYD may have found a solution to the problem of high costs. Austin told us that the keys to BYD’s ultra-low battery prices are 1) BYD’s iron-phosphate cells contain less lithium – an expensive cell material – than other lithium iron phosphate (LFP) cells made by the likes of A123 Systems or K2 Energy and 2) BYD’s pack is a hybrid of energy- and power-cell chemistries, allowing for rapid charging (50% SOC in 10 minutes) while reducing the total cost of the system. Moreover, in June 2010, the Chinese government announced a trial plan in five cities that will pay subsidies of up to 60,000 yuan (roughly $8,800) per electric vehicle directly to the automakers. This allows consumers to buy BYD F3DM PHEVs (with a 24 kWh pack) at roughly $10,000 per vehicle, while BYD’s E6 EV (with a 65 kWh pack) is now priced for U.S. sales at $35,000 – the Chinese consumer price is yet to be set. With these new lowered prices, BYD expects the sales of these vehicles to be very strong.
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Solar: Summit panelists dish on solar industry outlook
Conference invitees attending the Summit’s solar track caught perspective from the industry’s leading lights at two separate panel discussions. First up was the “Top Dogs” panel, wherein Satcon CEO Steve Rhoads and Enphase Energy Founder Raghu Belur discussed the relative merits of centralized inverters versus panel-level microinverters. In addition, Yingli Solar Managing Director Rob Petrina discussed Yingli’s market entry strategy for the U.S.
Overall, all three were incredibly positive about the prospects for the U.S. market in 2010 and 2011 as it begins to soak up demand from Germany. Further, Rhoads and Petrina stressed that the Chinese market is not to be overlooked, especially given the quick pace at which plants can be installed. For example, Satcon cited a total development, engineering and construction time of only a few months for its 38 MW of projects with GCL in China, compared to the 12 to 36 months more typical of U.S. installations
Later that day, Craig Cornelius, Managing Director at Hudson Clean Energy Partners, moderated a panel of “Solar’s Emerging Leaders.” The panel included Dave Pearce, CEO of CIGS start-up NuvoSun; Kurt Barth, founder of CdTe up-and-comer Abound Solar; and Cynthia Christensen, Director of Marketing for Stirling Energy Systems (SES), a developer of a unique variation on solar thermal. The three discussed some of the challenges of overcoming the “bankability” and “warrantability” concerns for new technologies. They suggested the use of third-party insurers and funding initial installations off the company’s own balance sheet were generally accepted best practices in the market downturn. Indeed, SES noted how it spun off a separate project development subsidiary, funded by the same investors, to allow it to focus on technology developments. Clients should watch Abound and SES carefully for their first installations this year, while NuvoSun’s progress with its partner Dow Chemical will determine that company’s future success.
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Water: Top dogs and rising stars discuss opportunities and challenges in the hydrocosm
Two separate panel discussions at the Summit generated insightful commentary on topics ranging from regulation in the hydrocosm, the need for innovation in the field, new market growth opportunities, and the impact of the current low cost of water.
The first panel provided perspective from “top dogs” representing every part of the membrane water treatment system, beginning with David Moll from Dow Water & Process Solutions (the membrane), Bill Musiak from Norit X-Flow North America (the modules), and Jeff Fulgham from GE Water Process & Technologies (system development and other facets).
The panel discussed markets for residential treatment systems, food and beverage processing, wastewater, and two areas of particular excitement: the produced water market and wastewater reuse, all of which we agree are significant growth areas.
We were glad to see the panel unanimously confirm the importance of the wastewater treatment market, which we recently covered in Technologies Turn Waste into Profit (client registration required). The panel also shared our interest in ultrafiltration membranes and the produced water market. Lux Research discussed membranes in a recent report Filtering Out Growth Prospects in the $1.5 Billion Membrane Market (client registration required), and will discuss specifics of the produced water market in an upcoming Water State of the Market Report (SMR) later this year.
The Summit also brought together “rising stars” in the water market, namely Amir Peleg from TakaDu Ltd, Emily Landsburg from Blackgold Biofuels, G.G. Pique from Energy Recovery Inc. (ERI), and Marc Bracken from Echologics Engineering Inc.
The current low cost of water was of particular focus for panelists who discussed how to grow a business given this fundamental truth in the water market. The low cost of water effectively reduces the drive for innovation and new products, since customers are not motivated to alter current water treatments and use patterns.
G.G. and Amir both noted that there is a need for national water policy to push the agenda of innovation, among other benefits. Marc from Echologics noted that repairing the aging water infrastructure is often a pain point for customers because, irrespective of the cost of water, it must still be transported efficiently. Emily noted that Blackgold Biofuels’ business actually helps water utilities stretch their revenue by providing a cash stream from the waste buildup in the pipe infrastructure. In addition to the cost/revenue discussion, the panelists emphasized the need to collaborate, and for solutions that form a “treatment train” instead of claiming to be silver bullet.
Fresh off its impressive $14 million Series B round in 2009, advanced materials start-up Novomer picked up further momentum after it announced a development agreement with investor DSM, a materials science company based in the Netherlands. Novomer’s catalyst technology enables production of plastics, polymers and other fine chemicals from renewable feedstocks like CO and CO2. As we’ve stated before (see the April 6, 2009 LRNJ and the August 31, 2009 LRNJ – client registration required), the company is a leader in a relatively unpopulated field: Other than U.S.-based Empower Materials (see the March 16, 2009 LRNJ – client registration required), Norway-based Norner Innovation (see the March 30, 2009 LRNJ – client registration required), and a few players in Asia, there are very few developers of carbon-dioxide-based polymers outside of university labs.
Novomer and its new partner, DSM, plan to focus on creating carbon-dioxide-based polymer coatings and inks for food and beverage, automotive, and industrial applications. The match between Novomer and DSM makes perfect sense, as their technologies and needs complement one another. Namely, Novomer’s carbon-based polymer production technology dovetails neatly with DSM’s deep experience in developing and selling petroleum-based versions of the polymers. This new agreement and its amenable licensing business model make it safe to predict that Novomer is starting to pull away from its competitors. Clients with needs for environmentally friendly polymers should engage.