CROs: Market Demands Diversified, Brand Consolidation Intensified

With the strengthening of the supervision on agrochemicals by governments around the world, and market demand becoming more specialized, premium and diversified, Contract Research Organizations (CROs) in the field of agriculture are continuously improving their innovation and research capabilities and expanding their service portfolios. Meanwhile, this industry is seeing more frequent mergers and acquisitions, along with enhanced collaborations. Emerging markets will certainly see more fierce business competitions. Recently, AgroPages invited five CROs: SynTech, SGS, Staphyt, EAS Group and BIOAGRI to join our discussion regarding their respective development status, competitive advantages, challenges and strategies in emerging markets, as well as their investment programs in the future. 
 

Development Status & Competitive Advantages 
 

In recent years, CROs in the field of agriculture have maintained stability and have achieved impressive growth rates, mainly benefiting from increasing market demand, technical skills and high quality services. Diversification of service portfolios, increasing global coverage, driving innovation and research capabilities as well as exploring new business areas are all necessary factors to ensure continuous development in a fiercely competitive market moving forward. 
 

SynTech: “SynTech’s revenue has grown on average 10% p.a. between 2005 and 2014; in the same period, the organization has grown from 20 staff at its original base in California to over 300 full-time employees worldwide today. We have established a network of field stations/satellites, in, 29 countries across the world.” 
 

“SynTech has been re-positioning itself to exploit emerging business opportunities driven by the growth of seeds/traits R&D, including GMOs, which compete for R&D resources within the major Ag Products company portfolios.” 
 

“We recruit technical and managerial staff with extensive experience in agronomy, agrochemical and seeds R&D, in both the laboratory and field, and provide extensive technical training programs across our global sites to ensure continue development of our staff and consistency in project delivery. A focus on “delivery on time and to specifications”, which is critical to building confidence and satisfaction with clients, and building our reputation in the industry, is paramount to our brand recognition and gaining repeat business.” 
 

“In addition, we develop strong relationships with multinationals; this and a company strategy that resonates with our clients, critical to achieving our growth and performance targets.” 
 

SGS: “Agriculture is a fast growing business. SGS has been operating in this field for more than 130 years, and continues to grow and develop both its services and its geographic reach. With many years experience in R&D, analytical chemistry, regulatory affairs/registration services and project management, we process laboratory and field studies within the scope of regulatory testing, such as efficacy, residue, biosafety, operator, consumer safety, environmental fate and behavior of pesticides, as well as eco-toxicological testing.”
 

“In terms of our position and competitive advantages in the market, our network of facilities is unparalleled, its scope and expertise is unique. We have a presence in all major regions of the globe, some 140 countries, with a superb network of experienced and dedicated experts who operate in a globally consistent and reliable manner. With a global network of truly local expertise, we work with local, regional and global clients.” 
 

Staphyt: “Staphyt benefits from a high and regular growth, sustained by a corresponding external growth. With increasing market share each year, and 350 staff members fully dedicated to agro sciences, we are proud to announce a cumulated growth of 50% on the 3 last seasons. This is the result of both an ambitious development and an innovative strategy in Europe and also a high recruitment policy to maintain highly skilled teams.” 
 

“We focus special attention to our methods and technical improvement in order to guarantee a high level of both performance and excellence in our services. It’s also the reason why we reinvest more than 10% of our turnover each year for innovation and R&D.”
 

EAS Group: “We aim for, and achieve, double digit growth annually in external sales. This financial performance is mirrored in other KPI’s too such as global staff headcount and facilities – both have more than trebled since the inception of EAS Group in 2006. Key factors driving growth include our internal goals and initiatives – we have a consistent approach to investing in our own staff and portfolio of services through both organic growth and acquisition. ” 
 

“Our strength lies in the breadth of our portfolio, the diversity of our global locations and the leverage gained through partnerships in other Eurofins companies such as Food, Pharma, Genomics etc. Combine this with our ‘strength in depth,’ – our huge global team of expert staff. The number of employees around the world, the outstanding caliber of these staff, their technical capabilities and expertise means that we have an unrivalled advantage. ” 
 

BIOAGRI: “Our group has doubled its revenues since 2007 and we plan to keep growing in the coming years at the same pace. One of the key drivers of our business is the ability to offer customers a complete set of GLP and non-GLP studies that range from simple known molecules to high complex and new molecules. Another key factor is that our agrochemical laboratory footprint is oriented to deal with the complexity of permissions to conduct analysis in Brazil, as well as to offer fast responses by performing preliminary analysis at our Shanghai lab. ”
 

“Regarding advantages, our expertise and high quality services allow us to adapt our studies to meet the regulatory demands of different countries. Our GLP reports are accepted by OECD countries through OECD-MAD agreement, as well as by other countries, giving customers the advantage of using our reports for global registration projects.” 
 

Challenges & Strategies of Emerging Markets 
 

Emerging markets are full of growth opportunities for CROs, while some factors, such as the lack of harmonized government supervision system, a deficiency of highly skilled local employees, complicated tax systems, as well as cumbersome labor laws, affect and restrict the expansion and development of CROs in these markets. However, these CROs are still exploring their own development path. 
 

