Summit Agro USA Rises to the Challenge

To Bill Lewis, the decision to form Summit Agro USA as a joint venture between Sumitomo Corp. and ISK Biosciences Corp., with Sumitomo as the majority shareholder, just made good business sense.

Sumitomo Corp. made the decision to enter the U.S. market at the start of 2011, when ISK was investigating its options for getting four proprietary compounds to market in the U.S. “In the past, (Japanese companies in general) usually went and did deals with companies like Bayer, BASF, FMC and Syngenta,” says Lewis, Summit Agro USA Chief Executive. He started his career with ICI Americas Inc. and spent 22 years with its legacy companies. He joined Summit Agro in June 2014 after heading up Arysta LifeScience’s new North American operation and getting it off the ground beginning in 2006.

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“Once you get to a certain critical size you start to see that maybe you don’t have to go and give this chemistry to one of the larger players,” Lewis says. “(ISK) said, why don’t we go with this (joint-venture) deal? It feels and operates more like we’re used to as a Japanese company … You’re successful in the country, you have Japanese colleagues in office, and can speak Japanese with them. This model has worked in other parts of the world, so that’s what we’re doing here.”

At the outset, Summit Agro had no registered products, so the charge to start the company and generate revenue was given to the now-retired Bill Wisdom from BASF, Wade Stewart, and Susan Hill. Lewis says that by paying the bills via a carefully selected group of generics – acifluorfen, sulfentrazone, and glufosinate – Summit Agro has been able to concentrate on developing and bringing its standout proprietary products to market along the way. ISK handles registrations and research and development, while Summit Agro focuses on field trials and awareness, commercialization, and marketing. The strategy is paying off. Starting from zero revenue in 2011, it has exponentially grown the business over the last four years. “What is even more rewarding is that even in the down year of 2015 we grew business by 25%. This just reinforces our ‘go to market strategy’ and support of our distribution partners,” Lewis tells AgriBusiness Global.

The lineup of proprietary products in its portfolio thus far:
•  Isofetamid, a broad-spectrum SDHI fungicide, was registered for use on grapes, canola, almonds, and strawberries in 2015. Branded as KENJA, more crop registrations are forthcoming. The U.S. is the first company to register the product and more country registrations will follow.
•  Pyriofenone, a fungicide for use in grapes, small berries, and cucurbits, belongs to a new group of fungicides, the aryl phenyl ketones. Branded as PROLIVO, EPA registration is expected this year, and is already registered in Europe to control powdery mildew (Erysiphe necator) on grapevine. This is a more narrow-focused fungicide than the former and it will continue to add registrations across the globe.
•  A broad-spectrum insecticide, cyclaniliprole, is to be sold under the brand name HARVANTA. It hopes to have it greenlighted in the second quarter of 2017. The product will first be registered in fruit, vegetable, and tree nut crops.
•  Tolpyralate, a selective herbicide for corn, controls a wide range of broadleaf weeds and grasses. It is in the HPPD class of chemistry with excellent post-emerge activity. EPA registration is expected in late 2017.

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Besides these four new compounds, Summit Agro has two other proprietary compounds in the portfolio. RANMAN fungicide is the only fungicide with a FRAC group 21 designation. It provides control of downy mildew, root rot, pythium, and late blight plant diseases.

MISSION herbicide provides powerful pre- and post-emergence control of broadleaf weeds and grasses in grapes, citrus, conifers, and tree nut crops. It offers long-lasting residual control with low application rates.

Growth Path and Challenges
Lewis acknowledges that Summit Agro is still a very small player in the industry overall and helping its customers get the message across their organizations will always be challenging. “We do not have the salesforce that will call on their people on a regular basis. So, we have to come up with different ways to help their sales folks understand and promote our products. This takes some creativity in the ways we roll out product launches and training. We are looking at utilizing many different internet tools to connect with people and keep them abreast of our portfolio and supply information and training with these types of tools.”

Talking product acquisitions, Lewis says that the company will come in with one or two more generics that fit the soybean market, where it is doing well with its sulfentrazone offering. He says Summit Agro also plans to take a look at fungicides or insecticides it might want to access for mixture partners next year, either by going after the product themselves, or if it’s a readily available generic, sourcing it from one of the generic suppliers.

On top of tackling the commercialization process of the company’s proprietary products, Summit Agro remains focused on relationship building, he says – which will come in handy particularly in agchem’s more turbulent environment of late. In the United States, it should be no surprise that one of the biggest challenges is pinning down EPA’s regulatory direction. Thanks to politics creeping its way into the process, the science-based guidelines and assuredness of the hurdles involved are no longer a given. Right now, it feels like “we’re somewhere in between” the European hazard-based precautionary model and the risk-based analysis for which North America has championed in the past.

“It feels like every time you’re about to cross the goal line a timing delay hits you. It has affected us,” Lewis says. Some of Summit Agro’s products have hit delays getting to market, and now the addition of required pollinator studies means more potential roadblocks. “You have assumptions in place, and you have to use the PRIA dates EPA has given you and just plan accordingly.”

Consolidation Means Opportunity
The rush for megadeals: It’s been the agchem sector theme of the year. Now, it looks as if the Big 6 could soon be the Big 4. Lewis knows the M&A landscape well. Prior to the formation of Syngenta, he headed the Zeneca Horticulture business in the U.S. and Canada, and during the merger of Zeneca and Novartis, he co-led the integration of the two.

He knows mergers aren’t easy, and that the companies will have their work cut out for them. It might sound cliché, but it’s no less true: “Change usually brings opportunities.” Lewis says it’s the one thing he’s learned over the years.

“At the end of the day, you’ve had grower consolidation going on for years in this country.” He points out that with a smaller base of customers, the size of the distribution channel also eventually shrinks. The same number of suppliers simply aren’t needed anymore. It is neither good nor bad – a business must just adjust for the new competition dynamic that results.

“Customers like choice, and they will still do what they have always done. They will balance their positions between the Big 6 and some medium-size players. Or if there’s only a Big 4, it might give a couple of medium-size players or others more room. We’re not going to look at it negatively,” Lewis says. “Saying, ‘They’re all going to have more power; I’m going to be locked out of the market,’ – I don’t know if that’s necessarily true. Customers, distributors – they all want choice, and they’ll do the right things to balance their business to make sure they have that choice. It’s up to us to make sure we do the right things so they want to pick us to help with that choice.”

For medium-size companies like Summit Agro, confusion often results from an M&A boom. Sometimes larger companies that are integrating and traversing merger-related activities are not as fleet of foot as they had been, and it opens a door to make sure customers’ needs are fulfilled. The objective is to make sure you look for those opportunities, and follow up on them when they happen, Lewis says.

Most of the opportunities emerging from consolidation will fall in the traditional chemistry realm, and when examining potential product acquisitions Summit Agro will look how the product meshes with its portfolio and how it fits in its distribution network. A fungicide will be a far more likely pick than say, glyphosate.

“If there are good products that come up for sale, we will put our name in a hat, want to analyze them, and possibly be in process of trying to bid for them,” Lewis says. “Right now we have some really good opportunities to create value for both our shareholders and our distributor partners.”

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