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Bayer CropScience

Data Year Ending December 2006    Agrochemical Industry Ranking: 1

Corporate Sales Breakdown

 

Key Points

 
  • The Bayer Group is now organised into the three main divisions of Material Science, HealthCare and CropScience. Group sales in 2006 were €28,956m, up 17.2% from the year before.
  • The CropScience division contains the group’s Crop Protection, Environmental Science and BioScience businesses. Reported division sales in 2006 were €5,700m, a decrease of 3.3% compared to the previous year.
  • The largest division for 2006 is Healthcare, which achieved sales of €11,724m in 2006, up 46.6% from the previous year, largely due to the acquisition of Schering.
  • Material Science sales were 7.6% higher at €10,161m.
  • The Chemicals division, along with part of Polymers, was spun-off as Lanxess during 2004.

 

Agrochemical Sales History

 


 

 
  • Bayer’s reported agrochemical turnover fell 3.8% to €5,358m in 2006. This was equivalent to a dollar decrease of 2.8% to $6,724m. Reasons behind the decline were weather-related, although included tougher economic conditions in Brazil and range rationalisation also.
  • Bayer remained positioned as the largest company in the agrochemical sector in 2006, with sales about $350m larger than its nearest rival, Syngenta.
  • Since 1996, pro forma sales have fallen 0.4% p.a. in $ terms and 0.3% p.a. in € terms.
  • Since 2001, the equivalent growth rates are 2.0% p.a. in $ terms and –4.6% p.a. in € terms.
  • Part of the reason for these relatively modest growth rates has been the enforced divestments due to the merger with Aventis, and to the spread of genetically modified crops.

 

Leading Agrochemical Products

   

Product

Launched

Annual Sales

Comment

Gaucho (imidacloprid)

1991

$708m

Largest insecticide globally; used for broad range of crops

Folicur (tebuconazole)

1988

$346m

Leading triazole fungicide; used for broad range of crops

Liberty (glufosinate)

1986

$287m

Non-selective herbicide

Puma (fenoxaprop)

1984

$246m

Post-emergent graminicide for cereals, cotton, etc.

Decis (deltamethrin)

1977

$230m

Pyrethroid insecticide used for wide range of crops

Flint (trifloxystrobin)

1999

$227m

Second generation strobilurin fungicide for cereals, etc.

Atlantis (mesosulfuron)

2002

$212m

Cereals grass and broadleaved weed herbicide

Proline (prothioconazole)

2004

$181m

Cereal fungicide, new triazole

Poncho (clothianidin)

2002

$159m

Seed treatment fungicide for rice, fruit and vegetables

Betanal (phenmedipham)

1968

$151m

Broad-leaved weed herbicides for sugar beet

Galace (diflufenican)

1985

$137m

Broadleaved herbicide for cereals

 

 

Geographical Sales Split

 

Key Points

 
  • Although Bayer reports sales segmented into four regions, we have divided sales into Cropnosis’s regional format for ease of comparison.
  • Europe was Bayer’s largest regional market. Sales gained 1.4% to $2,557m, and in € terms there was a 0.3% gain to €2,037m.
  • The North American business declined primarily due to the effect of dry conditions and increases in GM crops. Sales decreased by 4.2% to $1,744m.
  • The Far East region was affected by drought in Australia and overall lower pest levels. Sales fell by 2.5% to $1,025m.
  • Latin American sales decreased by 9.2% to $946m, due to a weaker farm economy in Brazil and to a reduction in the soybean area.
  • “Rest of the World” sales fell 6.0% to $452m.

 

Product Class Sales Split

 

 


 

 
  • Herbicide sales decreased 3.5% to $2,206m (-4.5% in €), due to dry conditions in some areas and to increasing cultivation of herbicide-tolerant crops.
  • There was a 6.0% decrease in insecticide sales to $1,530m (-7.0% in €). This was attributable to difficult conditions in Brazil, the spread of insect-tolerant crops and divestments.
  • Fungicide sales fell 2.9% to $1,506m (-3.8% in €). Flint (trifloxystrobin) and Folicur (tebuconazole) sales were affected by dry conditions, and the weak farm economy in Brazil.
  • The remaining sales rose 2.1% to $1,482m (+1.0% in €), due to improvement in sales in Environmental Sciences. Seed treatment sales declined by 0.7%.

 

Research and Development

    Budget/Trends

  • Bayer CropScience spent a total of €614m or $771m on research and development in 2006. Of this figure, €534m ($670m) was allocated to agrochemicals (Crop Protection and Environmental Science) and €80m ($100m) to BioScience. Agrochemical R&D expenditure was therefore equivalent to 10.0% of sales.
  • Agrochemical R&D is headquartered in Monheim, with major activities also in Frankfurt, Lyon, Yuki and Kansas.
 

    Product Candidates

  • Fluopicolide (AEC 638206), an acylpicolide fungicide for the control of oomycete diseases in vine and vegetables.
  • Flubendiamide (NNI-0001), a phthalic acid diamide insecticide for broad-spectrum control of lepidopteran pests in a wide range of crops. Development in conjunction with Nihon Nohyaku.
  • Tembotrione (AE 0172747), a triketone herbicide for use in maize, in combination with a safener.
  • Spirotetramat (BYI 08330), the third ketoenole insecticide/acaricide with broad-spectrum control through systemic action. For use in fruit, vine and vegetables.
  • Pyrasulfotole (AE 0317309), a pyrazole cereal herbicide. The product is reported to have a new mode of action and a good broad-spectrum activity.

 

Bayer CropScience was created in October 2001 as a separate legal entity of the Bayer Group. However, the current business wasn’t established until June 2002, when the acquisition of Aventis CropScience was closed. On formation, the company immediately became the largest company in the agrochemical industry. This leading position was maintained in 2006, despite a 2.8% decrease in sales to $6,724m. Bayer CropScience is in a period of range rationalisation, with older products being superseded through launch of a number of new materials.

In 2006, 38.0% of agrochemical sales were achieved in Europe, where the key markets are France, Germany, Spain, Italy and the UK. Sales (€) in Europe were a little higher, partly due to growth in the fungicide prothioconazole. North America was the next largest regional market with 25.9% of global sales. This region is dominated by the US, with only about one-tenth of sales achieved in Canada. North American sales declined due to unfavourable weather conditions, divestments and the increased planting of genetically-modified crops. The Far East accounted for 15.2% of sales. Revenues in this region fell due drought and the continuing weakness of the Japanese market. Latin American sales fell to account for 14.1% of the total, some 4.6% lower compared with 2004. The weaker farm economy and reduced soybean area in Brazil were responsible for the decline.

Bayer was ranked first globally in insecticides, second in fungicides and third in herbicides. The company also occupies the leadership position in the seed treatment and environmental science sectors. Despite only being the third-largest herbicide manufacturer globally, this product class accounted for the largest proportion of the company’s sales in 2006. Key products include Basta/Liberty (glufosinate), Puma (fenoxaprop) and Atlantis (mesosulfuron). Bayer is the clear leader in the insecticide market, even without the contribution from fipronil and other divested insecticides. The company’s strength in this sector is underpinned by the neonicotinoid imidacloprid, the largest selling insecticide in the world. This is supported by deltamethrin and clothianidin in particular, although a range of organophosphate, carbamate and pyrethroid products, as well as other newer chemistries, are together significant. Bayer is the second largest fungicide manufacturer in the world, though sales are around $200m below those of Syngenta. The company is the pioneer and sales leader in the triazole chemistry group, in particular tebuconazole, with the new prothioconazole showing rapid growth. Other key fungicides are trifloxystrobin and fosetyl.

Bayer had no involvement in agricultural biotechnology prior to the acquisition of Aventis CropScience. The purchase brought with it a substantial portfolio of technology and intellectual property built up by AgrEvo and Rhône-Poulenc, the two predecessors of Aventis CropScience. Commercialised products include a range of glufosinate- and bromoxynil-tolerant crops. These products have only so far achieved limited success. Revenue upsides from these technologies are primarily from increased sales of the herbicide glufosinate. The company does not charge farmers a technology fee for use of its traits. While the company is beginning to benefit from its involvement in agricultural biotechnology, particularly in oilseed rape and cotton, it is not among the leaders of the sector. Its agrochemical business has also not generally suffered, due to relatively low exposure to crops such as soybean and maize, however increased planting of the latter and of cotton has had an effect on recent US sales. In June 2007, concerns over the development of glyphosate resistant weeds prompted Monsanto to licence Bayer’s LibertyLink technology for use in maize and soybean. This is expected to benefit sales of glufosinate for use in dual herbicide tolerance crops. However, competition in this area will increase with the DuPont’s forthcoming Optimum GAT technology.

Range rationalisation is having a noticeable effect on Bayer’s product portfolio, and to a certain extent on sales. The company has divested a number of older products recently, not only organophosphate insecticides but certain other insecticides and herbicides as well. As a result, sales have declined in some countries. This is part of the strategy to modernise the range, and to re-align resource so as to concentrate on newer, higher-margin products.

With a strong commitment to agrochemical R&D, new product sales are increasing and should help Bayer return to growth in the near term. The company has recently raised its forecast for annual sales of crop protection products containing new active ingredients, to €2 billion. This will help offset losses due to rationalisation and generic imidacloprid and tebuconazole competition.

 

ntroduction

Bayer CropScience is one of the three key divisions in the Bayer Group. The division was created in October 2001 as a separate legal entity and incorporates the CropScience business acquired from Aventis in June 2002. Bayer CropScience segments its operations into Crop Protection, Environmental Science and BioScience. In this profile, we class Crop Protection and Environmental Science activities under agrochemicals, whilst BioScience is examined under the agricultural biotechnology section.

Bayer CropScience reported division sales of €,5,358m in 2006, an decrease of 3.8% from the previous year (or –2.8% to $6,724m). This was comprised of €4,644m ($5,828m) in Crop Protection, €714m ($896m) in Environmental Science and €342m ($429m) in BioScience.

With agrochemical sales of $6,724m, Bayer CropScience remained ranked first in the industry (the company is ranked second, behind Syngenta, if seed sales are included). At this sales level the company accounted for 20.9% of the global agrochemical market, a good percentage point ahead of Syngenta’s 19.8% share.

Sales Performance Index vs. Industry

Combined with historical Aventis CropScience sales

 

The above chart shows Bayer/Aventis CropScience’s combined agrochemical sales performance over the past ten years compared to industry performance. Since 1996, sales have grown on average by -0.4% p.a. (compared to the industry growth rate of -0.1% p.a.). Since 2001, the equivalent sales growth has been 1.6% p.a. (compared to the industry rate of 2.9% p.a.). The combined business has therefore underperformed the industry marginally over the last ten years, although this gap has widened over the last five years. With the formation of Aventis CropScience in 1999, sales in both 1999 and 2000 fell faster than the industry decline as a result of various anti-trust mandated product divestments. The strong growth in 2001 was partly a result of a restatement by Bayer during the formation of Bayer CropScience, which added c.$116m in Environmental Science sales that were formerly accounted for in the Animal Health group. However, both the Aventis and Bayer businesses performed well in that year, due to higher sales of key products such as isoxaflutole, fipronil, imidacloprid, tebuconazole, trifloxystrobin and flufenacet. The business continued to perform well in 2002, growing by 0.1% against the overall industry decline of -4.9%. In 2003, sales were below par compared to the industry due to divestments. Bayer grew strongly in 2004, with a 12.8% sales increase more or less on par with the overall industry’s 13.4% growth. The last two years sales have been characterised by decline greater than that of the industry; this has followed drought-induced sales falls in key fungicide sectors, along with heightened generic competition and increases in genetically-modified crops.

 

Bayer CropScience reported agrochemical sales of €5,358m in 2006, split €1,758m herbicides, €1,219m insecticides, €1,200m fungicides, €467m seed treatment and €714m environmental science.

Regional Sales Split

Region

2006 ($m)

2005 ($m)

Variance

North America

1,744

1,821

-4.2%

Latin America

946

1042

-9.2%

Europe

2,557

2,521

+1.4%

Far East

1,025

1,051

-2.5%

Rest of World

452

481

-6.0%

Total

6,724

6,916

-2.8%

 

Product Class Sales Split

Product Class

2006 ($m)

2005 ($m)

Variance

Herbicides

2,206

2,285

-3.5%

Insecticides

1,530

1,628

-6.0%

Fungicides

1,506

1,550

-2.9%

Others

1,482

1,452

+2.1%

Total

6,724

6,916

-2.8%

See appendix for sales values expressed in Euro

 

During 2006, Bayer CropScience’s agrochemical sales decreased 2.8% in dollar terms (3.8% in Euro terms) compared to the previous year. This decrease in sales was partly due to decline in the foliar fungicide business, particularly in Latin America, and also due to increased competition from generic product and genetically modified crops. Bayer CropScience remained ranked as the largest agrochemical company globally in 2006.

Europe

Sales in Europe gained 1.4% to $2,557m in 2006 (+0.3% to €2,037m). The region remained Bayer’s largest market, accounting for 38.0% of sales. Bayer’s largest individual country markets within Europe are France and Germany, followed by Italy, Spain and the UK.

Euro sales growth was limited in the region in 2006, resulting from a late start to the season due to the protracted winter and from dry conditions in the south. This affected fungicide and insecticide sales in particular. Some decline in sales of herbicides and seed treatments occurred as a result of the reduced sugar beet areas, following reform of the EU sugar market.

Sales have been supported significantly by growth of the cereal fungicide Proline (prothioconazole), and its range of products, following launch in 2004. Prothioconazole is clearly considered by the company to be of major significance in Europe, with potential sales of over €300m. This product is a later generation triazole, and demonstrates effective control of certain diseases which have developed a level of tolerance toward other triazole fungicides. The new strobilurin analogue fluoxastrobin has started to show growth also, following its launch in the UK 2005 and Germany in 2006. A launch in the important French cereal market will occur during 2007.

In France, Gaucho is still under a ban due to alleged bee toxicity issues, having been launched initially as a seed treatment for maize and sunflower. The decision of 2004, made by the Ministry of Agriculture, has been upheld recently by the council of State. Otherwise newer products such as clothianidin and thiacloprid are starting to boost the sales line as registrations are gained in the region.

Bayer remained the leading player in the European seed treatment sector, despite the previous sale of fipronil to BASF. Imprimo (imidacloprid + tefluthrin) is widely used on sugar beet. The launch of Poncho (clothianidin) for use on sugar beet, Efa (clothianidin + beta-cyfluthrin) for use on oilseed rape, and of Redigo (prothioconazole) and Redigo Twin (prothioconazole + fluoxastrobin) on cereals, has helped to maintain the company’s position as the leading supplier in Europe.

The cereal herbicide range has been refreshed both by Atlantis (mesosulfuron + iodosulfuron) following its launch year in 2002 (France), and by the launch of Liberator during autumn 2004, based on diflufenican. Global sales of mesosulfuron increased by some 20% to $212m in 2006, much of which growth was generated in Europe. For diflufenican the company has established an agreement for Europe whereby Nufarm will gain access to the product. This will both extend its distribution and create opportunities for new formulations in the region.

Of Bayer’s European sales, it is estimated that approximately $350m is derived from East Europe.

North America

North American sales fell by 4.2% to $1,744m, due to drier conditions in the south of the region and to the expansion in area planted to genetically-modified crops. Despite the fall this was the second largest regional market for Bayer in 2006, accounting for 25.9% of global revenues. Approximately 90% of sales were generated in the US, which was also the company’s largest country market globally. The balance of sales was achieved in Canada.

Bayer’s business in the US suffered from unfavourable growing conditions. Fungicide use was curtailed as disease pressure did not develop as expected, for example the Asian soybean rust, and sales of products such as Flint (trifloxystrobin) and Folicur (tebuconazole) declined as a result. In addition, price pressure is expected rise to due to generic pressure. Bayer will manage this by agreeing to supply companies such as DuPont, Makhteshim-Agan Arysta LifeScience with the active ingredient. Insecticide sales suffered also due to the dry conditions, as pest levels declined, and to divestments. Overall in the US, Bayer is relatively weak in herbicides but is strong in insecticides, fungicides, seed treatment (through Gustafson) and Environmental Science products. Increased planting of glyphosate-tolerant maize is taking its toll on sales of herbicides such as isoxaflutole and foramsulfuron, however sales of Liberty have benefited. The product Rimfire (mesosulfuron + propoxycarbazone) was launched on cereals in 2006, which will strengthen the company’s profile in that crop sector. There is also a new seed treatment fungicide for soil-borne diseases in soybeans, launched as
Trilex
(trifloxystrobin + metalaxyl), adding to the already wide range of the company’s seed treatments.
The Environmental Science business benefits from the range of active ingredients available, including pyrethroids, imidacloprid and fipronil to cover insect vector and termite control, along with use of fungicides and herbicides in the amenity and garden sectors.

