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Perspectives2012 01 Business-Perspective Jung BCG
Perspectives2012 01 Business-Perspective Jung BCG
>> A BUSINESS
PERSPECTIVE.
THE FUTURE OF VALUE CREATION IN THE GERMAN CHEMICAL & PHARMACEUTICAL INDUSTRY
Dr. Udo Jung
The Boston Consulting Group
ACHEMA PERSPECTIVES 2012
32
22
19
20
16
10
30%
49%
62%
77%
1 year
3 years
5 years
10 years
Multiple
Margin
1. TSR= Total return of a stock to an investor (capital gain plus dividends); TSR for top-quartile performers (S&P 500, 19922011)
Note: The rolling analysis covers one-, three-, five-, and 10-year time frames from 1992 through 2011. Shows the average of performers in the 75th to 100th percentile to illustrate approximate for the
top quartile companies (which would be equivalent to the 88th percentile); analysis excludes financial institutions
Source: Compustat; BCG Value Science Center
145420-34-18-AchemaPrsentation-June18-JF-FRA-RBHS.pptx
Copyright 2011 by The Boston Consulting Group, Inc. All rights reserved.
30
Why?
Growth with
value creation
20
Copyright 2011 by The Boston Consulting Group, Inc. All rights reserved.
R2=0,23
Growth without
value creation
-20
-20
20
40
50
5.2
4.6
40
4.0 3.9
3.7
3.5 3.4
3.1
5.4
2.0
1.6
2.9 47.9
7.7
30
2.8
2.4
Asia
2.7
1.2
1.4 1.3
7.8
2.0
Copyright 2011 by The Boston Consulting Group, Inc. All rights reserved.
5.5
20
4.6
10
9.3
0
India
China
Rest
of
Asia
Middle
World
Brazil
EUEast
15
C.E.
Russia
USA
Japan
Rest
Europe
of
Latam
China
Rest
EUMiddle
Japan
Brazil
World
of
15
East
India Asia USA
Rest
Russia
C.E.
RoW
of
Europe
Latam
World GDP
(K US$)
2010
70.6
2025
118.5
3.5%
x%
CAGR
Backup
Growth contribution
9% Rest of World
6% South America
61%
Asia Pacific
4,504
3.3%
55%
4.1%
16%
1.9%
17%
2.6%
6%
7%
3.6%
4.4%
+1,310
Global chemical
demand (B)
2,353
49%
Asia Pacific
Western Europe
+224
+305
21%
North America
+132
19%
South America
Rest of World
Copyright 2011 by The Boston Consulting Group, Inc. All rights reserved.
+2,151
5%
6%
+180
2010
Source: CEFIC Fact and Figures 2011; various analyst reports; company presentations; BCG analysis
145420-34-18-AchemaPrsentation-June18-JF-FRA-RBHS.pptx
2030
Draftfor discussion only
Backup
Global pharmaceuticals
demand (B)
Annual
growth rate
65% Pharmerging
1,080
4.8%
28%
14.4%
11%
4.8%
13%
- 0.7%
33%
1.8%
15%
3.6%
856
Pharmerging
18%
+148
Japan
11%
+25
EU5
17%
-5
+30
North America
38%
Rest of World
16%
2010
+26
Copyright 2011 by The Boston Consulting Group, Inc. All rights reserved.
+224
2015
Pharmerging countries: China, India, Brazil, Russia, Mexico, Turkey, Poland, Venezuela, Argentina, Indonesia, South Africa, Thailand, Romania, Egypt, Ukraine, Pakistan and Vietnam
EU5 countries: Germany, France, Italy, Spain, UK
North America: USA, Canada
Source: IMS; analyst reports; BCG analysis
145420-34-18-AchemaPrsentation-June18-JF-FRA-RBHS.pptx
Germany2
15
4.0
10
10.1
2.0
2.0
1.3
2.0
0.4
0.2
1.0
0.7
0.8
0.6
Growth
200830
1.2
55+
0.6
1.6
0.3
0.1
0.9
55+
0.7
< 55
< 55
6.1
4.1
2008
1.8
0.4
55+
4.0
6.1
0.6
Copyright 2011 by The Boston Consulting Group, Inc. All rights reserved.
US
2030
< 55
0.7
0
2008
Growth
200830
2030
2008
Growth
200830
2030
120
Low
100
69
56
54
51
60
45
16
10
10
0
-20
-5
-10
-5
-15
-13
-18
57
48
36
-14
4
-7
-15
35
31
29
-15
-21
-27
-40
-60
54
35
40
20
54
51
-19
-21
35
33
2
-14
-16
Mining
Constr. &
Build Mat.
