DSM plans €1.5bn innovation-led sales target for 2010-15

21 May 2010 17:15  [Source: ICIS news]

LONDON (ICIS news)--DSM plans to set ambitious targets to boost revenues and profits from innovation, the company’s chief innovation officer, Rob van Leen, said on Friday.

The Dutch chemicals and life sciences group wants to raise revenues from innovative products and applications by 50% to €1.5bn ($1.9bn) for the five years to 2015 and introduce a new innovation profit margin target.

The targets are designed to increase revenues from around €200m/year between 2005 and 2010 to €300m/year from new products, new applications of existing products, plus sales of patent-protected products. Van Leen said he was confident that DSM would achieve its current target of €1bn in revenues from innovation in the five years to 2010.

“We’re trying to figure out if these targets are [achievable],” he said.

“I’m confident that we can do it and on 22 September we’ll announce the new targets”

Management was still evaluating whether the new profit margin target would be made public, he added.

Van Leen said the innovation pipeline businesses would be given more demanding profit margin targets than existing businesses.

“Our recent analysis shows that a lot of current running businesses can’t explain what their return on investment will be [from innovation spend]. More risky investments must be justified every three months. So this will be a challenge for our existing businesses.”

After a focus on portfolio restructuring in 2000-2005 which saw the company sell off its commodity petrochemicals operations to Saudi Arabia’s SABIC, the period to 2010 has been about market driven growth through innovation, van Leen said.

“We set up our Innovation Centre, employed a chief innovation officer, and put in place new platforms for emerging business areas - biomedical materials, white biotechnology, specialty packaging and personalised nutrition.”

Van Leen also said that is considering new partnerships for joint ventures for two of these areas.

($1 = €0.80)

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Author: Will Beecham

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