Flying Under the Radar No More, FMC Goes Big

Jackie Pucci interviews Mark Douglas at FMC’s Philadelphia headquarters in 2015. Photo credit: Iredia Ekhato

Describing FMC as “under the radar,” admittedly, is probably a stretch. But in a snap of the fingers, FMC upped its game and aligned itself with the biggest names in ag.

It’s not only buying up DuPont’s crown jewel insecticides and cereal herbicides, but the game-changer: its robust pipeline and R&D capabilities.

“Probably a year or 18 months ago, once we became aware of the mega-mergers and those came to fruition, we made it very clear we wanted to play a part. We have wanted to grow our ag business for some time. We asked, ‘how could we get back into basic discovery given our size?’ Lo and behold, the DuPont assets came up for sale,” Mark Douglas, President, FMC Agricultural Solutions, said in an interview.

No doubt FMC has been stepping up R&D spending in recent years, but it has, until now, sat on the sidelines when it came to discovery, deferring to other players for its new molecules. While the nine actives in FMC’s current pipeline are late-stage, the 15 it is gaining from DuPont are nearly all early-stage, with a significant chunk of them being herbicides and fungicides, rounding out its portfolio and securing longer-term revenue sources. DuPont’s library of 1.8 million compounds now at FMC’s disposal is also of no small significance.

“I think (accelerated R&D) is going to be the nature of consolidation which is taking place in the industry — we are going to have companies that will be more and more innovative bringing new technology. This was the way for us to be competitive under the new market structure,” Paul Graves, FMC Executive Vice President and Chief Financial Officer, said.

FMC has been spending slightly under 6% of annual revenue on R&D. The DuPont asset acquisition will bump it up to more than 8% going forward, which would translate to nearly $300 million a year, Chief Executive Pierre Brondeau said on a conference call.

It made sense that it was FMC that flipped the script, according to industry insiders, who pointed out the Philadelphia company’s ambitious strategy and nimble maneuvering throughout the ag downturn. Case in point: in 2016, the Ag Solutions business managed to boost profits by 10% as it focused on maintaining price and terms rather than volume. This came on the heels of its $1.8 billion purchase of Cheminova in 2015, which furnished it with direct market access in key countries in Europe and improved its customer reach in India, Australia, and Latin America.

By contrast, the somewhat more plodding DuPont has struggled with its crop protection business for years. One source, who asked to remain anonymous, commented that the deal is a major win not just for the company but for growers and retailers, the majority of whom he said would “prefer to deal with FMC” than DuPont for this very reason.

Jim Borel, who retired in 2016 from DuPont, where he oversaw DuPont Pioneer, Crop Protection and Nutrition & Health businesses, believes the Dow-DuPont merger is a good thing not only for the manufacturing industry and crop protection players, but also farmers. “This is going to create an even stronger global competitor in the crop protection industry, which is a very competitive market. The great news is, the merger is one that will continue to be very committed to research. And when coupled with the FMC deal, it will assure what farmers need: a stream of new products.”

RETAILER PERSPECTIVE

Hensley

From an ag retailer’s perspective, Karl Hensley, Senior Vice President Agronomy with Central Valley Ag, said he views Dow and DuPont spinning off crop protection assets to appease European regulators fortuitously, in the sense that he expects it to benefit both the future of chemistry and the customer-facing side of business.

FMC “probably has a leg up on the mega-mergers,” he added, because it won’t need to struggle to reestablish relationships and manage shuffling of various customer-facing functions as much as say, a ChemChina-Syngenta, which carries the burden of merging divergent corporate cultures.

“I feel like DuPont has run their chemistry business and marketing program fairly tight as far as representation in our geography,” Hensley said. “As a retailer, I think our relationship is probably better with FMC than it has been with DuPont. I look at it as an opportunity for us.”

As the industry has dwelled on seed traits and technology spending for the last several years and pulled back on research outright feeling the pinch of the ag economy, a renewed push in chemistry R&D is long overdue.

“It’s been a long time since we’ve had entries into the marketplace with new chemistries. So, hopefully after the mergers and spin-offs are all completed, we will see a reemphasis on new products and development, especially in new chemistry and means of controlling hard-to-control weeds to give us different options,” Hensley said.

On the international side, the deal is also poised to support FMC’s supply chain and manufacturing capabilities, as it will add four active ingredient manufacturing facilities in China and North America and 10 formulation sites in key markets.

Brondeau noted that the deal will more than double FMC’s revenue in India and China and increase the number of countries where it has revenue of at least $100 million from three to 10. “It will also give us a meaningful position in cereals and enhance our position in crops such as vegetables, rice, and soybeans.”

Another bonus for FMC lies in the revenue ramp ahead. Rynaxypyr’s patent protection doesn’t expire until 2022 and Cyazypyr’s in 2024. These two plus indoxacarb are expected to command $1.2 of the $1.5 billion FMC sees the deal adding to revenue in the first year, with cereal herbicides accounting for the balance.

“It fits so well for us,” Douglas commented on the DuPont portfolio additions. Not only do the new actives give it a better balance of pre- and post-emerge as well as selective and broad-spectrum applications, but it also expands its offering from a geographic standpoint, particularly in Asia. “This improves our geographic balance with each of our four regions contributing approximately 25% of annual revenue, which will help us smooth out regional volatility.”