Chemicals
Machinery
Technology
Non-Durables
Sources: Thomson Reuters Datastream; BCG analysis
145420-34-18-AchemaPrsentation-June18-JF-FRA-RBHS.pptx
Retail
Durables &
Apparels
Components
Telecommunication
Automotive
Media &
Publishing
Utilities
Travel &
Tourism
Transport.
&
Logistics
Multibusiness
Medical
Technology
1
-8
-12
-49
Copyright 2011 by The Boston Consulting Group, Inc. All rights reserved.
80
93
83
Pharmaceuticals
Pulp and
Paper
10 years (20022011)
Rank (n=269)
20 years (19922011)
Rank (n=164)
LG Chem
Honam Petrochemical
Fuchs Petrolub
K+S
BASF
Linde
Fuchs Petrolub
BASF
Linde
EMS-Chemie
Bayer
Givaudan
Fuchs Petrolub
18.9%
H&R
Linde
Syngenta
K+S
BASF
14.1%
Bayer
H&R
EMS-Chemie
6.6%
Syngenta
Symrise
Lanxess
K+S
17.9%
Honam Petrochemical
LG Chem
IFF
8.7%
Givaudan
6.8%
Kuraray
-4.6%
2.5%
1.9%
Asahi Kasei
Wacker Chemie
H&R
-40
-20
Clariant
0%
Mitsui Chemicals
Clariant
20
40
annual TSR1
60
-40
-20
0%
20
annual TSR1
40
60
-40
-20
0%
20
40
60
annual TSR1
11
Copyright 2011 by The Boston Consulting Group, Inc. All rights reserved.
Honam Petrochemical
German & European chemical companies with a good track record in diversified and specialty
chemicals business modelsdriven by the ability to manage differentiated business models
145420-34-18-AchemaPrsentation-June18-JF-FRA-RBHS.pptx
Copyright 2011 by The Boston Consulting Group, Inc. All rights reserved.
Observation
13
Feedstock advantaged countries will continue investing in a scenario of lower gas prices vs. higher
naphtha prices
No great expectations for cheap unconventional gas in Europe
Shale gas revolution in the US reduces European competitiveness in Chemicals
Countries will growing Chemicals demand and advantaged feedstock will increasingly drive their
own economic development agenda, which includes localization of chemicals supply sources
Increase value added to local economies
Reduce imports and increase self sustainability
For specialty chemicals customer proximity (in emerging markets) provides competitive advantage,
thus favoring new capacity in demand centerssuccessful European chemical companies will have
to "localize" their global business models
Regulatory pressure on the chemical and adjacent sectors (e.g., power) will lead to increased costs in
Europe and a potential reduction of European industry competitiveness
Larger and integrated new "megasites" in the Middle East and in Asia copy successful European
examples
14
Copyright 2011 by The Boston Consulting Group, Inc. All rights reserved.
1980
Chemical
sales (B$)
1995
Chemical
sales (B$)
2011
Chemical
sales (B$)
14.1
24.2
79.6
14.1
22.1
60.0
13.8
21.2
58.1
13.7
18.0
57.9
13.7
17.9
50.6
10.6
15.9
50.6
10.0
15.3
38.0
8.4
15.1
37.3
7,6
14.5
33.0
10
7.0
13.3
26
PetroChina
Copyright 2011 by The Boston Consulting Group, Inc. All rights reserved.
Rank
29.6
6.3
16
European
chemical demand
Cluster
competitiveness
Changes in
trade balances
Relocation of
networks
towards
growth regions
Asset
invests
Share of new
invest into
growth regions
Innovation
invests
Relocation
of decision
centers
Investment
decisions of the
chemical industry/
companies
Invest focus
on competitive
clusters
Exit hurdles
non-competitive clusters
Changes in the
European chemical
production base
End-industry
production and
innovation
networks
European
competitiveness
in specific
segments
Raw
material
differentials
New advantaged
capacities in
growth regions
Industry
structure
Public and
political sentiment
Share of
SMEs
Copyright 2011 by The Boston Consulting Group, Inc. All rights reserved.
GDPdriven
Growth of
segment
"55+"
Share of
foreign asset
ownership
Perception shaping
145420-34-18-AchemaPrsentation-June18-JF-FRA-RBHS.pptx
18
Size
(employees)
Region
Rheinland-Pfalz (Mainz), DE
40,075
Dsseldorf, DE
25,284
21,937
Rhne-Alpes (Lyon), FR
20,361
Istanbul, TR
18,133
16,250
Kln, DE
15,928
Ege (izmir), TR
10,587
Mnster, DE
9,590
Cheshire (Chester), UK
9,108
Nordwestschweiz (Basel), CH
8,549
Large
Small to medium size
19
Copyright 2011 by The Boston Consulting Group, Inc. All rights reserved.
