Seizing fluorine-containing pesticide business opportunities created by Chinese supply chain advantages

Date:03-20-2024

This article is initially published in 2024 China Pesticide Industry Watch magaznie , click to downlowd 

Succinate dehydrogenase inhibitor (SDHI) fungicides are the third largest class of fungicides in the world after strobilurins and triazoles, while having the highest CAGR among fungicide varieties in recent years. This class of fungicides acts on protein complex II to affect the respiratory chain electron transfer system of pathogenic bacteria, hindering their energy metabolism, inhibiting growth and leading to their death, therefore, achieving the effect of disease control. In 2019, market sales of SDHI fungicides were close to US$2.5 billion, accounting for 3.4% of the global pesticide market. According to IHS Markit, sales of SDHI fungicides are about to break US$3 billion in 2025.

The chemical structure of SDHI fungicides is composed of carboxylic acid and amine, linked by amide bonds Representative SDHI fungicides include fluxapyroxad, pydiflumetofen, boscalid and isopyrazam, half of which are based on fluorine-containing structures.

This paper highlights the SDHI fungicides coming off patent from 2015 to 2023 from the perspectives of crop application, global supply of relevant intermediates, patent authorization and market dynamics.

Global market and patent status of major SDHI fungicides

Penthiopyrad, penflufen, isopyrazam, sedaxane, bixafen and fluxapyroxad are the SDHI fungicide varieties discussed in this paper. Among them, bixafen has considerable potential, with sales rising to US$212 million in 2021, followed by fluopyram with sales of US$189 million, and sedaxane with sales of US$135 million. In general, sales of this type of compound remain stable with an upward trend. All the above-mentioned compounds have already come off patent, with the newer compounds only coming off patent in 2023, including bixafen, fluopyram, isopyrazam and sedaxane.

Although the above-mentioned compounds have come off patent in China, except the original manufacturers and one for export, no other enterprises have started production in the country. Currently, some of the above compounds have been granted registration in India, with Deccan Fine Chemicals India Pvt. Ltd., having obtained registration for isopyrazam 92% TC, while UPL has obtained registration for bixafen 97.7% TC, both of which are registered for export only. 

Penthiopyrad

Penthiopyrad was developed by Mitsui Chemicals in 1996. In January 2007, Mitsui Chemicals authorized DuPont (now Corteva) to enter markets in the Americas, Europe, Australia and New Zealand, where Mitsui Chemicals supplied penthiopyrad to DuPont while DuPont took charge of the registration and sale of the formulation products of Mitsui. 

Penthiopyrad is an imported fungicide for preventing and controlling fruit tree rot diseases, including alternaria alternata leaf blight, gray mold, leaf spot, brown rot, rhizoctonia and sclerotinia. It is also recommended for the prevention and control of gray mold and powdery mildew, which are resistant to other fungicides. The main applications of penthiopyrad cover fruits and vegetables in North America, as well as cereals, fruits and vegetables in Europe.

So far, penthiopyrad has been registered and sold for application on various crops in 35 countries, including Japan, Canada, the United States, Australia, Canada, the United Kingdom, New Zealand and EU countries France, Austria, the Czech Republic, Hungary, Ireland, Italy, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Bulgaria and Spain.

Global sales of penthiopyrad were US$57 million in 2014 and reached US$76 million in 2021. At present, the sales value of the compound has not yet reached US$100 million but is growing steadily. DuPont once predicted the peak annual sales for penthiopyrad to be more than US$100 million.

Major commercialized penthiopyrad formulations are shown below, being mostly suspensions:

In China, Mitsui Chemicals is the only penthiopyrad technical and formulation registrant.

Penflufen

Penflufen was developed by Bayer in 2002 for application on rapeseed, potato, soybean, corn, small grain, cotton, rice and legumes, being largely used as a seed treatment agent to control rhizoctonia root rot and smut.

In 2010, penflufen was granted registration in Australia for use on cereals. In 2012, registration was granted in Canada, where the compound was sold for the first time in the western world, followed by its registration in the United States and Ukraine in the same year. In 2014, registration was granted in the EU. Currently, penflufen-based products have been sold in Australia, the United States, Canada, China, Ukraine and Japan, as well as 10 EU countries.

