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WORKING  DOCUMENT Rev. 2
Directorate-General for Agriculture

Economic Impacts of Genetically Modified Crops on the Agri-Food Sector

APPENDIX A

PROFILES OF THE LEADING AGRI-BIOTECH FIRMS

AgrEvo (Headquarters in Germany)

AgrEvo (A company owned by Schering and Hoechst, the latter having merged with Rhone Poulenc to form Aventis) is the fourth largest global agricultural and chemical producer and marketer. A high proportion of sales revenue is spent on research and development (13%) of which 80% is spent on chemicals and 20% is spent on biotechnology. The company has invested heavily on seed activities. In 1999, it acquired three Brazilian seed companies (Mitla Pesquisa, Sementes Ribeiral and Sementes Fartura). All three companies specialise in hybrid corn seed. AgrEvo also completed the acquisition of Biogentic Technologies B.V. (BGT). BGT is a 100% owner of the Proagro Group, which has its headquarters in New Delhi, India. In overall terms, Proagro is the second largest Seed Company in India and is ranked number one in corn, millet and forage sorghum and number two in India in sunflower and grain sorghum.

AgrEvo's investment in genomics has been quite substantial in the latter part of 1998 and continues in 1999 with its 95% acquisition of PlantTec Biotechnologie in September of this year and its acquisition of GeneX (terms undisclosed) in October 1999. The company has extensive agreements with numerous research institutes and Genomics corporations such as Cotton Seed International Proprietary Ltd, Gene Logic, Center for Plant Breeding & Reproductive Research and Lynx Therapeutics.

Novartis (Headquarters in Switzerland)

Novartis was formed in 1996 as a result of a merger between Ciba-Geigy (agro-chemicals) and Sandoz (pharma) and has core businesses in healthcare, agribusiness and nutrition. It is a lifesciences company and has invested significantly in agricultural biotechnology and genomics. In October 1998 the company announced that it would invest US$600 million in plant genomics. This would involve the formation of the Novartis Agricultural Discovery Institute (NADI) which would be located in San Diego, California. The company is involved in numerous collaborations with agrigenomic partners.

In terms of acquisition of seed companies, Novartis acquired the majority of the seed activities of Eridania Beghin-Say, a company that specialises in breeding, producing and marketing field-crop seeds. The transfer of activities include the majority of the Italian subsidiary Agra, the French Agrosem companies the Spanish Koipesol Semilla company as well as Hungarian and Polish seed activities.

Although Novartis holds participations in the food industry, its strategy appears to be more input-oriented, at least for the time being. Among the partners of Novartis in the food industry, the example of Gerber illustrates the case of non-integration between biotech and food activities. Gerber announced earlier this year that it would not include GM ingredients in its baby food.

Monsanto (Headquarters in the US)

Monsanto spinned off its chemical activities in 1997, and instead acquired biotech firms such as Calgene. It already entered the seed market in 1996 when it formed a strategic alliance with DeKalb Genetics. Continuing on from this, Monsanto purchased a 40% stake of DeKalb in the first half of 1998 for US$2.5 billion. This gives Monsanto an important outlet for its Roundup Ready and YieldGard varieties. In September 1996 Monsanto acquired Asgrow Agronomics for US$240 million. Asgrow Agronomics has 45% of its sales in Soybeans. In January 1997 Monsanto agreed to buy Holden's Foundation Seeds for US $1.02 billion. This acquisition along with other key acquisitions has given Monsanto key channels of distribution for its genetically altered/modified seeds. Then in 1998 Monsanto announced an acquisition plan for Delta and Pineland outright for US$1.9 billion. Delta and Pineland specialises in GM cotton and it already distributes Monsanto's Bollgard, Ingard insect-protected cotton and Roundup Ready Cotton. Monsanto however dropped this plan in early 2000, following both concerns expressed under the Anti-Trust Law and terms agreed under the merger with Pharmacia. Finally in July 1998, Monsanto acquired Plant Breeding International Cambridge (PBI) for US $525 million. PBI, a UK-based company, specialises in the breeding and marketing of winter wheat, barley, rapeseed, potatoes and other crops. Taken together all the above acquisitions give Monsanto a considerable market share of the seed business both in the United States and in South America.

In addition to the above acquisitions, Monsanto also entered into a number of agreements with both seed companies and genomic research institutions. In April 1998 Monsanto obtained licenses to all aspects of GeneTrace's technologies for plant and animal agriculture.

While Monsanto has heavily invested in input-traits and seed activities, it also has a portfolio of second-generation products, which are more oriented towards food processors/consumers. In the early part of this year Monsanto entered into an agreement with Cargill to create and market new products enhanced through biotechnology for the crop processing and animal feed markets.

