FOUNDATIONMGlobalChemicals|EuropeTheBioRevolutionMorganStanleydoesandseekstodobusinesswithcompaniescoveredinMorganStanleyResearch.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofMorganStanleyResearch.InvestorsshouldconsiderMorganStanleyResearchasonlyasinglefactorinmakingtheirinvestmentdecision.Foranalystcertificationandotherimportantdisclosures,refertotheDisclosureSection,locatedattheendofthisreport.Chemicalcompaniesarerespondingtothedemandfor‘greener’productsbytransitioningfrompetrochemicalstobiobasedmaterials.Withinthe‘biosphere’webelievebiosurfactantsofferaclearandattractivegrowthroadmaptoamarketweestimatecouldbeworth$16.5bnby2030.October21,201904:14AMGMTFOUNDATIONMGlobalChemicalsTheBioRevolutionThechemicalssupplychainismigratingbacktobiobased/renew-ablerawmaterialstoreducetherelianceonhydrocarbonsandlowerCO2,improvesustainabilitycredentialsandfulfilgrowingdemand.Beforethe1950s,chemicalswerelargelybiobased(e.g.derivedfromsugaroranimal/plantoils).Bythe1970s,petchemshadreplaced>95%ofmarketspreviouslyheldbybiobasedchemicals(MorrisandAhmed,1992)1.Wenowseeagravitationbacktobio-chemicalsasawarenessofpetrochemicals'environmentalimpactisincreasingamongstcorporates,consumersandgovernments,fosteringfurtherencroachmentinmarketsoncedominatedbyfossil-basedcounterparts.Thebiochemicallandscapeisbroad,diverseandgrowing,andit’snotjustaboutbioplastics...We’vecreatedaschematicdescribingwhatwecallthechemical'biosphere',comprisedofeightbiobasedproductgroups(Exhibit2)).EUChemicalcompaniesarecommittedtobio-routes(wemapoutthebiosupplychainhere)butchallengesofhigherproductioncostsandscalabilityarestillpresentforsomeproducts.Wheremuchofpreviousdebateandgovernmentinterven-tionhadrevolvedaroundbioplastics,theyonlymakeup1%ofthetotalplasticproductionanduptakehasbeenslowandstilted.…wethereforedeepdiveintobiosurfactantsasourareaofpref-erenceaspenetrationratesareaboveaverageandgrowing,endcustomersaredemandingsupplychainchangesandarewi...