Sales of penflufen hit US$60 million in 2016, $70 million in 2019 and $80 million in 2021. So far, the sales value of the compound has not yet reached US$100 million but is growing steadily. 

Major commercialized penflufen formulations are shown below, being mostly seed treatment suspensions dedicated to the seed treatment market:

In China, Bayer is currently the only penflufen technical and formulation registrant.

Fluopyram

Fluopyram was developed by Bayer in 2003. Since its market launch in 2012, Bayer has cooperated with several companies, including BASF, in joint market development, enabling fluopyram to grow into a US$100 million product in just three years after its market launch.

Fluopyram is applied to grape, cereal, potato and rapeseed crops, and is a leading product in the French grape market, ranking second in French fungicide applications after only to prothioconazole. In the Unites States, fluopyram ranks in the top 5 fungicides for grape and potato applications while ranking first in cotton field applications. In Japan, fluopyram ranks second in terms of cereal, sugar beet and potato fungicide applications. In Germany, fluopyram ranks in the top 3 fungicides in terms of potato applications, after mancozeb and mandipropamid.

Currently, fluopyram has been registered and sold in 50 countries, including China, the United States, 23 EU countries, Australia, Romania, Turkey, Chile and Mexico.

Bayer has exerted considerable efforts to promote fluopyram in the United States using two promotion models. The first is a seed coating agent developed to combat soybean Sudden Death Syndrome (SDS) in the United States, which is concurrently nematocidal. The second is the launch of a mixture of fluopyram and imidacloprid for controlling nematodes in cotton and peanut crops. In addition, turf nematodes are also an important target of application for fluopyram. Considering Bayer’s market layout in recent years, nematodes will be a major target for control for fluopyram in the future.

Global sales of fluopyram in 2012 were US$13 million, but it quickly broke through US$100 million in 2014 to reach US$145 million, followed by fluctuated rises in subsequent years. Global sales of fluopyram reached US$189 million in 2021, with a CAGR of from 2012 to 2021, quickly rising to become the world’s leading fungicide within 10 years after its market launch. Bayer once predicted the peak annual sales of fluopyram to be €200 million (roughly US$216 million), which soon became a reality.

Major commercialized fluopyram formulations are shown below, being mostly suspensions:

In China, Bayer is the only fluopyram technical registrant.

Bixafen

Bixafen was developed by Bayer in 2003, unveiled in 2006, granted registration in 2010 for the first time, and launched in the market in 2011. Bixafen was jointly developed by Bayer and FMC, with the latter acquiring exclusive rights for the development and sale of the product for cultivated crops in the United States and Canada. 

Bixafen is widely used in cereals (including barley, wheat, oat, rye and triticale), grape, corn, potato, cotton, sunflower, soybean, legumes (such as chickpea, field pea and lentil), rape, sugar beet and peanut, as well as non-crop fields. Bixafen is safe for use on wheat and has no environmental impact while its moderate duration of effectiveness has no effect on subsequent sowing. Therefore, it is widely used on winter wheat, rye and triticale. 

Currently, bixafen has been granted registration and launched in many countries, including the United Kingdom, 23 EU member states, Australia, the United States, Canada, Brazil, Argentina and Chile. The United Kingdom is the first country where bixafen was registered and sold and is where it has the most product registrations, being the most important bixafen market in the world.

Global sales of bixafen in 2014 were US$146 million, breaking through US$200 million to reach US$212 million in 2021. According to Bayer’s forecast, peak annual sales of bixafen may exceed €300 million ($324 million). 

Bayer has great expectations for bixafen, and its Xpro product series have been granted registration and sold in many countries, including 16 EU member states and Chile. Within the product series, a mixture with prothioconazole has become Bayer’s dominant product variety. According to Bayer, the mixture of bixafen with prothioconazole offers an incomparably long residual effect and broad-spectrum fungicidal effect, and provides plants with a positive phytophysiological effect that increases crop stress resistance and improves crop yield, a function similar to BASF’s pyraclostrobin. Currently, Bayer’s key strategy is to synergistically promote bixafen in a series of mixes with prothioconazole.

