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With so many products slated to come off patent during the next five years the crop protection industry has never had a better opportunity for growth, said industry analyst Bob Fairclough, team leader, amis AgriGlobe, Kleffmann Group.<\/p>\nWith so many products slated to come off patent during the next five years the crop protection industry has never had a better opportunity for growth, said industry analyst Bob Fairclough, team leader, amis AgriGlobe, Kleffmann Group.<\/p>\n
The most important factor affecting the industry going forward is the shift from propietary to off-patent to generic material.<\/p>\n
Off-patent products accounted for just over 77% of the total pesticide market at the end of 2013. That figure increases on average 2% to 3% each year. Of the remaining 22% of patented products, 54% will transition to off-patent in the next five years with the remaining 46% after 2020. While research is still being done by some of the multinationals and new active ingredients will come online, the majority of new patented products come from premixes.<\/p>\n
While that is an accurate way of looking at the market, said Fairclough, who was speaking to attendees of the Farm Chemicals International Global Sourcing Summit held in India in December, it is rather simplistic. It’s important to break down the off-patent market further. Fairclough divides the off-patent market into three categories: commodity (28%), generic (40%) and in transition (9.75%).<\/p>\n
What’s important, Fairclough said, is the price per kilogram. “It’s a lot easier to make margin when you’ve got $209\/kg as opposed to $17\/kg assuming production costs are the same.”<\/p>\n
Products that will be coming off patent in the next five years average $243\/kg. Those that come off patent post-2020 average $235\/kg. Where the product is in its off-patent lifecycle can make a huge difference. A product in the transition phase \u2013 roughly the first five years after coming off patent \u2013 averages $80\/kg. A generic garners $28\/kg. By the time it reaches the commodity stage a product brings in an average of only $9\/kg.<\/p>\n
It’s better to be in that “in transition” space than in the commodity space.<\/p>\n
\u201cAs it stands today, the generic industry has never had such potential opportunity in terms of the value of active ingredients coming off patent in the next five years,” Fairclough said.<\/p>\n
Looking at commodity prices for a variety of materials including agricultural raw materials, food, and fuel, prices were relatively stable through 2008, when there was a spike. Since then, Fairclough said, those areas have been much more erratic.<\/p>\n
The expectation is that the commidity prices will continue to show slight declines until they return to the levels they should have been before the 2008 spike.<\/p>\n
Basically, the stock-to-use ratio looks at the amount of next year’s crop that is stored. When that amount drops below 20% it is expected that prices will rise, and when they rise above 20% prices should decrease. In 2014, wheat and maize crop ratios were headed up while the rice ratio was decreasing. Fairclough points out that this is not an absolute ratio. In 2008, the ratios for wheat, for example, were dropping but prices increased anyway.<\/p>\n
The U.S. Department of Agriculture Outlook assessed global rice production for the 2014\/15 season at almost 475 million tons (slightly lower than last season\u2019s 477 million tons), consistent with a S\/U ratio of 21.7%, lower than last season\u2019s 23.3% but well above the 2006\/07 lows. The recent upward pressure in rice prices reflects worsening production prospects in India, Indonesia, Philippines, and Sri Lanka.<\/p>\n
Fertilizer accounts for half the input costs for farmers, Fairclough said. If fertilizer prices go up, farmers spend less on crop protection. Fertilizer prices tend to mirror natural gas prices, which are expected to come down or at least remain stable for the next couple of years.<\/p>\n
Although fertilizer prices reversed their downward trend in the third quarter of 2014 (up 4.9%), they are 6% down from a year ago and are 60% lower from their mid-2008 all-time high.<\/p>\n
The fertilizer price index was expected to decline 11.5% in 2014 and an additional 3.5% this year. Such declines come on top of the 13% drop in 2013. Yet, individual components of the index will follow different paths. Potassium chloride will decline almost 25% in 2015, urea will average 6.5% lower and DAP will make some moderate gains. This outlook is based on the assumption that natural gas price in the U.S. will increase moderately.<\/p>\n
Biofuels is another big story. Four or five years ago the biofuels market was growing 10% to 15% a year. Over the last three years it has been relatively stable.<\/p>\n
Fairclough doesn’t expect the amount of maize the U.S. dedicates to biofuels is going to decrease. Nor is the sugar cane market going to go away in Brazil.<\/p>\n
“I do believe the impetus for creating alternative fuel sources from other crops in other parts of the world is going to disappear a bit,” Faircloughs said. Biofuels will continue to play a key role in the behavior of agricultural commodity markets, but that role will be less important than in the recent past.<\/p>\n","protected":false},"excerpt":{"rendered":"
Los gen\u00e9ricos representan una mayor participaci\u00f3n en el mercado mundial cada a\u00f1o y los nuevos productos est\u00e1n preparados para un r\u00e1pido crecimiento.<\/p>","protected":false},"author":112,"featured_media":52436,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4,18,19,20,23],"tags":[54,561,908],"class_list":["post-52423","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-agrochemicals","category-fungicides","category-herbicides","category-insecticides","category-npk","tag-featured-home","tag-kleffmann-group","tag-patent"],"yoast_head":"\n