Each profile begins with a box detailing the activity and general uses of that specific ai. The profile then continues with: details on the generic companies that currently manufacture the ai; information on the registration status of the ai in major markets such as the US and EU; and information on the size of the global market.

1.4 Outline of Market and Industry Analysis report

This third report contains an analysis of the generic pesticide market and industry, building on the information presented in the first two reports. It provides a review of the major national generic pesticide markets and a discussion of the various business strategies adopted by generic pesticide companies, both in terms of competing with each other and with the major R&D-based agrochemical companies. This section of the report will also contain an in-depth analysis of the ways in which the major agrochemical companies try to maintain their market share after an ai has come off-patent, including finding ways to delay the manufacture of the ai by generic pesticide companies.

The report will also explore the current and future forces driving the development of the generic pesticide industry. Such forces include: the consolidation of the agrochemical industry and the associated divestment of pesticide products and businesses; patent issues, especially data protection; ai re-registration initiatives in the EU and US, and the forced withdrawal of certain generic ais in these markets; and the efforts of industry associations.

In addition, the report contains three interviews with senior personnel within the generic pesticide industry, who will provide a personal perspective on the issues raised in the report, and a case study on legal disputes involving generic pesticides.

1.5 Information sources

A variety of sources of information have been utilised to produce the three reports. These include: the previous editions of the reports; the internet, especially the profiled companies’ web sites; stories that have appeared in Agrow; and other Agrow Reports. The author has also obtained a great deal of information and personal opinion from a large number of people working in the generic pesticide industry throughout the world.

In this way, the author has built up an accurate and detailed picture of the generic pesticide market and industry, and the challenges that it will face over the coming few years.

1.6 Introduction to Market and Industry Analysis report

This report contains an analysis of the global generic pesticide market and industry, including detailed descriptions of the current state of the industry, the major regional markets and the factors that will influence the future growth of the global industry and market.

Chapter 2 contains an analysis of the global industry. It starts with an explanation of the different ways in which generic pesticide companies are established and then continues with a description of the similar ways in which they subsequently develop. This tends to involve the companies gradually evolving from producing bulk technical ais to selling own-brand formulated products, some of which contain proprietary ais. Then, there is a detailed discussion of the various business strategies adopted by generic pesticide companies and also of the various strategies adopted by the R&D-based agrochemical companies to try to prevent generic companies from entering the market for a specific ai.

Chapter 3 contains detailed profiles of the major country and regional pesticide markets, including the US, the EU, China and India. Each profile contains information on: the size of the pesticide market, including the market share taken by generic producers; the growth prospects for the market; the major crops grown and pesticide products used; the major pesticide companies, both domestic and foreign, that operate in the market; how pesticide products are marketed and sold in the market; and the regulatory environment.

Chapter 4 reviews the main factors that will influence the future growth of the generic pesticide market. These include: the pesticide ais that will come off-patent over the next 10 years, which are listed in the chapter; any further consolidation of the R&D-based agrochemical industry and the generic pesticide industry; the development of certain regulatory issues, such as data protection; the efforts of the various generic pesticide industry associations; and the ongoing re-registration initiatives in many countries and whether these will result in the banning of any generic ais.

Chapter 5 consists of three interviews with influential figures within the global pesticide industry, which were conducted during October 2005. The interviewees are: Brian Benson, Group General Manager of Agriculture, Nufarm; Mohit Chuganee, vice-chairman and managing director of Sabero Organics; and David van Hoogstraten, Secretary-General of the European Crop Care Association (ECCA). In addition, this chapter also includes a case study that details some of the legal disputes that generic pesticide companies have become embroiled in over the past 10 years.

1.7 Current state of the global generic pesticide market and industry

The global market for generic pesticides accounts for around 60% of the total pesticide market, valuing the global generic pesticide market at $18,000–19,000 million. However, the vast majority of these sales are generated by the major R&D-based agrochemical companies, which often continue to dominate the market for an ai that they developed after its patent has expired. Annual sales for the generic pesticide industry amount to $6,400–$9,600 million, representing 20–30% of the global pesticide market.