SynTech: “Our aim in fast growing emerging agriculture/agrochemical markets is to provide services to our key regional and global clients at the same high level of quality as we do in the USA and Europe.” 
 

SGS: “SGS has always been able to plan for expansion into new markets. With regard to Brazil, for us, it is no longer an emerging market, but has already reached a certain level of maturity. For example, it has gone through the privatisation phase common to developed markets, such as the European Union and USA. Further east, our strategy has seen the development of agrochemical services for China and India. At present, we have research and development projects in both countries working pre and post homologation, as many of the contract research elements are still managed by official entities.” 
 

EAS Group: “Emerging markets bring with them many challenging, but educational scenarios, all of them individual to that particular country / market. In short, make sure you fully research and understand the market/ arena you want to enter before investing – you may need to form local partnerships and collaborations for some time before you can expect success. “ 
 

BIOAGRI: “Understanding and knowing specific regulatory requirements for each country. However, by counting on our company´s network of over 80 labs spread in 20 countries across the globe, we are reaching out to authorities and experts in the regulatory field as to adequate and increase our scope of studies whenever needed. ” 
 

Investment Programs in the Future 
 

CROs will execute expansion plans via M&A, cooperation, focusing on enriching of lab services and construction of wider field trial bases. Meanwhile, CROs will increase consultancy services for marketing and regulation compliance, to meet the clients demand. In addition to existing core services, EAS Group, Syntech and other service providers will expand their seeds/traits businesses. 
 

SynTech: “Much of SynTech’s field and laboratory service expansion has been through organic growth of our business and our staff numbers, and acquisition of facilities. New field sites are now being established in the US– already opened in Florida and Iowa. We are also planning four new sites in each of Brazil and Argentina, and significant expansion of our operations in Germany, Poland, UK, Eastern EU, Central America, South East Asia, China and India.” 
 

“SynTech has also formed very successful alliances with experienced CRO partners to fill certain territorial and service gaps in our coverage. This year we have partnered with Symbiotic Research in the US, to provide access to additional analytical expertise e.g. for environmental fate, metabolism and physical-chemical studies. We are expanding our terrestrial ecotoxicology capability in Europe, based at our EU HQ near Macon in France. We also intend to augment our Latin American operation with residue and ecotoxicology analytical facilities, and to extend our field testing presence to 32 countries.” 
 

“As a result of these moves, SynTech aims to double its 2014 sales by 2020. This will represent a 10% market share of the agrochemicals + seeds/traits CRO sectors.” 
 

SGS: “Innovation and demand for sustainable agriculture from clients and regulatory bodies around the world drive the industry, and SGS, to develop new services, technologies and techniques. To support clients in different geographic and climatic regions, working either fertile or less than ideal farmland, we deliver extensive crop management, precision farming and water management services. SGS will soon launch the first private and independent seed quarantine services, and laboratory, in Brazil. As the industry embraces new technologies we are also moving into the field of digital data management – enabling farmers to use readily available data to better understand the actions that should be taken and improve decision-making. Furthermore, the development and registration of biopesticides add to the wide range of service we provide – from field trials to regulatory services.” 
 

“At SGS, we are always looking for strategic acquisitions to reinforce our presence, build on our expertise and to help reinforce our leadership position in key markets, as well as for specific expertise or innovation that has potential to be replicated across our network. We are also finding additional opportunities to expand our service portfolio.” 
 

Staphyt: “Staphyt hopes to evolve with its customers and to propose a range of services perfectly suited to their needs today while anticipating those of tomorrow.”
 

“In 2014-2015 we acquired 6 CRO companies in France, Hungary, Austria and Italy, in order to strengthen both our European cover and our technical skills. Our leading position requires us to have a large geographical presence and to choose highly qualified partners who bring their expertise and with whom we can develop homogeneous working methods. Our expansion will continue in 2016 in other countries with a specific reinforcement of our regulatory consultancy activities. This service has been already extended with the acquisition of the consulting agency A.S.C last September”. 
 

EAS Group: “This year, already to date we have announced the acquisition of De Bredelaar in the Netherlands and Trialcamp in Spain – both of these add to either our services or locations. Next steps for us are likely to be continued geographical expansion – this has been a theme for EAS Group since forming back in 2006. We will look to expand in South America, Africa and South East Asia with plans already underway regarding all these regions.” 
 

“In terms of portfolio growth, we are currently evaluating the global seed industry and expect a strong focus on seeds in the next few years, though I am certain this is a plan shared by many CROs.” 
 

BIOAGRI: “BIOAGRI (Merieux Nutrisciences Agrochemical Division) has three innovation centers (United States, Italy and Brazil) dedicated to implementing new technologies as to best serve the needs of our clients. Currently, our Brazilian Innovation center is working on the Alternative Methods project for agrochemicals, as to attend the upcoming Brazilian new legislation and the increasing demand for alternative method studies aligned with global technology trends in this area.” 
 

“Innovation and acquisitions are among the core pillars of our company. In these past years we had over 20 acquisitions worldwide and new acquisitions are also in line for this year, including in Latin America.”