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Enzyme Enigma

Enzyme Enigma
Enzymes are natural protein molecules produced by all living organisms, functioning as highly-specialised catalysts for accelerating pace of chemical reactions, and responsible for many biochemical reactions and metabolic processes in microorganisms, plants, animals and human beings. With the positive environmental profile offered by enzymes, there exist opportunities in the form of substituting non-renewable chemicals with the intent of reducing energy consumption or decreasing production of harmful wastes.

The global enzyme market stood at $5.1 billion in 2012, of which industrial enzymes constituted $3.6 billion, or 71 per cent of world demand, with the rest (29 per cent) being contributing by specialty enzymes. The global enzyme demand is expected to experience broad-based growth led by strong demand across all enzyme types, with market growing by 6.3 per cent yearly to $7 billion in 2017 from $5.1 billion in 2012. The market is further expected to grow at a five-year CAGR of 6.5 per cent after 2017, reaching a size of $9.5 billion by 2022. Through this period, the growth in the global enzyme demand is expected to be led by specialty enzymes including diagnostic and research and biotechnology enzymes, as well as biocatalysts and increasing penetration of enzymes into their potential applications in developing countries. Moreover, falling costs of DNA manipulation and sequencing will act as a demand driver allowing for rising use of enzymes in research and biotechnology and diagnostic applications. 

On the other hand, the industrial enzyme market will see modest growth as high growth in animal feed, food and beverage and cleaning products market will be partially offset by leveling off of grain-based biofuel production and challenging environment for various technical applications such as starch-processing, textile and leather production. The animal feed and food and beverage enzymes will experience above-average growth in demand benefitting from the expansion of the middle class population in rapidly-developing economies, which will fuel increased meat consumption and adoption of more western-style diets. Further. The environmental benefits of enzyme use – such as reduced wastewater production and energy use – provides room to further boost the industrial enzyme market.

Industrial enzymes constitute the larger portion of the world enzyme demand accounting for $3.6 billion and global demand for them is expected to grow at a five-year CAGR of 5.6 per cent to reach $4.8 billion in 2017 and 10-year CAGR of 5.7 per cent to reach $6.3 billion by 2022, with strongest demand in sub-segment of food, beverages and animal feed. On a regional basis, Asia Pacific and Central & South America will achieve fastest growth for industrial enzymes, going forward till 2022.
Enzymes provide a natural way for food and beverage processors to improve production efficiency, as well as food quality and consistency. Global demand for enzymes used in foods and beverages is expected to expand 7.2 per cent to $1.9 billion in 2017 from $1.3 billion in 2012. The market is further expected to grow at a CAGR of 6.5 per cent after 2017, reaching a size of $2.6 billion by 2022.

The largest application for enzymes in food and beverages is in baked goods for anti-staling/shelf life extension, volume expansion and dough strengthening, among others. Second largest is in dairy products for making cheese and removal of lactose. In beverages, enzymes are used in beer, distilled spirits, fruit juice and wine. Other food applications include confectionery manufacturing, cocoa, coffee and egg processing, fruit and vegetable processing, meat tenderising.

Bakery enzymes are expected to be one of the fastest-growing components of food and beverage enzymes growing at a five-year CAGR of 9.7 per cent to reach US$ 650 million by 2017. The dairy industry uses enzymes for; coagulation of milk, ripening of cheese, enhancement of piquant flavor in Italian and specialty cheese, modification of milk fat and processing of whey protein for breakfast cereals. Demand for dairy enzymes is projected to advance 5.5 per cent per year to $530 million in 2017, helped by rebounding economies in North America and Western Europe.

In Beverages, enzymes see applications in beer, distilled spirits, dairy products, fruit juices and wine, where demand for this segment is expected to reach $685 million in 2017. Demand for enzymes used in detergents and other cleaning products are forecast to increase 6.2 per cent yearly to $1.2 billion in 2017, supported by introduction of new and improved enzymes products, and continued strong growth in developed market and penetration in developing regions.

Demand for enzymes in biofuel production will rise 1.5 per cent yearly to $555 million in 2017. Growth will moderate for rapid gains of the 2002-2012 period as the dominant North American market continues to mature and ethanol producers increasingly look to non-enzyme-based production technologies for future capacity expansion.

Global demand for animal feed enzymes will rise 6.5 per cent yearly to $540 million in 2017, led by strong gains in phytase for poultry and swine feed. The fastest growth will be in the Africa/Mideast region and central and south America where market penetration rates are still slower and farmers have significant amounts of available land to boost meat production, which will be needed to meet increasing global meat demand, particularly as rising per capita income in developing countries allow more and more people to afford meat in their diets. 

