CHAPTER 1 - INTRODUCTION

This chapter gives an overview of the world agrochemical and agricultural biotechnology markets. It also ranks the 20 leading agrochemical companies in terms of sales and summarises how the industry has consolidated and restructured.

1.1 The agrochemical and agricultural biotechnology markets

1.1.1 Agrochemical sales by region

Estimates of the value of the global agrochemical market in 2006 vary depending on the source, the methodology, definitions, and the point in the supply chain at which the market is measured. Two preliminary estimates made by UK consultancies in early 2007 are given below. These are from Cropnosis (formerly Wood Mackenzie) and Phillips McDougall.

Cropnosis concluded that the value of global agrochemical market in 2006 was $31,962 million. This decline of 2.8% in sales represented a fall of 5.8% in real terms (see Table 1.1).

Table 1.1: World agrochemical sales by region, 2005-2006 ($ million), estimated by Cropnosis

Region	20051	% change	2006	Real % change 2
North America	8,641	- 1.4	8,520	- 4.1
Asia/Pacific	7,629	- 3.4	7,370	- 6.3
Western Europe	7,109	- 4.2	6,810	- 5.1
Latin America	5,860	- 3.0	5,684	- 6.6
Eastern Europe	1,231	+ 2.4	1,261	- 0.3
Rest of World	2,394	- 3.2	2,317	- 8.6
Total	32,883	- 2.8	31,962	- 5.8

Source: Cropnosis (2007).
Notes: 1 calculated from % change; 2 excluding currency effects and inflation.

According to Phillips McDougall, there was a 2.5% decline in global agrochemical sales to some $35,190 million at the distributor level in 2006. Crop protection sales were down by 3.7% to $30,040 million (Table 1.2), while non-crop pesticide sales grew by 5% to some $5,150 million.

Table 1.2: World agrochemical sales by region, 2005-2006
($ million), estimated by Phillips McDougall

Region	2005	% change	2006	Real % change 1
Europe	9,119	- 0.3	9,095	- 2.3
NAFTA	7,792	- 4.3	7,460	- 8.0
Asia	7,722	- 4.0	7,410	- 4.5
Latin America	5,348	- 9.1	4,860	-13.7
Rest of World	1,209	+ 0.5	1,215	na
Total	31,190	- 3.7	30,040	- 6.5

Source: Phillips McDougall (2007).
Notes: 1 excluding currency effects and inflation.

Although their detailed figures differ, Phillips McDougall and Cropnosis are in broad agreement that nearly all regions experienced a decline in crop protection market values in US dollar terms. However, Phillips McDougall reported a modest increase in crop protection sales in Africa/Middle East.

In northern Europe, the cereal sector was depressed by a prolonged winter, but the crop protection sector in several eastern European countries benefited from EU membership. According to Cropnosis, Eastern Europe showed a 2.4% growth in agrochemical sales in nominal terms. However, if inflation and currency effects are taken into account, sales were down by 0.3% in real terms.

The North American market was impacted by a number of factors, including a reduced maize area, increased fuel and fertiliser costs, increased plantings of genetically modified (GM) crops, and dry weather across much of the US.

Agrochemical sales grew in several Latin American countries in 2006, but a significant decline in the value of the Brazilian market brought down sales for the whole region. The main factors affecting the Brazilian market were the impact of a stronger Real on farmers’ incomes, reduced crop plantings (particularly soybeans) and lower herbicide and fungicide sales due to dry weather during much of the growing season and the lower incidence of Asian soybean rust (Phakopsora pachyrhizi).

According to the Brazilian generic agrochemical industry association, Associação Brasileira dos Defensivos Genéricos (AENDA), agrochemical sales in Brazil were down by 5.8% to $3,912 million in 2006. The market has lost over an eighth of its value since 2004.

The value of the Asian market fell largely due to lower sales in Japan and South Korea, which both reduced rice plantings. The Australian market was hit by a severe drought, while a late and heavy monsoon in India impacted the market there. By contrast, the Chinese market is estimated to have increased.

According to the marketing and consultancy company, ARN, the Chinese agrochemical market was worth $2,095 million at the provincial wholesale level and $2,421 million at the retail level in 2006. The value of the market rose by 11.6% on the previous year in US dollars and by 8.7% in Chinese Yuan, due to the 2.6% revaluation of the Chinese currency. This is the third consecutive year that the market has maintained such a high rate of growth. Foreign pesticide brands continued to grow at a faster rate than domestic products and achieved a 12.8% increase in value in 2006.

