Tag Archives: BASF

Novaled Going Public with Clear Near-Term Value, but Long-Term Challenges Remain

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Novaled (Client registration required) has filed with the U.S. Security and Exchange Commission (SEC) for its proposed initial public offering (IPO). The company is a developer of dopant and transport materials for organic light-emitting diode (OLED) displays and lighting. (For more on these markets see the reports “Sorting Hype From Reality in Printed, Organic, and Flexible Display Technologies” and “Finding the End of the Tunnel for OLED Lighting.” (Client registration required)

Novaled seeks to raise $200 million in its IPO, which will be listed on the New York Stock Exchange (NYSE) or NASDAQ. The company’s financial records, which it released with its filings, indicate revenues of €6.8 million and €17.4 million in 2010 and 2011 respectively, reaching profitability in 2011. This development primarily derives from its materials, produced by BASF, being incorporated into commercial Samsung Mobile Display (SMD) smartphone displays. SMD accounted for 59% of its 2011 revenue.

The application in SMD smartphones also indicates that Novaled has a validated product for improving OLED performance through power efficiency and lifetime enhancement.

Smartphones will be the dominant application for OLED displays through 2017 (see the report “Cutting Up the LCD Pie: Calculating the Billion-Dollar Slices from Display Innovation” (Client registration required). With this application market the power savings of the material is most important to extend battery life, while the short lifecycles of smartphones minimizes the impact of lifetime enhancement.

However, while 75% of Novaled’s revenue came from Korean firms, much of its remaining revenue came from Europe – indicating that it’s not doing much work with Japanese, Taiwanese, and Chinese OLED display developers such as AUO and Sony. These players will inevitably begin to take OLED display market share from SMD and LG Display.

In addition, Novaled’s work in Europe indicates that it believes that OLED lighting remains a viable market, as it claims in the SEC filing that the OLED lighting market will be at least $3.5 billion in 2018. By contrast, we project a $58 million 2020 market for OLED lighting (Client registration required). Novaled is well poised now for near-term growth through its supply of SMD and LG Display, but faces a rockier future if it continues to rest its hopes on significant revenue from OLED lighting and static OLED display market shares.

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Ranking Li-ion battery developers on the Lux Innovation Grid

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Li-ion batteries are the technology of choice for the first generation of all-electric and plug-in hybrid electric vehicles, and the subsequent hype has attracted an increasing number of competitors to an already crowded market. Soon, it will be impossible for all of these companies to survive, making strong partnerships a necessity. This week’s graphic illustrates how developers of Li-ion batteries compare on the Lux Innovation Grid, helping to identify which will make the strongest potential partners as the electric vehicle market matures.

LG Chem Power clearly leads the pack, standing out even amidst its competition in the graphic’s Dominant Quadrant. A subsidiary of LG Chemical, LG Chem owes its strong technical value to its high-energy lithium-manganese-spinel-based cells and strong cycle life, both of which come at costs that are among the most competitive in the market. Its multitude of supply partnerships with the likes of GM, Eaton, and Ford, however, justify the company’s strong business execution score.

Significant enhancements in specific energy and a commensurate reduction in cell costhas garnered Envia Systems the attention of major investors including GM, Asahi Glass, and Asahi Kasei. Yet serious competition remains for Envia in cathode materials, including two major corporations in BASF and Toda Kogyo licensing the same Argonne National Laboratory technology that Envia’s materials are based on.

China is home to a number of top contenders, thanks to the Chinese government’s desire to keep the electric vehicle value chain inside China’s borders (Client registration required.). But batteries from China BAK, BYD, and China Aviation Lithium Battery (CALB) are undifferentiated technologically, and may not share the quality of cells manufactured outside of China.

Source: Lux Research report “Using Partnerships to Stay Afloat in the Electric Vehicle Storm.”

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Materials suppliers follow consumer brand owners into synthetic biology

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Consumer goods material suppliers continue to turn to synthetic biology for advanced products and delivery systems. A few months ago at the Metabolic Design summit, Steve He, who is responsible for acquisition of sustainability technologies at Henkel, said the company is collaborating with Arizona State University to see whether CO2-fed algae could synthesize high-value, renewable oils, and surfactants.

