ADAMA and Syngenta: Identifying the Strengths, Challenges of ChemChina’s Powerhouses

Editor’s note: Contributor David Li examines the key strengths and weakenesses of ChemChina companies ADAMA and Syngenta.

ADAMA

After being acquired by ChemChina, ADAMA has invested heavily in its Chinese team and global R&D. As we saw in the speech by CEO Chen Lichtenstein at the company’s name-changing ceremony in Shenzhen, ADAMA aims to establish an “end-to-end value chain.”

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Having gained capacities in China including that of Sanonda, Anpon, Dacheng Bio, and Huifeng, ADAMA will be the first generic company to have finished building the bridge between Chinese agrichemical capacity to the global market.

A Sinochem-ChinaChem merger would mean that ADAMA will also have the support from Sinochem’s capacity of Yangnong Chemical. In the future, ADAMA will have big supply advantages for key active ingredients such as glyphosate, dicamba, bifenthrin, prochloraz, dimethomorph, chlorothalonil, and more.

STRENGTHS:

  • Strong R&D on generic active ingredient synthesis and formulation, and board collaboration with biotechnology R&D companies. The company, in addition, has key suppliers like Nutrichem.
  • The acquisition of Huifeng, Anpon, and Sanonda make ADAMA more competitive on post-patent AI production with huge capacity of supply. With this support, ADAMA will have its choice of products it wants to deal with.
  • ChemChina’s R&D system will bring strong support of key raw materials and intermediates and chemical resources. ADAMA has proposed a development strategy it calls “Core Leap,” in which it will explore possible formulations of new AIs coming off patent in the next decade. It will incorporate dozens of new AIs for its future portfolio and double the number of its products.
  • ADAMA will collaborate with Israel agriculture startups to introduce novel disruptive technology including biotech and digital agriculture in global markets. In agriculture, for instance, there are 400-plus startups in Israel, many of which benefitted tremendously from Israel’s strength in crop protection.
  • ADAMA’s China team can facilitate very fast access to the Asia market. Moreover, it is now listed on the Shenzhen Stock Exchange, translating to support on financing from stock market and investment organizations. Cash flow and financing will become the fuel to drive ADAMA to invest more around the world like new co-formulation registrations globally.
  • Since ADAMA headquarters is still in Israel, management organization remains stable. ChemChina’s M&A strategy is always based on the “He” (harmony) philosophy coming from traditional Chinese culture. This will help strengthen its position in the global market for the long term.

CHALLENGES:

  • The biggest challenge is the internal transformation: ADAMA needs to merge the business line. This line will lead ADAMA in marketing and R&D strategies, and sales and supply chain management.
  • Even though ADAMA has many years of experience handling China sourcing before merged by ChemChina, the new ADAMA top management needs to reorganize its supply chain management after acquiring new subsidiaries like Huifeng. We need to also consider the management of Sanonda, Anpon, and Dacheng Bio. It is totally different to manage Chinese agrichemical production vs. simple China AI sourcing.
  • The acquisition of Huifeng will be very critical: Huifeng has much stronger off-patent AI synthesis capability than any other subsidiary of ADAMA. Such key suppliers are controlling a huge percentage of global agrichemical supply, including global registration of key off-patent AIs of multinationals like BASF. With Huifeng, ADAMA will be armed with a powerful weapon to manage special co-formulations and relationships with multinationals with patent AIs.

SYNGENTA

Syngenta is the leading patented AI producer in the world. As Dr. Camilla Corsi, Head of Crop Protection Research, Syngenta and Dr. Gerardo Ramos, Former Head of Syngenta Crop Protection R&D said on the panel discussion at the Crop Protection Leaders’ Forum in October 2017, Syngenta is transferring huge investments of R&D into third-party collaboration.

Multinationals want to control the scale of R&D carefully for risk management after big mergers and acquisitions. Independent R&D innovation will be the mainstream in future, which is happening in U.S. as venture capitalists pour millions into agtech startups.

STRENGTHS

  • Syngenta, having access to the Chinese agrichemical R&D gate, will have lower costs of new molecule discovery and pilots. Not only are ChemChina’s R&D organizations cooperating with Syngenta, Sinochem’s R&D institutions like Zhejiang Research and Shenyang Research are also starting collaborations with the company for new R&D projects. Even we do not know the details of projects, we can assume that it will accelerate to transform China R&D for China and global market access.
  • Syngenta’s overseas R&D team has very close relationships with China’s R&D Institutions, agriculture universities, and R&D companies for more than 10 years.

CHALLENGES

  • Compared to Bayer and BASF, Syngenta has an older portfolio vs. other competitors. It needs to extend azoxysrobin’s life value and create novel co-formulations. Moreover, Syngenta also needs new technology for fungicide resistance.
  • It needs early-stage R&D to invest in new molecule discovery, and to shorten the distance between R&D and local market demand.
  • The company will need to learn how to best utilize China’s capacity and R&D resources efficiently.
  • Syngenta will need to establish a third-party alliance team for managing collaborations with ChemChina-SinoChem and ADAMA.
  • In the future, there is a need to look at China seed company M&A.