Table 1.3 shows the long-term trend in global agrochemical sales. The decrease in sales in 2006 represents the end of three years of growth, which followed a prolonged period of steadily declining agrochemical sales. The recovery in 2003-2005 was due to such factors as a return to more normal climatic conditions after a drought in northern Europe, the economic recovery in Latin America and an explosive growth in the Brazilian soybean fungicide market caused by serious outbreaks of Asian soybean rust.

The drop in sales in 2006 is thought to be temporary setback although most authorities consider that future rates of growth are unlikely to equal those seen in 2003-2005 (see Section 1.1.5 below).

Table 1.3: World agrochemical sales, 1998-2006 ($ million), estimated by Wood Mackenzie/Cropnosis

Region	1998	1999	2000	2001	2002	2003	2004	2005	2006
N America	9,860	8,702	8,497	7,951	7,613	7,679	7,704	8,641	8,520
Asia/ Pacific	5,673	7,489	8,030	7,356	6,936	6,731	7,504	7,629	7,370
W Europe	9,054	7,489	6,570	5,902	5,648	6,307	7,276	7,109	6,810
Latin America	4,837	4,529	4,351	4,252	3,589	4,134	6,046	5,860	5,684
E Europe	n/a	n/a	n/a	n/a	888	938	1,038	1,231	1,261
Rest of World	1,581	1,391	1,752	1,643	1,887	2,002	2,305	2,394	2,317
Total	31,005	29,600	29,200	27,104	26,561	27,791	31,873	32,883	31,962

Sources: Agrow Reports/Wood Mackenzie/Cropnosis

Of the total crop protection market in 2006, 26.7% was located in North America, 23.1% in Asia/Pacific, 21.3% in Western Europe, 17.8% in Latin America, 3.9% in Eastern Europe and 7.2% in the rest of the world. Over the past five years, the proportions of the market accounted for by North America, Asia/Pacific and Western Europe have declined whereas the shares held by Latin America, Eastern Europe and the rest of the world have increased (see Figure 1.1).

Figure 1.1: World agrochemical sales by region, 2000 and 2006 (% of total)



Source: derived from Cropnosis data in Table 1.2

1.1.2 Agrochemical sales by product category

The largest product category continues to be herbicides, followed by insecticides and fungicides (see Figure 1.2).

Figure 1.2: World agrochemical sales by product category, 2006

Source: percentages calculated from dollar-based values given by Cropnosis (2007)

During 2006, sales of all major product categories fell in dollar terms, with fungicides showing the largest decrease and herbicides the least. Preliminary analysis by Phillips McDougall indicates that fungicide sales were impacted by dry weather in Brazil, low disease pressure in the US, and a late spring in northern Europe. Herbicide sales continued to be impacted by increased plantings of glyphosate-tolerant crops as well as the reduced maize area in the US. Insecticide sales were depressed by greater plantings of insect-resistant crops, particularly corn rootworm-resistant maize in the US.

1.1.3 Agbiotech sector

The area planted with GM crops has shown double-digit percentage growth every year since the first crops were grown in 1996. Over the past 11 years, total GM plantings have amounted to around 577 million ha. Cropnosis has estimated that the global value of the GM seed and trait market was $6,150 million in 2006, up by 13.1% on the previous year. It estimated that the area planted with GM crops in 2006 was 96.2 million ha.

A study by the International Service for the Acquisition of Agri-biotech Applications (ISAAA) gave a slighter larger figure. According to this source, the global area planted with GM crops rose by 13% to 102 million ha in 2006 (see Table 1.4). This was the second-largest annual expansion in GM crop area in the past five years and brought the total area over 100 million ha for the first time.

Another milestone reached during the 11th year of GM crop planting was the number of farmers growing the crops. According to ISAAA, this topped the 10 million mark for the first time, at 10.3 million, compared with 8.5 million in 2005. Approximately 90% of these farmers were in developing countries, with the majority in China (6.8 million) and India (2.3 million). Developing countries accounted for 40% of the global GM crop area, with a growth rate of 21%. This compares with 9% growth in developed countries. There were 11 developing countries and 11 industrialised nations growing GM crops in 2006.

