Crop Protection Industry to Ebb to 3% Growth
Global market share of post-patent products has grown a couple percent each year for the last several years and could reach 80% in the next year or two, according to Bob Fairclough of Kleffmann Group, a crop protection and seed data consultancy. He spoke to 700 attendees at the FCI Trade Summit – Americas Aug. 5 at the Planet Hollywood in Las Vegas.
That trend will continue during the next five years but could reverse in the decade after. By 2020, the industry expects many crop protection molecules to fall off patent unless special protections are granted. That could be a boon for post-patent companies that can capitalize on the opportunity.
But after the glut in the next five years, there is a period of about a decade where very few AIs will be available for post-patent producers to add to their portfolios. It might be a challenge for those companies, which won’t have “new” AIs to expand their businesses.
Multinational companies, on the other hand, are entering a cycle of new AI introduction and development. Additionally, they are still the largest post-patent companies in the world, and consolidation is eminent. After months of Monsanto’s attempt to woo Syngenta into a $45-billion deal, Reuters is reporting that BASF has secured the financing to take over the Swiss giant. In 2014, the top 6 crop protection companies made up about 60% of the global market.
Fairclough said consolidation will happen at all levels of the value chain as companies seek more market share to stay competitive. East-West partnerships, such as the Adama-ChemChina deal, will also become more likely.
The collective moves, coupled with macroeconomic conditions that include lower commodity prices and currency fluctuations, will result in a slower growth rate for the crop protection industry. Adjusted for U.S. dollars, the industry has enjoyed robust growth the past few years at about 6%. Fairclough expects growth to slow to about 3% during the next five years.
Latin America and Eastern Europe are expected to continue to drive the most growth and present the largest opportunity for product development.