Major commercialized bixafen formulations are shown below, being mostly emulsifiable concentrates:

Currently, bixafen technical 98% TC is the only registration of this product, being held by Rainbow, which is registered for export only to Panama and valid until September 28, 2026. Apart from this registration, no companies hold any new bixafen-oriented pesticidal molecule registrations in China.

Sedaxane

Developed by Syngenta in 2003, sedaxane is Syngenta’s first active ingredient in its dedicated seed treatment portfolio. The fungicide contains four optical isomers, among which two trans isomers account for 80% to 100% while two cis isomers account for 20% to 0%. 

Sedaxane can be applied on many crops, such as cereal, soybean, corn, vegetable, sugarcane, grape, potato, cotton, pome and rape, to prevent and control various soil-borne and seed-borne diseases, as well as early foliar diseases, being effective controlling diseases caused by rhizoctonia and smut. Soybean, cereal and corn are major crops for which sedaxane is applied.

Currently, sedaxane has been granted registration and sold in many countries, such as Australia, Argentina, the United States, 20 EU member states, the United Kingdom, Chile, Pakistan and China. The North American Free Trade Area (NAFTA) is an important regional market for sedaxane. Europe and Latin America has witnessed wide applications of sedaxane, while Canada and the United States are important national markets, with the highest number of registrations and product launches. 

In 2019, global sales of sedaxane were US$106 million, up 5% year-on-year. In 2021, its sales reached US$135 million. Syngenta once predicted peak annual sales of US$500 million.

Major commercialized sedaxane formulations are shown below, being mostly seed treatment suspensions: 

In China, Syngenta is currently the only sedaxane technical and formulation registrant.

Isopyrazam

Developed by Syngenta in 2003, isopyrazam contains four optical isomers, among which two cis isomers account for 70% to 100% while 2 trans isomers account for 30% to 0%.

Isopyrazam was used to control foliar diseases on cereals, including powdery mildew and eyespot. Cereals are the largest crop variety for the application of isopyrazam. In addition, isopyrazam can be used on fruit vegetables, brassica, gourd, banana, rape, pome and ornamental plants to prevent and control fungal diseases. The market growth of isopyrazam is mainly driven by its use on cereal and rapeseed in Germany.

The earliest temporary registration of isopyrazam was granted in the UK in 2010, followed by registrations and sales in many countries. Currently, isopyrazam has been registered and sold in 33 countries, including Germany, Argentina, Belgium, the Netherlands, New Zealand, China, Chile, South Korea, Austria, the Czech Republic, Romania and Italy.

In May 2022, the EU cancelled the registration of isopyrazam due to its reproduction toxicity classification of 1B. The cancellation came into effect on June 8, 2022. In November 2023, Brazil’s ANVISA conducted public consultations on fungicides containing the active ingredient, isopyrazam. In cases of negative feedback, it will impose direct restrictions on the sale of relevant pesticides in Brazil.

In 2016, global sales of isopyrazam were US$40 million, which reached US$50 million in 2021. Syngenta predicted peak annual sales of US$150 million.

Major commercialized isopyrazam fromulations are shown below, being mostly emulsifiable concentrates and suspensions:

In China, Syngenta is the only isopyrazam technical registrant.

China: At forefront of the fluorine-containing pesticidal intermediates supply chain

 

The synthesis of compounds is key to the development and application of formulations, while the most important task in terms of process, research and development is the preparation of core intermediates. Based on a survey of the synthetic route, the core intermediates of the above-mentioned SDHI fluorine-containing pesticides are outlined as follows: 

As seen from the above table, the core intermediates and key raw materials required for the synthesis of relevant pesticides include 3-(difluoromethyl)-1-methyl-1H-pyrazole-4-carboxylic acid (DFPA), 1-methyl-3-trifluoromethyl-1H-pyrazole-4-carboxylic acid, 2,3-dichloro-5-(trifluoromethyl)pyridine, Ethyl trifluoroaceta and trifluoroacetyl chloride, of which DFPA has been one of the most promising core intermediates in recent years. In addition, 1-Methyl-3-(trifluoromethyl)-1H-pyrazol-5-ol is also an important compound in the application of fluorinated intermediates.