Table 1.4: GM crop plantings, 2005-2006 (million ha)

Country	2005	2006	% change
US	49.8	54.6	+ 9.6
Argentina	17.1	18.0	+ 5.3
Brazil	9.4	11.5	+22.3
Canada	5.8	6.1	+ 5.2
India	1.3	3.8	> 100
China	3.3	3.5	+ 6.1
Paraguay	1.8	2.0	+11.1
South Africa	0.5	1.4	> 100
Uruguay	0.3	0.4	+33.3
Philippines	0.1	0.2	+100
Australia	0.3	0.2	-33.3
Romania	0.1	0.1	0
Mexico	0.1	0.1	0
Spain	0.1	0.1	0
Colombia	<0.1	<0.1	-
France	<0.1	<0.1	-
Iran	<0.1	<0.1	-
Honduras	<0.1	<0.1	-
Czech Republic	<0.1	<0.1	-
Portugal	<0.1	<0.1	-
Germany	<0.1	<0.1	-
Slovakia	0	<0.1	-
Total	90.3	102.0	+13.0

Source: ISAAA

Slovakia was the only new country to start growing GM crops in 2006. It brought the number of EU countries planting such crops to six. Spain continued to be the major EU GM crop adopter, planting some 60,000 ha of insect-resistant Bt maize during the year. The other five EU countries growing Bt maize recorded a combined five-fold increase in area planted from about 1,500 ha in 2005 to some 8,500 ha last year. Growth in these countries is expected to continue in 2007.

The largest increase in GM crop area by any country was in the US, where plantings expanded by 4.8 million ha. This was followed by India, with a 2.5 million ha increase, Brazil (+2.1 million ha), Argentina and South Africa (both +900,000 ha). India recorded the largest proportional year-on-year expansion, with almost a three-fold increase. There were also substantial comparative growth increases in South Africa and the Philippines.

Herbicide-tolerant soybeans remained the dominant GM crop, representing 57%, or 58.6 million ha, of global GM crop plantings. GM maize accounted for 25% of the global GM crop area, at 25.2 million ha, with cotton accounting for 13% (13.4 million ha) and canola 5% (4.8 million ha).

A new GM crop, herbicide-tolerant alfalfa, was grown for the first time in the US on 80,000 ha. Monsanto’s second-generation glyphosate-tolerant Roundup Ready Flex cotton was introduced on over 800,000 ha in the US and Australia.

Herbicide tolerance has consistently been the dominant trait among GM crops and this continued in 2006. Herbicide-tolerant soybeans, maize, canola, cotton and alfalfa were planted on 69.9 million ha, representing 68% of the total GM crop area. Bt crops were planted on 19 million ha (19% of the total), with stacked-trait crops covering 13.1 million ha (13%). Crops with stacked traits showed the greatest increase in area in 2006, with a 30% rise, followed by insect resistance (+17%) and herbicide tolerance (+10%).

The indications are that the global area of GM crops will continue to expand. The ISAAA estimates that that more than 20 million farmers will be planting 200 million ha of GM crops in around 40 countries by 2015.

1.1.4 Non-crop market

In addition to the agrochemical market, there is a substantial market for pesticides for non-crop uses. In contrast to the agrochemical market, the non-crop sector has grown consistently over the last decade As noted above, Phillips McDougall has estimated that non-crop agrochemical sales in 2006 grew by 5.0% to $5,150 million at the distributor level at a time when crop protection sales fell by 3.7%.

In its Global Non-Crop Market Study – 2006, UK consultancy Agricultural Information Services (AIS) analysed the non-crop market at end-user level in 23 countries, and concluded that this market is growing faster than at any time since 1992. In 2006, non-crop pesticide sales at end-user level approached $20,000 million, or two-thirds of the global crop protection market. Growth has been especially marked in developing countries and in sales of over-the-counter (OTC) home insecticides. AIS put average annual growth rates between 2003 and 2006 at: 25% in China; 9% in India; 6% in the US; and 3% in Italy.

AIS saw no reason why this trend should not continue. There are more brands than ever in the marketplace and mark-ups remain high. Consumer companies are more active than ever in OTC markets and there are positive developments in the public health sector, with the US Bill and Melinda Gates Foundation expected to facilitate the development of new ais for vector control.

1.1.5 Short term outlook

Most analysts of the global agrochemical market are cautiously optimistic for 2007. For example, Cropnosis has forecast global agrochemical sales of $32,400 million in 2007, a 1.4% increase relative to 2006. Of particular significance will be the rush to meet maize for bioethanol production and the need to rebuild cereal stocks, most of which were extremely low at the end of 2006. A return to more normal weather conditions in Europe and the NAFTA region will also benefit the sector. However, negative factors include the weak agricultural economy in Brazil, drought in Australia and a further increase in GM crop plantings.

