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Novozymes, Monsanto announce new $300 million pact

By From page A3 | December 11, 2013

Two companies that are international powerhouses in the bioagricultural field — both of which have long-standing research-and-development operations in Davis, employing dozens of Ph.D.s — announced a $300 million cooperative agreement Tuesday.

Novozymes and Monsanto will enter into “a long-term strategic alliance to transform research and commercialization of sustainable microbial products that will provide a new platform of solutions for growers around the world,” according to the announcement, datelined Copenhagen (where Novozymes is based) and St. Louis (where Monsanto’s headquarters are located).

“The BioAg Alliance is unique in the industry, bringing together Novozymes’ commercial bio-ag operations and capabilities within microbial discovery, development and production with Monsanto’s microbial discovery, advanced biology, field testing and commercial capabilities,” the statement said.

A Novozymes spokesperson told The Enterprise that some of the research under the BioAg Alliance will be done in Davis, but added, “It’s too early to tell exactly where the work will be done. Novozymes and Monsanto both have talented BioAg R&D teams around the world and we will be thinking about how to use our sites and talents in the best way to bring new products to market.

“We will still rely on colleagues across the global R&D organization for the important work necessary for success,” the spokesperson said. “As part of our evaluation, we will also consider our future talent needs.“

Said Peder Holk Nielsen, CEO of Novozymes, “Today, we forge a game-changing alliance with the potential to transform global agriculture. The combined capabilities of Novozymes and Monsanto create an innovation powerhouse with a unique opportunity and approach to unleash the transformational opportunity in naturally derived microbial solutions in agriculture.”

And Robb Fraley, chief technology officer of Monsanto, said, “Monsanto, Novozymes and the farmer customers we serve share a need to meet growing demand in a sustainable way, and investing in the research and development of agricultural biological technologies like microbials is another step in that direction and a natural extension of our core business.”

The statement portrayed the new alliance as mutually complementary.

Over the past decade, Novozymes has “leveraged its know-how and experience in industrial enzymes and microbial technologies to build global positions in the agricultural biologicals market with a broad and proven product portfolio,” the news release said. Novozymes’ annual revenue in 2012 neared $120 million.

“Combining its strengths within microbial discovery, application development and fermentation and its leadership position in the agricultural biologicals market, Novozymes brings an established and unique starting point for the alliance to accelerate from in both the short and long term,” the release added.

Monsanto has a research team working on microbial solutions and has one of the most extensive seeds and traits discovery, field-testing and commercial footprints in the industry, the statement said.

“All this will help accelerate microbial development through the alliance, enabling more farmers to get more solutions, faster. Last year the company introduced its agricultural biologicals platform and earlier this year acquired the assets of the agricultural company Agradis Inc. as it builds out its discovery capabilities in the microbial space.”

Under the new collaboration:

* “Monsanto and Novozymes will maintain independent and complementary internal and external discovery research programs to identify microbial targets with the potential to help farmers.”

* “Novozymes will be responsible for production and supply of the microbial solutions to Monsanto, building on its expertise within fermentation. Monsanto will serve as the lead for field testing, registration and commercialization of all alliance products.”

* “The companies will co-manage the alliance and co-fund research and development efforts.”

* “Monsanto will pay Novozymes an aggregate upfront payment of $300 million net in recognition of Novozymes’ ongoing business and microbial capabilities, and for Novozymes to supply alliance products.”

The statement indicated “Marketing responsibility for Novozymes’ current product portfolio in agricultural biologicals will be transferred to Monsanto, along with much of the Novozymes commercial organization currently responsible for that work. The two companies will work to ensure that existing customer relationships and know-how are maintained and further built on for short- and long-term success.”

Both companies “will benefit from profits on commercialized products resulting from this alliance and those products brought into the alliance by the parties. Through the alliance, the companies will also test and sell commercial microbial products purchased from other suppliers to bring additional value to farmers,” according to the statement.

The agreement is subject to the approval of national antitrust authorities. The alliance is expected to close in early 2014. Further terms of the alliance were not disclosed.

Jeff Hudson

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