DuPont's Kullman talks biotech at Davos

With DuPont in the throes of acquiring Danish biotechnology concern Danisco in its first big ($6.3bn) M&A deal for many years (in fact since it bought the Pioneer seeds business for $7.7bn in 1999), it was no surprise to see it promoting white (industrial) biotech at the just-ended Davos World Economic Forum. DuPont chairman and CEO Ellen Kullman told attendees that bio-based technologies can expand economic opportunities in rural areas while reducing the burden on the environment.

Ellen Kullman - raising

DuPont's biotech game

“Bio-based technologies are an evolution, not a revolution,” Ellen said. “Modern uses of biotechnology, including industrial biotechnology, are just starting and there are vast opportunities to use these tools in new and valuable ways.”

Kullman was serving as a WEF annual meeting co-chair and participated in a forum panel on delivering bio-driven development”. This discussed how bio-based technologies can change the future of development in rural areas.

DuPont is staking a lot on the Danisco purchase but is following the strategy of addressing mega-trends on which this blog has already shed some light. Acquisition is one way to accelerate the move into new technology areas for DuPont. But as with all M&A deals, post-merger delivery is the critical step.

But as Nigel Davis, Insight editor at ICIS, commented recently: "The bid, welcomed as a good fit – and a good price – by Danisco management, puts DuPont in an extremely strong position as it strives to develop the enzymes that will create second-generation biofuels as well as other bio-based products."

Mega-trend focus grows

Recent news from Clariant that it is investing Euro50m in a new global innovation centre in Frankfurt, Germany, came with the statement that "our product innovations will also address current mega-trends such as renewable energies, energy efficiency and renewable resources with a view to opening up new business opportunities beyond current markets."

The new centre in Frankfurt will support

mega-trend-driven  innovation

Now, I've watched the rise of the mega-trend concept amongst leading chemical producers for a year or so now, as first one then another and then many companies jumped on this particular innovation bandwagon. Not that there is anything wrong with the concept of aiming your R&D spend in markets that will provide large markets for new technology platforms, rather than purely incremental growth. Dow Corning has been a particular leader in this respect.

But there is a sense that a herd mentality has set in here now - with some proponents really not up to exploiting the mega-trends they have identified, given lack of core expertise in some vital areas. I discussed this idea with Alasdair Nisbet of Lazard bank not so long ago - you can see his views in this ICIS article.

A quick search over the strategy pronouncements of the the leading innovation-centred chemical producers shows that many are focusing on the same mega-trends - not so much room there to carve out a competitive edge.

Take AkzoNobel - it is focusing its longer-term strategic thinking around population growth, climate change, scarcity of natural resources and improvement in quality of life in high growth markets. Or BASF - urbanisation, demographic change, growing energy and mobility needs and world population growth. And Dow - energy, transportation and infrastructure, health and nutrition and consumerism... see what I mean - I could go on with another half a dozen companies. Well why not: Lanxess - mobility, agriculture, urbanisation and water; DSM - global shifts, climate and energy, health and wellness...