Douglas added, “This is an important move for FMC and the crop protection industry given the large consolidations taking place. With FMC, growers will have another choice with a top-tier, research-based company bringing them novel crop protection technologies.”

Topics: , , ,

Agrichemicals

Agrichemicals

Arysta LifeScience Names New Head of Europe, Middle East & Africa

Arysta LifeScience has named Hildo Brilleman as the company’s CEO of its Europe, Middle East & Africa (EMEA) region, effective

Agrichemicals

Missouri Latest U.S. State to Set Dicamba Cut-off Date for 2018

Missouri Department of Agriculture 'takes proactive measures to reduce off-target crop injury during the 2018 growing season.'

Agrichemicals

BASF Reports End of Season Dicamba Results

BASF field reps investigated 787 soybean symptomology claims during the 2017 season.

Agrichemicals

Seed Firms’ Changes Bring Uncertainty, Promises

The months ahead will reveal what these altered players will look like and how they’ll work with dealers and growers. They’ll also show where companies are focusing efforts in trait development and crop systems.

Agrichemicals

AMVAC’s Trogele: ‘Entire Downstream Channel of Our Industry Will Be Challenged’

AMVAC Chief Operating Officer Bob Trogele offered his insight on the current agrichemical environment, and on how retailers can possibly engage with post-patent companies.

Agrichemicals

Albaugh Enters Collaboration on New Wheat Varietites

Colorado Wheat Research Foundation, Inc., Albaugh, LLC and Limagrain Cereal Seeds, LLC have announced the release of the first two new herbicide-tolerant CoAXium Wheat Production System varieties.

monsanto roundup
Agrichemicals

Monsanto, Farm Groups Sue California Over Glyphosate Warning Requirement

Monsanto Co. says it has joined a coalition of U.S. farm groups in a lawsuit against the state of California to stop a requirement for cancer warnings on products containing glyphosate.

Agrichemicals

Arysta, DuPont Sign Fungicidal Seed Treatment Deal

Arysta LifeScience will supply to DuPont Crop Protection an innovative fungicide technology with an initial focus on corn and soybean seed applied products.

Agrichemicals

The Dicamba Factor to Weigh Heavily in 2018 Decisions

Other newer herbicides, too, are poised to expand growers’ options as weed resistance struggles show no signs of abating.

Agrichemicals

FMC Third-Quarter Profit Jumps on Americas Volume Growth

Third quarter segment revenue grew 6% year-over-year, excluding India.

Agrichemicals

EU Hits Deadlock on Glyphosate Reauthorization

The EU license for glyphosate is set to expire on Dec. 15.

Agrichemicals

Is it 2008 All Over Again? Chinese Supply Crunch Hits Crop Protection Players

Post-patent players, retailers seek out options and opportunities as the unknowns of supply constraints and consolidation from the Big 6 to the Big 3 take hold.

Agrichemicals

Nufarm to Acquire Portion of FMC’s Herbicides

Nufarm will acquire FMC's SU-class herbicides and Florasulam.

Agrichemicals

Arkansas Plant Board Votes to Adopt Dicamba Cut-Off Date

Changes will prohibit dicamba use in Arkansas between April 16 and Oct. 31.

Bayer
Agrichemicals

EU Restarts Clock on Bayer-Monsanto Deal Review

The European Commission has resumed its antitrust review of Bayer’s planned takeover of U.S. seed maker Monsanto after the companies

Adjuvants

Aqua-Yield Introduces New Herbicide Adjuvant

At only 4 oz./acre application rate, Aqua-Yield has introduced the industry game-changer, Nano-Pro. In university and field testing, Nano-Pro was

Rice Field
Asia

India Asks Germany to Resolve Early Fungicide Issue in Rice

India today asked Germany to address at the earliest the issue related to the tolerance level of fungicide tricyclazole in

Fungicides

Adama New Zealand Removes Mancozeb Cover Spray from Sale

Adama New Zealand, a member of Adama Group, a global crop protection leader, has reported it had pre-emptively recalled Mancozeb

Agrichemicals

Weak Brazil Volumes, Prices Hit DowDuPont Results

Additionally, an expected reduction in corn area in Brazil, as well as a delayed start to its summer season, impacted sales in the region.

Latest News

Americas

Valagro Launches Biostimulant in Brazil

After being launched in Spain, Egypt, Mexico and Italy, RETROSAL is being officially presented to the Brazilian market.

Agrichemicals

Arysta LifeScience Names New Head of Europe, Middle East & Africa

Arysta LifeScience has named Hildo Brilleman as the company’s CEO of its Europe, Middle East & Africa (EMEA) region, effective

Agrichemicals

Missouri Latest U.S. State to Set Dicamba Cut-off Date for 2018

Missouri Department of Agriculture 'takes proactive measures to reduce off-target crop injury during the 2018 growing season.'

Agrichemicals

BASF Reports End of Season Dicamba Results

BASF field reps investigated 787 soybean symptomology claims during the 2017 season.

Agrichemicals

Seed Firms’ Changes Bring Uncertainty, Promises

The months ahead will reveal what these altered players will look like and how they’ll work with dealers and growers. They’ll also show where companies are focusing efforts in trait development and crop systems.