Bayer has invested $6.5 million in a new canola seed processing plant in Canada in support of its glufosinate-tolerant InVigor canola seed line, partly on the basis that demand for the crop will increase due to demand for biofuels. This became operational in 2006, and should support sales of Liberty (glufosinate) in this crop from the 2007 season.

Bayer’s North American CropScience HQ is located in Research Triangle Park, North Carolina.

Latin America

Bayer’s performance in this region is dominated by sales in Brazil. For this country, the 2006 situation was influenced by a strong currency impact on exports, and thus on farm income. This translated particularly into falling demand for Bayer’s insecticides and fungicides, as growers sought to control expenditure through reduced purchase of agrochemicals and through use of cheaper products. The company was forced to reduce prices in order to retain sales, with price up to 40% lower for certain fungicides, the worst affected sector. These conditions follow on from the same currency-related effects experienced during 2005. As a result the region’s share of Bayer’s global agrochemical business has declined to 14.1% in 2006, making it now the smallest of the main four regions. Sales fell by 9.2% to $946m. The largest market in this region is Brazil, followed by Argentina and Colombia.

Other factors contributing to the difficulty include the reduced planting of soybeans for the 2006 season and generic tebuconazole has been registered recently by two companies in Brazil.

Despite the decline in 2006, the company has a good product range. Previous growth was significant, primarily driven by products such as Folicur (tebuconazole) and Stratego (trifloxystrobin + propiconazole), which have enjoyed strong demand for treatment of the soybean rust in Brazil. Sphere (trifloxystrobin + cyproconazole) performed well on coffee. Growth has been achieved also from insecticide seed treatments on maize, cereals and cotton. More recently launches of several new products have occurred, including spiromesifen (as Oberon) for insect control in vegetables and cotton, fluquinconazole (as Atento) as a soybean fungicide seed treatment and ethiprole (as Curbix) for insect control in sugar cane and rice.

Far East

Bayer CropScience’s sales in the Far East contributed to 15.2% of total sales, with revenues in this region falling by 2.5% to $1,025m in 2006. Excluding currency effects, however, the decline was 1.0%.

The largest country market in the region is Japan, where Bayer’s recent sales have been static or in decline. The Japanese market itself remains in a stagnant state, in fact there was a 1.9% fall in sales during 2006 lead by decline in the key sectors of rice and fruit and vegetables. Within these crop sectors decline was notable in the fungicide and insecticide groups particularly. For herbicides some increase in sales value was seen, although this was largely due to replacement of older, lower value products by newer chemistry. Such conditions affected Bayer’s sales in 2006, as did the divestment of products such as trichlorfon for which Japan is the main market. The company has been implementing post-merger rationalisations at the same time, including the integration of sales and production operations, and plans change such that 50% of future revenues will be achieved through direct sales. This will be needed to ensure that the planned future growth will be delivered from the effective range of new products, especially for rice, which includes oxaziclomefone and fentrazamide. Recent launches include those of the Innova herbicides, based on fentrazamide, and Longshot (oxadiazon), as well as the fungicide fenamidone (Betoline) and the insecticide ethiprole (Kirappu) for use in vegetables and fruit respectively. The next series of introductions will include the insecticide spiromesifen in fruit and vegetables, the herbicide oxardiargyl in rice and the fungicide fluopicolide in vegetables. Bayer continues to invest in invest in Japan, such as the €2m in a formulation facility at the Hofu plant, which became operational in October 2005. This unit will formulate insecticides and fungicides, including Flint (trifloxystrobin) and Kirappu (ethiprole).

China remains a source of growth for Bayer CropScience in the Far East, with the company’s agrochemical sales in the country having grown by 46% to $82m in 2006. Growth in 2006 was lead by insecticides, with fipronil having become the leading product in the sector. Around 80% of the sector value is found over three crops, namely the aggregate fruit and vegetables, rice and cotton, for which the product has a good profile. The fipronil manufacturing joint venture in Hangzhou was excluded from the divestment package to BASF, and Bayer continues to market the product in China. The company won an important patent infringement case for fipronil early in 2005, which will have ensured that it remains the predominant supplier in the country. The acaricide spirodiclofen (Envidor) recorded strong growth in its second year on the market, and is one of a number of new products on which Bayer is basing its growth projections. Within herbicides, a trademark infringement case was won for fenoxaprop early in 2006, and sales of this product in cereals grew significantly. Looking to the near future, three new products are planned for launch shortly, an insecticide, an herbicide and a fungicide.

The company’s other key Far East country markets are Australia, South Korea, Thailand and Vietnam. The South Korean market remained difficult, with sales into rice unlikely to recover to previous levels; elsewhere conditions are also difficult, for example the on-going drought in Australia is reducing agrochemical sales significantly. Some growth might be seen in other South East Asia, as the effect of range rationalisation declines and as new products are launched. Bayer has agreed a license-back arrangement from BASF for fipronil in these countries, which will give a significant boost to its insecticide range.

Rest of the World

Elsewhere, sales are mostly achieved in India, Pakistan, Turkey, the Middle East and Africa. The turnover from these markets amounted to $360m in 2006, 7.0% lower than comparable results last year. The largest single market is India, where the company’s two subsidiaries, Bayer India and Bayer CropScience India, were merged in 2003 under the name Bayer CropScience. The company is amongst the leaders in India, with agrochemical and environmental science sales of $82m in 2006. Insecticide sales will decline, however, due to divestments of oxydemeton (Metasystox) and others in 2006, for which India is the main market. The Indian subsidiary will now play a more important role in Bayer’s global sourcing infrastructure. In 2004, Bayer’s Indian joint venture, Bilag Industries, announced that a new imidacloprid manufacturing plant was to be established. The new plant will have a capacity of 500 t.p.a. and will supply both the domestic and overseas markets. This will be only the second plant outside of Germany to manufacture Bayer’s imidacloprid.

duct Profile

Bayer CropScience was ranked 1st in insecticides, 2nd in fungicides and 3rd in herbicides sales in 2006. The company also has the largest share of the global seed treatment market (a position consolidated on following the acquisition of Gustafson in March 2004), despite the divestment of Trace Chemicals in the US, as well as the environmental science (i.e. lawn & garden, professional pest control, etc.) sector.

Following the divestment of the EU rights to propoxycarbazone to Staehler in May 2004, Bayer fulfilled all its anti-trust obligations relating to the acquisition of Aventis CropScience. Overall by 2006, with continuing divestment of non-core active ingredients in favour of higher value products, the company has forfeited annual sales in excess of $760m.

 

Divestments since acquiring Aventis CropScience

Active Ingredient(s)

Brand Name

Region

Acquirer

Herbicides

     

Flucarbazone

Everest

Global

Arysta LifeScience

Isoxaflutole

Merlin

Benelux

Certis Europe

Linuron

Afalon

Global

Makhteshim-Agan

Metamitron

Goltix

Global

Makhteshim-Agan

Flufenacet + diflufenican

Herold

Germany and Belgium

Makhteshim-Agan

Fenoxaprop

Ralon Super/ Puma

Germany and Belgium

Nufarm

Propoxycarbazone

Attribut

EU

Staehler

Asulam

Asulox

Global

United Phosphorus (UPL)

Insecticides

     

Fipronil

Regent

Global (exc. China)

BASF

Ethiprole

Europe

BASF

Carbaryl

Sevin

France

Certis Europe

Acrinathrin

Rufast/Orytis

Global

Cheminova

Phosalone

Zolone

Global

Cheminova

Cyfluthrin

Baythroid

Europe

Makhteshim-Agan

β-cyfluthrin

Bulldock

Europe

Makhteshim-Agan

Oxydemeton-methyl

Metasystox

Global

Makhteshim-Agan, UPL

Azinphos-methyl

Gusathion

Global

Makhteshim-Agan

Endosulfan

Thiodan

Greece and Portugal

Makhteshim-Agan

Acetamiprid

Profil/Assail

Global

rights returned to Nippon Soda

Amitraz

Mitac

Global

Arysta LifeScience

Azocyclotin

Peropal

Global

Arysta LifeScience

Omethoate

Folimat

Global

Arysta LifeScience

Prothiofos

Tokuthion

Global

Arysta LifeScience

Trichlorfon

Dipterex

Global

United Phosphorus

Fungicides

     

Prochloraz, iprodione, triticonazole, fluquinconazole, pyrimethanil

Global seed treatment rights, also European foliar rights.

BASF

Triadimenol

Baytan

UK

Makhteshim-Agan

Tebuconazole

Folicur

Germany (non-exclusive)

Makhteshim-Agan

Tebuconazole + triadimenol

Metador 300

Germany

Stähler Agrochemie

Triadimenol

Bayfidan

Germany

Stähler Agrochemie

Other

     

Tribufos

DEF

Global

Amvac Chemical

Fenamiphos

Nemacur

Europe

Makhteshim-Agan

Thiodicarb

Skipper

Europe

Sipcam-Phyteurop

 

 

At its formation, Bayer CropScience inherited a very large portfolio of products. Following the divestment of the anti-trust package, the number of active ingredients in Bayer’s portfolio stood at 113. This is expected to be reduced to about 93 by 2008 as the company consolidates its range. Products with low levels of sales and margins will be sold or phased out, including those that will be discontinued as part of the EU active ingredient review programme. The product portfolio in 2000 comprised then of 111 active ingredients launched prior to 2000 plus three new ones since. By the end of 2006, this will have changed to 82 older actives and 17 launched since 2000. Then by 2010, the ratio will be 62 older to 25 new active ingredients launched over the decade.

As of 2006, the 17 products launched since 2000, together with ten others planned for introduction by 2011, are projected to achieve peak annual sales of some $2,500 million. The first of these ten are due to be launched in 2007, and include the maize herbicide, tembotrione, as Laudis; and the insecticide, flubendiamide, which is being co-developed with Nihon Nohyaku for use against lepidopteran pests, as Belt/Phoenix. The other products include the cereal herbicide, pyrasulfotole, the insecticide, spirotetramat, the rice blast fungicide, isotianil, and then two fungicides, two herbicides and a safener.

 

Of the three main agrochemical product groups, Bayer has the lowest global share in herbicides, being ranked 3rd largest in the industry. This situation was largely due to the old Bayer’s relatively small herbicide business, which was ranked 7th globally in 2001, compared to Aventis’ 4th ranking business in that year. Nevertheless, herbicides was Bayer’s largest group in 2006, accounting for 32.8% of overall agrochemical sales. With sales of $2,206m (-3.5%), the position has not improved and Bayer remains behind Monsanto and Syngenta. There are three new herbicides due for launch between 2006 and 2010, two for maize and one for wheat. However, until these products start to deliver real sales, Bayer will have to rely on growth of established products such as fenoxaprop, glufosinate and diflufenican, and recently launched products such as fentrazamide, oxaziclomefone, and the sulfonylureas, if it is to gain in this sector.

Principal Herbicides

Active ingredient

Brand

Launched

Main Uses

diuron

Herbixol

1954

Commodity urea herbicide for a wide range of crops

bromoxynil

Buctril

1962

Commodity post-emergence herbicide for cereals and maize

ioxynil

Actril/Oxytril

1962

Iodinated analogue of bromoxynil mainly for cereals

desmedipham

Betanal AM

1968

Sugar beet herbicide used in mixtures

phenmedipham

Betanal

1968

Sugar beet herbicide used in mixtures

methabenzthiazuron

Tribunil

1968

Ageing urea herbicide mainly for cereals and fruit & vegetables

oxadiazon

Ronstar

1969

Broad-spectrum diazine herbicide for a variety of crops

metribuzin

Sencor

1971

Soil-applied triazinone herbicide for grass and broadleaved weed control, principally in soybean

ethofumesate

Tramat

1974

Sugar beet herbicide against grass and broadleaved weeds

diclofop

Hoelon

1975

Post-emergence herbicide against grass weeds in cereals

fenoxaprop

Puma

1984

Post-emergence graminicide for cereals and other crops

diflufenican

Quartz/Javelin

1985

Pre- or post-emergent cereal herbicide

glufosinate

Basta/Liberty

1986

Non-selective herbicide, also used on glufosinate-tolerant crops

mefenacet

Hinochloa

1986

Graminicide for paddy rice weed control

aclonifen

Challenge

1987

Diphenyl ether herbicide in a variety of crops

amidosulfuron

Gratil

1990

Sulfonylurea for broadleaved weeds in cereals

sulcotrione

Mikado

1990

Triketone maize herbicide of which the European rights were acquired from Syngenta in 2001

metosulam

Eclipse

1994

Cereals and maize triazolopyrimidine sulfonanilide herbicide acquired from Dow in 2001

isoxaflutole

Balance/Merlin

1996

Pre-emergent maize herbicide

oxadiargyl

Raft/Topstar

1996

Pre-emergence oxadiazole herbicide for rice, sugar cane and turf

ethoxysulfuron

Sunrice

1997

Sulfonylurea herbicide for rice, cereals and sugar cane

flurtamone

Benchmark

1997

Broadleaved weed herbicide mainly for the cereals market

flufenacet

Axiom

1998

Oxyacetamide graminicide with some broadleaved weed activity

fentrazamide

Lecs

2000

Tetrazolinone herbicide for grasses and sedges in rice

iodosulfuron

Hussar

2000

Sulfonylurea herbicide for cereals and maize

propoxycarbazone

Attribut/Olympus

2000

A sulfonylaminocarbonyltriazolinone herbicide for cereals

oxaziclomefone

mixtures

2001

Oxazinone rice herbicide developed for one-shot mixtures

foramsulfuron

Option

2001

Sulfonylurea maize herbicide

mesosulfuron

Mesomaxx

2002

Sulfonylurea cereal herbicide

 

Glufosinate, an ex-Aventis product, is the company’s largest herbicide. Introduced in 1986, glufosinate is a non-selective herbicide, active at lower rates compared to paraquat but offering control of a narrower weed spectrum than glyphosate. Reformulation and repositioning of the product (Basta) has led to sales growth in the East Asian plantation and orchard markets where it competes directly with glyphosate and paraquat. It finds use also in vegetables, non-crop areas and as a harvest aid. Glufosinate sales had been under previous pressure from glyphosate due to the latter’s declining price caused by competition between Monsanto and other suppliers. Glufosinate is also sold as Liberty for use on a range of genetically modified glufosinate-tolerant crops (Liberty Link). Again, competition in this area comes from Monsanto and other company’s glyphosate products for use on Roundup Ready glyphosate-tolerant crops. However, the greatest pressure on glufosinate sales appears to be over, and the product has returned recently to a phase of growth. In 2006, glufosinate sales increased 5.5% to $287m, with an increasing contribution coming from increased sowing of InVigor canola, LibertyLink/FiberMax (and other glufosinate-tolerant) cotton varieties and glufosinate-tolerant Herculex maize. The June 2007 agreement between Bayer and Monsanto should see increasing use of glufosinate in glufosinate/glyphosate dual herbicide-tolerant maize and soybean.

Fenoxaprop

Fenoxaprop, formerly an Aventis product, is Bayer’s second-largest herbicide, with sales of $246m in 2006. This aryloxypropionate compound was first introduced for use as a graminicide in broadleaved crops and rice in 1984. In this form, the product is sold under the brand names Whip and Excel with its major outlet being the rice and soybean markets of the US and certain East Asian countries. Although relatively successful in these markets, the product remained small in terms of sales. In 1987 however, Hoechst significantly expanded the potential of the product by including the safener fenchlorazole, which allowed its use in cereal crops. With this incorporated safener, fenoxaprop is sold mainly under the trade name Puma, although other names such as Cheetah (UK) and Ralon (Germany) are also used. Introduced in 1988 in France, Puma rapidly gained share in the post-emergence cereal graminicide market. It is lately gaining share in cereals in China, where Bayer has won a trademark infringement case. Overall, sales in cereals are under increasing competitive pressure, both as newer products reach the market and as generic material becomes available. The safener fenchlorazole is now largely replaced with mefenpyr-diethyl, which is twice as effective and has reduced toxicity. New formulations of fenoxaprop continue to be developed, including those in combination with the company’s newer herbicides such as iodosulfuron-methyl. The product has limited use also in rice, for which crop the safener used is isoxadifen. The marketing rights to fenoxaprop in Germany and Belgium were sold to Nufarm in 2003 for $13m, as required by the anti-trust authorities.