Technologies
Organic/inorganic feedstock
Energy efficiency
Energy
Proven technologies
Chemical
reactions
Energy efficiency
Products
Low carbon intense products
Energy efficiency
Enabling precursors/products
Bio-processing unlikely
to substantially match
traditional chemical processes in terms of volume
Energy
1 storages
Biomimetric
2 catalysts
Leight
2 weighted
materials
Organo3 electronics
CO2 as new
4 building
block
Methane
4 coupling
Chemicals for
4 enhanced oil
recovery
Noble earth
substitution in
5 industrial
application
Process
5 intensification
Active agro
5 ingredients
Driven by demographics
Multiple existing substances
Crop industry leaders foster
R&D to sustain AI-pipelines
20
Copyright 2011 by The Boston Consulting Group, Inc. All rights reserved.
Feedstock
Rank (n=306)
10 years (20022011)
Rank (n=248)
Novo Nordisk
18.5%
Merck KGaA
Pfizer
Morphosys
Novartis
Bayer
Biogen Idec
5.9%
Merck KGaA
Sanofi
Qiagen
Evotec
-20
0%
20
40
annual TSR1
Novo Nordisk
13.2%
Biotest
Biogen Idec
14.1%
Sanofi
Novartis
Bayer
4.2%
Roche
Bayer
Pfizer
6.8%
AstraZeneca
Novartis
Morphosys
Pfizer
Qiagen
Evotec
-4.0%
Stada
-40
Rank (n=90)
Novo Nordisk
Biogen Idec
Biotest
AstraZeneca
20 years (19922011)
60
-40
-20
Stada
Biotest
Sanofi
Astellas
-2.4%
1.9%
Kyowa Hakko
Immunogen
0%
20
annual TSR1
40
60
-40
-20
0%
20
40
60
annual TSR1
21
Copyright 2011 by The Boston Consulting Group, Inc. All rights reserved.
5 years (20062010)
(20072011)
1997
1998
1999
Pfizer
Warner
Lambert
Pharmacia
& Upjohn
Upjohn
Pharmacia
Monsanto
Glaxo
Glaxo
Wellcome
SmithKline
Beecham
Wellcome
Zeneca
2000
J&J
Genentech
Centocor
Sandoz
Fisons
Rhone
Poulenc
Hoechst
Marion
Merrel
2002
2003
2004
Roussel
Uclaf
Synthlabo
Note: Only a selection is shown on this slide
Source: Company webpage; BCG analysis
145420-34-18-AchemaPrsentation-June18-JF-FRA-RBHS.pptx
2009
2010
2011
Pfizer
Pharmacia
Bayer
Wyeth
Bayer
Schering
AG
GSK
Inspire
Merck
&Co
Rosetta
AstraZeneca
MedImmune
Chugai
ScheringPlough
Guangdong
BeiKang
Merck &
Co
Astra
Zeneca
Anadys
Roche
Crucell
J&J
J&J
Alza
Novartis
Chiron
Aventis
HM
Roussel
Sanofi
2007 2008
KingPharma
Ciba
Rhone
Poulenc
2005 2006
Pfizer
Astra AB
Roche
2001
SanofiSynthlabo
Alcon
SanofiAventis
Zentiva
Legend:
Buyer
Target
Year when it happened
23
Copyright 2011 by The Boston Consulting Group, Inc. All rights reserved.
1995
1980
Pharma
sales (B$)
1995
Pharma
sales (B$)
2011
Pharma
sales (B$)
1.6
9.7
56.3
1.4
9.6
51.5
1.4
7.8
40.1
1.2
7.7
39.3
1.2
6.8
37.0
1.1
6.5
34.5
1.0
6.2
34.3
1.0
6.1
27.6
1.0
5.7
25.8
0.9
5.5
23.9
10
Smith Kline
Bristol-Myers
Copyright 2011 by The Boston Consulting Group, Inc. All rights reserved.
Rank
24
To grow profitably and to create value European and German based chemical and
pharmaceutical companies will continue to globalize their business modelsand invest in
"localization" in the growth regions (production, R&D, decision center relocation)
Location perspective
European chemical and pharmaceutical company have proven their ability to create value with
differentiated and diverse business model (management of complexity)
The attractiveness of Europe and Germany as a location for innovation and production is
driven by the "integrated attractiveness" (infrastructure, logistics, resource efficiency) of sites
and clusters
Cross-industry innovation and production cluster are largely a unique German advantage
driven by the unmatched density of "Mittelstand-champions"
145420-34-18-AchemaPrsentation-June18-JF-FRA-RBHS.pptx
25
Copyright 2011 by The Boston Consulting Group, Inc. All rights reserved.
Company perspective