Dec. 6, 2012
"As safe and effective alternatives for traditional chemical pesticides, the latest round of M&A is a testament to the growing importance of biopesticides. I think this is a meaningful chance for biopesticide industry to experience a sea change in the next few years." Pam Marrone, the founder and CEO of biopesticide company Marrone Bio Innovations, told Agropages in a recent interview.
Agropages: How do you think about this round of mergers of biopesticide companies by multinational companies? Bayer bought AgraQuest, BASF acquired Becker Underwood, and Syngenta bought Pasteuria bioscience. As far as we know, in the past 15 year, every multinational company got involved in the Bt business, but quit the market within short time.
Pam: The latest round of M&A in this space is a testament to the growing importance of biopesticides as safe and effective alternatives for controlling pests, and as importantly for resistance and residue management. Multinational companies are recognizing that biopesticides have several important advantages including: lower cost to develop, good environmental and safety profiles, complex modes of action and exemption from tightening regulatory restrictions, such as residue limits. Chemical treatments also have experienced decreasing efficacy as more pests have developed resistance to them.
In previous times of heavy M&A, the focus was primarily on companies that had developed Bacillus thuringiensis-based products. While these products proved generally effective, they were not always as powerful as the multinationals had hoped. Additionally, there was not a great incentive to adopt biopesticides at that time, as the regulatory environment was not as stringent. Fortunately, today’s crop of “next-generation” biopesticides has moved beyond Bt and is proving to be revolutionary. These new biopesticides offer a viable alternative and supplement to chemical treatments, and have proven in many cases equally as effective as their chemical counterparts.
MBI’s GRANDEVO® is a prime example of how far biopesticides have come. GRANDEVO, based on a new species of Chromobacterium, is the first new broad-spectrum microbial insecticide to enter the market in nearly 50 years. Its complex modes of action give it the flexibility to be incorporated into integrated pest management programs as well as for use as the broad-spectrum foundation product.
Agropages: The global biopesticide market is predicted to reach $3.4 billion by 2017 by most consulting organizations, what's your prediction? What do you think are the main challenges to keep this strong growing market for biopesticide industry?
Pam: I agree with these market analyses that biopesticides are poised for significant growth over the next decade. You will see more biopesticides used as pre-mixes with chemicals, like Bayer’s Poncho®-Votivo® seed treatment, and more biological pre-mixes, with multiple active ingredients (just like new chemical brands these days), new longer lasting formulations and more new active ingredients which will drive growth. Advances in formulation and natural product chemistry have increased the stability of biopesticides, and therefore have enabled biopesticides’ exports to increase. We are also seeing biopesticide adoption grow as restrictions on traditional chemical pest managements increase.
Agropages: What is the different business model of marketing the biopesticide against traditional pesticide? Where are the main markets for biopesticides, developed countries, or emerging markets?
Pam: I don’t believe that traditional pesticide companies and makers of biopesticides have different business or marketing models. Biopesticides companies, however, have greater hurdles to overcome in terms of educating their growers and distributors. Our industry still battles embedded skepticism about biopesticides, and it’s incumbent upon us to aggressively and continuously educate our potential customers about the benefits of our products. Biopesticides are now performing on par with their chemical counterparts and also enhance programs (better yields and quality) when integrated in, yet that’s a message that is not always conveyed strongly enough.
We also have to work hard to support and supplement our distribution networks. Large companies have bigger sales organizations and access to distributors with larger offerings.
Asia and Europe are particularly receptive markets for biopesticides because of their strict regulations on residues. As more countries globally become concerned about the effect of residues and adopt greater restrictions accordingly, we see a great opportunity for expanding our market share as an industry. The government of Brazil has stated that they want to accelerate more biopesticides into the market.
Agropages: Many countries are trying to add or change regulations to make registration for biopesticide easier, what information have you got about these changes? Do you have any suggestion for these decision makers?
Pam: Yes, Europe and Brazil are talking about making it easier to register biopesticides, but in practice we have not experienced this yet. In North America, the biopesticide regulatory framework is well established and generally well understood by the industry, particularly for the “first wave” Bacillus- and pheromone-based technologies. Biopesticides companies with innovative, new active ingredients have felt frustration, at times, with lack of discipline, clarity and transparency in the regulatory decision making processes. As an industry, we were able to work with policymakers and regulators to overcome similar challenges in the early days of the biopesticide movement, and I expect similar success as the regulators, the regulated community and other stakeholders work together to bring better and safer pest management tools to market.
As an industry, we are hearing promising words of commitment to biopesticides from regulatory bodies in Europe, South America, Asia and Africa, but our current experience is that priorities, practices and policies of regulators have not yet matched their words. We have found that breaking the historical “chemical mindset” of regulators and evaluators is the greatest challenge to the biopestcide industry.
Biopesticides have a long 64-year history of safe commercial use, with no environmental or non-target safety issues. Biopesticides are readily biodegraded and are the safest category of pesticides for consumers, workers and the environment. Ultimately, the goal of the biopesticide industry is to quickly build upon the sensible and successful foundation provided by the existing regulatory framework established in North America. Worldwide harmonization guided by this proven approach is a high priority for the biopesticide industry. Certainly, the industry sees need for some improvement to current system in place in North America and foresees the need for flexibility to address local needs, but there is no need to re-invent the wheel on a country by country basis worldwide.
My primary message to regulators is “biopesticides are not the same as chemical pesticides,” and a successful regulatory framework needs to accommodate this reality.
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