Cropnosis expects to see an increase in insecticide and fungicide sales but a slight decline in the value of the herbicide market in 2007. On a regional basis, it expects to see most growth in eastern Europe, where sales are forecast to rise by 6.8% to $1,346 million.

1.1.6 Long-term outlook

According to a forecast made by the UK consultancy firm Phillips McDougall in late 2006, the global crop protection market is likely to grow by a mere 0.8% per annum between 2006 and 2010. The GM crop sector will grow by about 6.2% annually over the same period (see Table 1.5).

Table 1.5: Global crop protection market to 2010 (annual % change)

Region	Crop Protection	AgBio	Total
NAFTA	- 0.6	+ 3.6	+ 0.9
Latin America	+ 1.2	+ 12.5	+ 3.1
Europe	+ 0.8	+ 11.4	+ 0.8
Asia	+ 1.3	+ 18.0	+ 2.0
Middle East/Africa	+ 3.9	+ 19.8	+ 4.5
Total	+ 0.8	+ 6.2	+ 1.7

Source: Phillips McDougall
Note: from a presentation made at the Crop Protection Business Seminar held during the BCPC Conference and Exhibition in Glasgow, UK, in October 2006.

The continued expansion of GM crops will have the biggest impact on herbicides sales, which are forecast to grow by as little as 0.1% per annum. The fungicide market is predicated to grow by no more than 2.1% per annum (see Table 1.6).

Table 1.6: Global crop protection market by category to 2010 (annual % change)

Region	Herbicides	Insecticide	Fungicides	Others
NAFTA	- 1.3	- 0.5	+ 2.8	- 1.5
Latin America	- 0.5	+ 0.5	+ 5.0	+ 3.6
Europe	+ 0.5	+ 1.6	+ 1.1	- 0.2
Asia	+ 2.1	+ 0.8	+ 1.3	- 0.6
Middle East/Africa	+ 3.6	+ 3.9	+ 4.7	+ 3.8
Total	+ 0.1	+ 0.9	+ 2.1	- 0.1

Source: Phillips McDougall
Note: from a presentation made at the Crop Protection Business Seminar held during the BCPC Conference and Exhibition in Glasgow, UK, in October 2006.

A study by ARN forecasts that the Chinese pesticide market will maintain strong growth at an average rate of 7-10% per year. China is currently the fifth-largest market behind the US, Brazil, Japan and France. By 2008, China is expected to overtake the French market, which is stable at around $2,300 million at the ex-manufacturer level. By 2010, China is predicted to become the third-largest agrochemical market, overtaking the stagnating Japanese market, which is worth some $2,800 million.

1.2 Sales and ranking of the 20 leading agrochemical companies

1.2.1 Total agrochemical sales

The world’s 20 leading agrochemical companies, selected and ranked by Agrow according to their 2006 turnover in US dollars, are shown in Table 1.7. Although the sales figures relate predominantly to agrochemicals, in some cases it is impossible to exclude other areas of agribusiness. This is particularly true of seeds and products of plant biotechnology. As more of the research-led companies pursue an integrated approach to innovation in which crop protection chemicals are designed to operate in conjunction with modified crops, it is becoming inappropriate (and in some cases impossible) to compartmentalise the sales figures too strictly.

