Italy’s Biotech Surge

It was 1992 when Italy’s Novamont celebrated the use of its Mater-Bi starch-based polymer to make the official pen of the United Nations Earth Summit in Rio de Janeiro. Twenty years later, Novamont has been joined by a clutch of other Italian chemical and biotech firms investing in the biomaterials sector. The companies are risking hundreds of millions of dollars to develop new technologies and build industrial biotech plants at a scale not seen before around the world.

“It’s a new era for industrial biotech” in Italy, says Antonio Irione, head of life sciences business in that country for the consulting firm Ernst & Young. The main catalyst for the flurry of building activity is growing consumer demand for greener products, Irione explains. An additional stimulant, he says, is the advent of economically viable technologies for producing chemicals from biomass.

Among the industrial biotech plants that companies are planning or already building, Italy-based Beta Renewables, a joint venture between Mossi & Ghisolfi (M&G) and U.S. investment firm TPG, is building a cellulosic ethanol facility in Crescentino; Matrica, a joint venture between Novamont and Italian oil company Eni, is constructing a multiproduct biorefinery on the Italian island of Sardinia; and Novamont and San Diego-based biotech firm Geno­matica are jointly building a facility for making the important intermediate chemical butanediol (BDO) in Adria.

According to an Ernst & Young report published earlier this year, the industrial biotech sector in Italy is already strong. Sales in 2011 increased 24% to $195 million, research and development investment rose 27% to $34 million, and total R&D staffers increased by 26 to 456. Separate studies by Ernst & Young and EuropaBio, Europe’s biotech industry association, show that Italy’s industrial biotech industry is one of the largest in Europe: Germany has 65 industrial biotech firms—the greatest number in Europe; Italy is in second place with 15, and the U.K. has fewer than 10.

“There is definitely a lot of momentum, energy, and excitement” around the Italian industrial biotech industry, says Christophe Schilling, chief executive officer of Genomatica, which has developed an approach for genetically modifying Escherichia coli and other organisms to convert sugars into useful chemicals. Genomatica has relationships with five Italian firms: Novamont, Versalis, M&G, M&G’s Chemtex subsidiary, and Beta Renewables.

“These companies see the developing market demand for renewables. They’re investing their own money, and they’re partnering with companies like Genomatica to make it happen,” Schilling says. “M&G, Eni, and Novamont have all made renewables a priority and have invested hundreds of millions of dollars.”

Genomatica’s suite of biotech processes, including those for making BDO and the rubber intermediate butadiene, are particularly attractive to traditional chemical firms in Europe struggling with the region’s relatively high energy costs. “There will be even stronger economic benefits from our more energy-efficient processes in this part of the world,” Schilling says.

During the past year, Novamont has been at the heart of a number of deals to increase and diversify its biomaterials manufacturing footprint beyond the Mater-Bi polymer. In January, the company agreed to establish a joint venture with Genomatica to make BDO from renewable feedstock using the San Diego firm’s process technology. Novamont acquired a lysine facility in Adria and plans to retrofit it by the end of 2013 at a cost of up to $50 million. Novamont will use BDO from the project to meet growing demand for Mater-Bi.

Novamont also agreed to form a joint venture with Genomatica and Versalis, Eni’s chemical business, to develop a process for making butadiene from renewable raw materials. Versalis plans to take a majority stake in the joint venture and says it aims to be the first company to commercialize the technology. Versalis brings expertise in catalysis and process engineering scale-up, and Novamont’s know-how includes biorefinery operation and renewable feedstock management.

Versalis says its involvement in the project is strategic, because the market for butadiene is set to tighten. Demand for the four-carbon chemical is growing in applications such as car tires while less of it is being produced by many petrochemical companies, owing to a shift to ethane as a raw material. “It’s a promising business opportunity in a market that is experiencing a critical time,” says Versalis CEO Daniele Ferrari.

