China’s Pesticide Industry Oriented on Technological Innovation

By Prof. Xuemin Wu
Chief Scientist of Pesticide Formulation & Adjuvant Laboratory of China Agricultural University

From Generic AI, CDMO, and to Patented Molecules by Chinese Companies

China’s pesticide industry has experienced more than 70 years of development and has gradually formed a whole industry chain layout based on basic chemical industry with a scale effect. However, with the gradual expansion of China’s pesticide production capacity, the country’s pesticide industry is facing the challenge of reshaping the balance between supply and demand.

The basic business model of China’s pesticide industry started with the production of generic active ingredients (AIs) for multinational companies. With China’s accession to the World Trade Organization (WTO), overseas chemical production with high pollution and high energy consumption began to transfer to developing countries based on the “flying geese paradigm.” As a developing country providing basic chemical production, China fully accepted the transfer of the overseas chemical industry during the reform and opening-up period. As a result, China has helped reduce the overall cost of the global agricultural input industry, and the B2B model has developed into a common business model for the development of China’s pesticide industry.

As the R&D strength as well as the financial strength of Chinese chemical manufacturers gradually increased, the businesses began to expand into Contract Manufacturing Organizations (CMO) and Contract Development & Manufacturing Organization (CDMO) fields. Custom synthesis companies such as Lianhetech, whose main business line was CMO, were rapidly emerging. There are many chemical engineers as well as chemists with practical R&D experience in China who play a big role in the CMO and CDMO fields.

After a gradual enhancement in financial strength, Chinese pesticide producers gradually increased their investment in R&D. Chinese pesticide companies have been able to innovate processes for expired patented compounds, because process route innovation is more difficult for producers of generic compounds. Companies are more likely to invest in catalyst innovation and upstream intermediates supporting layout.

For example, Nutrichem’s patent on azoxystrobin process innovation mainly utilizes azabicyclic compound or its salt to achieve high transformation ratio, high product purity, and easy and convenient operation. At the same time, Nutrichem utilizes its own carbonyl chloride resources to support the upstream key intermediates. And this environmentally friendly process innovation coupled with the extension of the whole industrial value chain truly realizes the green production, which also reflects the social responsibility of Chinese enterprises.

At the same time, Chinese companies have gained the ability to synthesize compounds with expiring patents. Multinationals are very concerned about managing the life cycle of their patented products. They need to consider defensive strategies to ward off potential competition from generic agrochemical companies and Chinese companies, even 10 years before their patented products expire. In the Chinese supply market, compounds that are currently of high interest include prothioconazole, fluopyram, pyroxasulfone, and saflufenacil, among others.

The prothioconazole market is currently growing rapidly globally, mainly in Brazil for efficient control of soybean rust. The portfolios of prothioconazole in combination with trifloxystrobin and bixafen are leading the fungicide market in Brazil. In addition to prothioconazole, SDHI fungicides are a competitive category for the future market. Chinese manufacturers have already started to invest in the future production capacity of fluopyram. Manufacturers of the key upstream intermediate DCTMP have an inherent advantage. In a competitive market like China, almost all Chinese pesticide companies are laying out the self-owned whole industry chain. Having the production and cost advantage of key intermediates are the most crucial. In the synthesis of such products, the advantages of basic raw materials, such as carbonyl chloride, chlor-alkali, sodium cyanide, as well as the process advantages of fluorination and chlorination are the underlying logic that determines the success or failure of enterprises.

In the Brazilian market, pyroxasulfone has great potential for growth. The product mainly controls resistant weeds such as eleusine indica in soybean and corn fields.

It is also a high-growth product in combination with flumioxazin. For example, Iharabras’ Kyojin (30% pyroxasulfone + 20% flumioxazin SC), marketed in Brazil, is a competitive product. It provides farmers with a tool for higher effectiveness in field weed control.

As Bayer continues to make breakthroughs in the development of new generation GM traits, the multinational will introduce PPO herbicide resistance in future GM seeds, which will occupy a significant market share in the herbicide market in the future. Saflufenacil has the advantage of rapid broadleaf weed control and can be used in a wide range of crops with high activity, with rainfall tolerance and low temperature effects. In China, Huizhou Yinnong Technology, as a technical custom manufacturing partner of multinational companies in China, produces OD of saflufenacil with glyphosate for customers. The product can be mixed with glyphosate providing obvious synergistic effect. It fundamentally solves the problem of broadleaf weed resistance and significantly improves the speed of glyphosate’s action on weeds. On the other hand, such a novel formulation with a novel molecule also reduces the amount of glyphosate used for the control of persistent weeds. The formulation type, OD also makes up for the shortcomings in the solubility of saflufenacil, thus ensuring the efficacy of the AI.

As Chinese pesticide companies accumulated capital, they are conducting continuous research and development. Some leading companies have made zero-to-one progress in developing Chinese patented compounds. The encyclopedia is an important drilling pest in rice. Its resistance is developing rapidly due to the limitations of the AI used to control it in rice. Cyproflanilide is an independently created variety obtained by introducing cyclopropylmethyl into the lead compound broflanilide. CAC Nantong expects that it can be officially launched in 2024.

With the acquisition of global patents for the Chinese-created patented compounds represented by cyproflanilide, China’s innovative products will also progress step by step toward the globalization of the market layout. Currently, the global sales of China’s innovative molecules are mainly limited by the huge investment in the development of new compounds in the global market. The total R&D cost from the discovery of a new compound to its global launch has already exceeded US $280 million. The cost of market development and global registration accounts for more than 60% of the total investment. A single Chinese AI manufacturer cannot afford such a high investment. Therefore, Chinese companies need the support from overseas strategic partners to globalize their patent compound portfolio. Sharing risks also means sharing benefits. Business is not a zero-sum game where one operations loses and  another wins. Global licensing-out and cooperative development of formulation branded products, as some Japanese companies have done, is a feasible pathway.