Table 1.7: Agrochemical sales1 of the leading 20 companies, 2005-2006

Ranking		Company	$ million (2)			Recording currency million
2006	2005		2006	2005	% chnge	2006	2005	% change
1	(1)	Bayer CropScience(3)	6,698	6,960	-3.8	€5,358	€5,568	-3.8
2	(2)	Syngenta(4)	6,378	6,330	+0.8	$6,378	$6,330	+0.8
3	(3)	BASF	3,849	4,123	-6.6	€3,079	€3,298	-6.6
4	(4)	Dow AgroSciences (5)	3,399	3,364	+ 1.0	$3,399	$3,364	+ 1.0
5	(5)	Monsanto(6)	3,316	3,042	+ 9.0	$3,316	$3,042	+ 9.0
6	(6)	DuPont(7)	2,154	2,302	- 6.4	$2,154	$2,302	- 6.4
7	(7)	MAI	1,581	1,543	+ 2.5	$1,581	$1,543	+ 2.5
8	(8)	Sumitomo Chemical (8)	1,312	1,292	+ 1.5	¥152,606	¥142,277	+ 7.3
9	(9)	Nufarm (9)	1,261	1,202	+ 4.9	Aus$1,677	Aus$1,574	+ 6.5
10	(10)	Arysta LifeScience	941	906	+ 3.9	¥109,460	¥99,778	+ 9.7
11	(11)	FMC	767	725	+ 5.8	$767	$725	+ 5.8
12	(12)	Cheminova(10)	604	597	+ 1.2	DKr 3,588	DKr 3,575	+ 0.4
13	(18)	United Phosphorus(8)	477	350	+36.3	$477	$350	+36.3
14	(16)	Chemtura	360	354	+ 1.7	$360	$354	+ 1.7
15	(15)	Isihara Sangyo Kaisha (8)	359	368	-2.4	¥41,800	¥40,500	+ 3.2
16	(13)	Nissan Chemical(8)	348	393	-11.5	¥40,478	¥43,277	-6.5
17	(14)	Sipcam-Oxon (11)	341	378	-9.8	€ 273	€302	-9.6
18	(17)	Kumiai Chemical(12)	336	353	-4.8	¥39,101	¥38,835	+0.7
19	(19)	Nippon Soda(8)	312	337	-7.4	¥36,245	¥37,064	-2.2
20	(20)	Nihon Nohyaku (13)	302	308	-1.9	¥35,075	¥33,969	+3.3

Source: Agrow
Notes: 1 unless otherwise stated; 2 converted using average annual exchange rates for 2006 and 2005; 3 excludes BioScience sales of €342 million in 2006 and €328 million in 2005; 4 excludes seed and Plant Science sales of $1,745 million in 2006 and $1,797 million in 2005; 5 includes undisclosed seed and trait sales; 6 year ended August 31st 2005/06 - includes some animal health products - excludes seed & genomics sales of $4,028 million in 2006 and $3,252 million in 2005; 7 excludes seed sales of $2,764 million in 2006 and $2,749 million in 2005; 8 year ended March 31st 2006/07; 9 year ended July 31st 2005/06; 10 excludes fine chemical and intermediate sales of some DKr 444 million in 2006 and DKr 442 million in 2005; 11 excludes intermediate and plant nutrition product sales of some €17 million in 2006 and €33 million in 2005; 12 year ended October 31st 2005/06; 13 year ended September 30th 2005/06 - excludes landscaping and service revenues of ¥1,759 million in 2006 and ¥1,384 million in 2005.

2006 was a mixed year for the industry. Eleven companies reported an increase in sales in dollar terms and nine reported a decrease. Fourteen companies posted sales increases in their recoding currencies and six posted decreases. Changes were relatively modest with only one company, United Phosphorus, reporting a double-digit growth in sales.

There was no movement in the dollar sales rankings of the first 12 companies but there were some significant changes in the relative positions of the remaining eight. The most dramatic of these was the rise of United Phosphorus from 18th to 13th place. A series of product and company acquisitions made in 2005/2006 resulted this Indian company’s sales growing by 36% in the year to March 2007. These included: Dow AgroSciences’ herbicide, propanil; DuPont’s herbicide, bensulfuron-methyl; Bayer CropScience’s herbicide, asulam, and its insecticides, oxydemeton-methyl and trichlorfon; and the South African agrochemical distributor, Cropserve. Sales from US agrochemical firm, Cerexagri, which United Phosphorus acquired in early 2007, were not included in fiscal 2006 results and these will give further substantial boost to revenues in 2007.

The sales gap between the world’s two leading agrochemical companies narrowed during 2006. Bayer CropScience retained its dominant position despite a 3.8% drop in agrochemical sales, while Syngenta edged closer to its rival with a slight rise in revenues. Similarly the gap between the third ranking company, BASF, and Dow and Monsanto closed. Whereas BASF sales fell by 6.6%, the sales of Dow and Monsanto increased by 1% and 9%, respectively.

All the companies in the second tier of the ranking reported single-digit growth in 2006. As in the previous year, Makhteshim-Agan Industries (MAI), Nufarm and Arysta LifeScience benefited from acquisitions, while Sumitomo Chemical saw export gains being largely offset by a domestic decline.

