BASF innovation approach digitalization in R&D
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1 BASF R&D Roundtable on June 28, 2017 BASF innovation approach digitalization in R&D Dr. Martin Brudermüller Vice Chairman of the Board of Executive Directors and Chief Technology Officer
2 BASF R&D Success stories of innovation Success through strong commitment to R&D and continuous adaption to market needs Synthetic dyes Fertilizers Plastics / foams Health care & nutrition, crop protection Systems Polystyrene 1934 Magnetic tape 1949 U46 herbicide Opus fungicide 1996 Strobilurine fungicide 2008 HPPO 2015 Slentite 2016 Maglis 1869 Alizarin 1897 Indigo 1901 Indanthrene blue 1913 Ammonia 1923 Methanol 1936 Buna 1937 Polyethylene 1951 Styropor 1963 Vitamin A 1974 Basagran herbicide 152 years build-up and continuity of competency in R&D 1980 Citral Vitamin Ecovio B Neopor 2013 Infinergy DroughtGard FWC TM Four-Way- Conversion Catalyst 2011 Xemium fungicide 2
3 BASF R&D 2016 R&D is and will be the growth driver for BASF BASF R&D expenditures 2016 (%) Corporate research, other Oil & Gas 2 Agricultural Solutions billion Chemicals Performance Products Functional Materials & Solutions R&D expenditures on constantly high level 10,000 employees and 3,000 projects in R&D Global Know-How Verbund with external partners More than 300 new products each year 10 billion net sales each year with innovations 3
4 BASF R&D Today s environment Our innovation landscape is getting complex Patent applications Chinese patent applications , , ,177 10,137 18,699 51,906 8,558 x Academic publications Chinese academic institutes 1,000 1,137 1,325 1,434 1, x US risk capital 31,000,000 1,050,000 1,378,000 1,702,900 1,997,400 2,680,900 x920,000 2,238,079 31,006,937 1,348,087 1,654,041 2,100,005 1,211,859 x749, , , ,245 23,525 58,811 2,786 2,854 8,017 x 4
5 BASF R&D Today s environment Need for quick adaption to this fast changing environment The shelf-life of innovations drops significantly. Academic research broadens Chinese competitors leverage R&D Start-ups drive technology Technological progress accelerates Battle for talent intensifies 5
6 Innovation approach Constantly advancing BASF R&D performance Enhanced innovation approach to increase power of innovation and secure long-term competitiveness Dynamic environment Focus content BASF Innovation approach Optimize structures Drive methodologies 6
7 Innovation approach Focus content Foster creativity and accelerate evaluation of strategically relevant ideas The Creativity concept is a new approach for the early evaluation and pragmatic early pursuit of ideas with relevance for BASF. Idea submission Decision Creativity phase Stop/Godecision Creativity budget select strategically relevant topics Top management high turnover Transfer to business or Key Technology Capability 7
8 Innovation approach Focus content BASF s Key Technology Capabilities (KTCs) are bundled in seven focus areas Selected KTCs reflect where BASF requires continued effort and resources to safeguard today s and tomorrow s excellence in innovation. Biotechnology Catalysis Polymer Technologies Materials Enabling Methods Production Processes Biodegradable & Biobased Materials 8
9 Innovation approach Focus content KTCs enable technology development in operating divisions New catalyst materials, syntheses and applications KTCs combine key capabilities across Technology Platforms and integrate external capabilities More than one capability or KTC to meet specific needs of operating divisions (ODs) Heterogeneous Catalysis Novel concepts for catalyst synthesis New catalyst materials OD1 OD4 Inorganic & zeolite chemistry Data mining & computational chemistry OD2 OD3 9
10 Innovation approach Optimize structures Global R&D presence in key markets BASF R&D sites regional hubs and sites with specific customer know-how and proximity San Diego Enzymes Lemförde Polyurethanes Amagasaki Batteries Suwon Electronic materials Wyandotte Materials Iselin Catalysts Research Triangle Park Bioscience Research Muenster Coatings Ludwigshafen Process Research & Chemical Engineering Frankfurt Surface treatment Mumbai Crop protection Shanghai Advanced Materials & Systems Research Around 70 BASF R&D sites globally Headquarters of technology platforms Selected R&D sites 10
11 Innovation approach Optimize structures The latest addition to our global R&D network the Innovation Campus Asia Pacific in Mumbai, India Innovation Campus Asia Pacific in Mumbai started 2017 and is the 2 nd largest R&D site in Asia Pacific. Focus areas Crop protection, process development and organic synthesis Campus can accommodate 300 scientists Campus concept Mumbai site combines all parties in the innovation process for innovative solutions tailored to the local markets 11
