Nov. 11, 2019
By Christina Xie
In November 2018, Nihon Nohyaku, the world’s leading agrochemical company, celebrated its 90th anniversary. As an R&D-oriented company and the first agrochemical manufacturer in Japan, Nihon Nohyaku has a long and fascinating story.
AgroPages recently interviewed Yosuke Tomoi, President of Nihon Nohyaku, to explore the company’s history, development strategy and R&D plans, as well as its commitment to global agriculture.
President of Nihon Nohyaku
Please briefly review Nihon Nohyaku's 90 years of development and achievements.
Nihon Nohyaku was founded in 1928 as the first agrochemical manufacturer in Japan. As an R&D-oriented company, we have created unique and effective agrochemicals that ensure safe and steady food supplies and improve everyone’s quality of life. Today, our agrochemicals are used in over 100 countries and regions around the world, with some being in demand for over 40 years.
We have actively expanded into growing overseas markets since 2012 and established bases in major agricultural countries. As a result, our consolidated net sales reached ¥60 billion, with overseas sales accounting for more than 50%. To achieve our target to create at least one active ingredient every three years, we invested over 10% of our net sales in R&D activities, to reach the milestone of ¥100 billion in net sales.
Nihon Nohyaku has been expanding its global market share by establishing offices overseas or acquiring companies. Last year, the company acquired a 100% stake in the Colombian agrochemical company, Adnicol (the company name has been changed to Nihon Nohyaku Andica S.A.S. after acquisition). What is the company's development strategy in Latin America? Can you use your experiences of expanding United States (US) and Europe market to develop the Latin American market?
In Central America, we have a long history of selling isoprothiolane and fenpyroximate used on bananas and paddy rice, prior to the establishment of Nihon Nohyaku Andica S.A.S. (NAS). Our strategy to establish a subsidiary in Colombia is similar to our strategies in the US and Europe, as we aim to conduct local promotional campaigns, streamline our distribution, and regularly release products. In addition to strengthening our alliances with existing partners to expand our businesses in neighboring countries, such as Ecuador and Peru, we aim to boost our direct sales in Colombia through NAS. The banana market is a major potential market for us, so NAS will be key to accessing exclusive distribution routes to and from plantations.
In South America since 2014, we have prioritized the Brazilian market, the world’s largest agrochemical market, by establishing two local bases to boost our proprietary sales. We will continue to contribute to the agriculture sectors in Central and South America.
We noticed that many Japanese companies have significantly increased their investments in India in recent years. Nihon Nohyaku acquired an Indian company, Hyderabad Chemical (the company name has been changed to Nichino India Pvt. Ltd. after acquisition). What is the reason for these investments?
In India, the economy is growing rapidly along with the population, and this is significant for the food industry. India has been one of the world’s largest grain exporters, but in recent years, the number of Indian farm laborers has declined because people in rural areas moved to urban areas due to economic growth. Therefore, India has become a growing market with considerable demand for high-performance agrochemicals that increase agricultural efficiency and quality.
Prior to the acquisition of Nichino India Pvt. Ltd. (NIL), we sold our products through a leading local company. To further expand our business, we invested in NIL, which has sales, production and development functions. As well as increasing our sales in India, we expect NIL to advance our production and development capacities and play a key role in our global expansion. As the first phase of collaboration in product development, we applied to register benzpyrimoxan, an insecticide for paddy rice, in both India and Japan this year.
As the first agrochemical company in Japan, Nihon Nohyaku has always attached great importance to R&D and innovation, and its annual R&D expenses account for about 10% of total sales. Please tell us about the company’s expertise in R&D. What is the company's new product development and commercialization strategy?
We have an integrated research center, where experts in chemical, biological, toxicology and pharmaceutical research can inspire each other through direct communication. In that open research environment, we conduct "all-round screening" to discover compounds with the potential to become insecticides, fungicides, herbicides or other products. For example, the insecticide, flubendiamide, was originally researched as a herbicide, but researchers discovered its high insecticidal effect.
We also focus on open innovation to accelerate the use of artificial intelligence technologies and research in new fields. Along with our Research Division, which is responsible for active ingredient discovery, our Market Development Division drafts product development strategies that meet market needs, in cooperation with group companies from around the world.
What new products were launched by the company in the past two years? Could you introduce us to your new products currently in the R&D pipeline?
In Japan, we launched acaricide pyflubumide in 2015 and the fungicide, pyraziflumid, in 2018. These products are currently under development at the same time in several countries and have the potential to become future global core products. In 2019, we applied to register the insecticide, benzpyrimoxan, in both India and Japan while two other insecticides and one fungicide are in the R&D pipeline, both planned for launch from 2026 to 2028. We achieved our target to create at least one active ingredient every three years.
Nihon Nohyaku expects to rank among the top 10 agrochemical companies in the world, what is your plan to achieve this goal?
We believe that our business requires a minimum net sales value of ¥100 billion to secure R&D investment, which has risen gradually due to the growing difficulty in creating new agrochemicals.
To achieve this, we need to further expand our business globally. In addition to “organic growth” with our existing management resources, we will expand our business to leverage our strength, including through M&A, mergers and other options.
What is the future direction of the company? Where does its driving force for growth come from?
Our core is to create safer and more effective agrochemicals that will help global agriculture. We aim to accelerate the creation of new active ingredients while exceeding our target - “Create at least one active ingredient every three years”, by stabilizing our capital base and improving our R&D capacities.
We are also supporting farmers through promoting smart farming business methods, including by developing an artificial intelligence -based pest and weed image diagnosis app that utilizes our agrochemical business technology expertise.
We will continue our technological innovation and aim to be a corporate group that contributes to society by supporting agriculture.