MAI acquired majority stakes in the US company, Alligare, and the Italian firm, Kollant, which are both active in the non-crop sector. The Alligare purchase contributed to a 13% rise in North American sales, but the Kollant deal could not offset difficult conditions in Europe, where sales dropped by about 2%. MAI’s overall agrochemical sales were up by 2.5%.

Increased sales in North America and Europe contributed to a 4.9% rise in Nufarm’s revenues in US dollars and a 6.5% rise in Australian dollars in the year to July 2006. The acquisition of the herbicide, Assert (imazamethabenz), from BASF in 2005 boosted Nufarm’s Canadian sales by almost 50%, while North American sales were up by 20% in fiscal 2006. The company saw a ten-fold increase in sales in Colombia following the purchase of the local firm, Agrogen.

Arysta’s acquisition of BASF’s US off-patent pesticide business, Micro Flo, contributed to a 3.9% rise in the Japanese company’s sales in dollar terms and a 9.7% gain in yen. The Micro Flo business helped boost Arysta’s North American sales by 81% in yen terms. The previous year’s purchase of a 50% stake in South African company Volcano and sales growth in eastern Europe boosted Arysta’s Europe, Africa and Middle East revenues by 21%.

Higher sales of herbicides in the Americas contributed to a 17.5% increase in Sumitomo’s agrochemical exports in yen terms in the year to March 2007. However, this growth was partly offset by a 4.6% decline in domestic sales. Overall revenues were up by 7.3% in yen, representing a 1.5% increase in dollars.

Ishihara Sangyo Kaisha (ISK) posted a 3.2% sales increase in yen, but dollar-based sales were down by 2.4%. Exports accounted for 71.5% of revenues, which was virtually unchanged from the previous year. The company saw higher overseas sales, while domestic sales remained firm despite unfavourable market conditions. Nihon Nohyaku recorded a 3.3% rise in agrochemical sales in yen but exports were up by 11.3%. Growth was led by exports to China, India and Vietnam, whereas sales to Europe declined.

Improved exports could not offset a decline in domestic agrochemical sales for Nippon Soda, which posted a 2.2% drop in overall sales in yen and a 7.4% decline in dollars. Along with several other Japanese companies, Nippon Soda partly attributed its domestic downturn to the effects of stricter maximum residue levels (MRLs) on the Japanese market. Nissan Chemical and Kumiai Chemical both saw agrochemical exports decline in 2006. Kumiai recorded a slight rise in domestic sales, but this was offset by declines in Latin America and Asia, with overall sales remaining flat in yen terms. Nissan’s exports fell by 4.6% and overall sales were down by 6.5% in yen.

Both European companies in the second tier of the ranking were adversely affected impacted by market conditions in Brazil. Sipcam-Oxon attributed its 9.6% fall in agrochemical sales to the crisis in the Brazilian market and the weakening of the US dollar. Cheminova’s agrochemical sales remained flat in 2006. Increased revenues in Mexico and some European countries were largely offset by a decline of nearly 30% in Brazil.

In contrast, FMC saw strong sales growth in South America, particularly Brazil, which contributed to a 5.8% rise in agrochemical sales. The company also saw growth in North America and Asia. Acquisitions boosted the sales of the other second-tier US company, Chemtura, by 1.7%. However, revenues were impacted by lower volumes and prices.

1.2.2 GM plantings

According to Cropnosis, plants expressing Monsanto traits accounted for 91% of the global acreage of GM crops in 2006, with Syngenta traits accounting for 3.3%, Bayer CropScience traits for 2.6%, and DuPont/Dow AgroSciences traits for 2%.

1.3 Industry restructuring

In response to stagnant sales, declining profits and a need to rationalise research and development (R&D) efforts, the agrochemical industry has gone through massive restructuring over the last fifteen years Although some consolidation went on in Europe and the US during the 1980s, the process started in earnest with the acquisition of Shell’s agrochemical business by American Cyanamid in 1993. Mergers and acquisition activity (M&A) accelerated during the 1990s and later the enlarged companies that resulted from the initial mergers and take-overs started, in turn, join forces. The major realignment of western companies was essentially complete by 1992 when Bayer acquired Aventis CropScience (ACS) to create Bayer CropScience (see Table 1.8).

