We spoke to Dr Matthias Hofmann, Group Director – Innovation & Technology at Azelis, which has just released its sustainability report for 2022 entitled ’One sustainable future’. This sets out a comprehensive overview of the company’s sustainability strategy, business model and extra-financial performance.

 

Q: Azelis has over 20 dedicated application laboratories in Asia-Pacific, across various market segments, including Personal Care, Food & Nutrition and CASE. Could you explain how developing formulations that allow manufacturers to tap into new markets and opportunities can also provide localisation of trends for specific countries?

A: If you want your innovation to reach a local market, you need to understand the needs of that local market. Your ideas and concepts need to be relatable, as what works in one country might not apply to the market of another country, because each country is influenced by its own environment, culture, economic factors and heritage. Thanks to our network of application laboratories, coupled with our strong customer intimacy and market presence, we are able to formulate marketable concepts. Having a regional network of laboratories enables the cascading of innovative solutions and formulations across Asia-Pacific through technical collaboration and provides the laboratories with the capabilities to customise and tailor formulations for specific countries. In Asia-Pacific, by leveraging our lateral value chain, we ensure manufacturers’ ingredients reach new markets and, through our formulation knowledge, develop products using their ingredients that meet consumer demands and industry trends. For example, our Regional Innovation Centre for Food & Nutrition in Singapore formulated a shelf-stable, reduced-sugar, vegan Thai milk tea that is also enriched in fibre, leveraging the plant-based protein and health & wellness trends, while also incorporating a flavour that is very popular across South-East Asia. By combining our extensive product portfolio and technical expertise, we create products that can be manufactured and solutions that cater to the needs of consumers, leverage market trends, create value for manufacturers and take into account local tastes.

Q: As well as innovative formulations, could you go into detail as to how Azelis’ laboratories collaborate and exchange knowledge to raise Governance and Environmental standards as part of the firm’s Action 2025 plan?

A: Our sustainability strategy, Action 2025, reflects our commitment to reducing the impact of our operations on the environment. Through our Together for Sustainability® membership, we also have policies in place to evaluate our suppliers and their environmental practices.

Thanks to our extensive and widespread lab network, we are able to support the local sustainability needs of our principals and customers. Assisting many local producers of formulations and working with principals, we can identify safer chemicals and products with a reduced carbon footprint. For customers, leveraging our lateral value chain, our technical team works to develop new, sustainable starting point formulations for their products.

As for our direct impact on the environment, we are amongst others implementing a robust strategy to improve our waste management policy and reduce the volume of non-recoverable waste from our operations. Over the past years, we focused on consolidating the data that we collect on a regular basis from across our operations. Every month, we receive detailed information about the hazardous and non-hazardous waste generated in our offices, labs and operational sites. As a result of our new reporting capabilities, we are able to detect trends and patterns in waste generation across Azelis and to develop waste reduction plans.

All Azelis employees, regardless of whether they work in a lab or an office, participate in an annual online knowledge review on our Code of Conduct and ethical business behaviour. It’s an effective way to refresh understanding of the key compliance policies and ethical principles that Azelis stands for.

Q: Markets have been impacted by raw material shortages, supply chain disruptions, inflation and price increases of raw materials. How has Azelis’ network of labs banded together to support customers with their challenges in these areas?

A: At Azelis, we believe every challenge presents opportunities, including the challenges being faced worldwide with supply chain disruptions, raw material shortages, etc. Utilising our extensive lateral value chain, with around 78,000 stock keeping units (SKU) sold in 2022, our technical teams are able to work with customers to provide innovative and sustainable solutions through the products and materials available. The depth of our portfolio enables our teams to suggest sustainable alternatives or formulations, while ensuring business continuity and that all customer requirements are met.

Q: The line between health, nutrition and beauty is becoming ever more blurred as consumers increasingly look for products that support an inside-out approach to beauty and wellness. Do you think there is an opportunity for specialised laboratories to collaborate with each other in order to benefit from industry-specific knowledge? (i.e. the convergence of food and cosmetics, will see food ingredients used in personal care and beauty applications).

A: With the line between health, nutrition and beauty becoming increasingly blurred, there is more opportunity for labs to collaborate on new formulations and products, applying technologies from differing sectors. A nice example of our Azelis labs doing that is through our award-winning formulation, ’Redefining In and Out Gummies’.  These gummies, which are two separate formulations, developed collaboratively by our EMEA Personal Care and Food & Nutrition teams, follow the trend of beauty – both inside and out. The Out Gummy is a skin care formulation, which comes in the form of a transforming texture gummy. Using a synergistic blend of natural hydrocolloid gums and rich in glycerin, superfruit juices, apricot and mulberry extracts, the Out Gummy can be diluted in boiling water to become a moisturising face mask. The In Gummy, an edible food supplement to enhance beauty from within, is developed using pectin and plant-derived antioxidants.