Enzyme feed additives act as biocatalysts to assist in digestion and utilisation of nutrients, thereby allowing feed compounders to develop products with unconventional and less expensive formulations. When low cost or nutritionally inferior raw materials such as cereals, beans or seeds are processed enzymatically, they can be used as substitutes for higher quality feed rations without sacrificing animal productivity. Enzymes can also act as milk replacers in feed formulation, allowing early weaning of farm animals, which is important to animal breeders, and also providing following benefits: increased final animal weight, better feed utilisation, healthier digestive systems, more homogenous production, lower death rate, improved eggshell quality and waste products that are easier to handle.

As developing countries gather momentum in their adoption of feed enzymes, acceleration in demand is expected because animal feed remains a major cost in production of meat, the ability of enzymes to reduce both actual costs and cost volatility in the production of feed is expected to drive increased adoption, especially in the Asia/Pacific region and other developing economies. New product introduction will continue to be an important factor in the market as newer and more customised enzyme products are developed, which have been optimised for particular animals, feed types and other conditions.

Tapping the enzyme market, Advanced Enzyme Technologies Limited launched an IPO of equity shares at Rs 880 to Rs 896 per share, aggregating Rs 500 million from July 20 to July 22, 2016. “The global enzyme market is worth $6 billion and comprises 200-odd enzymes  that are commercialised today with North America dominating the market,” Piyush Rathi, CMO and MD, said. Phytase enzymes work by breaking down naturally-occurring phytase in animal feeds into a form that is bio-available to the animal, thus ensuring that less inorganic phosphate supplement is needed in the feed, and lower levels of phosphate excreted in animal waste. 

Fed primarily to pigs and poultry, phytase is expected to experience the strongest growth through 2017, expanding at a five-year CAGR of seven per cent to reach $280 million in 2017. Higher levels of growth will occur in the Asia/Pacific and other regions as a result of rising per capital meat consumption that will boost feed demand and expand the addressable market. The primary application of starch processing enzymes is the production of sugar, syrups and sweeteners from corn, wheat and other grains. Demand for starch processing enzymes will expand 2.2 per cent yearly to $240 million in 2017.

INVESTMENT INVICTUS

World demand for enzymes in other industrial markets will grow by 2.9 per cent per annum to $555 million in 2017. World demand for Specialty enzymes will grow a strong 7.9 per cent yearly to $2.2 billion in 2017. Growth will be robust in all markets, with fastest gains in diagnostics and research and biotechnology markets. The ongoing demographic shift toward older populaces in developed countries will also support higher diagnostic enzyme demand. Research and biotechnology will continue to benefit from robust investment in the biotechnology sector as both the corporate and national levels. On a geographic basis, growth will be in Central and South America, and the Asia/Pacific and Africa/Mideast regions as strong economic growth and rising disposable incomes boost demand for improved healthcare, and as pharmaceutical and other fine chemical companies increasingly turn to Brazil, China and India for contract manufacturing solutions.

Enzyme demand in research and biotechnology reached US$ 815 million in 2012, accounting for 54.3 per cent of specialty enzyme demand. This segment is led by DNA polymerases, which have experienced strong growth as new DNA sequencing techniques have been developed in recent years and the cost of DNA sequencing has dropped dramatically. The market for enzymes used in research and biotechnology will advance 7.7 per cent yearly to $1.2 billion in 2017, supported principally by continued investment in biotechnology and genetics as pharmaceutical companies rely on biotechnology to overcome difficulties in bringing successfully new small molecule drugs to market.

Diagnostic enzymes accounted for nearly 30 per cent of specialty enzyme demand, or $430 million, in 2012, making it the second largest specialty enzyme market. Diagnostic procedures using enzymes are widely conducted in physicians offices, hospital laboratories and by consumers at home for routine urinalysis, blood chemistry determinations, and immunological and microbiological testing. Demand for disgnostic enzymes is projected to advance 8.3 per cent yearly to $640 milllion in 2017. The greatest gains will occur in the developed North America economy, while the fastest growth will be in the developing countries of the Asia/Pacific and Africa/Mideast regions, Central and South America, and Eastern Europe as growing per capita incomes lead to greater access to healthcare.

Though the market for enzymes in India is relatively small ($105 million in 2012), it will be the fastest-growing in the world through 2017. Advances  will average more than 10 per cent per year through 2017, driving demand to $173 million, as, with most other markets in Asia/Pacific region, demand is concentrated in industrial enzymes. However, the rapid development of India’s pharmaceutical and chemical industry is starting to change this, and specialty enzyme demand will outpace industrial enzyme demand going forward. Enzyme demand in India is concentrated in industrial enzymes, particularly the cleaning product (detergent), food and beverage, and textile and leather markets. 

To a large extent, this can be traced to government policies that have made it disadvantageous for companies to grow above a certain size, and restricted access to foreign capital for modernisation and productivity enhancements. Consequently, smaller companies have lacked the assets and financial resources to modernise their operations with the newer efficient technologies that make greater use of enzymes. As the economy is slowly opened to increased foreign direct investment, enzyme usage rates should continue to improve.
Dominick Rodrigues

Dominick Rodrigues

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