 

Diflufenican

Diflufenican is an ex-Aventis product first launched in 1985 as Galace for pre- and post-emergence use in the cereal sector, and is now Bayer’s fifth-largest herbicide. The product originally became one of the leading cereal herbicides in Europe, where it is predominantly sold in mixtures (Dièze/Traviata) with other herbicides such as isoproturon, flurtamone, ioxynil, mecoprop and trifluralin. Philagro also markets a premix in France as First with bromoxynil and ioxynil. The premix Herold (diflufenican + flufenacet) in Germany and Belgium were divested to Makhteshim-Agan in 2002, though as Liberator it is marketed by Bayer in the UK. During 2006 Bayer has agreed two deals for the product in Europe, in order to release resource to focus on its new range of cereal products. The first is with Nufarm for a supply and distribution arrangement, and the second is with Cheminova for distribution of the current mixture products. Diflufenican sales in 2006 were an estimated $137m.

 

 

 

 

 

Isoxaflutole

Launched in 1996, isoxaflutole was one of Aventis’ most successful recent additions. The product is primarily used for the control of grass and broadleaved weeds in maize and was first registered in Argentina, the West Indies and South Africa in 1996. US registration was achieved in 1997 where it was launched in 1998 under the name Balance. In 1998, it was also introduced to seven European countries as Merlin. In Canada, it was launched as Converge in 1999. A mixture of isoxaflutole with flufenacet under the name Epic is also available for use on maize, as is isoxaflutole plus aclonifen as Lagon in France. The latest registration has been in the UK in 2006, for the mixture with flufenacet as Cadou Star. In the US, revised application and mixing instructions for isoxaflutole were issued following reports of phytotoxicity damage to plants in 1999. This was attributed to the high activity of isoxaflutole requiring more precise applications. During 2006 Bayer granted Dupont access to the product in the US, with a view to forming a mixture with rimsulfuron for maize. In addition to maize, the product also finds uses on sugar cane although this is a minor use. Isoxaflutole is now sold in the Benelux countries by Certis Europe, following anti-trust mandated divestment of its marketing rights in 2002. Good acceptance in the US, EU and Latin American maize markets had resulted in rapid sales growth, although the potential is limited to pre-emergence application. Sales are now expected to have peaked, primarily due to competition from Syngenta’s mesotrione. In 2006, global isoxaflutole sales are estimated to have been $122m.

Bromoxynil

Although bromoxynil (Buctril) is a commodity herbicide first introduced in 1962, it still achieves significant sales. Bromoxynil is mainly sold in premixes, with the other hydroxybenzonitrile herbicide, ioxynil and/or diflufenican. Both these products are widely used in the West European cereal sector, largely in mixtures with other herbicides such as isoproturon, mecoprop, MCPA and diflufenican. In addition to this use, bromoxynil is also widely used as a broadleaved weed herbicide in maize. Bromoxynil is registered for use on bromoxynil herbicide-tolerant BXN/Navigator canola in Canada (in a mixture with clethodim as Compas). Bromoxynil-tolerant (BXN) cotton was also commercialised in the US but has now been withdrawn. Recent sales of bromoxynil have declined as a result of lower cotton and canola plantings, competition from genetically modified crops and increased generic supplies. Sales in 2006 were estimated at around $85m.

Metribuzin

Sencor (metribuzin), from the old Bayer portfolio, was launched in 1971 and mainly sold in soybeans. Sales have been declining since 1997 due to competition from Roundup Ready soybean. In addition to selling metribuzin under its own label, Bayer also sells metribuzin directly to DuPont. New applications for the product are continually being sought – a mixture with amidosulfuron was introduced as Galis for use on cereals in the UK in 1996; the same combination was launched in France as Galice in 1999. Axiom (flufenacet + metribuzin), for soil application in maize, was registered by Bayer in the US in 1998 and is also being recommended for use on Liberty Link (glufosinate herbicide-tolerant) maize. 2000 saw Syngenta launch Boundary (metribuzin + S-metolachlor) in the US soybean sector. The main crop use in Europe is in potato, where the product is used alone or In mixture. Annex 1 listing in Europe is expected during 2007. The premixes are helping to maintain sales of metribuzin at around $65m per annum.

Phenmedipham, desmedipham and ethofumesate

Phenmedipham, desmedipham and ethofumesate are all mainly sold in the sugar beet market, although some sales occur in other crop sectors. This range comprises three of the five mainstay herbicides for sugar beet (the others being BASF’s chloridazon and Makhteshim-Agan’s metamitron). Metamitron belonged to Bayer until 2002, but with the company’s clear domination of this sector following the Aventis CropScience acquisition, this product had to be divested to Makhteshim-Agan in 2003.

This group of three herbicides contributed around $240m to Bayer’s sales in 2006, down slightly on 2005 due to reform in the EU sugar beet market. Phenmedipham was first introduced in 1968 as Betanal for post-emergence broadleaved weed control in sugar beet, fodder beet and spinach. Now that the product is off-patent it faces generic competition in a number of markets. Closely related to phenmedipham is desmedipham, although sales are not as significant. The standalone product was also launched in 1968 and is marketed as Betanal AM/Betanex. Unlike the other two products, ethofumesate is active against both grass and broadleaved weeds. These three herbicides are now mostly sold in combinations, including Betanal Progress/Elite (ethofumesate + phenmedipham + desmedipham), Betanal Tandem (phenmedipham + ethofumesate), and Betanal Trio (phenmedipham + ethofumesate + metamitron).

Flufenacet

An oxyacetamide herbicide launched in 1998 for use in maize, soybean, rice, cereals, cotton, peanuts, potatoes, sunflowers and other crops. The compound is used in premixes, including Diplôme (flufenacet + Dow AgroSciences’ metosulam) and Epic (flufenacet + isoxaflutole) for use on maize, Herold/Liberator (flufenacet + diflufenican) for use on cereals and Axiom (flufenacet + metribuzin) for use on maize and soybeans, and more recently potato. Axiom was promoted as a pre-emergence treatment for Liberty Link (glufosinate herbicide-tolerant) maize in 1999. The latest launch has been of Cadou Star (+ isoxaflutole) for use on maize in the UK. Flufenacet sales have grown rapidly since launch as more market introductions were made, although rate of growth is now slower. Sales in 2006 were estimated at $90m.

Oxadiazon

Oxadiazon (Ronstar) is a diazine compound first launched in 1969 and is suitable for use on a wide variety of crops, including rice, sugar cane and turf. Following its introduction, Ronstar made significant inroads into the East Asian rice market, and although the product is now mature Bayer has launched it back into the Japanese rice market during 2005 (as Longshot). Sales have been increasing on rice in China. The herbicide is manufactured in France and formulated in many countries worldwide. Generic material has been registered in the USA by Makhteshim-Agan. Sales in 2006 were around $70m.

Sulcotrione

Sulcotrione was originally developed by ICI and is the first product derived from the triketone chemistry class (the second being Syngenta’s mesotrione). In 2001, Bayer acquired the sulcotrione business in Europe from Syngenta for $109m. The herbicide was first launched as Mikado in 1990 for broadleaved weed control in the French maize sector, where it became one of the leading products. A premix with atrazine is also sold as Galleon in South Africa only. Bayer’s sulcotrione sales are estimated to have stabilised at around $45m, having suffered competition from Syngenta’s Callisto (mesotrione).

Diclofop

Diclofop, inherited from the Aventis stable, was once Hoechst’s leading herbicide. The aryloxypropionate compound is primarily used for post-emergence grass weed control in cereals, against wild oats and ryegrass. Key markets for diclofop are Canada, Australia and Europe. Sold as Hoelon, Hoegrass and Illoxan, much of the sales of diclofop have now been superseded by fenoxaprop, or by other graminicides. Widespread use of diclofop in the past has led to increased grass resistance problems in countries such as Australia, France, the UK and the USA. The compound is now subject to increasing generic competition, especially in Asia. Annual sales are around $35m.

Mefenacet

Mefenacet (Hinochloa) is used for barnyard grass control in rice. The compound has for a long time been the core of Bayer’s rice herbicide offering in the Far East. It is mostly sold in one-shot mixture products and is a component of several leading mixtures in Japan including Zark (+ bensulfuron), Wolf-Ace (+ bensulfuron + thiobencarb) and Prosper (+ pyriminobac-methyl + pretilachlor). Besides Japan, mefenacet is also marketed in South Korea, and to a lesser extent, Spain and Portugal. Recent sales have fallen to around $30m annually, partly due to competition from newer compounds and the decline in the Japanese and Korean rice sectors.

Sulfonylureas

Bayer CropScience has a range of five sulfonylurea herbicides, all of which were inherited from Aventis. Most of these were developed and launched during the past few years mainly for the cereals sector. The oldest is amidosulfuron, which was introduced in 1990, and the newest is mesosulfuron, which was launched in 2002. The group as a whole is estimated to have contributed around $483m to sales in 2006. This level of sales is expected to grow further, driven mainly by expansion of mesosulfuron.

Amidosulfuron (Gratil/Eagle) offers early season control of cleavers in cereals as well as control of other broadleaved weeds. Since its launch, the product has been gradually gaining market share in what is a very competitive market. The product is available in a variety of mixtures with other herbicides. Annual sales are estimated at approximately $30m.

Ethoxysulfuron was introduced in 1997 for control of broadleaved weeds and sedges in cereals (Skol/Hero) and rice (Sunrice) in Europe. The herbicide is also a component of several one-shot mixtures in Japan, and has been launched on rice also in Vietnam. Approval for use in sugar cane was gained in Australia in 2005. Ethoxysulfuron is Bayer’s least important sulfonylurea, with sales estimated at $20m in 2006.

Iodosulfuron was first launched in Germany in 2000 as Hussar (with the safener mefenpyr-diethyl) for broad spectrum weed control in cereals, and is now found as a common component of Bayer’s cereal herbicide range in Europe, in which it extends the broad-leaved spectrum. Mixture products are typically with mesosulfuron and amidosulfuron. The herbicide is also suitable for use on maize, where again it is included in mixture in order to extend control of broad-leaved weeds. The main mixture partner is foramsulfuron, and sales are made in Europe and the US. Iodosulfuron is Bayer’s second largest sulfonylurea, with 2006 sales of $130m.

Foramsulfuron (Option, Equip), introduced in 2001, is used for broad spectrum weed control in maize. It is mostly sold in combination with iodosulfuron (as Fortuna, Tribute and MaisTer) to expand the range of broadleaved weeds controlled, though in some countries it is sold alone (as Equip). The product normally contains a safener. Use occurs in the principal maize herbicide markets of North America and Europe, where it competes with other sulfonylureas such as nicosulfuron. 2006 sales were $91m.

The newest herbicide in this range is mesosulfuron, a cereals herbicide first introduced in France in 2002 as Mesomaxx, and more recently into the UK as Atlantis and Pacifica (mesosulfuron + iodosulfuron). Usage on rice is also being developed. Mesosulfuron is in the process of being introduced globally, which in 2006 included China. In 2003, mesosulfuron was included in Annex I, and a US launch (as Osprey) was made in 2004. This was extended for the 2006 season with the mixture product Rimfire (+ propoxycarbazone), for use on wheat. The product has found ready acceptance in cereals due to its cost-effective weed control, and particularly in Europe where grass weed resistance is a problem to other chemistry. Despite only being introduced in 2002 mesosulfuron is now Bayer’s largest selling sulfonylurea, with on-going growth bringing 2006 sales to $212m.

In 2005, Bayer launched a new oil dispersion formulation technology called ODesi for its sulfonylurea cereal herbicide range. The technology permits the herbicides to be formulated as liquids, increasing efficacy and ease of use. Initial product launches using the technology have been made as Alister (mesosulfuron) in Poland and Grodyl Maxi (amidosulfuron). Further products are expected to be introduced from 2006 onwards.

Oxadiargyl

Oxadiargyl received its first registrations in 1996 and was introduced in the Caribbean and Colombia and subsequently in Japan as Raft. A grass weed herbicide for rice, the major portion of sales are achieved in the Far East. The product was launched in China in 1997, as well as in Peru. Approval was received in India in 1999 under the trade name Topstar. Oxadiargyl’s first European approval was in Bulgaria in 1999 for use on sunflower. In the same year, the product was also approved in Italy for use on sunflower, and there is a registration also in France. At the end of 1999, the Australian NRA recommended its approval for summer and winter grasses. In Japan, the herbicide was also registered as Fenax for use on turf in golf courses in 2001. Bayer plans to launch on rice. Additional registrations are currently being pursued in Europe and the US. Oxadiargyl was listed on Annex I in the EU in 2003.

Metosulam

Metosulam is a triazolopyrimidine sulfonanilide compound exclusively licensed in by Bayer from Dow AgroSciences in 2001. The herbicide is used for broadleaved weed control mostly in maize and cereals, but approvals have also been gained for rice and sugar cane. First introduced in Australia and France in 1994 as Eclipse, the product has now been launched in most major European cereals markets. Initial sales growth was boosted by the upturn in the cereals sector during the mid-1990s. However, growth since then has been much slower and the product is being challenged by newer chemistry. With the acquisition of metosulam and sulcotrione, and the launch of foramsulfuron, Bayer now has the second largest share of the European maize herbicide sector, after Syngenta.

Fentrazamide

A tetrazolinone, which is recommended for the control of grass weeds and sedges in rice, fentrazamide has the potential of being used as a partner in a wide range of herbicidal combinations. The product, together with oxaziclomefone, is one of the key components of Bayer’s growth strategy in the Asian rice herbicide sector. A first introduction was made in 2000 in Thailand, Malaysia, Vietnam and the Philippines as Lecspro (fentrazamide + propanil). In Japan, various mixture products including Innova (+ bensulfuron), Doublestar (+ pyrazosulfuron), Inebrite (+ azimsulfuron + bensulfuron), Bigsure (+cyclosulfamuron + daimuron) and Donichi (+imazosulfuron + daimuron) were registered late in 2000. The Innova formulation, launched during 2004, is a novel product that is applied at the time of transplanting rice, thus offering time and labour saving. In China, fentrazamide was registered in 2000 under the name Bai Tian Jing for use both in direct-sown and transplanted rice.

Oxaziclomefone

With fentrazamide and oxaziclomefone, Bayer has the potential to substantially enhance its share of the Asian rice herbicide market. Jointly developed by Aventis and the Japanese Zen-Noh co-operative, oxaziclomefone was first registered at the end of 2000 in Japan for the control of grassy weeds and sedges in paddy rice and turf. A launch followed in 2000 as part of several one-shot mixtures for pre- and post-emergence weed control. The rights to the key bensulfuron combination belong to Hokko, which has launched several variations under the brand name Homerun. Nihon Nohyaku also market mixtures including fentrazamide for rice in Japan. Oxaziclomefone is also being developed for other markets such as Korea, China, Thailand and Vietnam.

Flurtamone

Flurtamone was first introduced in the EU by Rhône-Poulenc in 1997 as Benchmark. The herbicide is used primarily for broadleaved weed control in cereals, with sales also achieved in crops such as cereals, peas and beans. Since its launch, flurtamone has experienced limited demand, and sales are still relatively minor. Combination products include Cline (+ aclonifen), Baccara (+ diflufenican) and Ingot (+ diflufenican + isoproturon).

Propoxycarbazone

Propoxycarbazone is a novel sulfonylaminocarbonyltriazolinone herbicide developed for post-emergence control of grassy weeds in wheat, rye and triticale. An initial launch was made in Kenya in 2000, followed by lesser markets such as the Czech and Slovak Republics, Switzerland and Hungary. The first major registrations were obtained when the herbicide was approved in Germany and the UK in 2001 as Attribut. The French registration was not obtained until 2003. Bayer was required to grant a co-exclusive licence for the development of combination products of propoxycarbazone in Europe, as one of the conditions for approval of the acquisition of Aventis CropScience. The rights were acquired subsequently by Staehler in 2004. In North America, propoxycarbazone was introduced under the trade name Olympus in September 2004 to coincide with autumn planting of winter wheat. This was followed by the launch of Rimfire (+ mesosulfuron) in 2005. The product is showing growth and is becoming a key part of the company’s cereal herbicide range.

 

 

Other herbicides

The remainder of Bayer’s new herbicide portfolio mostly consists of products that have static or declining sales. The majority of these contribute less than $20m in sales each year.