This share of the global pesticide market, although still minor, has grown over the past few years, mainly as a result of the generic section of the pesticide market growing faster than the proprietary section, especially in countries such as India and China. Indeed, the generic pesticide market is highly skewed around the world, accounting for a much greater share of the total pesticide market in developing countries than in developed countries. For instance, pesticide products manufactured by generic companies account for around 75% of all pesticide sales in China, but have practically no market share in Japan.

Markets for both generic and proprietary pesticides are also growing faster in developing countries than in developed ones. This is both because agricultural practices in developing countries are becoming more advanced, and therefore demanding more pesticides, and because developed world countries are trying to limit pesticide use, due to increasing concerns about the effect of pesticides on human health and the environment. The world’s largest country markets for pesticides, in order of size, are the US, Brazil, Japan, France and China, but Brazil has only recently overtaken Japan and China is poised to overtake France.

The largest generic pesticide companies are still based in the developed world (with only Agripec in Brazil just making the list of top 10 largest generic companies by sales), but companies based in the developing world, particularly India and China, are growing fast and could soon overtake the developed world companies. In the list of the top 20 largest generic companies, those based in the developing world account for all the positions from 10 to 20.

Glyphosate is by far the largest selling pesticide ai in the world, with annual sales of around $5,000 million, and is manufactured by a large number of generic companies. Nevertheless, of the top 10 most manufactured ais, six are insecticides. This reflects the fact that a large number of generic pesticide producers are based in countries with hot regions, such as India, where insects are the main crop pest and the demand for insecticides is great. The other herbicide in the top 10 is 2,4-D, which is widely used throughout the world, and the top 10 also contains two of the largest selling fungicides, carbendazim and mancozeb.

1.8 Future prospects for the generic pesticide industry

A number of factors will influence the growth and development of the generic pesticide industry over the next 10 years. Perhaps the most important of these factors will be the effect of various predicted changes to pesticide regulations.

Efforts to harmonise pesticide registration systems around the world will benefit the larger generic pesticide companies that have international sales networks, as well as the multinational R&D-based agrochemical companies. Resolving the uncertainties over data protection and access to registration data will specifically help generic pesticide companies, but the R&D-based companies are lobbying hard against the forced sharing of data.

David van Hoogstraten, the Secretary-General of ECCA, warns of a bleak future for generic pesticide companies operating in Europe if this issue is not resolved. ‘I mean [the European Commission] really must make it possible for the generic industry to have access to data that are out of protection and if the data is not out of protection then reasonable access to such data,’ he says. ‘We’re very willing to pay for the real cost, but not exorbitant costs that have no relationship to the real cost.’

The ongoing re-registration initiatives in a number of countries will also have an impact on the generic pesticide industry as older ais are withdrawn from the market. In Europe, this process has also resulted in 25 of the ais profiled in the second report being formally excluded from Annex 1, including some major ais such as atrazine and simazine. A similar re-registration initiative has been implemented in the US, but has generally resulted in risk reduction measures being implemented for specific ais rather than product withdrawals. Such schemes are also beginning to be implemented in certain developing countries, such as China.

Over the past 10 years, there have been numerous waves of consolidation within the top tier of the R&D-based agrochemical industry. This has resulted in a number of pesticide products being divested, many of which were acquired by generic pesticide companies. There is not much scope for further consolidation at the top end of the pesticide industry, but there is scope for further consolidation in the generic pesticide industry, where there are a lot of small and medium-sized companies. So far, this consolidation has mostly involved the larger, developed world generic companies, such as MAI and Nufarm, acquiring smaller competitors from around the world. This process will probably intensify as developing world companies grow larger and start to acquire companies, as is happening with United Phosphorus.

Although the rate at which the R&D-based agrochemical companies have been discovering new pesticide ais has been falling, numerous new pesticide products have been commercialised over the past 10 years. This means that large numbers of ais will lose their patents over the next 10 years, which will help to fuel growth in the generic pesticide industry.

Overall, then, the generic pesticide industry will probably continue to grow over the next few years, mainly driven by the growth of the market and the industry in developing countries, particularly those in south-east Asia and Latin America.


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