Dow Agroscience (Headquarters in the US)

Dow Agroscience is a wholly owned subsidiary of The Dow Chemical Company and was formed in 1998 after Dow purchased the remaining shares of its joint partner Elli Lilly. The joint venture between Eli Lilly and Dow was formerly known as DowElanco. Dow's commitment to biotechnology was exemplified by the formation of a new company in September 1998 called Advanced AgriTraits LLC. The strategy of the new company involves developing the company's own technology and forming alliances with other companies to expand its biotechnology base in a cost-effective way. Dow Agroscience formed a strategic partnership and controlling interest in Mycogen in 1996. Mycogen is the sixth largest Seed Company in the United States. Mycogen is the biotech arm of Dow Agrosciences and concentrates on agronomic traits for new plant varieties. Dow Agrosciences also has numerous agreements with many different companies. The agreements are for the most part concerned with crops such as corn and canola. At the end of 1997, Dow signed an agreement with Seed Genetics Inc. to develop, market and license high oil corn inbreds using DowElanco's technology (now Dow Agroscience), as well as biotech traits as they become available. In 1998 Dow formed an alliance with three major companies, Performance Plants Incorporated, BioSource Technologies Inc. and Illinois Foundation Seeds all of which are in genomics. In the second 1999 Dow formed a joint venture with Danisco to develop new varieties and hybrids that will increase the value of canola to customers.

Zeneca (Headquarters in the UK)

In 1994, Zeneca introduced the first GM-food crop on both the US market, namely an increased pectin tomato. Proceedings for authorising its introduction on the EU market are on-going. Therefore, Zeneca is considered to have an output-oriented strategy. Nevertheless, it also has invested in the seed market, as well as in input-traits. In 1996, Zeneca and Van der Have formed Advanta, which now accounts among the top 5 of the seed industry. It then acquired several biotech companies active in disease resistance and quality traits. In 1998, Zeneca seeds formed an alliance with American Cyanamid, to combine Zeneca's expertise in biotechnology and Cyanamid's one in herbicide tolerance. Cyanamid was the first company to introduce herbicide tolerant corn in 1992, however it is not considered as transgenic. This company has searched for ways of naturally incorporating herbicide tolerance into the plant through traditional and hybrid methods of plant breeding.

Rhone-Poulenc (Headquarters in France)

Rhone-Poulenc is a lifesciences company and has over 200 production plants in Austria, Brazil, France, Germany, Italy, Spain, Switzerland, UK and the United States. In December 1998 it announced a merger with Hoechst (owner of AgrEvo, together with Schering) to create Aventis. The merger was effective in December 1999, with the first quotations for Aventis on stok exchanges places. Hoechst and Rhone-Poulenc have agreed to spin-off their chemical activities before merging. As a result, Aventis will focus on life-sciences, in particular on pharma (70% of the turnover). Its agri-biotechnology sector is quite small but is a growing part of the overall operations of the company. The plant and animal health sector contributed 19% of total sales in 1998, which were US $15.5 billion in total. Unlike its counterparts in the United States, the strategy of Rhone-Poulenc has been to focus on joint ventures and research agreements without the cost that would be involved in acquiring seed companies. The company has a number of agreements in the area of genomics, including, Biogemma, The National Agricultural Centre Brazil (which will pursue the development of GM soybeans) and Dow Agroscience where the collaboration will focus on GM traits in corn, canola, soybeans, sunflower and cotton.

DuPont (Headquarters based in the US)

DuPont formed a joint venture with Pioneer in 1997 in which DuPont purchased a 20% stake in Pioneer for US$1.2 billion. In November of this year DuPont purchased the remaining 80% of Pioneer for US$7.7 billion. Although DuPont has gained an extended access to the seed market by acquiring Pioneer, it is considered to be more output-oriented. While other companies have focused on input traits i.e. those traits which are of particular benefit to farmers in improving the yield of the crop, Du Pont has remained focused on output or value added traits or those traits which are of direct benefit to the processor and consumer. In addition, Du-Pont/Pioneer has also developed quality traits by conventional breeding. Pioneer seeks to improve the output traits of crops and specialises in GM corn, soybeans and other oilseeds in order to improve their oil, protein and carbohydrate composition. In January 1998, DuPont acquired Protein Technologies International for US$1.5 billion. Protein Technologies International supplies soy proteins for the food and paper processing firms and has a 75% market share worldwide for soy proteins. DuPont also has a number of agreements with research institutes such as the John Innes Centre and has an agreement with Lynx Therapeutics in which DuPont will have exclusive access to Lynx's DNA sequence analysis technologies for the study of corn, soybeans, wheat and rice.

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