Enzymes – They may be small, but they make a big difference

Reading Time: 5 minutes


Enzymes – Improving
every life, every day

The Indian enzyme market is yet to find its feet, as it is quite small when compared to the other sectors in the country. However, the growing awareness about the capabilities of enzymes and the subsequent benefits (both nutrition and cost-wise) will be important growth factors in the coming years. Nature’s enzymes and microbes are at work everywhere – from converting sugar into energy inside your cells, to enabling photosynthesis in the trees and plants outside your window. 

What are Enzymes?

Enzymes are proteins that act as catalysts. When one substance needs to be transformed into another, nature uses enzymes to speed up the process. In our stomachs, for example, enzymes break down food into tiny particles to be converted into energy.

Enzymes are used as catalysts to manufacture a variety of everyday products – like sugar, beer, bread, and ethanol. They are also used directly in products such as laundry detergent, where they help remove stains and enable low-temperature washing.

Industrial Enzymes have been used in the food & beverages industry for decades now. They are mainly used in baking, brewing, and food preservation. Microbial enzymes are increasingly preferred over plant and animal enzymes, owing to their high level of stability. 

In specialized enzymes, the polymerases & nucleases are the largest segments whereas in industrial enzymes, carbohydrate, which is a cost-effective and flexible segment, is widely used. Enzymes segment enjoys very high margins compared to other specialty ingredients, as it is a highly research-driven segment and also requires significant time investment before getting approvals for registrations or patents. 

Enzymes are another sunrise industry and are expected to deliver strong growth on a sustainable basis as industries keep moving away from synthetic solutions. Along with a better margin profile, enzyme companies claim premium valuations.

Industrial enzymes and specialty enzymes are expected to grow at 6% and 7% CAGR respectively over 2019-25

Source: Global Market Insights

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The enzymes industry has very high entry
barriers on account of extensive R&D focus and long gestation period before getting registration approvals for
products in the USA and EU. Most companies are now moving away from synthetic products to eco-friendly solutions and
enzymes is a sunrise industry with significant growth potential across various industries. Therefore,
pure enzyme players claim premium valuations over other companies.

Enzyme Market Size 

Fashionista? Foodie? Enzymes have you covered. 

Enzymes
make many of the products you use even better. They’re good for the environment
too. Enzymes can replace chemicals and minimize energy consumption.

Source: Global Market Insights

Enzyme market size is projected to surpass
USD 10.7 billion by 2024, Inclusive Global enzymes market is set to gain remarkable
significance over the coming years, with the increasing usage of enzymes as
biocatalysts in various industrial processes and reactions. Strong application
outlook of enzymes in biofuels, detergents, food & beverages, and animal
feed to improve the overall quality of the product is fueling the enzymes the market size in these sectors.

Rising demand for high-quality meat,
beef, and other protein food has fueled the penetration of enzymes in the
overall food & beverage sector. Escalating demand for nutritional packaged
and processed foods with extended shelf-life has propelled the growth of the enzyme market.

The food enzymes market, at a CAGR of 6.9%, is projected to be valued at
$3.23 billion by 2023
. Factors like better food quality, rising demand for
processed food, and increased awareness about nutrition-rich foods have
contributed towards the market’s growth. With the growing demand for
environment-friendly manufacturing processes, the market is primed to shift
towards a path of a promising and sustainable future. 

The industrial enzymes market is valued at $5.9 billion in 2020
and with a CAGR of 6.5%,
it will touch an estimated $8.7 billion by 2026 and will continue to propel the industry for
years to come. Industrial usage has been boosted by developments in enzyme
engineering and green chemistry, coupled with the increasing use of genetically
engineered enzymes.

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Growth driver for bioethanol production

The ethanol process through the usage of Enzymes. Enzymes are applied in multiple stages, along with yeast in fermentation. 

Source: Novozymes

1. Past: Basic products for liquefaction and saccharification 

2. Present: Multiple offerings across liquefaction, saccharification, and now also yeast 

3. Future: Increasingly customized solutions for liquefaction and saccharification, novel solutions for other process steps

Industrial
enzymes and specialty enzymes are expected to grow at 6% and 7% CAGR respectively
over 2019-25

Source: Global Market Insights

In FY19, the Indian enzyme industry was valued at 23.60 billion with a growth rate of 7%. The developments in pharmaceuticals and
chemical sectors will provide a much-needed boost to the enzyme market and it is
expected that the demand for specialty enzymes will be more than the industrial
ones.

The Indian manufacturers are
expanding their market base by exporting their products to a number of
countries. In FY20, on an average per quarter enzymes worth approx. 78.57
crores were exported to the USA, Japan, Germany, and Denmark. With the revival of
the economy, an increase in foreign direct investment will support the industry
and promote the use of enzymes. The government will motivate R&D in
biotechnology to exhibit the nation’s capabilities in terms of pharmaceuticals
and the relevant technology.

The flourishing food and beverage sector has significantly
fueled the demand for carbohydrates, which are used to catalyze the starch
conversion process. The Asia Pacific is observing high population growth and a
considerable rise in its food & beverage industry base. Japan, South Korea,
India and China are the leading countries that are driving the Asia Pacific
enzymes industry trends. As per estimates, the regional market is anticipated
to show a 9% rate of growth over the period of 2016-2024.

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There is a large potential for future enzyme
inclusion, especially in emerging markets. Significant up-dosing and
penetration potential in emerging markets in general and in the Asia Pacific in
particular.

Source: Novozymes

This move will make India an attractive market and companies
will look for inroads for gaining ground. Apart from biotechnology and
pharmaceuticals, enzymes are resourceful in other industries like household
care, food, and beverage, leather manufacturing, animal feed, etc. Better
R&D infrastructure and increased awareness about enzymes and their products
will help in improving the overall market size in India.

Sources & Credits:

Novozymes Annual Report

Global Market Insights 

Grandview Research 

Market Media

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Shuchi Nahar

Shuchi Nahar

Shuchi is NISM Certified Equity Research Analyst, CFA - Level 1, a student of Law and Finance, and an aspiring CS.
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