12 Innovation approach Drive methodologies The digital acceleration exponential technology development enables digitalization Rise in supercomputer performance (Peta FLOPS*) 1 Improvement in telecommunications transmission speed (bits per second) 2 Number of smartphones shipped worldwide (in million units) 3 0,04 93,0 56K 1G Year ,432.9 Year 2015 Year 2002 Year 2016 Year 2002 Year 2015 Sources: 1 Top 500, 2 T-Mobile, 3 IDC *FLOPS: the number of floating-point operations per second performed by a computer. 12
13 Innovation approach Drive methodologies BASF 4.0 digitalization in BASF will support growth and efficiency Growth Digital Business Models Smart Innovation Digital business models enable new revenue streams Higher supply share by customer connectivity Drive new kinds of innovation by connecting to customers and partners Smart Supply Chain Smart supply chain reduces working capital Efficiency Smart Manufacturing Predictive maintenance leads to increased capacity Augmented reality increases production efficiency Scope of BASF
14 Innovation approach Drive methodologies Digital business models create new offerings and strengthen customer collaboration OASE connect: Digitalizing the gas treatment business and supporting customers in real time Key aspects New digital platform supporting customers in operating their plants more efficiently Simulation of optimum plant parameters available to the operator in real time Complements existing gas treatment solutions to companies worldwide Unique offering setting a new benchmark in the industry 14
15 Innovation approach Drive methodologies Digitalization in R&D enabling new digital solutions for our businesses Data Science Fast access to integrated clean data Knowledge Systems Connect knowledge from inside and outside BASF Modeling & Simulation Accelerate modeling & simulation with supercomputing Scope of Digitalization in R&D 15
16 Innovation approach Drive methodologies We will use supercomputing to digitalize R&D We will drive innovation through integrating digital technologies into everyday work in R&D. Key aspects QURIOSITY BASF s new supercomputer The most powerful supercomputer in the chemical industry worldwide Proprietary computer designed to precisely meet BASF s needs Boost modeling and simulation capabilities opening new avenues for BASF Illustrative picture Enable BASF to reduce time to market and costs 16
17 Innovation approach Drive methodologies Digitalization projects in R&D demonstrate tremendous potential Predict catalyst lifetime Modeling to design functional polymers Performance ranking 3 times faster New formulations pinpointed Accelerate enzyme discovery by big data 85 mio. candidate sequences explored Augment bacteria discovery by literature mining 38 hits found automatically in 48,000 documents 17
18 Innovation examples Advanced Materials & Systems Research Stain-resistant coating: faster market entry by digital engineering New stain-resistant coating for the furniture industry developed based on systematic data analysis Number of experiments reduced by factor 10 Challenge No suitable water-based white furniture coating with improved resistance against colored stains found via classical experiments Research Data analysis led to dedicated experiments Solution Newly developed formulation enabled accelerated market entry 18
19 Innovation examples Bioscience Research Revysol : the new blockbuster fungicide Active ingredient selected through molecular modeling technologies New benchmark in disease control Challenge Need for innovative new chemistry that meets future efficacy and regulatory requirements Research Molecular modeling contributed to quick identification of compounds with optimal performance Solution First registrations and market introduction of Revysol expected in 2019 season 19
20 Innovation examples Process Research & Chemical Engineering Cathode materials for high-performance batteries Data-driven approach to optimize innovative battery materials for electric vehicles with extended driving range Driving range >600km Challenge Enhance battery performance for affordable electro-mobility Research Modeling, simulation and big data analytics drive the development of cost-efficient, innovative battery material solutions Solution Accelerated development of high performance cathode materials 20
21 Innovation examples Process Research & Chemical Engineering L-Menthol: top-notch through radical process innovation Computational chemistry accelerated the development of a new efficient and resource-saving process to reliably produce L-Menthol More costefficient than natural Challenge Cost-competitive synthesis route for L-Menthol from cis-citral with high yields and in short time Research Enantioselective hydrogenation of cis-citral: obtain detailed mechanistic understanding via density functional theory (DFT) Solution Understanding of kinetics enabled faster optimization of catalyst structure and high selectivity 21
22 BASF R&D and innovation approach Digitalization in R&D will enable us to be the most innovative company in the chemical industry! 22
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