Incorporated by second-generation enzymologists, the Rathibrothers in 1989, Advanced Enzyme Technologies (AET) is one of the largest research-driven Indian enzyme companies with a product basket of 400+ proprietary products developed from 68 indigenous enzymes and probiotics.
Broadly, the business can be divided into three segments –
1) Human healthcare
2) Animal healthcare
3) Industrial processing
It manufactures enzymes by using natural resources such as plants, fungal, bacterial, and animal sources, using environment-friendly biotechnology processes.
It offers these products to 700+ customers across 45 countries worldwide.
This classification provides a break-upon the basis of the enzyme function. For example:
1) Proteases: They break down proteins (used in industries like detergent, leather, animal feed, food & beverage, pharmaceuticals, etc)
2) Cellulases: They break down cellulose (used in industries such as paper & pulp manufacturing, coffee production, grain processing, textile, animal feed, etc)
3) Lipases: They break down fats (lipids) into glycerol and fatty acids (used in biofuels production, biocatalysis, industries such as leather, dairy, and cheese, etc)
4) Carbohydrases: They break down starch into simple sugars (used in industries like food & beverage, animal feed, cleaning agent, bio-fuel, etc)
5) Polymerases & nucleases: They replicate/break down DNA material (used in research & biotechnology, diagnostic segments)
Revenue Growth Trend of Advanced Enzyme Technologies Over the Years
Indian Enzymes Estimated Product Type Bifurcation
Oligopolistic Environment – Vast Addressable Market for Advanced Enzyme Technologies
Globally, the growth of the enzymes market piggybacks on a diverse spectrum of the customer base.
This, together with a limited number of meaningful players, has created a conducive business environment for existing players in the space.
Note that enzymes as the cost to the percentage of sales are not material, yet their efficacy is very important to end-products including constituency of the end product in terms of its taste, appearance, aroma and, thus, quality perception of the products leading to significant supplier stickiness.
Revenue Split Product Category Wise FY19 v/sFY20
Specialized in the business model with high entry barriers, one of the biggest challenges for companies looking to enter the enzyme industry is to offer continuous and differentiated solutions as per the client’s requirement that demands real-timeR&D capability and flexibility in manufacturing.
Large manufacturing capacities, proven capabilities, experienced promoters, customer stickiness, fairly consistent track record, ability to develop new products in-house, and the quest for unique acquisitions are some differentiators for Advanced Enzyme Technologies.
Revenues have grown at a CAGR of11% during FY16-20 through the organic and inorganic routes.
Business Segments of Advanced Enzyme Technologies
The company provides proprietary enzyme products, probiotics, and customized enzyme solutions to various pharmaceutical and nutraceutical companies in the US, India, Europe, and other countries. While pharma comprises 40% of the human healthcare portfolio, nutraceuticals account for the remaining 60%.
In pharma, the company provides proprietary enzyme products and customized enzyme solutions to various pharmaceutical and nutraceutical companies in India, the US, Europe, and the rest of Asia.
Customers use these enzymes as active ingredients in their pharmaceutical and nutraceutical formulations. Some of its key customers include Sanofi India, Alkem Labs, Emcure Pharma, and Torrent Pharma.
AET’s animal healthcare (animal HC) segment contributed 13% i.e 54 crores to net revenues in FY20. Animals are fed with mainly two categories of livestock feed viz. 1) forage and 2) Fodder.
Other than these two the third category is compound feed, which uses enzymes for production.
This feed is designed specifically to suit the nutritional requirements of animals and includes additives, corns, soybeans, sorghum, oats, barley, etc.
AET’s human healthcare (Human HC) segment contributed 75% i.e 321 Crore net revenues in FY20.
Advanced Enzyme Technologies provides proprietary enzyme products and customized enzyme solutions to various pharmaceutical and nutraceutical companies in India, North America, Asia (ex-India), Europe, and other countries globally.
These products include various anti-inflammatory solutions, digestion solutions, probiotics, etc. which are used by customers as active ingredients.
The industrial enzymes segment contributed 13% i.e 56 crores to net revenues in FY20.
As mentioned earlier, the segment has been divided into two sub-segments- food and non-food industrial processing.
The food business consists of baking, dairy & cheese processing, fruits & vegetable processing, cereal extraction, brewing, grain processing, protein processing, and oils & fats processing.
R&D – The Biggest Advantage for the Company
One of the biggest challenges being faced by new companies looking to enter the enzyme industry is to offer continuous and differentiated solutions as per the client’s requirement that demand real-time R&D capability and flexibility in manufacturing.
Advanced Enzyme Technologies has an upper edge here.
Integrated R&D Facilities
Advanced Enzyme Technologies is an integrated player with a presence across the enzyme value chain, covering the entire range of activities from R&D, commercial-scale manufacturing, to the marketing of enzyme products and customized enzyme solutions.
In the last five years, the company has enhanced fermentation capacity from 360 cubic meters to ~510 cubic meters.
Advanced Enzyme Technologies intends to set trends in the R&D areas mainly for the formulation of new applications and will continue to significantly invest to build its portfolio in focus applications and industries.
Fundamental Analysis of Advanced Enzyme Technologies
*1GRAS Dossier under evaluation with US FDA
Cover Image: Bloomberg Quint