One of the larger products is methabenzthiazuron (Tribunil), with sales of just under $30m annually. First launched in 1968, the herbicide has had a relatively stable share of the European cereal and Indian wheat markets. European sales in cereals have ceased, however, following non-inclusion in Annex 1 during 2006. Derogated use in certain minor crops is permitted until 2009, after which the product will be withdrawn completely.

Aclonifen (Challenge) is a relatively new herbicide in this range, having first been introduced in 1987. Sales are limited to around $20m due to its small main market of sunflower, protein peas, potatoes and bulb vegetables. There is minor use in maize.

Other herbicides include a range of commodity products such as anilofos, benazolin, dichlorprop, diuron, ioxynil, isoproturon, neburon and propanil. A number of these will be discontinued or divested as Bayer CropScience implements its range rationalisation process.

 

 

cticides

Bayer CropScience was the largest insecticide company in 2006. Sales amounted to $1,530m, 6.0% lower than the previous year. Difficult conditions in Brazil, an increase in insect-resistant crops and divestments resulted in reduced insecticide sales.

Although a portion of Bayer’s insecticide sales are still derived from older products such as the organophosphates, carbamates and pyrethroids, certain of these are being divested as the company modernises the product range. Bayer’s position in this sector is underpinned by the neonicotinoid imidacloprid, which the company discovered and introduced. Imidacloprid remains the largest-selling insecticide in the world.

 

Principal Insecticides

Brand

Active ingredient

Launched

Main Uses

Folidol

parathion-methyl

1947

Broad-spectrum organophosphate insecticide

Gusathion

azinphos-methyl

1955

A broad-spectrum organophosphorus insecticide/acaricide used mainly on fruit & vegetables

Sevin

carbaryl

1956

Commodity carbamate insecticide for a variety of crops

Thiodan

endosulfan

1958

Organochlorine insecticide for cotton, fruit & vegetables

Yaltox

carbofuran

1967

Commodity insecticide/acaricide/nematicide for broad spectrum control in a variety of crops

Mocap

ethoprophos

1967

Soil-applied broad spectrum insecticide for a variety of crops

Temik

aldicarb

1968

Broad-spectrum soil-applied systemic insecticide, acaricide and nematicide for a variety of crops

Tamaron

methamidophos

1970

Broad-spectrum organophosphate insecticide

Croneton

ethiofencarb

1974

Carbamate insecticide for control of aphids on fruit and vegetables

Oftanol

isofenphos

1974

Broad-spectrum organophosphate insecticide

Decis

deltamethrin

1977

A light-stable pyrethroid used in a wide variety of crops

Larvin

thiodicarb

1977

Broad-spectrum carbamate insecticide mainly for cotton, soybeans and vegetables

Bolstar

sulprofos

1979

Organophosphorus insecticide for use on cotton, maize, tobacco and peanuts

Baythroid/Bulldock

cyfluthrin/β-cyfluthrin

1980/1990

Pyrethroid insecticide for cotton, fruit and vegetables

Gaucho/Admire

imidacloprid

1991

Broad-spectrum chloronicotinyl insecticide, first introduced as a seed treatment and as a foliar product for rice

Mr. Joker

silafluofen

1992

Soil-applied broad spectrum insecticide for rice

Aztec

tebupirimfos

1994

Organophosphorus insecticide for corn rootworm control

Calypso

thiacloprid

2000

Chloronicotinyl insecticide for seed treatment and foliar use

Envidor

spirodiclofen

2003

Acaricide for use in fruit and vine

Oberon

spiromesifen

2003

Insecticide/acaricide used on cotton, vegetables, etc.

Poncho

clothianidin

2003

Neonicotinoid insecticide licensed from Sumitomo Takeda for seed treatment uses

 

 

Imidacloprid is Bayer’s leading product and also the world’s largest-selling insecticide. Originally discovered and launched by Bayer in 1991, the product is now sold in over 120 countries and for use on more than 140 crops. Imidacloprid is the first and the most successful neonicotinoid to be commercially introduced. The insecticide is systemic and acts by inhibiting acetylcholine receptors in insects. One of the reasons for imidacloprid’s success lies in the fact that mammalian acetylchloline receptors are less sensitive to it than those of insects. The compound is therefore an excellent alternative to older insecticides such as the organophosphates and carbamates. Imidacloprid is suitable for use on a wide variety of crops, the most common of which are rice, cereals, maize, potatoes, fruit & vegetables, sugar beet, and cotton. The insecticide’s versatility extends to its application method, which can be foliar, seed or soil treatment. In addition to crop protection, imidacloprid also find uses in the animal health, lawn and garden, and household sectors.

Imidacloprid is sold as Admire in the Japanese market, of which a key sector is the rice nursery box treatment sector where it was introduced in the 1992/1993 season. The wide spectrum of action, unique chemistry, and longer duration of action rapidly resulted in imidacloprid becoming one of the leading insecticides in Japan. In recent years, combination products have contributed to the continued growth of the insecticide. These include the rice insecticide/fungicide combination, WinAdmire (imidacloprid + carpropamid), which was launched in Japan in 1998, and WinAdmireGreatam (imidacloprid + carpropamid + thifluzamide), launched in 2000. In Europe, the US and rest of the world, the product is sold under a variety of brands, and in a range of mixtures, including Gaucho for seed treatment and as Confidor for foliar use.

Global sales of imidacloprid were $708m in 2006, down by 2.9% from the previous year (3.9% in € terms). Although the insecticide had sustained steady sales growth over a number of years, this trend has started to come under pressure from generic producers. Bayer’s patent for imidacloprid expired in 2005 in the US and 2006 in the EU. Generic versions are already manufactured and sold in countries such as China and India. There will likely be a ready supply of imidacloprid sourced from these countries as the compound comes off-patent, exemplified by Nufarm’s first sales in the US during 2006. One of the strategies Bayer has adopted to combat this threat is to establish manufacturing facilities in lower cost countries, such as India. In 2005, Bayer also agreed global supply arrangements with other companies, starting with Cheminova and Makhteshim-Agan. This will help to slow down the inevitable sales decline due to generic competition.

Organophosphates

Although having contributed a significant portion of sales previously, Bayer’s organophosphate group is in decline as regulatory restrictions, newer chemistry and divestments take their toll. The company’s involvement in this area began with the ethyl and methyl parathions in 1947. Subsequently products such as Gusathion (azinphos-methyl), Dipterex (trichlorfon), Di-Syston (disulfoton) and Metasystox (demeton-S-methyl) were introduced, and, during the 1970s, Tamaron (methamidophos), Tokuthion (prothiofos), Oftanol (isofenphos) and Bolstar (sulprofos). The most recent organophosphate introduction was tebupirimfos to control corn rootworm, the active ingredient being registered by the US EPA in 1995 and launched in a mixture with cyfluthrin as Aztec in 1996. Since then product divestments have had a major influence. In 2000, Amvac acquired US marketing rights to Aztec 4.7% for application through the SmartBox delivery system; Bayer retained US marketing rights for Aztec 2.1% used via conventional applicators. The regulatory authorities required several products in this group to be divested in 2003 as conditions for the Aventis acquisition. These were the global rights to Zolone (phosalone), which was divested to Cheminova, and the European rights to Metasystox (oxydemeton-methyl) and Gusathion (azinphos-methyl), which were sold to Makhteshim-Agan. Bayer CropScience retained the rights to Kilval (vamidothion), which is mainly used in orchards, and Mocap (ethoprophos), an insecticide/miticide used largely on plantation crops. As part of the on-going range rationalisation process, in 2005 Bayer divested both omethoate and prothiofos to Arysta LifeScience, in 2006 both oxydemeton-methyl and trichlorfon to United Phosphorus, followed by the remaining rights to azinphos to Makhteshim early in 2007.

Carbamates

Bayer is active in the carbamate sector with products such as Yaltox (carbofuran) and Etrofolan (isoprocarb). Up until the acquisition of Aventis, carbofuran was Bayer’s leading carbamate, although the insecticide’s sales are slowly declining. The acquisition of Aventis CropScience brought with it Temik (aldicarb), Sevin (carbaryl) and Larvin (thiodicarb). Aldicarb is a systemic insecticide that is applied to soil to control a wide variety of insect pests on a variety of crops. Despite its age, aldicarb was one of Aventis’ top-selling insecticides and is now Bayer’s CropScience’s biggest carbamate, with annual sales of around $125m. Sales in Europe will start to decline from 2007, following the EU decision to withdraw the product. In the US, however, the company still defends sales and is due to launch aldicarb as a seed treatment for cotton in 2007. Carbaryl is a commodity product primarily used as a foliar insecticide offering broadspectrum insect control on a diverse range of crops. The French rights were divested to Certis Europe in 2003. Thiodicarb is an insecticide with both larvicidal and ovicidal activity, but also used in the EU and USA as a molluscicide, for snail and slug control. Its major markets are usage on cotton, sweetcorn, soybeans and vegetables. In 2002, Sipcam Phyteurop acquired the European rights to Aventis’ aldicarb-based molluscicide business. The latest launch has been as a seed treatment in mixture with imidacloprid (as Cropstar) during 2006 in Latin America. The other main carbamates in Bayer CropScience’s range are Garvox (bendiocarb), Draza (methiocarb), Methavin (methomyl) and Unen (propoxur).

Pyrethroids

Bayer launched its own patented pyrethroid, cyfluthrin, under the tradename Baythroid in 1980. Cyfluthrin has a spectrum of activity similar to most other commercial pyrethroids, and is half as potent as deltamethrin. In 1990, the company introduced Bulldock, a more active product based on β-cyfluthrin, the resolved form of cyfluthrin. β-cyfluthrin has since displaced cyfluthrin in some markets, and is finding new use in mixture with clothianidin as a seed treatment for sugar beet. The European rights to both cyfluthrin and βcyfluthrin were sold to Makhteshim-Agan in 2003 to fulfil anti-trust conditions.

The pyrethroid range acquired with Aventis is based on the lightstable pyrethroids developed by Roussel Uclaf. By far the most significant product is deltamethrin, originally licensed by Roussel Uclaf from the UK’s National Research and Development Corporation (NRDC). Launched as Decis in 1977, sales growth for the product was impressive, this despite the fact that the licensing position until recently excluded it from North America, Japan and parts of Europe. Its high activity and its broad application on a wide variety of crops resulted in deltamethrin becoming the leading product in the sector. AgrEvo launched Decis in the US in 1996, for use on cotton, replacing the older tralomethrin (Scout). In 2005, a licence was granted to Arysta LifeScience to co-market deltamethrin in the US, as Battalion. Bayer will continue to market Decis. Although deltamethrin is now subject to generic competition, especially in India and China, sales still amounted to some $230m in 2006. Considerable sales are accounted for by the environmental health sector.

Acrinathrin, derived from a nonpyrethric ester rather than the pyrethric source of the existing products is sold under the brand name Rufast, for use on fruit and vines and is the first truly miticidal pyrethroid. The European rights to this compound were sold to Cheminova in 2003 as part of the anti-trust package, followed by full global rights early in 2007.

Endosulfan

Bayer CropScience is now one of the main manufacturers of the organochlorine Thiodan (endosulfan). Despite its age, having been introduced in the mid1950s, Thiodan still achieves significant sales although this is in decline due to regulatory pressure. Competitive product manufacture from Israeli and Indian companies is prevalent but overall, sales continue to benefit from the product’s wide spectrum of action. Endosulfan is now subject to increased scrutiny, with restriction on its use introduced in the US, Australia and elsewhere, particularly for cotton. In the EU the product has been excluded from Annex 1 and all use will cease after the end of 2007.

Silafluofen

Originally developed by Hoechst, silafluofen is a silicon-containing soil-applied broad-spectrum insecticide, although it is not effective against nematodes or mites. Silafluofen is primarily active via ingestion, but also has some contact action. The product was first launched in Japan in 1992 for control of social insects such as termites, ants and wasps. In crop protection, silafluofen is marketed both as MR. Joker and as Silatop for use in rice and tea, and is normally formulated as an oil-in-water emulsion, although other formulations, including floating granules for dissolving in rice paddies, are available. In rice, the product offers residual control of a broad range of sucking and biting pests, including various plant hopper species, green rice leafhopper and rice water weevil. In tea, pest species controlled include the tea tortrix, the small tea tortrix, the tea green leafhopper, the tea leaf roller and yellow tea thrips.

Thiacloprid

Thiacloprid is Bayer’s second neonicotinoid insecticide to be commercialised. The compound is active against sucking and biting insects on a range of crops such as pome fruit, cotton, vegetables and rice. Besides aphids and whiteflies, it is also active against various species of beetles. Like imidacloprid, thiacloprid is an acute insect stomach poison, and acts as an agonist on the nicotinic acetylcholine receptor. Thiacloprid is currently in the process of being commercialised globally, primarily under the Calypso trade name. First launches were achieved in Brazil and Switzerland in 2000. In the EU, a launch was made in the UK (the rapporteur state) in 2001, followed by Germany in 2002. EU Annex 1 listing was gained during 2004. Apart from the launch as Calypso, an oil-based formulation has been launched on potato in the UK during 2006, as Biscaya. Approval was gained in Germany late in 2006, with a launch expected on potato, oilseed rape and wheat during 2007. In Japan, thiacloprid has been introduced as Bariard, for use on fruit, vegetables and tea in 2001. The product is distributed there by Bayer CropScience Japan, Kumiai and Hokkai Sankyo. Bayer is also developing a co-formulation of thiacloprid with its new fungicide active ingredient carpropamid, for seedling box application in rice. In the US, a registration was obtained late in 2003 and the product is available for use on pome fruit. A further launch is expected for cotton seed treatment, as Aeris (+ imidacloprid) during 2007. The product is recently available also in Canada for pome fruit. Global sales of thiacloprid amounted to $85m in 2006.

Clothianidin

Bayer has developed Sumitomo Takeda’s clothianidin as a seed treatment called Poncho. Clothianidin is a neonicotinoid insecticide, suitable for use in a wide range of crops, and with a broad spectrum of activity offers advantages over soil-applied insecticides in certain crops, such as maize. In 2003, Poncho was registered in the US and Canada for use in maize and canola and was subsequently launched by Gustafson in seed treatment products in 2004. In the EU, first approval was gained in the UK for treating beets, although the standalone formulation was not introduced then. A commercial launch was made in the middle of 2004 for the clothianidin/beta-cyfluthrin combination Poncho Beta, followed by the straight product (as Deter) for use as a seed treatment in cereals. EU Annex 1 listing was gained in 2006. Other countries where Poncho has been launched include Austria, Germany, Italy and New Zealand. Poncho has been very well received, with first season sales in 2003 having amounted to $21m. By 2006, this had grown significantly to $159m.

Spirodiclofen

Spirodiclofen is a novel broad-spectrum acaricide developed by Bayer from a new chemical class, the tetronic acids (aka the ketoenoles). The insecticide shows good control of mite pests and has no cross-resistance to currently available acaricides. Activity is particularly high against eggs, larvae, nymphs and quiescent stages but slightly less so against adults. The speed of spirodiclofen’s activity is slower than other highly active acaricides but faster than chitin synthesis inhibitors. Target crops include citrus, pome fruits, stone fruits, grapes and nuts. Spirodiclofen also has good residual activity and is safe to beneficial insects, although it may be slightly harmful to beneficial mites depending on the use pattern. The compound is also reported to have good toxicological and environmental profiles. In 2002, first global registrations were gained in South Korea and South Africa, followed by Brazil, Colombia and Switzerland. These were followed by market approvals in Japan and the Netherlands in 2003 under the brand Daniemon and Envidor. Other European registrations include Belgium, Germany and Hungary. North American registration was gained in 2005.

Spiromesifen

Spiromesifen is the second compound from the tetronic acid group of insecticides. Bayer developed the product for control of whitefly, mites and other pests in vegetables, cotton, maize and ornamentals. The other use to be commercialised is for turf, where the product will be branded as Forbid. The product has a novel mode of action, making it suitable for resistance management programmes, and the safety to beneficial insects renders it suitable for IPM programmes also. At the end of 2003, initial registrations were gained in the UK and Indonesia as Oberon. A launch in the US was made in 2005, also as Oberon, for use in vegetables, maize and cotton. Two further launches were made during 2006, in Mexico and Brazil, for use in cotton and vegetables. Other introductions are expected, for example a Japanese launch is expected in 2007, as Danigetter, for use in fruit and vegetables.