As well as original research enterprises, other enterprises such as Deccan Fine Chemicals India Pvt. Ltd., and UPL Limited have obtained registration for relevant technical materials for export only. The figure below shows India’s import and export summary for required intermediates, together with an analysis of the distribution of downstream pesticides and its relevance to China.

DFPA

According to the survey, the world’s prime suppliers of DFPA are mostly distributed in China, India and the European Union, whilst China is the most competitive country for the supply of DFPA. Firstly, here is a presentation of the observed volume of DFPA purchased from India by the multinationals, Bayer, Syngenta and BASF (Fig1). 

As shown by the chart above, India’s total export of DFPA to multinationals has stabilized at more than 2,000 tons since 2020. In 2023, from India, Bayer imported 1,000 tons of DFPA accounting for 48% of India’s total exports; Syngenta Europe imported some 800 tons accounting for about 40%; BASF Europe imported roughly 200 tons, while Syngenta Nantong has stopped imports from India (Fig2).

At the time of this report’s publication, the unit price of DFPA exported from India is US$42.87/kg (approx. RMB310,000 yuan/ton), while the Chinese market price is approaching RMB250,000 yuan/ton. The lower price highlights China’s DFPA market competitiveness.

1-Methyl-3-(trifluoromethyl)-1H-pyrazol-5-ol

Indian imports continued to rise from 1,000 tons in 2021 to 2,000 tons in 2023 (Fig3). The intermediate is imported by the Indian PI as supplied by Kumiai Chemical, originating in Belgium, China, Japan and Switzerland, of which China’s share increased from 24% in 2021 to 35%, an increase largely attributable to supplies from China.

2,3-dichloro-5-(trifluoromethyl)pyridine

In 2018-2023, India’s imports mostly came from China, being imported mainly by Cropnosys India and UPL. However, in recent years, Indian enterprises have been able to produce considerable amounts of the product (Fig 4).

Ethyl trifluoroacetate

The import volume of this intermediate has remained relatively stable since its sharp rise in 2021-2022. In 2023, some 500 tons were imported, mostly by the Indian PI, relying on supply from China (Fig5). 

Trifluoroacetyl chloride

The importation of this intermediate in 2023 all came from China, highlighting the comparative advantage of the Chinese trifluoroacetyl chloride industry chain (Fig6). 

Overall, Chinese companies lead in supplying most of fluorine-containing intermediates. Although the Indian government encourages independent R&D and production, China is still the major supplier of a large variety of fluorine-containing intermediates. In the short-term, India might not be able to completely replace imports from China.

Upon the expiration of a compound patent, how can the market be developed?

Currently, the compounds of various SDHI pesticides have expired in China, and, except for the original manufacturers and only those for exports, no other Chinese companies have begun production. In India, a small number of SDHI pesticide technical materials have been granted registrations but only for exportation.

The expiration of compound patents creates opportunities in the fast-growing market where manufacturers can legally produce and sell generic SDHI pesticides coming off patent. However, interested manufacturers could face technical obstacles when replicating the original production process, such as the complicated fluorination technology required for the synthesis of key intermediate, such as DFPA. For this reason, companies must study relevant production processes to master synthesis of key intermediates or establish strategic cooperation with Indian companies in process development and production localization, to facilitate rapid market access.

In addition, patent expiration opens the door to opportunities for new formulation that combines SDHI active ingredients with other active ingredients, which can improve product performance. Product registrations can also be focused on key markets, such as Brazil, Canada and the United States.

Moreover, regulatory controls may have an impact on market access. Companies must closely monitor changes in residue limitations and use restrictions in different countries, and generating strategic data and preparing regulatory compliance plans are critical to market launch. For example, isopyrazam is facing strict regulation in Brazil and the EU. Going forward, will this happen to other SDHI products? AgroPages reminds companies to pay close attention to regulatory changes.

In general, the opportunities created by SDHI compounds cannot be ignored. A patent expiration usually brings about a golden time of 15 to 20 years, during which companies that effectively utilize production advantages and wisely respond to regulatory controls will be in an advantageous position to benefit from the new era in the agrochemical industry. With the global SDHI market being expected to break through US$3 billion by 2025, huge growth potential does exist in major agricultural countries. With regards to leading SDHI products, such as bixafen and fluopyram coming off patent, the future is promising.  

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2024 China Pesticide Industry Watch