Health and Wellness Trends and their Impact on the Chemical Industry

Dr. Brian Balmer

Yong-Li Qian

2nd December 2010

2

Focus Points

• Overview• Health & Wellness trends impacting the Chemicals & Materials industry

• Health & Wellness Trends in Transportation

• Health & Wellness Trends in Construction & Utilities• Healthy building design trends

• Health & Wellness Trends in Food, Drug & Cosmetic Applications• Nutricosmetics

• Conclusions

3

An Overview of Health & Wellness Trends

Putting "Wellness" in Context

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Health & Wellness in Context Frost & Sullivan's assessment of the key megatrends impacting Chemicals & Materials companies

Globalisation

Health &Wellness

Low CarbonEconomy

Functionality &Performance

5

Health & Wellness as a MegatrendWhat does it mean?

"[There is] widespread acknowledgement that GDP is not the ideal measure of well-being... It's time we admitted that there's more to life than money, and it's time we focused not just on GDP but on GWB - general wellbeing."

Source: UK government press release, Nov 2010

"[There is] widespread acknowledgement that GDP is not the ideal measure of well-being... It's time we admitted that there's more to life than money, and it's time we focused not just on GDP but on GWB - general wellbeing."

Source: UK government press release, Nov 2010

Health

Safety

Security

Socialresponsibility

"More than one in three French people can not find enough time to take care of their well-being."

Source: Ipsos survey sponsored by MerckPublished in Le Monde, Nov 2010

* Original French term: bien-être

"More than one in three French people can not find enough time to take care of their well-being."

Source: Ipsos survey sponsored by MerckPublished in Le Monde, Nov 2010

* Original French term: bien-être

Fitness

Quality of life

2010 represents the 20th year of publication of the UN Human Development reports:

"For the first time since 1990, the Report looks back rigorously at the past several decades and identifies often surprising trends and patterns with important lessons for the future."

Well-being

Bien-être

Wohlfühlen

6

Impact of Health & Wellness TrendsThe continuing drive to live in a safe, secure and healthy environment will have a wide range of ramifications for Chemicals

PPE (personal protective equipment) for safety at work

Structural materials for cars that improve pedestrian impact safety performance

Exposure to chemicals - regulation such as Europe's REACH to be implemented in other regions too

Urban environments designed around personal well-being e.g. by using anti-graffiti coatings on building exteriors

In addition to these trends, chemicals are also a critical element of many healthcare solutions. The areas of greatest growth will be in chemicals & materials used in preventative and diagnostic applications.

Materials for "healthy buildings" such as odour-neutralising paints, or electric lighting integrated into wallpaper using polymer electronics

Modern engineering practices will enable the use of natural materials such as wood, but in modern architectural designs without the drawbacks traditionally associated with natural materials such as lack of uniformity

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Health & Wellness Trends in Transportation

and their impact on Chemicals & Materials

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Securing the Health and Well-being of Vehicle PassengersThe next big trend after environmental (fuel efficiency)

OEMs generally tend to focus on one of the 7 key factors

(as shown on the right) for positioning of their vehicle

brands.

For each factor OEMs evaluate whether they want to be

‘best-in-class (BIC)’, ‘amongst the leader’ or ‘a follower’.

Those factors which strengthen their brand values are

normally bracketed in the ‘BIC’ box (e.g. Volvo on safety,

BMW on driving dynamics).

This new factor will evolve from the current focus on

environment. We already see huge evidence of this factor

in modern society.

Safety

Environment

Quality

Comfort/Convenience

Driving Experience

Design and Styling

Cost Of Ownership

Factors which currently form basis of differentiation among

OEMs

Source: Frost & Sullivan

Health, Wellness and Well-Being is expected to be the Next Big Factor For

Differentiation for OEMs

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Securing the Health of Other Road UsersPedestrian impact safety is a key trend in car design for Europe

The European Pedestrian Impact Phase 2 standard comes into force in 2010. Malleable steel, polyurethane foams and other energy absorbing materials are being used in automotive bumper systems to meet pedestrian lower-leg impact requirements.

Two competing product

approaches. Metal alloys

versus polymer based products

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Health & Wellness Trends in Construction & Utilities

and their impact on Chemicals & Materials

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Health & Wellness in BuildingsRecent trends

"The adhesives and sealants of our OSI Green Series set new standards in environmentally compatible building and healthy homes."

Source: Henkel

"The adhesives and sealants of our OSI Green Series set new standards in environmentally compatible building and healthy homes."