Ethiprole

Originally developed by Aventis, ethiprole is a phenylpyrazole insecticide (as is fipronil) suitable for foliar use in rice, fruit and vegetables. The product has been under widescale development and the first launch came in Japan in 2005 as Kirappu for use in rice, fruit, tea and vegetables, for the control of sucking pests. Approval was granted in Brazil recently on sugar cane and rice, and a launch is expected as Curbix during 2007. The product will be registered elsewhere by Bayer, except in Europe. Due to anti-trust reasons, Bayer was required to divest the European rights to ethiprole, which were subsequently acquired by BASF.

 

Bayer CropScience’s sales of fungicides in 2006 amounted to $1,506m, a decrease of 2.9% from 2005. Dry conditions, and the weak farm economy in Brazil, led to reduced sales of key products such as Folicur (tebuconazole) and Flint (trifloxystrobin). Growth of Proline (prothioconazole) was significant, however failed to off-set the decline. Bayer’s fungicide sales was ranked the second largest in the world.

Bayer’s key fungicides currently are Folicur (tebuconazole) and Flint (trifloxystrobin), both of which have seen strong sales previously, particularly in Brazil for control the Asian soybean rust. Flint, the strobilurin fungicide acquired from Syngenta, had continued its rapid growth as new labels were obtained. Any further sales growth will be dependent mainly on recovery in Brazil, though strong demand will likely remain in other sectors and countries. The company is bringing new products forward in the fungicide sector, with prothioconazole already showing significant growth and fluoxastrobin gaining registrations.

Principal Fungicides

Brand

Active ingredient

Launched

Main Uses

Antracol

propineb

1967

A dithiocarbamate protective fungicide mainly for fruit and vegetables

Hinosan

edifenphos

1968

An organophosphate rice blast fungicide

Euparen M

tolylfluanid

1972

Broad-spectrum protective fruit and vegetable fungicide

Rovral

iprodione

1976

Broad-spectrum fungicide for a wide variety of crops

Aliette

fosetyl

1978

Broad-spectrum organophosphate fungicide

Baycor/Sibutol

bitertanol

1979

Triazole fungicide for top fruit and vegetables and a cereal seed treatment

Alto

cyproconazole

1988

A triazole fungicide mainly for use on cereals

Monceren

pencycuron

1988

Contact protective fungicide useful for rice sheath blight control

Folicur

tebuconazole

1988

One of the most important triazole fungicides in the cereals sector

Real

triticonazole

1992

Triazole fungicide used mainly in cereals

Win

carpropamid

1997

Systemic cyclopropane carboxamide fungicide for rice blast control

Impulse

spiroxamine

1997

Spiroketalamine fungicide for cereals

Elevate/Teldor

fenhexamid

1999

Hydroxyanilide fungicide for fruit and vegetables

Melody

iprovalicarb

1999

Amino acid amide carbamate fungicide for fruit and vegetables

Oribright

metominostrobin

1999

A strobilurin originally developed by Shionogi, primarily for use in rice

Flint

trifloxystrobin

2000

Strobilurin fungicide with protective-curative application in cereals, vines, fruit, rice, nuts and turf

Fenomen

fenamidone

2000

A novel imidazolinone fungicide for control of downy mildew in fruit and vegetables

Proline

prothioconazole

2004

A new triazole fungicide for disease control in cereals, oilseed rape and rice

Fandango

fluoxastrobin

2005

Curative foliar systemic strobilurin fungicide for use on cereals, potatoes, vegetables, peanuts and other crops

 

 

Bayer was the pioneer of this chemistry group, introducing the first triazole, Bayleton (triadimefon) in 1976. Triadimefon was a highly effective systemic fungicide at the time, active against powdery mildew and rust diseases in cereal crops. The second triazole, triadimenol, was launched in 1980. Once leading cereal fungicides, these products suffered from widespread resistance problems in the 1990s and consequently sales are now relatively insignificant. Bayer’s sales of triazoles amounted to an estimated $690m in 2006, which represented around 46% of the total triazole fungicide market. Of these sales, around 45% is accounted for by a single active ingredient, tebuconazole.

Tebuconazole, was first launched in France for foliar use as Folicur during the latter half of 1988. The product has systemic broad-spectrum action on diseases of cereals, vines, soybeans, fruits and vegetables. In addition it has shown beneficial, hormonal effects in crops like oilseed rape (canola) which has helped its sales to expand. Since its introduction, tebuconazole has rapidly gained market share, although in 2006 sales amounted to $346m, a fall of 17.8% from the previous year. The product is the leading triazole as well as being the fourth-largest fungicide in the world (after mancozeb and main strobilurins). In the US, seed treatment sales remain strong following Bayer’s take-over of Gustafson, which markets the product as a cereal seed treatment (Raxil), the use of which has also spread to pulses, beans and other grains. The product has registrations also for foliar use across a range of field crops, including soybeans and peanuts, for which mixtures continue to be introduced. The most recent is Provost (+prothioconazole), for launch in 2007 on peanut. A number of premixes are also available elsewhere, with spiroxamine as Beam in the UK and as Pronto Plus in Germany for control of foliar diseases in cereals, and with imidacloprid in Raxil Secur combination seed treatment for use on winter barley in the UK. The latest cereal seed treatment launch is in Germany, of Efa (+ fluoxastrobin + prothioconazole + triazoxide). The efficacy of tebuconazole has resulted in it being registered currently for use on over 80 crops in 70 countries. The product faces competition from other manufacturers’ newer actives like BASF’s epoxiconazole (Opus) and metconazole (Caramba, licensed from Kureha); and difenoconazole (Score) from Syngenta. Bayer also had to divest tebuconazole in Germany (to Makhteshim-Agan and Stähler Agrochemie) in 2003 to satisfy anti-trust concerns.

Tebuconazole sales have fallen recently in Brazil due to decreased demand in soybeans, which has not been compensated by increased use for Asian soybean rust in the US. Growth would be expected if demand returns, however there is now increasing licenced and generic material reaching the American markets. Thus even with a return to market growth, Bayer sales are likely to be impacted by both volume and price. Licence agreements for tebuconazole in the US have been established with DuPont, BASF and Makhteshim-Agan, for sale in the soybean rust sector. Further label expansions with potential combinations, especially with strobilurins (such as Nativo, a combination with trifloxystrobin), will help to maintain future tebuconazole sales. The product is expected to remain one of Bayer’s leading fungicides for the foreseeable future, however a period of further rapid growth is unlikely.

The newest addition to Bayer’s triazole portfolio is prothioconazole, developed for use in cereals, oilseed rape, rice and nuts both as single a.i. and in combination products. The compound is reported to have very good curative activity, whilst also being a protectant. It is particularly active against Septoria spp, eyespot, mildew, Fusarium spp., and Rhynchosporium secalis. The activity against Septoria in particular is leading to demand in cereals in Europe, where the product is finding favour as a replacement for the strobilurins in wheat. In 2004, the first global registration was achieved in Germany under the brand Proline, followed by the UK as Proline and as Scenic (+ fluoxastrobin + tebuconazole). The other mixture launched was Fandango (+fluoxastrobin). Full launches in these markets were made in 2005. Approvals have been gained in France, Belgium, Austria, Netherlands, Australia, Canada and the US since then, for both foliar and seed treatment use in cereals and several other arable crops. Seed treatment combinations for cereals launched to date in Europe include Redigo, Redigo Twin (+fluoxastrobin) and Raxil Pro (+ tebuconazole + triazoxide). The dual use seed treatment product Deter (+ clothianidin) has been approved in the UK. Other combination a.i.s being considered include trifloxystrobin and spiroxamine. Prothioconazole achieved sales of $181m in 2006, in only the second year following launch. At this sales level, the product is already Bayer’s second largest triazole compound.

Cyproconazole (Alto) is Bayer’s third most important triazole although sales trail behind those of tebuconazole and prothioconazole by a large margin. Bayer has the rights to this fungicide in Europe, acquired from Syngenta in October 2000. Originally launched in Europe by Sandoz in 1988, cyproconazole exhibits a broad spectrum of action against diseases such as mildew and rusts in cereals, vines, fruit and coffee. Introduction in the US in 1994 and the launch of a prochloraz combination helped sales to grow strongly throughout most of the 1990s. Sales, however, have been on a declining trend since 1997 as the fungicide lost ground to the strobilurins. The recent introduction of Sphere (+ trifloxystrobin) may help to stabilise sales, though conditions have not been conducive for this in soybeans in the meantime.

Baycor (bitertanol) is mostly sold for the fruit and vegetables sector but is also a component of a number of seed treatment premixes. First introduced in 1971, sales of bitertanol are relatively stable at around $30m per annum. Other less important triazoles include fluquinconazole (Castellan), triadimenol (Bayfidan) and triticonazole (Real), which all achieve annual sales of $20-25m, and bromuconazole (Granit), which has sales of about $10m p.a. With the divestment of the European rights to fluquinconazole and triticonazole to BASF in 2003, these two triazoles now contribute much less to sales.

Trifloxystrobin

Trifloxystrobin is a second-generation strobilurin that was acquired from Syngenta in 2000. Strategically, it was a very good purchase for Bayer (the entire product line was acquired for €880m); it has performed very well both in terms of efficacy and sales. Like the other strobilurins it shows both protective and curative properties as well as a yield-enhancing effect in cereals, contributing to its success. The product has been registered on major crops such as cereals, rice, soybeans, vines, top fruit, nuts, bananas and in specialist turf/lawn applications. In the USA, it has been classified as a low-risk product due to its toxicology profile, which shows low mammalian toxicity, little toxicity to non-target organisms and rapid dissipation in soil and water. It has also been developed as a combination product with the triazoles like cyproconazole, propiconazole, cymoxanil and, more recently, with prothioconazole. This has not only give it additional entry into the high-end of the cereal fungicides market, but also into the soybean, fruit, vegetable and oilseeds sectors. Sales of trifloxystrobin have increased rapidly since its introduction, particularly in soybeans, however use in this crop has suffered decline recently. In 2006, sales fell 5.4% to $227m, which followed a 19.6% decline in 2005. Trifloxystrobin is Bayer’s second most important fungicide, though now its sixth most important product. New product combinations for foliar use, such as Nativo (+ tebuconazole), Sphere (+ cyproconazole), Mobius (+ prothioconazole) and Jaunt (+ prothioconazole + fluoxastrobin) have delivered some growth. More recently the company has introduced a new fungicidal seed treatment, Trilex (+ metalaxyl) in the US, for use in soybeans, and a similar mixture for use in cotton.

Fosetyl

Aliette (fosetyl) is a broad-spectrum organophosphate fungicide and is by far the best-selling of its class. In 2006, sales amounted to $120m. Its major use is on vines, with applications also in a range of fruit and vegetables. Whilst the product is targeted at a similar crop range to Rovral, it offers a different spectrum of disease control. Fosetyl is marketed in a variety of mixture formulations, predominantly for use on vines, which has provided value growth for the product. Some new mixtures and minor label expansions continue to be registered. Aventis introduced Elicio/Verita (fosetyl plus the new fungicide fenamidone) in the French vine sector in 2001, with Bayer launching this premix in Germany in 2003. A propamocarb/fosetyl combination has been developed for use on vegetables, and was launched as Previcur in Italy during 2005. A launch is expected in Spain also. A further mixture, with fluopicolide, is under development for vines, and will be launched as Profiler. EU Annex 1 listing was granted in 2006.

Iprodione

Rovral (iprodione) was one of Aventis’ leading fungicides, with annual sales of about $90m. It is a product registered worldwide principally for use on fruit and vegetables and vines. The development of mixture formulations expanded the use of iprodione into field crop sectors such as oilseed rape (e.g. Compass, iprodione + thiophanate-methyl), cereals (e.g. triticonazole + iprodione) and other crops. The product has preventative activity due to inhibition of spore germination and the blocking of mycelium development. Recent sales have been impacted by the introductions of competing combinations of triazoles and strobilurins. The European rights to iprodione were divested to BASF in 2003.

Propineb

Although Antracol (propineb) is one of Bayer’s oldest products, having first been introduced back in 1967, the compound continues to achieve good sales, amounting annually to approximately $65m. The dithiocarbamate compound is a contact fungicide with protective activity and is used mainly on fruit and vegetables. Registrations have also been obtained for some applications in rice, hops, tropical fruit and coffee. The majority of sales are achieved in Europe, with significant sales also in Asia. Melody Duo (+ iprovalicarb) was launched in New Zealand late in 2005. Propineb is not sold in North America. In Europe, the fungicide was listed on Annex I in 2003 despite some risk concerns.

Carpropamid

Carpropamid is a relatively recent addition from Bayer. Developed together with Japanese subsidiary Nihon Bayer Agrochem KK for the control of rice blast, the compound was first launched in South Korea as the seed treatment Zubard, and in Colombia as Arcado in 1997. In Japan, the product was launched under the trade name Win in early 1998. WinAdmire (carpropamid + imidacloprid) has performed particularly well in this market, as has a further line extension, WinAdmireGreatam (carpropamid + imidacloprid + thifluzamide). The combination Windantotsu (+ clothianidin), launched in 2002, contributed to further sales growth. However, despite the relatively young age of carpropamid, there are already resistant isolates of rice blast, which resulted in some sales decline of the active ingredient. Sales in 2006 are estimated at $44m.

Edifenphos

Edifenphos (Hinosan) is another member of Bayer’s older fungicide range. Introduced in 1968 the product is used mainly to control rice blast in the Japanese market, although there are registrations elsewhere in Asia. Its inclusion in various mixtures, including with fungicides and insecticides, has helped sales remain at around $30m per annum.

Spiroxamine

Spiroxamine (Accrue) provides control of powdery mildew in cereals. In addition, it also provides moderate control of both yellow and brown rust in wheat and of Rhynchosporium in barley. Launched variously as Impulse (Belgium, Germany and Ireland), Torch (UK) and Prosper (France) in 1997, spiroxamine is also available in premixes with tebuconazole. Spiroxamine continued to slowly gain share in the European cereal fungicide sector, although sales remain at around $25m. A premix of spiroxamine with tebuconazole was registered by Bayer for the control of powdery mildew and rust on cereals in the UK (under the brand name Beam) and in Germany (under the brand name Pronto Plus). Another premix, Prosper Plus (+ quinoxyfen) was registered in France in 2002. A further addition to the cereal range in 2005 in the UK was Input (+ prothioconazole), and a launch is planned also in France. In 2004, spiroxamine was introduced in the US as Accrue for use on hops, whilst 2005 saw an introduction in Latin America for the control of black sigatoka on bananas. Further sales growth will depend on success of these recent launches, and on the cereal mixtures in the UK, Germany and France.

Fenhexamid

Fenhexamid, jointly developed with Tomen (now part of Arysta LifeScience), is a protectant foliar fungicide from the new chemical class of the hydroxyanilides, which controls grey mould (Botrytis cinerea) and related pathogens (such as Monilinia spp.) and stem rot (Sclerotinia sclerotiorum) in vine, fruit (including citrus), vegetables and ornamentals. The product is only locally systemic; as a result, it is best utilised in a preventive spray schedule. Combination products with chlorothalonil, tebuconazole and tolylfluanid are under development. A first global launch was achieved in Florida, US, by Tomen Agro (now Arysta LifeScience North America) under the trade name Elevate. A Canadian launch also took place in 1999. Arysta handles sales in the NAFTA region, whilst Bayer sells the product in Europe and the rest of the world for use on grapevines, fruit and vegetables under the tradename Teldor. A combination product (Tiebreak) with tebuconazole has been launched on vines in Chile. In Europe, Bayer introduced the fungicide to the UK market in 1999 for the control of Botrytis on soft fruits such as strawberries, raspberries and other cane fruit. Market launches elsewhere in Europe followed in 2000, as well as other world regions such as Africa and the Far East. Sales are estimated at $35m annually.

Iprovalicarb

Iprovalicarb is a highly active member of a new chemical class, the amino acid amide carbamates. It has been developed for the control of downy mildew (Plasmopara viticola) on grapes, late blight (Phytophthora infestans) on potatoes and tomatoes, and other oomycete pathogens on vegetables, such as downy mildew of cucumber (Pseudoperonospora cubensis), as well as bluemould of tobacco (Peronospora tabacina). Bayer is also developing the product for control of soil borne Phytophthora diseases in a number of crops, including citrus and tobacco. It exhibits protective, curative and eradicant properties against several phytopathogens. To ensure good anti-resistance management and a broad spectrum of activity, Bayer recommends that iprovalicarb should be used in combination with other fungicides (e.g. with contact fungicides such as folpet, mancozeb, propineb or tolylfluanid, mixtures with which are being developed) for protective measures only. Combination products (for which registration is pending or has recently been gained), include Tossa (+ mancozeb) for use on potatoes, in Germany; Melody Med (+ mancozeb), in Ireland and Poland; Melody Multi (+ tolylfluanid), for use on grapes also in Germany; Melody F (+ folpet) in Hungary; and Melody Duo/Positron Duo (+ propineb) in the Far East and Latin America. Iprovalicarb was first approved in Indonesia in 1998, and was launched in Indonesia and Cuba in 1999. In Latin America, iprovalicarb is marketed under the brand name Positron. The EU registration dossier for iprovalicarb was declared complete in 1998 (Ireland is the rapporteur Member State), with commercial introduction into the main European markets now underway. The product is registered now in over 50 countries. Sales are estimated at $30m annually.

