Enzyme demand increases, supply remains balanced

David Hannon -- Purchasing, 3/2/2006

Buyers at detergent makers, animal feed makers, pharmaceutical firms and cosmetics companies will increase buying of various enzymes by 6.5% globally through 2009, as new applications abound. According to Freedonia Group, demand for enzymes is strong right now. The U.S. is the biggest consumer of enzymes, accounting for 38% of the buying activity, with 6% growth through the end of the decade.

Pharmaceutical buyers will be increasing buying of enzymes the fastest, with growth increasing as much as 10-12% in that market. "The continued introduction of new drugs to treat lysomal storage disorders will help drive expansion of the pharmaceutical market at double-digit rates, while research and biotechnology enzymes will also maintain strong growth as the pharmaceutical industry continues to invest in biotechnology as a means of shoring up weak drug pipelines," a recent Freedonia report says, citing sulfatases being developed for use in enzyme replacement therapy as an example.

John Gell, vice president and business unit manager at the Genencor division of Danisco in Rochester, N.Y. says one of the fastest growing applications of enzymes is in the production of fuel ethanol produced from corn. "That business is growing rapidly and is more than $100 million now," Gell says. "And we believe the demand for enzymes in the fuel ethanol market will more than double by 2012."

Buyers at food and beverage companies in the U.S. will also be gobbling up the enzymes quickly. The end of the low-carb craze has spurred buying of baking enzymes while another major application, dairy processing, matures steadily. Food and beverage is the largest global market for enzymes.

On the opposite end of the spectrum, the protease sector of the market is maturing and growth is slowing. And enzyme buying at textile and leather companies will decrease dramatically in the U.S. as more of those industries leverage overseas production and suppliers. As a result of this trend, enzyme demand in China is booming for applications like ethanol, textiles and brewing.

"Historically enzyme demand has been concentrated in the more developed economies due to high value-added nature of enzymes and the significant technical resources needed for their development, production and application," says the Freedonia report. "However countries such as China, India, South Korea and Taiwan will offer some of the best growth opportunities."

Unlike petrochemical supply, enzyme supply was not impacted in late 2005 by hurricanes because its production is not concentrated in the Gulf Coast region.

"Most of our raw materials are agricultural and not petrochemicals, so we weren't hit by the hurricanes," Gell says. "We didn't have to declare any force majeure."

Gell says buying organizations should dedicate a person or persons to the enzyme market, because of its uniqueness in comparison with other chemicals. "Some companies have their chemical buyers working on enzymes," he says. "But if those buyers are not familiar with enzymes, they may think enzymes are all the same and one can replace another, as they do in chemicals. Enzymes are organic and they are all different. You can't just substitute one for another, so it usually requires more detailed testing than chemicals."

Larger or more advanced companies buying enzymes have dedicated enzyme buyers. Gell says Genencor works more closely with the technical organizations at those companies or a combination of purchasing and technical professionals to ensure they've matched up the right enzyme for the right application or desired use.

"For example, we're working with some paper companies to use enzymes in converting paper byproducts into something useful," Gell explains. He also says there is much interest in replacing petrochemicals with more organics compounds like enzymes to reduce reliance on oil-based commodities.