Biotechnology has been used for decades in everything from medicine to agriculture. Use of living organisms and their derivatives have helped cure diseases, develop pest-resistant plants and even advance brewing methods.

Increasingly, biotech is being applied in industry to develop industrially useful chemicals, foods, textiles and biofuels.

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This fascinating movement, best described as industrial biotechnology, is under the radar of most investors. But there are massive opportunities for those willing to do the work to uncover the little-known industrial biotech stocks.

Over the last couple of years I’ve been following companies that make chemicals derived from renewable feed stocks, mainly corn. These bio-based chemicals, also known as sustainable chemicals, are “drop-in” replacements (i.e. exactly the same) for the petroleum-derived chemicals that currently dominate the market.

And that is a key point. Because it means that purchasers of bio-based chemicals don’t need to do anything different in order to use them. They simply replace the petroleum-derived chemicals with the bio-based version, and they’re good to go.

The chemicals are used in a huge variety of everyday products, including clothes, plastics, personal care products, paints and even food.

The benefits of these sustainable chemicals are many. Because they are derived from renewable feedstock they have a lower carbon footprint. Their “greenness” means that products made from the bio-based chemicals can be advertised as eco-friendly, something that manufacturers crave these days.

And perhaps most importantly, many bio-chemicals are cost-competitive as compared to petroleum-based versions.

I’m typically dubious of green tech companies because they often rely on subsidies and grants to have a competitive product. But not in this case – many of these businesses have models that are extremely compelling.

The benefits of bio-based chemicals have led to rapid demand growth. Industry-wide growth is expected to be 10% annually. But demand for specific bio-based chemicals is growing far faster.

For example, the global market for succinic acid is expected to grow by 20% to 30% per year over the next five years.

Small quantities of succinic acid are used to make personal care product and food additives (it is approved for these uses by the U.S. FDA), while larger volumes are used to make plastics and resins.

Bio-based succinic acid can also be transformed into 1,4-Butanediol (BDO) and Tetrahydrofuran (THF). These chemicals are used to make plastics, polyurethanes, biodegradable polyesters and spandex.

Industrial biotechnology isn’t an area of the market that many analysts are talking about. But there is very real and very large potential with select stocks in the sector.

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Published by Wyatt Investment Research at