Business model

Because we work so closely with our customers and know that our products often have a tremendous impact on their production processes, we see them as partners.

By using Novozymes’ enzymatic and microbial solutions, our customers can save on costs and reduce the environmental footprint of their products and processes. Our solutions have the potential to lower the need for raw materials, conserve resources and improve product quality and effectiveness.

Excellent results are achieved by working closely with our customers to gain a deeper understanding of their needs and those of their consumers. That is how we develop solutions that enable customers to enhance their impact.

Our Partnering for Impact strategy drives us to seek out and build meaningful partnerships with other influential industry players, for example Monsanto (now Bayer) as part of The BioAg Alliance, and DSM and Adisseo in Animal Health & Nutrition.

These partnerships enable Novozymes to explore and enter new business areas faster and more efficiently by combining our strong innovation know-how and manufacturing expertise with our partners’ strong skills in areas such as screening, testing, data processing and commercialization.

Novozymes’ revenue comes from sales of enzymes and microorganisms. Product prices include the cost of technical services.

Around 13% of our sales revenue is reinvested in R&D, benefiting both product innovation and production economy. Novozymes’ largest costs are direct production costs and R&D.

When it comes to shareholder returns, we have a target dividend payout ratio of around 50%. We also conduct regular share buyback programs to provide returns for investors.

With R&D facilities in multiple regions and commercial teams with strong insights into different markets, we are able to identify enzymes and microorganisms capable of meeting global and regional needs. More than 23% of our employees work in R&D. Every year, our researchers screen thousands of microorganisms to track down the one that produces the enzyme with the exact characteristics we need for a specific product. Most of our products take between two and five years to progress from idea to market.

We have anchored our specialized application development units in the commercial side of our organization within the Household Care & Technical Industries, Agriculture & Bioenergy and Food & Beverages divisions. This creates a strong connection between the commercial side and R&D. The result is a solid pipeline of impactful products with the characteristics our customers are looking for. A Portfolio Board manages the R&D pipelines and prioritizes funding across Novozymes’ divisions. This board ensures that the innovations we bring to market have strategic and financial impact, and that they help us to deliver on the SDGs.

In order to produce large quantities of enzymes, we use fermentation techniques that enable our microorganisms to multiply. Fermentation is a core part of our production process. After recovering enzymes or microbes from the fermentation process, we prepare them for use by our customers, either in the form of liquids or granulates. We produce our enzymes and microbes at 16 plants on four continents, and continuously endeavor to optimize and innovate our production processes to ensure that we get the most out of our production capacity. Thanks to these efforts, our capacity utilization is very high.

By using an efficient supplier management system, we support and encourage our suppliers to apply the same rigorous standards to their processes as we do. We work closely with them to innovate and implement responsible and sustainable solutions.

Our technical service teams set us apart from the competition because they optimize product use and make the necessary adjustments tailored to the needs of individual customers. This ensures that our customers realize the value they expect.

Our service does not come to an end when our teams leave the customer’s plant. The knowledge our teams gain from working closely with customers feeds back into our product pipeline and goes into improving future innovations. In this way, our relationships with customers are key to measuring our progress and helping us to rethink tomorrow.

At Novozymes, we pride ourselves on our high-quality solutions, services and processes. Our close relationships with our customers allow us to anticipate and understand their needs and, consequently, deliver the quality expected of us.

Continuous monitoring and improvement are an integral part of our quality system and a cornerstone of how we advance the products and services we offer our customers.

Distribution of Novozymes’ products differs from one industry to the next. In Bioenergy and Household Care, most products are dispatched directly from Novozymes to our customers. Within Agriculture & Feed, distribution is carried out by our industry partners. Food & Beverages and Technical markets are more fragmented, with a mixed distribution setup.

Every interaction we have with our customers is an opportunity to learn more about their needs and engage in dialogue about our solutions. We leverage this in-depth understanding of our customers’ products and production processes when selling our enzymes and microorganisms, because we know exactly how our solutions can make a difference to the customer. Take Bioenergy as an example. Here we provide tailored solutions to ethanol plants where we supplement the technology we sell with technical know-how, bringing additional value to the customer.

With facilities such as our Innovation and Technology Center in Turkey and our Detergent Design Center in India, we are able to showcase to customers exactly how our products work for their specific product or industry. The close proximity to customers in these regions is also a great advantage when presenting new products to existing and new markets.

Traditionally, we market most of our products in direct interaction with customers, but digital go-to-market strategies are becoming increasingly important, and we are constantly looking to optimize how we make customers aware of the benefits of our products and services. We are available and open for dialogue through social media, at trade events and via our owned digital channels such as Novozymes.com.