Matrix Innovation

Innovation in the crop protection industry should be a matrix innovation — from the upstream basic chemical raw material resources to the fluorination and chlorination process capability to the improvement of atom utilization rate, so as to obtain high-yield and high-purity active ingredients. The innovation of end-use formulation products and the innovation of application methods are the last kilometer of the industrial value chain.

At the end of 2022, China’s Ministry of Agriculture and Rural Affairs released an action plan to reduce chemical pesticides and fertilizers by 2025. China is aiming to strive to establish and improve an environmentally friendly and ecologically inclusive integrated crop protection and control technology system by 2025. During the 14th Five-Year Plan period, the intensity of chemical pesticide use in major grain crops such as rice, wheat, and corn (the equivalent amount of AI per unit of sown area) will strive to reduce by 5% compared with that during the 13th Five-Year Plan period. The intensity of chemical pesticide used in fruit, vegetables, tea, and other cash crops strives to reduce 10%. In the 13th Five-Year Plan, China’s average annual pesticide use (in percent) was 270,000 Mt in the farmland.

China is the most rapidly developing country in the world in terms of drone crop protection. It took less than a decade for drone crop protection in China to go from a few hundred hectare (Ha) to a total of more than 130 million hectare by 2022. Innovative technologies are bringing fundamental changes to the Chinese agriculture and crop protection industries. Drone crop protection in agriculture is in line with China’s national policy to reduce both chemical pesticides and fertilizers in agriculture. Take Bayer’s Nativo as an example, the traditional manual spray on rice requires about 450L to 600L of water for dilution. With drone crop protection, only 15L to 30L per Ha of water are needed, which saves manpower and improves operational efficiency on the one hand and saves water on the other. Drone crop protection technology has become a key factor for the sales promotion of Bayer Nativo in the rice production areas in Northeast China.

The adoption of new technologies is characterized by both opportunities and challenges. Water dispersible granules (WDG) is not well suited for drone spraying. Traditional solid formulations are subject to problems such as sedimentation at ultra-low dilution system. This calls for a fundamental enhancement of the AI delivery system to ensure efficacy in the field. Tank mixing adjuvants provide a solution in this regard. For example, when applying Nativo WDG products by drone, it is necessary to add vegetable oil-based additives to realize a stable liquid system under low dilution. In addition, the addition of key adjuvant can control the drift, evaporation, and rainfall resistance, and increase the penetration and adhesion. Moreover, innovative formulations suitable for UAV crop protection have begun to gradually replace traditional formulations, such as DF instead of WDG, OD instead of SL, and ME instead of EC. It is worth mentioning that spreading oil as well as floating granule are also going to be used in combination with drones for spreading and applying in rice fields in China. The automatic and homogeneous dispersion of the formulations into the water of the rice paddies further enhances the efficiency of drone application.

In general, the innovative methodology of pesticide formulations starts from the study of dilution stability and the controlling of particle size distribution of the spray. The field performance of the product needs to be improved for different crops and application methods. For example, different crops have different foliar structures and they have different requirements for the delivery system of the agent. Ultimately, we can obtain reliable and stable biological activity. On the other hand, the development of pesticide formulations should take into account the regulatory policies, legislation, and policy trends in global territories. The reduction of pesticides use in China, the Farm to Fork policy in Europe, the development of organic agriculture in the Americas, and the strong demand for biologics in LATAM all require global formulation development teams to consider the sustainability of formulations in their research.

Not only the formulation itself, but also the innovation of the raw material for the formulation is a key focus of our research. Our team’s research on the modification of nature polymer is focused on the challenge of microplastics posed by the European Union evaluation on pesticide CS formulation. The availability of natural materials is an advantage for the pesticide formulation field in China. We also believe that continued research on the modification of natural polymer materials and the establishment of a natural material database will be very important for R&D team to continue to contribute to the success of the pesticide industry in the future.

Modification of Nature Polymer by Pesticide Formulation & Adjuvant Laboratory, China Agricultural University, Team of Prof. Xuemin Wu.

Challenges Faced by Biological Formulations

Biologicals are a hotspot of global crop protection market. Although biologicals are characterized by safety, environmental protection, and strong targeting, they also have the disadvantages like large particles. This is mainly because biologicals are mostly obtained through fermentation. Whether for drone spraying, manual spray application, and large-scale agricultural equipment spraying, the spray nozzle is one of the most important key nodes. Some biologicals can easily cause blocking of the nozzle, so it is difficult to realize water based. In China, some biopesticides, such as insect nuclear polyhedrosis virus (INPV), are inactive in water, so Chinese researchers can only make them into solid formulations. Nosema Locustae can be affected by the grinding process. This is mainly due to the pressure during the milling process that affects the activity. Therefore, flexibility in research is the central entry point for the R&D of biologicals.

As a leading pesticide formulation and adjuvant laboratory in China, our team is internationalizing with licenses out in cooperation with multinational companies. During cooperation with various multinational companies, we have learned from our partners that China’s pesticide formulation R&D is not lagging behind the world.

Future of Formulations

If we have to define the future of pesticide formulations, nanopesticides are inevitable. Chinese R&D researchers have been working on nanopesticide products on a large scale. We are focusing on how nanoscale pesticide formulations will change the crop protection industry.

However, nanopesticides are not the end of the line. The molecular level of compound innovation technology may bring great changes to the industry in the near future. Perhaps the portfolios commonly use now will be iterated by innovative portfolios soon. And these innovations may not only come from the crop protection industry itself, but also from the pharmaceutical or cosmetic sectors.  •