Managing Sustainable Breakthrough Innovation

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Tracey Felicity O’Connor’
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1 Managing Sustainable Breakthrough Innovation Herman Wories VP Global Business Incubator DSM Innovation Center Barcelona 27 th February 2014

2 DSM Biomedical materials improve over 4.4 million people s lives, every day.

3 Aspirations and Metrics If you don t imagine it, it won t get done S. Lydenberg If you can t measure it, you can t manage it P. Drucker 3 Page

5 People People+ Health Food & Nutrition Security Sustainable Innovation Themes a Sustainable Company Profit Planet Energy Security Eco+ Sustainable Manufacturing/ Raw Materials

6 Building an intrinsically innovative company 20% Top Quartile McKinsey Innovation Benchmark 2012 Innovation Sales 2015 ~5% higher Gross Margins Disruptive Platforms, 2020

7 Fuzzy Front End Value Creation by Open Innovation Open innovation is no longer a competitive advantage. It has become a competitive necessity! Market Scouting, Business Intelligence Supplier driven innovation Joint Business Developments Licensing In Venturing Public, Private Partnerships Spin in Acquisitions, Alliances / JVs Interaction / Synthesis ODI Divestments Crowdsourcing R&D services (Chemelot) Licensing Out Spin out/off Competence Development, Technology Intelligence Intellectual Asset Management

8 Turning the pipeline into a bowling alley of opportunities Clear Front End

9 Market Maturity Decline Emerging Manage portfolio of innovations Renew & Grow existing position Red Box Explore & Build Maintain & Strengthen existing position Expand to adjacent markets Existing New Disruptiveness

10 Red box assessment: How good will we be able to execute? Market Attractiveness Ability to Execute

11 Red box experience Venture/project life cycle Market Attractiveness Original assessment and plan Learning the details Evaluate and adapt Ability to Execute

12 Blue box examples..

13 The first natural, scientifically substantiated solution for healthy blood flow EFSA (proprietary) health claim: Fruitflow helps maintain normal platelet aggregation, which contributes to healthy blood flow FiSA 2012 : Fruitflow one of the most innovative products of the year People+ Page 13

Maxilact The freedom to enjoy dairy Lactose free is one of the fastest

intolerance and health & wellness trend.

14 Maxilact The freedom to enjoy dairy Lactose free is one of the fastest growing segments in dairy, driven by increasing awareness of lactose intolerance and health & wellness trend. Maxilact breaks down lactose in dairy products, making them suitable for lactose intolerant consumers. DSM was the first company to commercialize lactase and has been innovating ever since to meet today s and tomorrow s lactase needs. People+

15 Arnitel Eco A high performance thermoplastic elastomer Partially made from renewable resources, using rapeseed oil. Adding new performances, like UV and heat resistance Panliners of Arnitel Eco, lowering the carbon footprint enabling higher temperatures Eco+ Page

16 Brewers Clarex Natural beer stabilization system for extended shelf life With DSMs Brewers Clarex CO2 emissions from brewing 1 hectoliter of beer are reduced between 5 and 8% Every December, in the UK a billion pints of beer are being sold Eco+ Page 16

17 Red box examples..

Excellence in Innovation EBA Bio-based Products & Services EBA

18 Managing breakthrough innovation DSM Innovation Center New Business Development Enablers / Accelerators EBA Biomedical Excellence in Innovation EBA Bio-based Products & Services EBA Advanced Surfaces CTO Office Licensing Business Incubator Venturing

Three exciting growth platforms established DSM Biomedical Innovative materials that enable more advanced clinical procedures and improved patient outcomes DSM Bio-based products & Services

19 Three exciting growth platforms established DSM Biomedical Innovative materials that enable more advanced clinical procedures and improved patient outcomes DSM Bio-based products & Services Advanced Enzymes and Yeast platforms: enabling Advanced Bio-Energy and Biobased chemicals DSM Advanced Surfaces Smart coatings and surface technologies to boost performance in the solar industry

20 20 DSM Bio-based Products & Services Eco+

21 Why Renewable Energy? The Fossil Age Living off the land A brief moment in history, the Fossil age Living off the land

22 Current major Biomass Ventures Cellulosic bio-ethanol Renewable diesel + Advanced Biogas Partner + Bio-Succinic

23 Enabling Advanced Biofuels POET & DSM: two innovative leaders one shared vision Making cellulosic ethanol competitive to grain ethanol Building Project LIBERTY ($250 Mln investment) in Emmetsburg, Iowa

24 People+ DSM Biomedical

25 Materials evolution Treatment moves from repair to healing BIO-PASSIVE Medical coatings and polymers BIO-ACTIVE Resorbable polymers and Drug Delivery BIO-INTERACTIVE Therapeutic materials, Regenerative medicine Material stays in the body Highly durable Maintaining mechanical properties over years Controlled drug release Disappears after use Healing by stimulation and growth of patients own tissue Disappears over time Cardio Orthopedic CMF Ophthalmology Orthopedic Orthopedic Orthopedic Pacemaker leads Hip implants Bone cement Back-of-the-eye medication Resorbable screws tendon repair Cartilage repair Stimulation of Bone growth

26 A world class portfolio of biomedical materials Silicone hydrogels Biomedical polyurethanes UHMWPE biomaterials Drug delivery Coatings Natural Materials Mechanical Devices ECMs Polymers & Metals Bio Commercialization

27 Biomaterials history at DSM PTG Acquisition (est. 1989) Start of DSM Dyneema s Medical R&D Efforts Official launch of Dyneema Purity orthopedic sutures Biomedical EBA launched First cardiovascular and ophthalmic drug delivery development agreements First sales of Dyneema Purity fiber in cardiovascular and spinal applications DSM targets EBA sales in 2020 > 1bn Expanded portfolio for ophthalmic applications Kensey Nash Acquisition Medical Coatings R&D efforts started in DSM Desotech First sales of Dyneema Purity fiber for knee ligament fixation First sales Medical Coatings Start of UH and Drug Delivery activities BMM Public Private Partnership funded by Dutch government Medivas technology acquisition for Drug Delivery Bionate II PCU Antimicrobial Coatings Next generation UH product VitroStealth nonbiofouling coatings Actamax DSM-DuPont JV HQ move to Berkeley, CA

28 Open Innovation in biomedical materials Joint R&D Joint Business Developments Licensing In Venturing Spin in Actamax Joint-venture Acquisitions Divestments R&D services Licensing Out Spin out/off Device design; Exclusive material developments Scientific Advisory Board & other Consultants

29 Summary: Managing Sustainable Breakthrough Innovation Sustainable Company WHY Sustainable Innovation Themes Building an intrinsically innovative company HOW Blue & Red Box Open Innovation Innovative solutions that improve, nourish and protect WHAT Growth Platforms

DSM perspective on Innovation-driven growth

DSM perspective on Innovation-driven growth Henk Noorman Corporate Scientist BE-Basic Innovation Workshop 18-10-2011 Overview Innovation progress DSM Bio-based Products & Services DSM Biomedical Open innovation