Elsewhere, Evolva’s Pascal Longchamps described the company’s synthetic biology platform, and how it’s applied for partners like Roche (cancer drugs), BASF, and the U.S. Army (antimicrobials). The company creates yeast artificial chromosomes (eYACs) that combine genes from “trees, from coral, from the brain” – apparently not meant as casual examples – into one new organism. For example, Evolva has developed a pathway for producing Stevia (a sweetener found in certain plants) in yeast. The company was collaborating with Abunda*, which it acquired in April.

We also spoke with Marcus Wyss of DSM Nutritional Products, which aims to become the cosmetic industry’s leading supplier by building a product portfolio with designed metabolic processes. The company is a sponsor of the BioFAB consortium based at SynBERC, and it is also contemplating agricultural waste as a feedstock for bio-based chemicals and materials. Also, Wyss specifically said DSM’s recent acquisition of Martek will bring “significant improvement” to its algal biotechnology abilities.

Lastly, we noted that Roquette’s partnership with Solazyme* has deepened into a JV, as successful partnerships often do (see the report: “Green Materials’ Social Networks”)*.

These examples of how bio-based materials and chemicals suppliers are supporting brand owners only appear cutting-edge. In reality, brand owners are leading the suppliers. Procter and Gamble has been using genomics and proteomics technology since the 1990s, even publishing papers on the subject. In the last twelve months, it struck a supply deal with Amyris, invested in personal genomics company Navigenics *, and opened a collaboration with the Institute for Systems Biology to study skin conditions ranging from aging to cancer. Similarly, Unilever has been acting like a drug company* for several years*. It is now using controlled-release biopolymers to deliver encapsulated lipids,* and investing* in its partner Solazyme*.

We expect to see more companies use biotechnology to improve food and cosmetics by blazing new routes to known and new substances, applying delivery technologies to improve substance benefits, and using their products as delivery technologies in and of themselves. These strategies are part of the broader trend of convergence of food, cosmetics, chemicals, and medicine, driven aggressively by BASF* and DSM*. Clients should note that these technologies are maturing at an opportune moment for companies looking to enter pharmaceuticals, as the collapse of drug majors clears the way for new entrants from delivery,* consumer products, and even the electronics industries*.

* Client registration required.

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Lux Research Picks the Top Emerging Catalyst Companies

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Graphic of the WeekThe high and often volatile prices of platinum group metals (PGMs) has drawn many inventors and entrepreneurs to create technologies that reduce the need for PGMs in catalysts for the automotive, hydrocarbon processing and fuel cell industries. To assess which of these emerging catalyst developers stand to capitalize on this growing opportunity, Lux Research’s latest report ranks the field by technical value, business execution, and maturity and compares each company on the Lux Innovation Grid. Among the report’s key findings:

  • Nanostellar and SDCmaterials occupy the Dominant quadrant. SDCmaterials and Nanostellar recently moved into the Lux Innovation Grid’s Dominant quadrant, as the two strongest developers in the automotive catalyst space. Both firms boast strong technical solutions as well as solid partnerships – BASF and Volvo for SDCmaterials and several undisclosed European automakers for Nanostellar.
  • Headwaters Technology Innovation (HTI) retains High Potential, but may be stalled. HTI has lost momentum and missed a few milestones, but the firm can still claim commercial deployment of two catalyst products: a palladium catalyst that allows for simplified production of hydrogen peroxide (H2O2), and an oil refining catalyst that increases gasoline yield during catalytic reforming. However, HTI’s recent lack of significant developments and  a parent company whose revenues have nearly been cut in half over the past three years all  raise concerns that the company may soon see an even sharper drop in standing.
  • Once squarely in the Dominant quadrant, Catalytic Solutions may see trouble ahead. While Catalytic Solutions’ revenues are five times higher than any other company ranked in the report, they have dropped from $50.5 million in 2009 to $48.1 million in 2010. Meanwhile, net loss increased slightly, and the firm will likely be required to raise additional funds. The catalyst division also recently lost an automaker customer after its core technology failed to meet a required performance standard.
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Kraft, GSK, and BASF announcements illustrate convergence of food, cosmetics, chemicals, and medicine

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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.

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