New Facilities, Mergers Set to Double, FCI Study Finds
7 July 2014 
Diverse product offerings are on the horizon with output slated to increase.
The industry is seeing a greater demand for products, and companies are accommodating it by building or opening new facilities, FCI concludes from its 2014 State of the Industry survey.
“In discussions with the companies I am working with, the focus is on putting facilities into China for the dual purposes of serving the growing China market and also as a low-cost base for exporting to other regions,” Consultant Peter Southgate of F&P Experts Consultancy told FCI.
More respondents than ever before (49%) report in 2014 that they plan to build or open new facilities. That is almost double the amount of respondents last year (26%).
“We have plans to undertake expansion of our existing facilities at Srikakulam and Ethakota in the state of Andhra Pradesh, India,” Dr. B. Saha of Nagarjuna Agrichem told FCI. “The facility at Srikakulam is for the manufacture of technicals and intermediates, whereas the facility at Ethakota is for formulations. They will serve to meet increasing demand for existing products in domestic and export markets and also requirements for new products.”
In addition to manufacturing or formulation facilities, increased demand is driving the need for more research and testing facilities and resources.
“More investment in R&D and registrations will be done in the coming years as part of Hubei Xingfa’s global development strategy,” said Hongjun Lee, assistant to the general manager at Hubei Xingfa Chemicals Group in China. “In 2014 the company will engage in production of glyphosate solutions to consolidate its position and better meet customer demands. In Africa and Southeast Asia, solutions are essential and top priority for customers. We will also look into blends to provide solutions for glyphosate-resistant weeds in the future.”
Similarly, FMC United in Pakistan has established a new laboratory near Shanghai to carry out different kinds of studies related to pesticides, according to M. Sarwar Rahi, technical manager at FMC.
Some companies are looking at locations outside of China or India to build or acquire to boost capacity and gain access to new product lines.
“We are not going to build our own new facilities, but we are looking for new ones outside of Europe and Asia (China, India),” Holger Fege of ASCM in Germany told FCI. “We are interested in contract manufacturers who are not selling plant protection products on their own into the markets. Our strategy is to be present in the Latin America markets on a larger scale than today.”
In addition, consolidation is slated to be more widespread across the industry in 2014 than it has been in any previous year.
Mergers and acquisitions in 2014 are set to double. About 31% of respondents report they will buy all or part of another company in 2014. That is about twice as many purchases as in any previous year. Similarly, the number of companies reporting that they will sell all or part of their business is roughly double that of most previous years at 13% but nearly triple that of 2013.
More people are also registering more products. In 2014, more companies are registering greater varieties of products, indicating that manufacturers are continuing to seek product registration more aggressively. Many manufacturers have bolstered their ability to gain access to markets and distributors by holding registrations for key products, a departure from the transactional model that had been customary for some time.
The survey shows a small increase in companies registering 21 to 50 products, but more than twice as many companies are registering 51 to 100 or more products this year than they were last year.
However, they are not doing it in as many places. In 2014, more respondents report registering in less than five countries than in 2013, indicating that a few geographic markets are becoming industry hubs. The number of companies registered in more than 21 countries has also starkly decreased since last year.
FCI administered the State of the Industry survey to crop protection professionals in 46 countries in May 2014 and awarded an iPad and certificates to select participants.
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