Agriculture Reference
In-Depth Information
Changes in the Structure of the Global Seed Industry
Over the past 15 years, the seed industry has consolidated through mergers
and acquisitions (see fig. 2.2 for global activity; Fernandez-Cornejo (2004) for
U.S. activity; and Howard (2009) for graphics on current and historical seed
industry ownership, including that of many small companies.
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Some of the features of changes to the seed industry can be summarized as
follows:
1)
Among the largest firms in terms of total product sales, the
close rela-
tionships between seed and agricultural chemicals industries
have
continued. This applies to the Big 6 firms in particular (see fig. 2.2).
These relationships may result partially from complementarity of
product lines such as herbicide-tolerant seeds and chemical herbicides
(Just and Hueth, 1993), or possibly from economies of scope in
marketing as well.
Chemical companies also realized GM crops with pest resistance traits
would compete with the crop protection chemicals, which helped drive these
companies' interest first in biotechnology and eventually in seed, thus
changing their business models to meet farmer demand for crop pest
management as technological opportunities changed.
2)
On the other hand, the
“life science industry” model
suggested a
decade ago (Enriquez, 1998)
has not become the dominant paradigm
.
This model stemmed from the likelihood that technologies underlying
pharmaceutical discovery were the same as those underlying gene
discovery for seeds.
Differences in business models and types of customer, however, prevented
firms from combining both pharmaceuticals and agricultural biotechnology.
Of the current Big 6 companies, only one— Bayer—has pharmaceuticals as its
primary product line. Even when Bayer expanded into the seed/biotechnology
industry in 2002 with its acquisition of Aventis Crop Science, Aventis
pharmaceuticals eventually became a component of Sanofi-Aventis
pharmaceuticals, not Bayer. Monsanto, which entered pharmaceuticals in the
mid-1980s with its acquisition of Searle, was briefly held by Pharmacia before
the agricultural enterprise was spun off as the “new Monsanto”; Pharmacia
retained the pharmaceutical business segments. When Novartis's chemical and
seed businesses were merged with Zeneca's agricultural chemical business in
2000 to form Syngenta, the pharmaceutical portion of Novartis remained intact
as a separate large pharmaceutical company. BASF and DuPont ended their
