Specialist
Former senior executive at Bayer AG
Agenda
- Biopesticide market assessment and growth outlook
- Cost trends in biopesticide production and pricing dynamics
- Supply-demand for biopesticides and market share development
- Key producers, highlighting Bayer (ETR: BAYN), Corteva (NYSE: CTVA), BASF (ETR: BAS), Novozymes (CSE: NYZM B) and others, and medium-term outlook
Questions
1.
The global biopesticide market was around USD 5.6bn in 2021, which is around 6% of the USD 85bn pesticide market. What do you think of these numbers? How would you size the market?
2.
What do you think is a reasonable penetration in the next 5-10 years?
3.
How would you segment the biopesticides market across biochemical, microbial and plant-incorporated protectants? Would you segment it differently?
4.
Do biopesticides grow the total pesticide market or do you see them taking share from pesticides? I imagine there are cases where it’s additive and a substitution.
5.
What drives uptake? How do you think about ROI or the environmental impact and whether people are willing to pay a premium for that? Is this primarily an efficacy and cost improvement point, or is it more around environmental concerns driving uptake that gets passed through to the consumer?
6.
What part of the biopesticides market is net positive for biodiversity and CO2 emissions? Are other products riding that wave that perhaps aren’t as good for the environment? How do you think about the split between the two?
7.
Are you particularly excited or concerned about any products?
8.
How do the biopesticide types, efficacy, price and ROI change across the different crop types? Are any particularly strong in soy, corn, fruit and vegetables? Which crop categories are you particularly excited about, or which are more challenging?
9.
What is your outlook for biopesticides’ cost decline? Do you think this will contribute to the uptake, or will the premium increase due to political pressure or customers willing to pay for it?
10.
How are you viewing efficacy improvements? Do you think there is much further to go here, or have the key bacteria strains been found?
11.
How much capacity is there in the market, and how do you assess the ability to ramp up production? Is this a capital or feedstock issue, or is it more a demand issue and ramping capacity is actually quite easy?
12.
What feedstocks go into making these biopesticides, and what is their availability?
13.
You said time and capital aren’t really issues on the capacity side. How much of both does it take, both with and without supply chain disruption? Are you ramping things up in a year or less?
14.
Can you outline the regulatory environment for biopesticides and the headwinds and tailwinds?
15.
Do you see the current regulatory framework as being particularly supportive of biopesticides, or has it still got quite a way to go?
16.
How would you compare the major competitors on biopesticides, such as Syngenta, Bayer, Novozymes, Marrone, Sumitomo and Certis? Are there any clear winners or leaders?
17.
Is there a meaningful difference across the main players’ strategies? Are they focusing on different market segments? How would you segment the competitive set?
18.
How do you think about the positioning of players such as Novazymes, which don’t have the seed portfolio of a Bayer or Syngenta?
19.
How do the economics of the partnerships you mentioned typically work?
20.
Bayer said it had 270,000 microbes in collection and 1,400 trials in 38 countries in 2020 in crop protection biologicals, with 80 million acres of commercial products in row crops annually. How does this compare to a player such as Syngenta, and how do you think about Bayer’s size in this market?
21.
How do you think about biopesticides’ economics for the major producers? Do you expect it to be margin-expansive or -dilutive for their overall crop protection portfolios?
22.
Would you expect the ROIC to be higher for biopesticides than traditional pesticides? You said production is quite easy to expand.
23.
What EBITDA multiples would you expect the larger companies to be paying on these biopesticide businesses?
24.
Would anything make you consider going for the higher end of the EBITDA multiple range? What are the characteristics of these assets?
25.
How do you see soybean seeds market share developing between Corteva and Bayer? Bayer’s XtendFlex came out in the last year. Do you expect that to stop share loss to Corteva’s Enlist E3?
26.
How much better is XtendFlex than Xtend in terms of yield or farmer ROI yield?
27.
BASF and Corteva recently announced a partnership to develop new soybean weed control solutions. Do you see this meaningfully impacting Enlist E3’s overall product offering and how that impacts Corteva’s mid-to-long-term market share vs Bayer?
28.
Why did Bayer recently decide to carve out its Environmental Science business and how has PE acquiring it played out?
29.
How does Bayer’s Environmental Science carve-out change the glyphosate risk profile of both businesses?
30.
How do you see the glyphosate positioning developing?
31.
How many years of glyphosate non-registration do you expect in Europe? If it manages to get re-registered, will there be any hit to top line? How do you think about the base case?
32.
How do you see the European gas crisis impacting biopesticides and pesticides? Where do you think the biggest impacts will be for crop protection seed players? Are there any positives for biopesticides such as getting substitution in from more competitive pricing?
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