Fenamidone

Fenamidone (Fenomen) is an imidazolinone fungicide inherited from the Aventis portfolio. The s-enantiomer of the compound has protective and curative activities against oomycete fungi in cereals, vines, fruits and vegetables. The fungicide is mainly sold as part of combination products. A limited introduction of the fungicide was made in Kenya and South Korea in 2000. In Europe, a first market launch occurred in France in 2001 as Sereno/Sagaie (+ mancozeb) for potatoes and Arte/Duofast (+ cymoxanil) for vines. Registration in the UK followed in 2003 for use on potatoes, followed by a 2004 registration for Consento (fenamidone + propamocarb). Registrations have been gained also in Germany, Italy, Brazil and Columbia. In the US, fenamidone was approved for use on lettuces (as Reason) at the start of 2003. Sales are estimated at $30m annually.

Fluoxastrobin

First registered in the UK and Ireland during 2004, with a launch made in 2005 as Fandango (+ prothioconazole), this product is the most recent of Bayer’s strobilurin fungicides. Primarily for cereals as a foliar or seed treatment application, fluoxastrobin has been launched subsequently in the Netherlands, France and Germany as part of a mixture product. Use on other crops is likely to follow. In 2005, Bayer granted Arysta exclusive licences to market fluoxastrobin in the US, Canada and Japan for crop uses, and globally for non-crop uses, such as turf and ornamentals. Bayer’s strategy is for fluoxastrobin to be used as a mixture partner where improved disease management is required, to which end it will supply Arysta with the triazole fungicide, tebuconazole, for combination products in the US.

Other Fungicides

Bayer CropScience’s other main fungicide products are mostly based on tolylfluanid, pencycuron and metominostrobin. Tolylfluanid is a methylated analogue of dichlofluanid (Euparen) marketed by Bayer as Euparen M. The product is a broad-spectrum multi-site-acting protective fungicide, formulated as a wettable powder or water dispersible granule, and used primarily for the control of scab and powdery mildew in orchards and for Botrytis control in strawberries, vines and tomatoes.

Pencycuron (Monceren) is a non-systemic protective fungicide, which since its introduction has established itself in the rice sheath blight control sector. The product also finds some sales in the vegetable (including potatoes), turf & ornamental, cotton and sugar beet sectors for the control of Rhizoctonia solani diseases. Pencycuron is sold in over 40 countries by Bayer, although it is not registered in the US or Canada.

The strobilurin metominostrobin entered Bayer’s portfolio via Aventis CropScience Shionogi in Japan. The fungicide was originally developed by Shionogi for the control of rice blast and rice blight by foliar and submerged application into paddies. Metominostrobin is active against downy and powdery mildew in cereals, fruit and vegetables. The Japanese registration package for metominostrobin was submitted in July 1996 and approval for rice use was obtained in 1998. The product was commercialised in Japan during 1999 under the brand name Oribright. Registration was also achieved in South Korea in 1999. Sumitomo is marketing the product also, focusing on Latin America and Europe.

Other Agrochemicals

Seed Treatment Chemicals

Bayer CropScience reported seed treatment sales of €467m ($586m) in 2006, a decline of 1.7% due to drought in Australia and to reform of the European sugar beet sector. At this level, the company was ranked first in this market sector, accounting for some 40% of global sales.

Bayer’s key products in the seed treatment sector are the insecticides imidacloprid and clothianidin, and the fungicide tebuconazole. A number of other products find use also, such as aldicarb, fluquinconazole, prothioconazole and other fungicides, and this enables the company to market a wide range of seed treatment offers across multiple crops. This has resulted in the company having built a very strong position in the seed treatment market over the last decade, particularly in the UK, France, Germany and the Benelux countries. This position was further expanded with the acquisition of a 50% share in Crompton Uniroyal’s Gustafson North American seed treatment business in 1998, which itself was expanded to full ownership in 2004. Subsequently, this has given the company a strong base from which to launch new products into crops such as maize, soybeans and cotton. New products have been launched also in Latin America, such as fluquiconazole for soybeans and imidacloprid + thiodicarb for maize, in response to the growing demand for protection of higher-value seed. The other traditional market of significance is Australia, although sales are affected by the current severe drought. Future growth is expected in the emerging markets of Asia. Clothianidin, and the two new fungicides prothioconazole and fluoxastrobin, are expected to be key drivers of Bayer’s seed treatment business growth in the near future. Indeed, new seed treatment products are being launched in replacement of the company’s traditional range in cereals in Europe.

Aventis CropScience was also a major player in the seed treatment sector. The dominance that would result from Bayer possessing both businesses was one of the main European Commission concerns at the time of the proposed acquisition of Aventis. One of the main anti-trust conditions imposed was for Bayer to divest fipronil and a range of fungicides (prochloraz, iprodione, triticonazole, fluquinconazole and pyrimethanil) used for seed treatment in Europe to a single buyer. This essentially represented Aventis’s entire seed treatment business. In October 2002, BASF emerged as the purchaser of this package, thus satisfying the European Commission’s desire to maintain an effective competitor in the seed treatment market.

Environmental Science

Bayer is also the leading company in the environmental science market, with sales of €714m ($896m) in 2006. Around 75% of sales are generated in North America and Europe. The company has grown this business with the help of a number of acquisitions/joint ventures during the past decade, including Swedish-based Planfer, Netherlands-based AA Huis & Tuin, UK-based PBI Home & Garden, and US-based Pursell Industries. Environmental science covers pest control in non-agricultural areas such as lawn and garden, household, golf courses, post-harvest and professional pest control. This sector is a highly attractive and profitable market, especially for companies that already manufacture the active ingredients for the crop protection market. Generally, the active ingredients used are readily available, the products command a high premium, pricing structures are similar to fast-moving consumer goods, and margins are higher.

Unsurprisingly, the company continues to launch new products, based on active ingredients from the crop protection sector. Tartan (trifloxystrobin + triadimefon) and Forbid (spiromesifen) were launched into turf in 2006, and Quickbayt (imidacloprid) was launched into the pest control segment. Further launches are expected for 2007.

 

Agrochemical Research and Development

Bayer commenced agrochemical research as far back as 1916. The research and development of crop protection products is a major objective for the company, and over the years, supported by substantial expenditure, it has met with considerable success. The techniques utilised to achieve this goal range from classical chemical synthesis to genomics and the ultra highthroughput screening of chemical libraries held by the company or purchased in, some of which are derived using combinatorial chemistry.

Bayer CropScience is estimated to have spent €534m ($670m) on agrochemical research and development in 2006, equivalent to 10.0% of sales. This level of expenditure has reduced over the past two years due to rationalisation of facilities and projects, however due to declining sales its proportion has fallen less. The key research centres are now based in Monheim and Frankfurt in Germany, Lyon in France, Yuki in Japan and Kansas City in the US.

With an expanded development portfolio seventeen new products have been introduced since 2000, sales of which reached €1,000m in 2006. This has underpinned the company’s immediate growth strategy, though did not offset decline in 2006 across the whole range. Twenty-nine older products have been divested or phased-out over the same period, as part of the strategic move away from areas of lower margin business. Thereafter, between 2007 and 2011, there are plans to launch a further two insecticides, three fungicides and four herbicides. However, two of the fungicides and two of the herbicides are likely to be launched only toward the end of the period.

Research and Development headquarters are based at the company’s 135 acre Agricultural Chemicals Centre at Monheim. The site is one of the largest of its kind in the world, and has numerous functions ranging from process development to basic new active ingredient discovery. The site also houses Bayer’s new ultra high-throughput screening facility, which has the ability to screen more than one million compounds per year. Ex-Aventis’ site in Frankfurt is mainly focused on herbicides, although research on fungicides and insecticides is also conducted. The site is the main base of the company’s herbicide safener technology developments. In France, the ex-Aventis La Dargoire Research Centre near Lyon concentrates on the development of fungicides. Initial fungicide candidates screened in Monheim and Frankfurt are brought here for further testing. In Japan, the Yuki site co-ordinates research activities in the Far East, mainly for rice, fruit and vegetables. Bayer also has research centres in Naruto and Akeno. In the US, the Agricultural Research Center based in Kansas City, Missouri, houses an array of greenhouses and laboratories as well as 60 test fields on 150 hectares of land. The US product research for maize, soybeans, cereals and cotton, is conducted here. The other main R&D sites are located in Potsdam (Germany), Sophia (France), Gent (Belgium) and Nunhems (The Netherlands).

Bayer is a leader in highthroughput screening technologies. At its site in Monheim, 30,000 to 150,000 compounds are screened every day using automated handling, dosing and signal-measuring systems. Using these machines, as little as 0.01 milligrams of the chemical can be used, although it is more common to use quantities of several milligrams.

The company’s insecticides business has been bolstered by the recent addition of a new chemistry class – the ketoenoles (or spirotetronic acids). The first two members of the chemistry, spirodiclofen and spiromesifen, are already in commercialisation. A third ketoenole active ingredient is in development and is due for commercialisation in 2008/2009. The phenylpyrazole insecticide ethiprole was launched in 2005. Following divestment of the European rights to BASF, Bayer plans to continue with this product elsewhere. A registration has been gained and the product was launched during 2005 in Japan, as Kirappu (ethiprole), for use in rice and orchards. Launch is planned in Brazil for 2007, as Curbix. In the fungicides sector, Bayer has two major active ingredients now under early commercialisation – the triazole prothioconazole and the strobilurin fluoxastrobin. These two active ingredients are designed as formulation partners for cereals and will mainly be marketed as such, particularly the latter. They are also suitable for seed treatment uses, which will further boost Bayer’s leadership in that market. Prothioconazole was first commercialised in 2004 whilst fluoxastrobin was launched in 2005. A further product, fluopicolide, was first launched in 2006, and is the first member of the new acylpicolide class. As an oomycete fungicide it is suited to disease control in such crops as vine, potato and vegetables. This product is likely to find use in mixture also, and will help boost sales of other active ingredients such as propamocarb. The herbicide business will benefit from 2007 following the launch of tembotrione, a new product for maize which will compete with Syngenta’s mesotrione.

 

Late-Stage Development Compounds

Compound

Code number

Brand

Expected Launch

Comment

Fluopicolide

AEC 638206

Infinito

2006

Fluopicolide (formerly called picobenzamid) is the first member of the new acylpicolides chemical class. The fungicide is being developed for the control of oomycete diseases in potato, vine and vegetables. First launches occurred in 2006, in combination with propamocarb as Infinito, in China, South Korea and the UK.

Tembotrione

AE 0172747

Laudis

2007

Triketone herbicide for use in maize, in combination with a safener. Reported to be effective for broadleaved weed control and some grasses. First approval gained in Austria.

Flubendiamide

NNI-0001

Belt/ Phoenix

2007

Phthalic acid diamide insecticide for broad-spectrum control of lepidopteran pests in a wide range of crops. Development in conjunction with Nihon Nohyaku.

Spirotetramat

BYI 08330

2008/2009

The third ketoenole insecticide/acaricide developed by Bayer, with claimed broad-spectrum control and multi-crop utility with systemic action. For use in fruit, vine and vegetables.

Pyrasulfotole

AE 0317309

2008/2009

A developmental pyrazole cereal herbicide. The product is reported to have a new mode of action and good broad-spectrum activity.

Isotianil

BYF1047

2010/2011

Under joint development with Sumitomo Chemical, BYF1047 is a isothiazole-carboxamide fungicide active against rice blast. A launch in Japan is expected before 2011. BYF1047 is active by inducing the plant’s natural mechanism.

Pyraclonil

AEB 172391

Ex-Aventis protoporphyrinogen oxidase (PPO) inhibitor diphenylether herbicide. Previously known as pyrazogyl. Probably discontinued.

Isoxachlortole

RPA 201735

Pre-emergence maize herbicides for broad spectrum weed control. Probably discontinued.

 

At least another six active ingredients are known to be in an earlier phase of development, for launch after 2011. The acquisition of rights to FMC’s insecticide pipeline in 2006 will further strengthen the company’s leading position in the sector.

 

 

oth Bayer and Aventis were active in forging research collaborations with external companies to bolster their own internal effort. Some of the most important agreements are listed in the table below.

External agrochemical R&D agreements

Year

Original Company

Partner

Agreement

2007

Bayer

Plant Health Care

Development of new seed treatments, based on myconate technology. This is designed to stimulate nitrogen fixation, and enhance plant growth.

2006

Bayer

Cresset BioMolecular Discovery

Virtual agrochemical screening agreement

2006

Bayer

Magellan BioScience

Research agreement to identify novel crop protection candidates from marine microbial sources, as part of overall natural product discovery plan.

2006

Bayer

Cellectis

Agreement through which Bayer gains access to meganuclease technology for use in plant research, and for development of products for agricultural use.

2005

Bayer

Medicago

Product development agreement for plant-made pharmaceuticals.

2001

Aventis

ComGenex

Entered second phase of compound design agreement; original deal initialised by Rhône-Poulenc in 1998.

2000

Bayer

Exelixis Pharmaceuticals

Established GenOptera joint venture to discover insecticides and nematicides; this is an expansion of the 1998 agreement. Research phase collaboration ended March 2005, Bayer will take full share of GenOptera.

2000

Aventis

BioFocus

Design and supply compounds for Aventis’ R&D programme

1999

Bayer

ArQule

Three year deal to discover agrochemicals using combinatorial chemistry

1999

AgrEvo

3-Dimensional Pharmaceuticals

3DP provides chemical library and technology to AgrEvo for agrochemical screening

1999

Rhône-Poulenc

ICAgen

Agreed to exchange chemical libraries for screening purposes

1999

Rhône-Poulenc

Cerep

Two year agrochemical screening agreement

1999

Bayer

Lion BioScience

Five year agreement to supply Bayer with targets for new actives

1998

Bayer

Exelixis Pharmaceuticals

Discovery of new insecticide receptors

1998

Bayer

Paradigm Genetics

Five year agreement to develop assays for high-throughput herbicide screening. Extended for further five years in 2001

 

The above agreements mainly focus on combinatorial chemistry, the development of assays for high-throughput screening and the search for products with natural origins. However, Bayer is also active in work to decode the target pest’s genome with the view to detect and identify genes that will help in the development of chemicals. To this end, the company’s first success came in 2002 through the GenOptera joint venture, which successfully decoded the genome of the tobacco budworm (Heliothis virescens). This insect is one of the top ten global Lepidopteran pests, targeted annually with a huge quantity of insecticides, conventional and Bt toxins, and money. The genome decoding would help Bayer in focusing its efforts to refine delivery of its products straight to the sites of susceptibility, within the insect. Moreover, it would certainly give Bayer a significant competitive advantage in having the technology, and help to maintain the company’s leadership in the insecticide sector. The research phase of this collaboration has come to an end (March 2005), and Bayer has the exclusive rights to assays, compounds and products developed under the collaboration.

Bayer is also collaborating with the German genomic company LION Bioscience to sequence the genome of Ustialgo maydis, the maize smut. The project is aiming to increase the understanding of host-pathogen interaction between maize and the fungus, leading to the development of pesticide targets.

 

Overview

Bayer CropScience’s entire agricultural biotechnology portfolio is inherited from Aventis CropScience. Bayer itself had no involvement in this sector prior to the acquisition of Aventis CropScience. Although initially cautious, the company now sees substantial longterm growth opportunities in agricultural biotechnology and is intent on building its presence in this area.

