Novozymes and Monsanto form BioAg strategic alliance on agricultural microbials; more yield, less input
Novozymes and Monsanto Company formed a long-term strategic alliance to transform research and commercialization of sustainable microbial products that will provide a new platform of solutions for growers around the world. The new BioAg Alliance brings together Novozymes’ commercial BioAg operations and capabilities within microbial discovery, development and production with Monsanto’s microbial discovery, advanced biology, field testing and commercial capabilities.
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Microbial-based products are derived from naturally occurring microorganisms, such as bacteria and fungi. They are normally applied to seeds before planting, in-furrow or sprayed on crops, and they protect crops from pests and diseases and enhance plant productivity and fertility. With faster development cycles compared to other agricultural innovations, as well as broad geographic and crop applicability, microbial solutions offer tremendous potential to deliver sustainable, cost-effective solutions that can increase yield using less input. Microbials can work alone or complement traditional methods of plant production and protection.
Earlier this year, Monsanto acquired the assets of the agricultural company Agradis Inc. to support its discovery capabilities in the microbial space.
Microbial solutions are a significant part of the agricultural biologicals industry, which today represents roughly $2.3 billion in annual sales and has posted mid-teens sales growth each of the last several years.
The emerging agricultural biological technologies complement the integrated systems approach that is necessary in modern agriculture, bringing together breeding, biotechnology and agronomic practices to improve and protect crop yields.
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Novozymes has over the last decade leveraged its know-how and experience in industrial enzymes and microbial technologies to build global positions in the agricultural biologicals market with a product portfolio and annual revenue of approximately $120 million in 2012. Combining its strengths within microbial discovery, application development and fermentation and its leadership position in the agricultural biologicals market, Novozymes brings an established and unique starting point for the alliance to accelerate from in both the short and long term.
Monsanto has a research team working on microbial solutions and has one of the most extensive seeds and traits discovery, field-testing and commercial footprints in the industry. All this will help accelerate microbial development through the alliance, enabling more farmers to get more solutions, faster. Last year the company introduced its agricultural biologicals platform and earlier this year acquired the assets of the agricultural company Agradis Inc. as it builds out its discovery capabilities in the microbial space.
In bringing together Novozymes’ and Monsanto’s capabilities, the companies are poised to deliver an entirely new category of more effective microbial solutions for global broad-acre crops, fruit and vegetables. Under the collaboration:
Monsanto and Novozymes will maintain independent and complementary internal and external discovery research programs to identify microbial targets with the potential to help farmers.
Novozymes will be responsible for production and supply of the microbial solutions to Monsanto, building on its expertise within fermentation. Monsanto will serve as the lead for field testing, registration and commercialization of all alliance products.
The companies will co-manage the alliance and co-fund research and development efforts.
Monsanto will pay Novozymes an aggregate upfront payment of $300 million net in recognition of Novozymes’ ongoing business and microbial capabilities, and for Novozymes to supply alliance products.
Marketing responsibility for Novozymes’ current product portfolio in agricultural biologicals will be transferred to Monsanto along with much of the Novozymes commercial organization currently responsible for that work. The two companies will work to ensure that existing customer relationships and know-how are maintained and further built on for short- and long-term success.
Through the alliance, the companies will also test and sell commercial microbial products purchased from other suppliers to bring additional value to farmers.
The agreement is subject to the approval of the relevant national antitrust authorities to the extent required. The alliance is expected to close in early 2014. Further terms of the alliance were not disclosed.