Book reviews - Pesticides News No 57

Industry updates – new Agrow reports 

Agrow consistently provides high quality information on the agrochemical industry. Three recent reports cover new developments. 

Agrow’s Top 20
The top 20 report largely covers company activities in 2000, when the overall market declined. The driving factors were low commodity prices, depressed farm incomes and the impact of genetically modified (GM) herbicide-tolerant and insect resistant crops. Trends show dramatic declines in pesticide sales in Europe, which dropped from over US$9 billion in 1998 to US$6.57 billion in 2000. A less dramatic drop was recorded in North America, while in Asia sales increased by 41% over the two years, to reach US$8,030 in spite of a small drop in the Japanese market. Sales elsewhere remained more static. 
    The so-called ‘lifescience’ companies that once found a synergy between pharmaceutical and agrochemical activities have almost all sold off or separated the agrochemical sector. Companies now describe themselves as ‘crop science businesses’, and their industry association changed its name to CropLife International in 2001.
    Figures now available for 2001 (see table) showed the two leading GM companies, Monsanto and Syngenta shifting more of their sales to their GM seeds business. It is increasingly difficult to distinguish agrochemical from genetic engineering interests. Syngenta, Monsanto, Aventis, Dow and DuPont all have heavy investment in biotechnology and seeds. With the Bayer acquisition of Aventis it has entered the field. BASF has smaller interests, but these are expanding. Syngenta would add US$938 million to its 2001 figures if seed sales were included, and Monsanto would move into second place with an additional US$1,707 million. Aventis included its GE sales of US$214 million in its figures. Others are less transparent in their reporting. Even without GM sales, the seven largest companies account for 80% of the sales of the top 20 companies. With Bayer’s take over of the Aventis agrochemical interests, six companies now dominate the global market. 

Duncan Allison, Agrow’s Top 20: Current edition, Agrow Reports, PJB Publications, Richmond, UK, 14 March 2002. 350pp, £395 / $830,  www.agrowreports.com

Shaping the market – corporate research and development 
The top six agrochemical companies all maintain their position through heavy investment in research and development (R&D). Indeed, the rapid pace of mergers and takeovers is largely driven by the high cost of R&D in bringing products onto the market. 
    The main trend over the last five years has been the emphasis on genetic engineering, which is changing the face of agriculture and has attracted a storm of protests worldwide. It is possible that no other technological change has faced such controversy. In spite of concerted consumer resistance, particularly in Europe, the agrochemical industry believes its future lies in GM technology. 
    A spin off of novel technologies is their ability – through miniaturisation and automation – to screen millions of compounds for pesticidal properties, rather than tens of thousands as in the recent past, dramatically reducing costs.
    The average R&D budget of the main agrochemical companies is around 10% of sales, and this has remained consistent for decades. Companies often point to the financial burden of research, but a study by the US Council for Chemical Research estimates that each dollar invested in R&D generates $2 in income over six years. However as sales from traditional agrochemical markets offer diminishing returns, companies have looked to the new pastures of GM, and R&D is increasingly directed to the development of novel biotechnologies.
    While the cost of R&D has increased, so has the cost of product registration, as regulatory authorities require increasingly comprehensive data
    It is not yet clear to industry observers whether separation from pharmaceutical interests will inhibit new developments. However the report predicts that application of genomics and bioinformatics (using computers to speed up biological research) to target selection and mode of action studies, the use of high-throughput synthesis and screening technologies, and development of products through computer modelling, will become commonplace over the next five years. 

Philip Jarvis, Trends in crop protection R&D, Agrow Reports, PJB Publications, Richmond, UK, 25 February 2002. 120pp, £495 / $1,040,  www.agrowreports.com

Projecting the future
This thorough report investigates key factors and issues influencing the industry over the next decade, and is written by six authors, all experts in their field.
    Looking at market size, a panel of experts concluded that the most significant influences in future will be world commodity prices, the removal of government farm subsidies, and economic growth. 
    Over 16 years, long-term growth of the agrochemical industry in the US generally reflects the gross domestic product. However the trend changed over the last two years with the influence of genetic engineering. Any analysis of the market must now include both agrochemicals and the technology fees earned from GM products. The more uneasy relationship of Europe with GM technology bucks this trend. Nevertheless, the report suggests that the ‘crop protection market’ has reached maturity, and future growth will be in line with growth in the economy.
    The R&D pressures will continue to drive consolidation down to just four or five major players with sales over US$2 billion by 2005. On the other hand, the generic producers will grow, primarily picking up lines that the big companies shed when merging to avoid monopolies.
    The rejection of GM technology by Europe and Japan remains a problem for the industry. Nevertheless predictions are that this part of the business could grow from US$2.3 billion in 1999 to US$25 billion by 2010. The report points out that GM technology is already the mainstay of US agriculture and is optimistic that it will continue to attract research funds. 
    There is scope for more development in the field of precision farming, focusing on the use of Global Positioning Systems (GPS) to identify in-field variations and specific needs. Almost 40,000 GPS yield monitors are used in the US. Possibly more important, and certainly neglected, is the need for increasing the effectiveness of applying agrochemicals to the plant or the soil.
    The non-crop market is identified as the best long-term growth prospect, particularly home and garden products and leisure and amenity use. Increased sales are in the region of 4-5% a year. Manufacturers’ mark-ups in this sector are high, averaging 170% – far higher than for crop protection.
    In the regulatory field, the industry hopes there may be a move to one common dossier of core data, reviewed first by one regulatory body, while responsibility for making risk assessments will remain at national or regional levels. Clearly for the industry harmonisation is hugely important because of the increasing regulatory demands for product testing.

The Global Crop Protection Industry in 2010, PJB Publications, Richmond, UK, 30 August 2001. 223pp, £1,500 / $3,150, www.agrowreports.com

[This article first appeared in Pesticides News No. 57, September 2002, page 23]