Another great example of the blurred lines between labs comes from our APAC labs, which collaborated to develop ready-to-use toothpaste in a gummy form – the ‘Chew and Brush Gummy’, making teeth brushing more fun for all involved. The Personal Care and Food & Nutrition teams worked together to create a chewable and gummy-textured toothpaste, inclusive of all essential toothpaste components and herbal fermented actives.

Q: The cross fertilisation of ideas, thoughts and possibilities between laboratories is an excellent way of exploring new directions and strategies. How does Azelis ensure the exchange of innovation and technology remain free-flowing and unstifled in what are traditionally regulation-heavy and restrictive sectors, particularly pharma?

A: Operating over 65 application laboratories in 27 countries, Azelis serves a range of market segments. We have a Global Lab Innovation Community to share formulation concepts and best practices across those labs. We are careful to protect the trade secrets of our suppliers and customers; we focus instead on sharing basic science and formulation know-how. By protecting the trade secrets of our business partners in this way, we free ourselves to share other know-how in a free-flowing and unstifled way.

At Azelis, our labs share ideas and information through both formal and informal forums. We hold regular meetings allowing colleagues to exchange ideas and showcase work, and have numerous internal knowledge-sharing platforms allowing for a more informal exchange of research findings. All of our teams, including the heavily-regulated Pharma team, understand the value of learning from one another and the importance of the cross-fertilisation of ideas and opportunities from labs in adjacent verticals, such as Food & Nutrition and Personal Care.

An example of how this works comes from an industrial application involving concrete. The application requires a stable water-in-oil emulsion, which can be more difficult to achieve than the more commonly used oil-in-water emulsions. Our industrial concrete labs handling this project found that other Azelis labs serving other market segments (Home Care and Industrial Cleaning, and Personal Care) had special know-how in water-in-oil emulsions. None of those labs had any experience with concrete, but it turned out that their know-how could be used successfully in the industrial concrete application. No one knew that this would work until the proof-of-concept was established in our concrete labs, but the possibility that it could work came from cross-functional fertilisation.

The cross-fertilisation of ideas, thoughts and possibilities is at the heart of how we seek to bring value to our customers and suppliers. Utilising our extensive lateral value chain of products, we are able to propose numerous new formulations to meet the needs of our customers and their customers.

First, it is critical to understand what features our customers need a new formulation to deliver. Our customers serve many different applications with many different performance requirements.

Then, we look at the many different ingredients from our suppliers that could help us to deliver a formulation that meets the customer’s needs. We also draw on other ingredients that Azelis may not be able to offer, but that we believe will help the customer.

In many cases, this cannot be predicted from the known properties of the individual ingredients. Testing in formulations is essential. Results can be surprising, both favourable and unfavourable.

Q: How much of a role has acquisitions and/or mergers played in extending Azelis’ network of laboratories and hence knowledge and know-how?

A: Azelis’ M&A strategy works to complement organic growth with acquisitions, in turn strengthening our lateral value chain and improving our geographical footprint. When looking for an acquisition partner, we don’t limit ourselves to financial performance, but also the roles that innovation, sustainability and digitalisation play in their business model. Many of those companies that join Azelis come with strong innovation elements of their own and with application laboratories – such as one of our recent acquisitions, Chemiplas, or other past acquisitions, Catalite, Orkila and many more. Through our M&A strategy, Azelis is able to strengthen our technical expertise and expand the product offering provided to customers.

We also have the aforementioned Global Lab Community, which works to build on innovation through global collaboration amongst both lab and commercial colleagues. When acquisitions bring new technically-skilled team members, our lab community becomes even stronger, thus our knowledge and know-how only increases. A nice example of this collaboration comes from one of our Home Care teams working on a dishwasher gel formulation with reduced spotting.  One of our labs found an anti-spotting benefit with an ingredient, but excess foam was a negative by-product, preventing the release of the formulation to customers. Utilising the global lab community, they discussed the project parameters with colleagues from across the world and were able to incorporate a different ingredient into the formulation, thus solving the problem through co-operation.

Q: Could you comment on how digitisation has proved helpful in collaboration during widespread institutional shutdown during Covid-19? What were the lessons learnt here and have they continued to be put into practice post lockdown?

A: Even prior to Covid, digitalisation was a vital pillar of Azelis’ strategy and growth. The pandemic pressed us all to adopt new ways of working and living. The implementation and adoption of collaboration tools and other technology – all in the cloud – showed us that we are less dependent on our physical offices than we thought. Our local-for-local approach has proven to be equally successful in a more virtual environment.

Our focus on digital has allowed us to globally roll out our customer portals to numerous market segments, providing expert knowledge, technical documentation, inspiration articles, formulation support and generally improving the customer experience. In addition to our portals, the Azelis e-Lab allows customers to get in touch with our global lab network from wherever they are in the world, to help with creating or adapting formulations and discovering new innovations.

We’ve learned from Covid that our customers increasingly expect the B2C digital experience while working B2B and our comprehensive digital strategy has allowed us to keep a real-time, close connection with customers and principals. All of our digital services work hand-in-hand to complement traditional business channels while strengthening relationships with customers and principals and opening up new channels to market.