Aventis CropScience’s agricultural biotechnology interest was derived from its predecessors, AgrEvo and Rhône-Poulenc, both of which had been very active in this sector. AgrEvo had invested in building its biotechnology assets since the mid-1990s, when it undertook the strategy to become a major player in this area. One of the first major acquisitions was of the Belgium biotechnology company Plant Genetic Systems (PGS) in 1996. The purchase of PGS gave AgrEvo access to patents on plant characteristics and process patents relating to the genetic modification of plants. Prior to the purchase, PGS was already linked to AgrEvo through collaboration in the development of the glufosinate-tolerance trait. In 1999, AgrEvo acquired the German company, PlantTec, a leader in the field of carbohydrate metabolism. In addition to technologies, AgrEvo also sought to expand its seed assets, having decided that building a seeds base was necessary to give market access for its biotechnology traits. This led to series of acquisitions, including Granja 4 Irmoaos in 1998, a Brazilian rice breeding company in 1998; the Brazilian companies Sementes Ribeiral, Sementes Fartura and Mitla Pesquisa Agricola in 1999, all of which are involved in hybrid maize; and Proagro, a leading Indian seed company. In Australia, AgrEvo also initiated a seeds business expansion drive in 1998, with the establishment of AgrEvo Cotton Seed International, a joint venture with Cotton Seed International of Australia. This was built upon with the formation in 1999 of the wholly-owned subsidiary, AgrEvo Seeds Australia, which incorporated the Genex sorghum business acquired in the same year. AgrEvo had also intended to acquire Cargill’s North American seed business in 1999, although this plan was dropped due to legal complications regarding germplasm misappropriation involving Cargill. The Cargill business would have given AgrEvo direct access to the North American maize seed market.

Rhône-Poulenc was less acquisitive, preferring to build its biotechnology platform through collaborations. One of the early collaborations, with Calgene, resulted in the commercialisation of BXN (bromoxynil-tolerant) cotton in 1995, the first transgenic herbicidetolerant crop to reach the market. In 1998, Rhône-Poulenc signed a major agreement with Mycogen to co-operate on agricultural biotechnology research. Initially the collaboration was to focus on developing cotton and sugar cane with insect resistance deriving from Mycogen’s Bt genes and herbicide tolerance to products such as bromoxynil and isoxaflutole from Rhône-Poulenc’s gene library. The alliance provided for future expansion into other crops, such as maize, canola, soybeans and sunflowers, and to additional agronomic and quality traits. In 1998, a joint venture called Rhobio was established with Biogemma to develop plants that are resistant to diseases and genetic engineering technologies to facilitate this. Throughout 1998 and 1999, Rhône-Poulenc enhanced its position in plant biotechnology with a number of joint ventures and alliances, such as the Genoplante project and the Agrinomics joint venture.

Following the formation of Aventis, the company acquired a 25% stake in Novance in 2000, a French vegetable oil company to give it a platform for developing genetically modified oil-producing plants for industrial purposes. In 2001, a joint venture called Solavista was created with the Dutch co-operative AVEBE to develop commercial uses of genetically modified potato starch. Bayer CropScience continued to extend the number of outside collaborations. In December 2002, the Agrinomics joint venture agreed with Renessen, a joint venture between Monsanto and Cargill, to enhance oil content in oilseed crops. The next agreement made was in April 2003, to indefinitely extend a 1998 agreement between AgrEvo and CSIRO. This alliance focuses on development of crops for the Australian market, particularly those with enhanced insect resistance. A further agreement in 2006 gives Bayer access to Senesco’s technology for yield enhancement in oilseed rape, which will help the company develop its InVigor brand globally. The most recent development is in the vegetable sector, with the acquisition of Unilever’s tomato seed business by Nunhems early in 2007. The two companies have signed also an agreement to co-develop new tomato varieties with improved nutrition, taste and health characteristics.

Bayer’s agricultural biotechnology interests are now under the aegis of Bayer BioScience, a division that looks after the company’s business in vegetables, agricultural crops and new business ventures. Specifically, Bayer BioScience is focussing on vegetables seeds, cotton, canola, rice, nutrition, health and biomaterials. In North America the company claims market leadership in sales of canola seeds and to be second in cotton seeds. Globally the seeds and traits sector accounts currently for a 6% share of Bayer CropScience’s business, however, the strategy is for this to increase to 15% over the next eight years at the expense of the traditional crop protection share.

 

Bayer CropScience’s agricultural biotechnology revenues are accounted for in the BioScience division. The division also includes sales of conventional seeds. In 2006, BioScience achieved sales of $429m (€342m), a 4.3% increase over 2005. The main contributors to growth were InVigor (canola seed) in North America, FiberMax (cotton seed) in the US and vegetable seeds.

The vast majority of these revenues were derived from seed sales, both conventional and transgenic. Nunhems vegetables seeds sales accounted for the largest proportion of sales, followed by InVigor canola and FiberMax cotton, then Arize rice. Vegetable and rice seeds are conventional to date, while in cotton and canola sales include GM insect-resistant and herbicide-tolerant lines. The insect-resistant traits are licensed and the company does not charge farmers a technology fee for the use of its herbicide tolerance trait. There is currently no proprietary insect resistance trait in development. Any technology revenues obtained would be derived from access to the company’s genetic platform by outside seed breeders, e.g. the use of the glufosinate-tolerant gene as a marker. The company’s current commercial strategy for incorporating biotechnology traits into crops is to increase sales of seeds and the herbicide glufosinate. In 2006, the company reached an agreement with Dupont and Pioneer through which Pioneer will include LibertyLink and Liberty itself in its US maize seed programme. A more significant agreement was the licencing of the LibertyLink trait to Monsanto in 2007 for the development of dual herbicide-tolerant maize and soybean. These crops would tolerant both glyphosate and glufosinate, and provide a more durable defence against the development of herbicide resistant weeds. The upside for Bayer will be royalty fees plus increased sales of glufosinate.

Agricultural Biotechnology Products Profile

Bayer CropScience’s main agricultural biotechnology trait is glufosinate tolerance, which is primarily marketed under the Liberty Link brand. Bromoxynil tolerance, which was previously marketed as BXN in cotton and Navigator in canola, has been discontinued.

Bayer CropScience does not currently have any proprietary insect resistance trait in commercialisation. Former Aventis CropScience did develop the StarLink trait, which employs the Bt Cry9C toxin. In the US, StarLink maize was approved for commercial planting in 1998, but only for non-human uses. Approval for human consumption was not granted due to potential allergy concerns. However, in 2000, traces of StarLink was found in the human food chain. This prompted a series of food recalls, which ultimately led to the cancellation of the StarLink registration and an ongoing lawsuit against Aventis, who retained all liabilities. Despite showing early promise, and the company not ruling out a reintroduction, StarLink has not been commercialised again. However, Bayer is still involved in insect resistance due to its ownership of several important patents on Bt technology, including the stacking of certain proteins to give increased control durability. A second-generation insect resistance technology is under development although commercialisation will not occur before 2010.

Principal Agricultural Biotechnology Products

Crop/Brand

Trait

Launched

Comment

Canola

     

Liberty Link InVigor

Glufosinate tolerance

1995

The best performing herbicide-tolerant product, Liberty Link/InVigor canola accounts for a significant portion of the planted area in Canada. The product has competed well against Roundup Ready varieties.

Navigator

Bromoxynil tolerance

2000

Developed by Rhône-Poulenc, the variety found limited commercialisation in Canada. Superseded by InVigor.

Maize

     

Liberty Link

Glufosinate tolerance

1997

Initially received well, Liberty Link maize sales have now been overtaken by Monsanto’s Roundup Ready variety. Essentially restricted to the US and Canadian markets.

Cotton

     

BXN

Bromoxynil tolerance

1995

The first GM herbicide-tolerant cotton in the market, sales have been dwarfed by Roundup Ready cotton. The trait was withdrawn at the end of the 2004 season.

Liberty Link FiberMax

Glufosinate tolerance

2004

Able to control certain weeds that glyphosate does not control well, such as morningglory. Improved yield and lint quality.

Canola

Former AgrEvo’s Liberty Link (glufosinate-tolerant) canola was the first genetically modified canola variety to reach commercialisation. It is marketed now under the InVigor brand. Following approval in 1995, an initial area of 16,000 hectares was planted in Canada in 1996. A market introduction in the US followed in 1999. Since its launch, Liberty Link canola grew quickly to a peak of 1.7m hectares in 1999. This area fell in each subsequent year to less than 1m hectare in 2002. Part of the reason for this decline was due to the general fall in the Canadian canola area. In 2003, the Liberty Link canola area rose back to about 1m hectares, representing about 21% of the Canadian canola planted area. Monsanto’s Roundup Ready canola has proved a strong competitor, and has now overtaken Liberty Link to become the dominant genetically modified canola type in Canada (about 50% of the area in 2003). During 2004, Liberty Link accounted for about 1.2m hectares of canola in Canada. Bayer had expected to introduced Liberty Link InVigor hybrids in Australia in 2003, however this was then delayed to allow further trials to take place during 2004. The product was actually approved for commercial planting in July 2003. However, due to bans by individual states, commercialisation has yet to occur. Although not approved for cultivation in the EU, glufosinate-tolerant oilseed rape is recently permitted for import and processing into animal feed and for industrial use. Cultivation permission still seems unlikely in the EU, however the import permission will give greater confidence for increased planting in North America.

Bromoxynil-tolerant canola was originally developed by Rhône-Poulenc and registered in Canada in 1999 (the registration was for both bromoxynil and ioxynil tolerance, developed under the Westar-OXY label). A commercial launch occurred in 2000 under the Navigator brand name, together with the partner herbicide Compas (bromoxynil + clethodim. Navigator only found limited commercial success, being planted on around 10,000 hectares each year. It competed directly with Liberty Link canola, which appears now to be the focus of the company’s marketing efforts.

Maize

Liberty Link (glufosinate-tolerant) maize was the first herbicide-tolerant maize variety to be commercialised, on an area of 0.3m hectares in the US in 1997 by AgrEvo. Although a launch in Canada followed in 1999, more than 95% of Liberty Link maize seed sales are still made in the US. The area planted with this variety in the US and Canada rose to a peak of 1.1m ha in 1999. Since then, plantings have been overtaken by the Roundup Ready variety and now stand at around 0.7m ha.

The glufosinate resistance gene has been used also as a marker for the development of other traits. These include Syngenta’s Bt-11 Agrisure maize and Dow/DuPont’s Herculex’s range . Whilst Bayer grants the use of Liberty (glufosinate) on these maize varieties, only a portion of the planted area is applied with the herbicide.

The company has now dropped maize from its priority seeds business, and retains an interest in North America mainly through a recent agreement with Dupont/Pioneer. Bayer’s LibertyLink seed and the product Liberty (glufosinate) will be promoted through Pioneer’s programmes, in return for access to certain of Bayer’s maize herbicides by Dupont. In Latin America, however, the company is seeking an approval for commercialisation glufosinate-tolerant maize, with a decision expected in April 2007.

The recent agreement with Monsanto will see the commercialisation Roundup Ready/Liberty Link maize. However, a market launch will not likely occur until the end of this decade at the earliest.

Cotton

Bayer’s oldest agricultural biotechnology product had been BXN (bromoxynil-tolerant) cotton, first introduced by Rhône-Poulenc in 1995 and then sold by Stoneville Pedigreed Seed. Stoneville expanded this range with the release of a stacked BXN variety with Monsanto’s Bollgard trait in 2002. Although BXN cotton was not as successful as Monsanto’s Roundup Ready variety, its planted area nevertheless reached a peak of over 1m acres in 1998. BXN cotton was favoured in some areas over Roundup Ready due to the superior performance of bromoxynil on certain weeds such as morning glory, a common problem in the Mid-South of the US. However, due to higher costs than the Roundup Ready system, and to declining sales, Stoneville Pedigree Seed ceased sales of BXN cotton, with 2004 being the last year the product was on the market.

Bayer’s other main cotton products are those based on FiberMax. FiberMax was originally licensed by AgrEvo from the Australian research organisation CSIRO, through the establishment of a joint venture, AgrEvo Cotton Seed International (now called Bayer CropScience Cotton Seed International). These cotton varieties have superior lint quality and have higher yields than normal varieties. FiberMax cotton has performed well for Bayer; in 2003, it accounted for 16% of the US cotton market, as well as being the leader in the Spanish and Greek markets. In March 2001, Monsanto and Aventis settled two lawsuits, as part of which, Monsanto granted Aventis licences to commercialise Roundup Ready and Bollgard technologies in FiberMax varieties. This resulted in the release of four new FiberMax varieties in 2002, carrying the Roundup Ready trait only, Bollgard only or Roundup Ready stacked with Bollgard traits.

Bayer has also developed five FiberMax cotton varieties with the Liberty Link trait, for which a full scale commercial launch occurred in 2004. The companion herbicide for Liberty Link cotton is Ignite (glufosinate), which was registered early in 2004. Development of the product was originally initiated by AgrEvo with the formation of the Australian joint venture AgrEvo Cotton Seed International. One advantage of Liberty Link cotton is that it can be sprayed with glufosinate up to the tenth leaf stage, compared to only the fourth leaf stage with glyphosate for the first generation Roundup Ready cotton product. Glufosinate is also able to control certain weed species on which glyphosate is weaker. Pricing of the Liberty Link system is similar to that of Roundup Ready with Roundup WeatherMax (glyphosate). Bayer is also developing a multiple trait glufosinatetolerant/Bt cotton product, which is under test currently in the US.

Early in 2005, Bayer acquired the regional US cotton seed company, Associated Farmers Delinting, giving the company a substantial increase in storage and processing facilities to meet strong demand for its FiberMax cotton seed varieties. Two further acquisitions were made later in 2006: California Planting Cotton Seed Distributors and Reliance Genetics, which will extend the germplasm options and future geographic reach of the company’s cotton seed business. Bayer’s FiberMax business is now the second largest cotton seed supplier in the US. Total FiberMax varieties now account annually for about 27% of US cotton planting, and if AFD varieties are included then Bayer’s cotton varieties cover 30% of the US planted area. In 2007, Bayer acquired the Stoneville Pedigreed cotton business from Monsanto, which was forced to divest it as one of the antitrust conditions for its acquisition of Delta and Pine Land. This acquisition boosted Bayer’s US cotton seed market share to some 41%, significantly closing the gap between itself and the leader (now Monsanto with around 51% share). Stoneville and Bayer’s other recent acquisitions should provide the company with additional quality germplasm resources to widen the penetration of FiberMax.

Bayer is seeking also to extend use of FiberMax cotton in Asia, with a first launch in India during 2005. This initiative has been taken where there is a move away from grower-sourced, traditional varieties to modern, higher-yielding hybrids.

Agricultural Biotechnology Research and Development

Whilst Bayer BioSciences’ headquarters are located in Lyon, agricultural biotechnology research is located in Research Triangle Park, North Carolina, US. However research is also conducted around the world, depending on the specific area of focus. Apart from Research Triangle Park, other important locations include Potsdam in Germany; Ghent in Belgium; Lyon and Evry in France; Haelen in the Netherlands; Gurgaon in India; and Toowoomba and Horsham in Australia. In 2006, Bayer BioScience spent an estimated €80m ($100m) on research and development, although this is predicted to increase to some €200m in future.

With the purchase of Aventis CropScience, Bayer immediately acquired a substantial portfolio of developmental agricultural biotechnology products. Prior to this, Bayer’s only involvement in this area had been in projects that supported its agrochemical business or as a partner in a venture capital fund. Bayer BioScience is now focussed on three strategic crops plus one crop group; – cotton, canola, rice and vegetables, and has plans for greater involvement in oilseeds, feed and industrial crops. Ancillary research is conducted also on other crops such as maize, soybean, sunflower, sugar cane and tobacco. In 2005 the company sold its maize and soybean seed business in Brazil, including all research facilities, to the Dutch company Nidera as part of the strategic crop alignment.

Principal Agricultural Biotechnology R&D Products

Crop/Brand

Trait

Expected Launch

Comment

Cotton

     

Glyphosate tolerance

2009

In-house developed glyphosate tolerance

Insect resistance

2010

2nd generation insect control

Canola

     

Specialty oil

2007

Improved oil profile

Glyphosate tolerance

2008

In-house developed glyphosate tolerance

Rice

     

Liberty Link

Glufosinate tolerance

2007+

A variety that has been developed to facilitate the control of red rice weed, which is a problem mainly in North and Latin America

Specialty starch

2010+

Modified starch content

Potato

     

Specialty starch

2008

Modified starch content

Soybean

     

Liberty Link

Glufosinate tolerance

Approved in the US in 1997, but a launch was delayed until overseas import clearances have been obtained.

Sugar beet

     

Liberty Link

Glufosinate tolerance

Deregulated in 1998 but not commercialised due to the failure to reach an agreement with US sugar companies

 

Glufosinate tolerance

Bayer CropScience has a number of glufosinate-tolerant crops under development, which are to be marketed under the Liberty Link branding. Development of some of these have already reached the commercialisation stage, but are delayed due to various marketing or regulatory issues.