Meanwhile, Matrica has an ambitious project to convert Eni’s Porto Torres petrochemicals complex on the Italian island of Sardinia into a biorefinery by 2016. The project involves building seven plants to convert biomass into chemicals including additives, intermediates, lubricants, monomers, and plastics. Matrica plans to spend $720 million on the project. The company says it will source feedstock, including vegetable oils, from crops grown locally.

Although Italy is better known for its fine wines and Ferraris than for its biomass production, the country’s Mediterranean climate provides the potential for plenty of raw materials, from both food and nonfood crops. Beta Renewables has identified marsh cane, a perennial grass that grows naturally throughout the Mediterranean basin, as the feedstock of choice for its Proesa process for converting lignocellulosic biomass into sugars and then ethanol. Ultimately, however, the method is feedstock-agnostic, Beta Renewables says.

The Proesa process features four key steps: “cooking” of biomass using water vapor, hydrolysis with a mix of enzymes to obtain simple sugars, fermentation using a modified brewer’s yeast to create an ethanol beer, and distillation to separate ethanol from fermentation residues.

Beta Renewables is building a cellulosic ethanol plant in Crescentino, about 100 miles west of Milan, that will showcase the technology. The company plans to license the technology globally. Even before the plant is operational, Beta Renewables has forged agreements with a series of companies to use Proesa, including Amyris, Codexis, Brazilian ethanol producer GraalBio, Gevo, and Genomatica.

Beta Renewables’ parent companies say they have invested more than $200 million in R&D since 2006 to develop the technology. The firm expects Proesa to generate cellulosic ethanol at a cost of $1.50 per gal, making it competitive with fossil fuels.

The start-up of the Crescentino plant will be “an important milestone for us and at the same time a new beginning,” says Vittorio Ghisolfi, president of M&G, one owner of Beta Renewables. “But research is not stopping here. We are developing technologies to displace a range of other petrochemical products and chemical intermediates with biobased substitutes.”

Non-Italian chemical firms also are planning to manufacture large volumes of chemicals derived from biomaterials in Italy. Reverdia, a joint venture between Dutch chemical firm DSM and France’s Roquette, is building a succinic acid facility in Cassano Spinola. Succinic acid is used to make solvents, pigments, and polybutylene succinate, an emerging biodegradable polymer.

The plant, which Reverdia claims will be the world’s first commercial biosuccinic acid facility, is expected to open later this year. Reverdia investigated multiple global options before choosing to locate in Italy. “We looked at time to market, sustainability, production options, availability of feedstock, and options for integration in an existing biorefinery,” the company tells C&EN. “The proximity to the port of Genoa ensures efficient global logistics.” It will source its starch from corn grown in Italy.

It is not only large chemical firms that are developing industrial biotech projects in Italy. Start-up companies are emerging across the country thanks to a step-up in funding and support for biotech firms, says Federico Martello, head of polymer therapeutic technologies at Fondazione Filarete, a nonprofit foundation that provides biotech start-ups with access to laboratories and scientific and business expertise.

The organization, which was set up in 2009 by the University of Milan and a group of private companies, already has helped create 10 biotech companies. Another 10 or so public-private biotech incubator groups exist across Italy, Martello says.

In addition to working for the foundation, Martello is seeking to start his own company producing synthetic bone for humans. The artificial bone is made of a moldable, biodegradable cross-linked polymer blended with hydroxyapatite, the mineralizing agent in bone. A Ph.D. chemist, Martello will test the technology in sheep and mice and then seek start-up funding.

Biomaterial start-ups have relatively good access to private funding in Germany, the U.K., and the U.S. compared with Italy, Martello says. He is convinced, however, that Italy’s strong scientific and business support for start-ups and the success of small and medium-size biotech companies across the country make Italy a better location for his firm.

The key components required to create a flourishing industrial biotech industry are in place in Italy. These include systems to assist start-up companies, government support, feedstock availability, technological expertise, and investment in manufacturing. Leading Italian firms are betting they can deliver a new model of sustainable development and value creation above and beyond the traditional one featuring petrochemical processes. Countries and companies around the world will be watching closely to see whether they succeed.