Source: Henkel

"WHO recognises the international importance of healthy buildings."

Source: CIB update on Task Group 77, Aug 2010

"WHO recognises the international importance of healthy buildings."

Source: CIB update on Task Group 77, Aug 2010

Healthy indoor environment

The restaurant is well ventilated, lit with natural light and incorporated non-toxic materials to promote a high quality indoor environment for both customers and employees.

Detail from a case study, "Green McDonald’s Restaurant", completed in July 2009

Healthy indoor environment

The restaurant is well ventilated, lit with natural light and incorporated non-toxic materials to promote a high quality indoor environment for both customers and employees.

Detail from a case study, "Green McDonald’s Restaurant", completed in July 2009

Governmental support

Healthybuildings

Materials for healthy buildings

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Healthy Building DesignWhat constitutes a "healthy" building?

Air quality, emissions & toxicity concerns

Keeping out external pollution (noise, electromagnetic etc.)

Lighting, ventilation and humidity considerations (and how to balance this against thermal / energy efficiency considerations)

Building design (layout and ergonomic considerations)

Disease and infection control

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Healthy Building DesignWhat other factors from the built environment can influence health & wellness?

• Urban planning can be just as important as the design of individual homes

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Health & Wellness Trends in Food, Drugs & Cosmetics

and their impact on Chemicals & Materials

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Agenda

• Introduction• Market Overview• Market Factors: Drivers & Restraints, Challenges• Additional Insights and Growth Opportunities • Q&A

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What are nutricosmetics ingredients?

Ingredients used in nutricosmetic products to impart effects, such as:

• Vitamins such as A, C, and E• Carotenoids such as lycopene, lutein, and beta

carotene• Others such as fruit and vegetable extracts,

green tea extracts, CoQ10, and collagen

When ingested, nutricosmetics support the function and the structure of the skin, nails, and hair, having a preventive or reactive effect.

What is a Nutricosmetic?

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Ou

tsid

e th

e B

od

y

Nutricosmetics Digestible Supplements that

offer beautification and/or personal hygiene benefits

$ 2.1 Billion

Cosmetics and Toiletries

Products that offer beautification and/or personal

care/hygiene benefits

$ 250 Billion

Insi

de

the

Bo

dy

Inside the Body Outside the Body

Dietary Supplements or Nutraceuticals

Digestible Supplements that offer nutritional and/or

health benefits

$ 65 Billion

Cosmeceuticals Cosmetic products that offer

nutritional and/or health benefits

$ 11 Billion

Active Ingredient Delivery Format

Co

nsu

mer

Ben

efit

Market Overview

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Nutricosmetic Ingredients Market: Revenues by Product Type (EU & NA), 2009

Others represent the largest market segment in the nutricosmetics ingredients market with 53.6% market share. This category includes a large number of ingredients such as fruit extracts, green tea extracts, CoQ10, phytosterols, and collagen.

Next, carotenoids have a 23.3% market share. Key ingredients include beta-carotene, lutein, and lycopene

Vitamins A, C and E hold the third largest market share representing 23.1% of the market revenues. Vitamin A palmitate and vitamin A acetate (retinyl acetate) are the principal forms used as nutritional supplements.

Source: Frost & Sullivan

54%

23%

23%

Carotenoids Vitamins Others

The largest segment of the ingredients market is captured by an Others category including fruit & vegetable extracts, CoQ10, phytosterols, and collagen --> implying the market is very fragmented.

Nutricosmetic Ingredients

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Nutricosmetic Industry Performance

Source: Frost & Sullivan

Unclear Market Definition

Establishing Credibility

Uneducated Consumers

Ensuring Quality and

Formulation Stability

Industry Challenges

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“Beauty from within”

Aging Concerns in Population

Natural & Organic Trends

Potential Geographic Regions – NA, Russia

Growth Opportunities

Hair & Nail Applications

Partnerships: Supplement & Cosmetics Companies

Growth Opportunities

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Rank Critical Success Factor

Impact

1-2 Years 3-4 Years 5-7 Years

1 Educating Consumers High Medium High

2 Establishing Scientific Credibility High High High

3 Ensuring Reliable Supply Medium High High

Education, credibility, reliability are the key areas of improvement needed to

Success Factors

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Summary & Conclusions

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SummaryHow Health & Wellness trends impact chemicals & materials use

• Health & well-being as a general mega trend is gaining more and more attention at present

• Downstream industries are reacting to this as a result

• As these industries react, many of the new solutions will require innovation from the chemicals & materials industry for their implementation

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