monsanto MON_06/25/04
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monsanto MON_06/25/04

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monsanto MON_06/25/04 monsanto MON_06/25/04 Presentation Transcript

  • Monsanto Cotton Business Investor’s Tour June 25, 2004 Dr. Randy Deaton Director, Global Cotton Business
  • Key Messages • Leader in developing technology for cotton farmers • First-mover advantage – Proven technology – Established brands/market approach – Knowledge of market needs • Strategies in place to continue growth of business – Second generation products – Introduction of germplasm component thru Cotton States – Continued global expansion – Future products in development
  • Product Offerings Through 2002 • Introduced in 1996 • Largest agricultural product introduction ever • Planted on 5.7M* acres in 2003 (43% of total) • Introduced in 1997 • Planted on 9.9M acres in 2003 (74% of total) • The “standard” in herbicide tolerance traits – future Monsanto and competitive products must consider stacking with Roundup Ready® to succeed • Introduced in 1997 Represents 95% of Bollgard® sales and 55% • of Roundup Ready® sales in 2003 *Source: Monsanto estimates
  • Market Approach • Open architecture - licenses with almost all cotton seed companies • Thorough distribution/dealer coverage using agency approach – No inventory costs – Grower fee set by Monsanto • Grower licenses – Detailed information on product sales and customers – Market value pricing No one has been able to duplicate Monsanto’s success in marketing cotton traits.
  • Second generation products • Advantages over Bollgard® – Improved control of target insects – Improved spectrum of insects controlled – Improved IRM characteristics – could lead to improved refuge requirements for growers • Introduced in 2003 with premium pricing • Expect most growth to occur as second-generation Roundup Ready® is introduced
  • Second Generation Products • Advantages over Roundup Ready® – Wider window in which Roundup® can be applied over-the-top – Improved weed control and flexibility • Planned introduction as early as 2006 pending regulatory approvals • Anticipate rapid adoption
  • is highly anticipated: • By cotton growers • By the cotton industry • By Monsanto
  • Cotton States Monsanto’s Germplasm Initiative • Provides growers additional, innovative sources for seed with Monsanto traits • Provides independent and university breeders opportunity to access market and to do so with Monsanto’s traits • Provides germplasm licensees the opportunity for new revenue in seed and traits without large R&D investment • Provides Monsanto new outlets for our traits and gives us access to germplasm for future R&D innovations
  • Cotton States Business Model • Modeled after Monsanto’s Corn States business • How business works – Access germplasm • License from third parties • Develop in-house – Identify “winners” through extensive testing program – Introduce Monsanto traits – License germplasm with Monsanto traits to third-parties on “win-win” terms – Third-parties licensees create their own seed brands, inventory and sales • Established practice for corn and soy, but new for cotton
  • Cotton States 2003 Trial Results (top 11 of 29 tested) 1400 CS1 CS2 1200 CS3 CS4 Yield (lb lint/acre) 1000 CS5 800 CS6 CS7 600 CS8 CS9 400 CS10 CS11 200 DP 555 BR ST 4892 BR 0 FM 966 Varieties
  • Cotton States Planned Timeline First sales of Commercialize - Cotton States BGII/RRF material in CA products 2004 2005 2006 2007 Seed production Increase of broad-acre share germplasm
  • Rapid Market Share Gains Not Uncommon - e.g. FiberMax® Market Share Conventional w/MON traits 16% 14% 12% 10% 8% 6% 4% 2% 0% 1999 2000 2001 2002 2003 *Source: USDA
  • Existing Markets United States Bollgard 1996 RR 1997 China Bollgard II 2003 Bollgard 1997 Mexico Bollgard 1996 RR 2000 Colombia India Bollgard 2001 Bollgard 2002 RR 2004 South Africa Australia Argentina Bollgard 1998 Bollgard 1998 Ingard 1996 RR 2000 RR 2001 RR 2000 Bollgard II 2003
  • New Markets Egypt Brazil Pakistan French West Africa Future opportunities pending in next 4+ years.
  • New Innovations • QTL’s – “mining nature’s genes” – Yield – Quality – Abiotic and biotic tolerances • Drought tolerance • Lygus/stinkbug resistance
  • Strong IP Position in Key Markets • Existing patents give substantial IP protection to existing/future products • Patents pending for Bollgard II® and Roundup Ready® Flex that would provide protection through 2020+ in key markets – Notable decision recently with synthetic Bt patent by U.S. PTO
  • Competition • Bollgard® competitors – WideStrike™ by Dow in 2005? – VipCot™ by Syngenta in 2006+? – DeltaMax in ??? • Roundup Ready® competitors – BXN® by Bayer in 1995 • Stoneville dropping BXN® after this year – Liberty Link™ by Bayer in 2004 – Glyphosate tolerance by Syngenta/Dupont/DeltaMax in 2008+? • Monsanto pipeline products – none as visible as these
  • Hurdles for “Me-Too” Competitors • Monsanto’s: – second gen products with superior performance and value – established brands and market approach • Regulatory uncertainties (esp. IRM disadvantages) • IP uncertainties • Lack of interest by seed companies – Limited R&D dollars to invest in new traits – Aversion to inventory risk – Lack of financial incentives
  • Summary • Planned growth through: – continued innovation – capitalizing on first-mover advantage • Cotton States key component of business strategy • Well positioned to manage future business uncertainties