Model 10: High-value Products from Knowledge-based Processing

The type is based on four enterprises specialising in using novel biomass and developing different new products, specifically for pharmaceutical, nutraceutical, cosmetics, food and feed industries.

Value proportion

The main value proposition lies in processing novel and natural biomass for new and innovative products and ingredients for cosmetics, pharmaceutical, nutraceutical products, food and animal nutrition industries.

Infrastructure

The key partnerships are biomass (seaweed, crops such as hemp) collectors or producers, universities and other research institutes for R&D of the novel products. With pharmaceutical, food and feed industries as customers, the enterprises are subject of variety of regulations and cooperation with public regulatory bodies is required.

The key activities are collecting the raw materials, production starting from primary processing of raw materials (washing, extracting and filtering, drying and milling), followed by quality control, packaging, storage, also R&D activities, marketing and sales. One of the enterprises also offers biochemical analysis and related services.

The tangible key resources are biomass (i.e. the algae, seaweed, hemp and other plant-based biomass), processing facilities, production infrastructure, equipment and machinery for washing, filtering, drying, milling the raw material, intermediate and final products, and equipment for packaging and conducting biochemical analysis. As enterprises work with novel products, intangible resources such as patented know-how (product formulations) and technical knowledge, trademarks and skilled staff are especially important.

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Customer interface

The enterprises established their customer relationships through personal direct and automated online sales via webshop.

The main focus is on B2B sales and main customer segments are producers of various processed foods, feed, cosmetics and pharmaceuticals. To a certain extent sale to private persons as end users takes place. Those customers include often high-income and health-conscious persons, who are end users of the cosmetics and pharmaceuticals products.

The enterprises reached their customers through following channels: their own sales forces and direct sales, but also through intermediaries, including foreign partnerships. Exhibitions for introducing novel products to business customers were mentioned.

Business Model Canvas for High-value Products from Knowledge-based Processing Business Model type

Financial viability

Most significant costs for operating this business model are R&D and development of product formulations; patent applications, investment into processing facilities and biomass refinement to intermediate material; marketing, personnel and raw material costs. The revenues come from the sale of intermediate and final products, services offered and potential grants and subsidies for R&D.

Socio-economic aspects and novelty

The companies provide social and health benefits by developing new products for human well-being and by supporting production of healthy food and by exploring new uses of existing bioresources, e.g., aquatic resources. Companies stimulate local economies not only with employment, but with buying biomass from locals. The production can be the subject to specific regulations (e.g., volume of collection of aquatic biomass). In comparison with other types, the companies are less dependent on policies, but also have more limited access to subsides in comparison with energy or agricultural producers.

The novelty of the activities of companies is high. Companies represent both product and processing innovation as they work on finding new ingredients for food, feed, cosmetics, new recipes for food industry or developing novel biomass-based products for treatments in integrative medicine. This Business Model depends heavily on the investment into knowledge workers and resources and in some cases a specific local biomass, thus the transferability is limited.

The Business Cases of this Business Model type include two cases – Est-Agar (Case 10.1: Est-Agar – sustainable enhancement of the red algae Furcellaria lumbricalis – Estonia) and oceanBASIS (Case 10.3: oceanBASIS – natural cosmetics and food from seaweed – Germany), which utilize algae and other aquatic biomass. The Business Case of SatiMed (Case 10.2: SatiMed – wellness and health products from the hemp plant – Lithuania) illustrates a Lithuanian biotechnology company developing hemp-based products.

Other related Business Models

Archetype of novel uses of bio-based materials for non-energy purposes includes Business Models developing innovative biomass based non-energy products and processing technologies for food, pharmaceutical, cosmetics, construction and other industries. The Business Model innovation in this archetype includes finding new ways to capture value from novel biomass, new uses of existing biomass or designing new processing systems, and related changes in other elements of the Business Model. The Business Models in this archetype rely heavily on knowledge resources and their combination with networks, and thus are not so easily transferable.

Model 8: Sustainable Bio-based Products from Plant-based Biomass

Model 11: High-value Products from Circular Bioeconomy