Liberty Link soybean was approved for planting by the US EPA in 1997 and was scheduled for release after import approval into the EU is obtained. However, due to the EU moratorium on genetically modified organisms, which halted all approvals, Liberty Link soybean has still not been launched commercially. It is now uncertain whether Bayer CropScience will launch Liberty Link soybean even if EU import approval is obtained, given that the product would face intense competition from the firmly established Roundup Ready soybean system. However, it should see commercialisation by Monsanto as part of a dual herbicide tolerance system with Roundup Ready, following the licencing agreement in 2007.

Glufosinate-tolerant sugar beet is another product that is ready technologically but has not yet been commercialised. The product was deregulated in the US in 1998, with commercial plantings intended to follow in 1999. However, the company has still been unable to reach an agreement with US sugar companies for its acceptance. Liberty Link sugar beet will unlikely be commercialised until the sugar companies are comfortable with its acceptance by consumers. The major market for this product is in West Europe. However, market acceptance in this region is even more of an issue, which, together with the moratorium, is unlikely to result in commercialisation in the short to medium term.

The development of glufosinate-tolerant rice is at an advanced stage. In the US, the Bengal variety of Liberty Link rice was deregulated by the USDA in 2001. However, the EPA has yet to approve the use of Liberty on Liberty Link rice for human consumption. The product will be targeted for the control of red rice (Oryza sativa), a weed problem mainly affecting North and Latin America. One of the main issues holding back the commercialisation of this product is concern voiced by millers and other processors about market acceptance. The company has indicated previously that Liberty Link rice will only be launched when all the necessary international approvals are in place. Consumer resistance in key export markets such as Japan and Korea is such that GM rice has not been approved for import. In turn this means that Liberty Link rice will not see a launch in the near term.

Other herbicide tolerant traits

Other herbicide tolerant crops previously under development included bromoxynil-tolerant sunflower and sugar cane; isoxazole-tolerant cotton, maize, soybean and sugar cane; and glyphosatetolerant cotton, canola, sugar cane and sunflower. Acifluorfen tolerance has also been explored. The company had also researched products with combinations of these traits, such as isoxazole and glyphosate-tolerant (ex-Rhône-Poulenc technology) maize, soybean and sugar cane. These multiple herbicide-tolerant traits were thought to have promise from the weed control perspective, offering both residual and pre-emergence activities from the isoxazole herbicide component to complement the contact post-emergence control from glyphosate. However, the potential commercial success of this system was found to be a different matter, with isoxazole herbicide likely to cost more than both glyphosate and other potential selective mixture partners. Due to the success and cost benefit of the glyphosate-tolerant crop systems, most of the above developmental herbicide-tolerant crops will not see commercialisation.

Output traits

Like other major players in Agricultural Biotechnology, Bayer has a broad programme in the research and development of output traits. One of the areas of focus is carbohydrate metabolism, in which expertise was acquired with the 1996 acquisition of PlantTec (now part of Bayer BioScience). At the end of 2001, Aventis furthered its interests in this area with the establishment of the Solavista joint venture to develop novel starch potato varieties. Starch products developed by Solavista could potentially be commercialised for use in a wide range of industries such as textiles, food and paper production by the end of the decade.

For the North American market, Cargill and Bayer CropScience formed an alliance in 2005 to produce specialty canola for the supply of high stability oil to Cargill’s food industry customers. This high oleic oil does not require hydrogenation and is used by food processors when there is a need to eliminate trans fat and reduce saturated fat content. The alliance also intends to collaborate on research to develop other desirable oil traits, with a goal of accelerating the supply of canola varieties that produce high stability oil with improved nutritional composition. The seed produced by the alliance will be developed from Bayer’s InVigor line of hybrid canola, which also carry the Liberty Link trait. InVigor hybrids with special oil profiles could be released for commercial growing in Canada and the United States in 2007.

 

Other areas of research include the development of plant-based solutions for nutrition, health and biomaterials, and of plants with drought stress tolerance. The development of these areas come under Bayer’s New Business Ventures unit, which is working to create new products and markets through innovation.

 

 

Despite the numerous divestments made since acquiring Aventis CropScience and the on-going range rationalisation programme, Bayer remains the largest agrochemical company in the world, with a 20.9% share of the global market in 2006. However, the previous sales difference of approximately $1 billion with the second-ranked company, Syngenta, has closed to around $350m in 2006. Bayer CropScience ranks behind Syngenta if seed sales are taken into account, and performance of the new products will need to meet expectation if its leadership in the agrochemical market is to remain secure.

Key Issues

Although the processes of rationalisation and restructuring are still ongoing, Bayer had essentially completed the integration of Aventis CropScience by 2005. In the period since merger the company has made cost savings of some €700m through integration synergies and the Challenge 2007 initiative. The latest cost saving initiative, along with the continuing Challenge 2007, is due to deliver a further €300m reduction per annum by 2010. Over the next few years, we see the following issues as having the most impact on Bayer’s business.

  • Rationalisation

Bayer is embarked on a programme to divest or phase-out a number of lower value active ingredients. Immediately post-merger, the company’s portfolio numbered 114 active ingredients. This was reduced to 99 by 2006, with a further reduction to 87 planned by 2010. Whilst this will represent about a 24% reduction in the portfolio size in terms of the number of active ingredients, the cumulative value of these products is estimated to be only $320m, or 4.8% of 2006 sales. This will be accompanied by a reduction in the number of manufacturing and formulation sites, from 50 to 35 by 2010. These actions will bring improvements in range management. Although a sales loss of $320m is not insignificant, the strategic objective is to grow through increased profitability of, and additional resource availability for, products coming out of Bayer’s strong R&D pipeline. Target sales for this group are around $2.5bn.

  • Imidacloprid post-patent strategy

The insecticide imidacloprid remains Bayer’s single most important product, accounting for 10.5% of the company’s overall agrochemical sales in 2006. Defence of these sales is key to the company’s continued dominance of the global insecticide sector. However, imidacloprid has reached the end of its patent protection period, with expiry in the US in 2005 and in Europe in 2006, and is facing generic competition. Bayer has developed a post-patent strategy to protect its market position, containing at least four elements to date:

  • A new production plant in India, with a capacity of 500 tonnes, giving improved manufacturing cost,
  • Strategic supply and distribution arrangements, for example with Makhteshim and Cheminova,
  • Product differentiation through novel formulation technology and mixtures,
  • Maintaining the pipeline of new insecticides in the seed treatment sector.

In countries such as China and India, where the compound is not under patent protection, significant generic manufacture already exists. Some 34 plants are to be found in China alone. Although the combined output from these manufacturers does not currently match that of Bayer, capacities will undoubtedly increase quickly once access to currently protected markets is allowed. Apart from material supplied by Bayer’s partners, generic product is finding registration in major markets, for example from Nufarm in the US.

  •  

This fungicide is Bayer’s lead product in the segment, and accounted for 5.1% of total agrochemical sales in 2006. It has found considerable success in a number of crop outlets, including cereals and soybean, with mixtures supporting sales of other products also. Patents have fallen now in a number of key countries, and generic material is beginning to find use. Manufacturing capacity exists not only in Asia, but also Latin America, and there is increasing interest from a range of generic companies. Pressure has come also on Bayer’s sales from the difficult conditions in Brazil during 2006, and recovery in this market will be important for the company’s future position with the product. Bayer has developed certain strategies for post-patent management so far:

  • Strategic supply and distribution arrangements, for example with Arysta, Dupont, BASF and Makhteshim in the US,
  • Product differentiation through a wide range of mixtures, some of which contain partner fungicides still under patent.
  • New product sales growth

Bayer’s tradition of chemistry innovation continues with its commitment to all discipline sectors of agrochemical research and development. Even having launched seventeen new products since 2006, the company retains a well-populated late-stage development pipeline. The first group of products is expected to achieve some €2bn sales per annum at the peak, a target Bayer will need to meet in order to maintain its overall agrochemical sales in a tightening global market. Considerable marketing and technical resources need to be devoted to such an objective, which will present a challenge in view of the complexity involved. However, the sales potential is clear and in time the range of new products should deliver very significant sales.

Looking at the herbicides products portfolio, the sulfonylurea chemistry class will likely lead growth, especially if the new ODesi oil dispersion technology for cereals proves to be a success. This will be supported by sales of iodosulfuron and propoxycarbazone in cereals, by growth of oxaziclomefone and fentrazamide in the Far East rice market and by the new product tembotrione for maize in Europe and the US.

In the insecticides group, the ketoenole chemistry (spirodiclofen, spiromesifen) is a promising group of active ingredients in early commercialisation, to be joined in 2008/2009 by the third member, spirotetramat. The two new neonicotinoids, thiacloprid and clothianidin, also have good growth potential, especially as long-term successors to imidacloprid. Clothianidin is showing good growth in the seed treatment sector already. Ethiprole, a compound from the same class as fipronil, may become an important product given its wide-ranging suitability. Although European sales will be excluded, this product should become a useful addition to the insecticide range.

The two fungicides prothioconazole and fluoxastrobin are showing good growth already, especially as resistance to strobilurins and older triazoles has become a real concern. Combinations of these compounds are starting to find success in the European cereal fungicide market, where Septoria resistance has reduced strobilurin use in wheat. Bayer’s expertise in the seed treatment market will also help to maximise the potential of these two compounds. This growth will be augmented by the recently commercialised product, fluopicolide, which is positioned in the fruit, vine and vegetable sectors. Although not of blockbuster potential, this product is another example of Bayer’s willingness to exploit the benefits of a wider product range.

  • Agricultural biotechnology

Bayer CropScience will likely remain a relatively small player in the agricultural biotechnology sector. The company essentially has one trait in commercialisation – Liberty Link. The main commercial upside for the Liberty Link technology is increased sales of glufosinate, although hybrid seed incorporating traits can carry a premium. Canola and cotton are the main crops for the trait, due to the success of InVigor canola hybrids and FiberMax cotton varieties. However, the LibertyLink trait in maize and soybean will receive a major boost following the recent licencing agreement with Monsanto. Concern for weed resistance to glyphosate will make a dual herbicide system attractive, although this will be met with competition from DuPont’s Optimum GAT, and Monsanto own developmental dicamba tolerance trait.

Bayer also plans to increase investment in research on a range of potential quality and output traits, and is concentrating resource into oilseed rape, cotton, rice and vegetables. While hybrid seed sales are increasing in these crops and the business is strengthening, output traits are not expected to reach commercialisation until the next decade.

Conclusion

Bayer continues to be in a period of agrochemical range modernisation, with older products still being divested or phased out and replaced by the launching of newer chemistry. This is enabled by a strong pipeline of new products, which is expected to deliver significant sales in the near to medium term. The company is striving to implement post-patent strategies for certain key products at the same time, which ought to be successful given the strength of its market position in all regions. This is a key activity, which will have a direct impact on sales. Growth in the non-crop sector will assist the sales line, however concern remains over the position in the input trait technologies. Bayer’s lack of agricultural biotechnology products means that it is less able to compete effectively in this sector, although in the longer term the increased research and development spend should result in the launch of output traits.

 

Corporate Structure

Division

Activities

2006 Sales (€m)

2005 Sales (€m)

Variance

 

Pharmaceuticals (incl. acquired Schering business)

7,478

4,067

+83.9%

 

Consumer Health (Consumer Care, Animal Health)

4,246

3,929

+8.1%

HealthCare

Total

11,724

7,996

+46.6%

 

Crop Protection

4,644

4,874

-4.7%

 

Environmental Science, BioScience

1,056

1,022

+3.3%

CropScience

Total

5,700

5,896

-3.3%

 

Materials

2,925

2,837

+3.1%

 

Systems

7,236

6,609

+9.5%

Materials

Total

10,161

9,446

+7.6%

Other

Reconciliation

1,371

1,363

+0.6%

Bayer Group

Total

28,956

24,701

+17.2%

 

 

Agrochemical Sales Split (Euro)

Regional Sales Split

Region

2006 (€m)

2005 (€m)

Variance

North America

1,390

1,466

-5.2%

Latin America

754

839

-10.1%

Europe

2,037

2,030

+0.3%

Far East

817

846

-3.4%

Rest of World

360

387

-7.0%

Total

5,358

5,568

-3.8%

 

Product Class Sales Split

Product Class

2006 (€m)

2005 (€m)

Variance

Herbicides

1,758

1,840

-4.5%

Insecticides

1,219

1,311

-7.0%

Fungicides

1,200

1,248

-3.8%

Others

1,181

1,169

+1.0%

Total

5,358

5,568

-3.8%

 

 

The Friedrich Bayer company was founded in Wuppertal-Barmen in 1863, for the production of aniline dyestuffs. In 1881, the company was transformed into the joint-stock company Farbenfabriken vorm. Friedr. Bayer and Co. The first synthetic insecticide – antinonnin – was discovered in 1892. The headquarters of the company were transferred to Leverkusen in 1912, and then in 1925 the company became part of I G Farben. The synthesis in 1936 of the amidocyano ester of phosphoric acid not only heralded the beginning of an important era in the field of crop protection chemicals, but also provided the base from which Bayer’s crop protection business has grown.

In the late 1940s, I G Farben was broken up into separate companies, but in 1951 these companies were rejoined to form Farbenfabriken Bayer AG. From the early research into organophosphorus compounds, methyl and ethyl parathions were launched in 1947, and these products formed the launching pad for today’s success. In the 1950s, several more related organophosphate insecticides were successfully brought to the market by Bayer, including Gusathion (azinphos-methyl), Dipterex (trichlorfon), Di-Syston (disulfoton) and the first systemic insecticide, Metasystox (demeton-S-methyl). Gradually, the company re-established itself through diversification. It returned to the US through the establishment of the Mobay Chemical Company in 1954, in conjunction with Monsanto. Over the course of the 1960s, it became involved in petrochemicals and photographic products, and expanded in the US, the UK, Japan and Brazil. The present name of Bayer Aktiengesellschaft was adopted in 1972.

In January 1992, Bayer merged all its US operations into one operating company, Miles Inc. With the purchase of the over the counter (OTC) drug business of Sterling Winthrop in 1994, Bayer regained the rights to trade under its own name in the US as well as the rights to all its trademarks, such as the Bayer cross. Miles Inc. was renamed Bayer Corporation in 1995, and includes the Canadian operation Bayer Inc.

At the start of 1996, the Chemicals operations were merged into a separate business unit, and the 21 business groups in the corporation consolidated into five: agriculture, polymers, chemicals, health care and Agfa. In January 1997, marketing in Germany was reorganised and divided between Bayer Vital for Life Sciences and Bayer Industrieprodukte for Chemical Products although this is reportedly not a start of any demerger in the company. The polymers and graphic systems areas of the business were expanded by further acquisitions in 1997, and towards the end of the year the joint venture company Twinagro was set up with Monsanto to develop and market crop protection products. The most notable acquisitions made in 1998 were the offset printing plates and graphic films business from DuPont, Chiron Diagnostics and a 50% stake in the US seed treatment company Gustafson. Several key businesses were also divested, including copying systems and citric acid. Also in 1998, Bayer formed a joint venture with Pursell Industries to market US lawn and garden products.

In 1999, 70% of Agfa was floated on the stock exchange; the other 30% was sold in 2002. In Agriculture, Bayer strengthened its Garden and Professional Care business with the acquisition of PBI Home and Garden from Sumitomo Chemical and AA Huis & Tuin from AgrEvo Benelux (PBI Home and Garden later acquired the UK company, Phostrogen, in 2000). Bayer has also recently invested in the expansion of its agrochemical production capacity. In 1999, $114m was spent to expand the capacity of the pesticide production plant in Dormagen, Germany, while the construction of the $30m herbicide formulation plant in Kansas, US, was completed and the plant brought on-stream in 2000. In South Korea, Bayer acquired the remaining 50.1% stake, in the agrochemical company Misung, from Aventis.

In 2002, Bayer implemented the biggest change in its history. The company now consists of a management holding company and four independent operating subgroups – HealthCare, CropScience, Polymers and Chemicals. These separate entities are supported by various service companies. One of the drivers for this change was the acquisition of Aventis CropScience, which was announced in September 2001 and closed in June 2002. The acquisition, which at €7.8bn is the largest in Bayer’s history, propelled the company to the top of the agrochemical industry.

There were further structural changes in 2004 as Bayer decided to spin off its chemicals operation to shareholders (as a new company called Lanxess) to focus on CropScience, Healthcare and Material Science. The planned spin-off occurred in 2005, the remaining business was renamed Material Science, leaving the company with three operating subgroups.