AMVAC has contrarian view on agrochemical sales strategy

While giant crop protection companies are looking at biotechnology, eliminating much of the market for conventional agrichemicals, AMVAC is taking a contrarian point of view planning for a future making a good profit manufacturing and selling conventional chemistry.

"AMVAC has a contrarian strategy,” said John Immaraju, Ph.D., director, commercial product development, AMVAC Chemical Corporation. “Basically, contrarian thinking involves understanding long-term agrichemical trends…. We are thinking ahead out of sync with other company philosophies.”

Immaraju explained how AMVAC has prospered in the last few years during a presentation at the recent CropWorld North America conference attended by agribusiness managers of large and small companies.

Immaraju contends AMVAC, as a small company with slightly more than 300 employees, most of them operating four manufacturing and formulating plants in the U.S., is thriving “in the massive marketplace of agricultural chemicals.” The company was founded in 1969 in Los Angeles as a toll manufacturer and has grown from there but maintained manufacturing in the U.S. instead of going offshore with manufacturing.

"AMVAC’s basic model, our basic model, has been a company that grows through private acquisitions of name branded, mature products that we add to our portfolio. We bring them in, we nuture them and we find new applications. These products are coming from major companies like Bayer, Syngenta and those who are moving on to newer chemistries,” Immaraju said.

"We have a very strong incentive to grow these product lines. We are looking at adding new crops or launching new formulations. We also pay a lot of attention to customer service because we are more focused. We know to focus on even a small opportunity to leverage value out of the compound,” he continued.

The company has been successful in investments “in field research and development trying to find new uses or fine tune elaborate extensions of use.” This expansion into several small markets includes working with government agencies such as the IR4 program to label products for minor crop registrations that are often ignored by giant crop protection companies.

AMVAC also isn’t afraid to invest in products that will not be able to maintain all its uses. It is something the company considers in its long-term contrarian strategy. “And we recognize by this strategy that some uses will be lost in re-registration because these are older chemistries, and we have to literally pick our battles, so to speak, and determine what is worth defending and what’s not. In the process, we have given up literally hundreds of opportunities but managed to hang on to some very key uses,” the product development manager said.

AMVAC acquires post-patent products, and “acquires the total assets of active ingredients and formulations, including regulatory dossiers of registration, and manufacturing know-how, the recipes” and more, which gives the company complete ownership for manufacturing and marketing in the U.S. As Immaraju stressed, “We are not a generic company.”

Immaraju said, “With the manufacturing know-how, we integrate them (acquired chemistry) into our manufacturing units here in the United States. It does not involve dealer compensation or generic strategy or data comp. In fact, we get data comp from others, and we have a strategy to defend against generic competition as well.”

The acquisition of closed delivery systems for insecticides, has provided a major difference for AMVAC, compared to generic companies. Smartbox and Easy-Load were two of those closed delivery systems obtained more than 10 years ago. Immaraju said, “They play an important role in our long-term strategy.”