Table 1.8: Major mergers and acquisitions in the agrochemical industry, 1993-2007
Year Event

Year	Event
1993	Zeneca formed from de-merger of ICI’s agrochemicals, seed, pharmaceutical and speciality chemical sectors
	Cyanamid acquired Shell Agriculture
1994	Cyanamid acquired by American Home Products
	AgrEvo formed from the agrochemical interests of Hoechst and Schering
1996	Ciba and Sandoz merged to form Novartis
	Uniroyal acquired by Crompton & Knowles
1998	DowElanco wholly acquired by Dow Chemical and renamed Dow AgroSciences
1999	Zeneca and Astra merged to form AstraZeneca
	AgrEvo and Rhône-Poulenc merged to form Aventis
2000	Monsanto merged with Pharmacia and Upjohn
	BASF acquired Cyanamid
	Monsanto had partial IPO (85% Pharmacia, 15% public)
	Crop protection businesses of Novartis and Zeneca merge to form Syngenta
	Sumitomo Chemical acquired Abbott Laboratories’ agricultural business
2001	Dow AgroSciences acquired Rohm and Haas (R&H)
	Agrochemical businesses of Tomen and Nichimen merged to form Arysta LifeScience
2002	Bayer acquired ACS to create Bayer CropScience
	Nihon Nohyaku acquired agrochemical business of Mitsubishi Chemical
	Sumitomo Chemical agreed to acquire agrochemical business of Takeda Chemical and set up interim joint venture Sumika Takeda
	Nufarm acquired Crop Care Australia
	MAI acquired Australian generic agrochemical company Farmoz
2003	DuPont acquired Griffin
	Proposed merger of Sumitomo Chemical and Mitsui Chemical in 2004 abandoned
2004	Reorganisation of Sumitomo Chemical Takeda Agrochemical company: two former Takeda subsidiaries merged with their counterparts in Sumitomo
	Nippon Soda acquired agrochemical business of Dainippon Ink and Chemicals (DIC)
	MAI acquired Feinchemie Schwebda
	Arysta Life Sciences acquired Moviagro
2005	United Phosphorus acquired SWAL corporation, Cequisa ands Reposo
2006	United Phosphorus acquired Cropserve
	Chemtura acquired Trace Chemicals
2007	Monsanto acquired Delta and Pine Land (D&PL)
	Mitsui acquired Sankyo Agro
	United Phosphorus acquired Cerexagri

The major restructuring of the Japanese industry, however, did not start until 2001 when Tomen and Nichimen merged to create Arysta LifeScience. Subsequently Takeda’s agrochemical business was acquired by Sumitomo Chemical and, most recently, Mitsui acquired Sankyo Agro.

Several of the mergers in the late 1990s led to the creation of large-scale life sciences companies such as Novartis, AstraZeneca and Aventis. These were created in the belief that significant synergies existed between the pharmaceutical and agrochemical activities of such companies. Subsequently, however, the value of such synergies was questioned and many companies concluded that the benefits from the juxtaposition of agrochemicals and pharmaceuticals were outweighed by the benefits of allowing them to operate totally independently.

The negative impact of agrochemical activities on the share prices of predominantly pharmaceutical companies was also a factor. Such reasoning led to: the formation of the first wholly agribusiness-led multinational, Syngenta; DuPont’s divestment of its pharmaceutical business to Bristol-Myers Squibb; and the separation of the “new” agribusiness Monsanto from Pharmacia. It also led Aventis to divest its crop protection and seeds business (ACS) so that it could focus on pharmaceuticals and to the reorganisation of Bayer within which the new Bayer CropScience and Bayer Health Care operate as independent and separate subsidiaries. Despite Arysta LifeScience (which still retains a small involvement in pharmaceuticals), the concept of the global life science company is now defunct.

As a result of the consolidation of the agrochemical industry, over 95% of the global market is now in the hands of only 20 companies. Furthermore, since the formation of Bayer CropScience in 2002 there are now only six agrochemical R&D-led multinationals, compared with 11 in 1995. These six companies now hold around three quarters of the market and in 2006 the two largest companies accounted for approximately 36% of the market.

The rationalisation among the majors has created many opportunities for smaller companies to acquire products and/or businesses. This has particularly benefited firms like MAI, Cheminova, Nufarm and Arysta LifeScience. In particular, the two largest generic companies have grown markedly in size through the acquisition of competitors. Since 2001, MAI has acquired Feinchemie Schwebda (Germany), Proficol (Colombia), Farmoz (Australia) and others, and Nufarm has acquired Agtrol (US) and Agtrol International (France), Crop Care Australasia and Agroquímicos Genéricos (Colombia). Since 2003, both have crossed the $1,000 million sales barrier.


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