BAYER CROPSCIENCE PROVIDES UPDATE ON ITS BUSINESS STRATEGY
Sep. 24, 2012
Source: Bayer CropScience news release
Bayer CropScience has a robust strategy in place and is geared for continued strong growth over the mid-term, said CEO Sandra Peterson at the company's annual press conference. "Bayer CropScience is on track for above market growth," she said. Backing the company's ambitions are plans to invest a total of EUR 7 billion between 2011 and 2016 in Research and Development (R&D) and an expansion of production capacities and seed processing facilities.
As part of this program, Bayer CropScience is committing funds of EUR 5 billion for its R&D operations to develop new solutions for the farmer in seeds, novel chemical and biological crop protection. These funds are intended to fortify Bayer CropScience's already promising pipeline of integrated agricultural solutions; the company anticipates that products launched during this period will have a combined peak sales potential of at least EUR 4 billion. The company also plans to invest in new production capacities and seed processing facilities to meet rising global demand for agricultural raw materials, by allocating a total of EUR 2 billion for such investments within the same time frame.
At the company's annual press conference today, Peterson emphasized that the company is well-positioned to propel farming's future by leveraging the opportunities ahead. "Bayer CropScience aims to lead the way in sustainable crop solutions, and we are heavily investing in R&D, as well as production capacities, to respond to global demand for differentiated crop solutions," Peterson said. In August, Bayer CropScience completed its close to USD 500 million acquisition of US biological pest control company AgraQuest, securing its foothold in the biologics market, which is expected to triple to almost USD 4 billion by 2020.
Peterson noted the strong progress the company had made since it launched its new four pillar strategy. The four pillar strategy is based on: 1) Rejuvenating its core Crop Protection business; 2) Reinventing customer-centricity along the entire value chain; 3) Refocusing innovation, and 4) Extending the company's Seeds business.
"Our four pillar strategy has transformed the company and set our path for future success," Peterson noted. "We have streamlined our portfolio and rebalanced the mix while accelerating the potential of new technologies. These all play a significant role in how we strive to propel farming's future."
Driving a world-class R&D portfolio
Bayer CropScience's R&D strategy and world-class portfolio are at the core of an aggressive plan that will see the company increase its R&D spend and invest EUR 5 billion from 2011 to 2016. This strategy focuses on reinforcing the company's best-in-class R&D portfolio in the agricultural industry by: delivering differentiated solutions meeting customers' needs; leveraging the company's expertise in seeds, small molecules and biologics to build a unique position in plant health; and developing a world class external network based on open innovation.
"With our strong expertise in seeds, chemistry and biological solutions Bayer CropScience is uniquely positioned in the agricultural industry," said Dr. C. David Nicholson, Bayer CropScience's Head of Research & Development. "Our goal is to develop integrated crop solutions that provide farmers with a full package of products and services for the entire growing cycle - from planting the seeds to helping their harvest arrive fresh and in perfect shape on the retail shelves."
To achieve this, Bayer CropScience has integrated its R&D operations across all its three divisions and disciplines. This enables the company to better leverage its full research and development capabilities - spanning weed, pest and disease management to stress-tolerance and yield enhancement - to focus on key crops.
New products lift peak sales potential
Attesting to the innovation potential of the company, Bayer CropScience CEO Peterson outlined the extensive range of new products that the company will bring to market over the period 2011-2016, showcasing solutions for its strategic crops. "The seed and crop protection solutions we develop are geared towards helping growers address some of the most critical issues they face. We believe the products that are in our pipeline of new seed, small molecules and biological crop solutions hold significant promise in the market, and expect the peak sales potential for our products being launched from 2011 to 2016 to be at least EUR 4 billion," Peterson revealed.
Investing in capacities to boost production
Bayer CropScience is also determined to secure its future growth by investing in production capacities and seed processing facilities. At the same time, through these investments the company aims to extend its cost and safety leadership in the industry.
Over the period 2011-2016, the company has earmarked EUR 2 billion to build up further facilities for the production of crop protection products as well as seed breeding, production and processing facilities.These plans will see the company invest in advanced process technology, substantially increase its global asset footprint, while at the same time enhancing its global supply flexibility.
"Given the strong global demand we expect to see for our products, we are significantly expanding the capacities of our top crop protection active ingredients, including our best-selling brands like the FoxTM fungicide family and Liberty TM / Basta TM herbicides," said Achim Noack, Bayer CropScience's Global Head for Product Supply.
The company is already expanding its global breeding network for various crops as part of plans to build up its global footprint in Seeds. "Our goal is to apply our worldclass production and supply chain expertise to our rapidly growing global seed production and processing infrastructure," Noack emphasized.
Share of Seeds business to double by 2016
Peterson also emphasized that the company's Seeds business - formerly referred to as BioScience - is set to continue its rapid pace of growth. "We expect Seeds to double to around 20 percent its contribution to the company's overall sales by 2016," she revealed. The unit recorded a 21 percent leap in sales in the first half of this year on the back of significant growth in broad acre crops.