Monsanto Set to Meet 2012 R&D Pipeline Goals
Grant said the company is on track to expand the seeds and traits side of the business at a 20 percent compound annual growth rate from 2007 to 2012. He also reaffirmed the company's commitment to double 2007 gross profit by 2012.
14 Aug 2009 Monsanto Company's R&D pipeline is on the verge of a technology explosion that is expected to deliver value-added products with improved yield for growers and has the company poised to meet its goals for 2012 and beyond, Hugh Grant, Monsanto's chairman, chief executive officer and president, has told investors.
"We see substantially increased demand from agriculture, and the most sustainable way to meet that demand is to create more yield on existing acreage," Grant said. "We have committed to using our technology to double yields in our three core crops - corn, soybeans and cotton - by 2030, while reducing our use of key resources by one-third per unit produced. Innovation has us well on our way to achieving this, with our most robust pipeline ever. We're on the verge of an unprecedented technology explosion that will deliver the types of products growers want most - those that offer greater yield and value."
Grant said the company is on track to expand the seeds and traits side of the business at a 20 percent compound annual growth rate from 2007 to 2012. He also reaffirmed the company's commitment to double 2007 gross profit by 2012. By 2012, Grant said seeds and traits are expected to reach $7.3 to $7.5 billion of gross profit, approximately 2.5 times its 2007 level, and the Roundup division is expected to provide approximately 10 percent of total gross profit at approximately $1 billion.
Reinforcing Monsanto's commitment to deliver seven new high impact technologies (HIT), on average one a year, Grant said the projects have the potential to deliver an incremental $3 billion in gross revenues by 2020 in the first countries of launch. The company's HIT projects include traits from the drought-tolerant corn family; the broad-acre, higher-yielding corn and soybean families; and the nitrogen-utilization corn family, all of which are part of Monsanto's yield and stress collaboration with BASF; as well as insect-protected soybean technology for Brazilian farmers.
"These projects came to be through a disciplined investment in seed and biotech that is unmatched in the industry," Grant said. "We consistently invest 14 to 15 percent of our total net sales for seeds and genomics in research and development for breeding and biotechnology. This investment underlines our commitment to continued innovation and growth."
Grant announced that Monsanto-branded Genuity SmartStax is expected to be offered to farmers on 3 to 4 million acres in 2010, the largest corn biotech launch to date. Genuity SmartStax, created through a cross-licensing agreement and research and development collaboration between Monsanto and Dow AgroSciences LLC, a wholly-owned subsidiary of The Dow Chemical Company, recently received regulatory registration from the United States, Canada and Japan.
Genuity SmartStax is the agriculture industry's most advanced, all-in-one corn trait platform featuring a combination of insect control traits that significantly reduce the risk of resistance for both above- and below-ground pests. This will allow reduction of typically structured farm refuge from 20 percent to 5 percent in the U.S. Corn Belt and Canada and from 50 percent to 20 percent in the U.S. Cotton Belt.
Monsanto continues its extensive, multi-year research of a refuge in the bag (RIB) concept, a blended seed system that would allow a farmer to plant one bag of seed that contains all of the necessary refuge seed for both above-ground and below-ground requirements. The U.S. Environmental Protection Agency's decision to grant a lower structured refuge to 5 percent in the Corn Belt is a critical first step to a commercially-viable RIB product. Monsanto is evaluating the scientific data, and most importantly, the value to farmers delivered through RIB with Genuity SmartStax, and will make a final commercial decision on Genuity SmartStax RIB after all yield trials are analyzed late this year.
The company expects seed production for Genuity Roundup Ready 2 Yield in 2010 to reach 7 to 8 million acres across additional relative maturity zones. Genuity SmartStax and Genuity Roundup Ready 2 Yield will be the platforms for all new traits to come and will create the value to allow for incremental pricing and mix lift as they become an increasing portion of Monsanto's portfolio.
"As a technology company in the agricultural space, our right to be a partner with growers is purely a function of the value we create and the value we share," Grant said. "Every decision we make about our business is rooted in these two basic principles. All things being equal, the sharing with the grower matters the most, and that sharing gives us the permission to sell more seed with more technologies year after year. Our pricing has the flexibility built in to ensure the grower captures the greatest return from his seed investment, irrespective of market volatility."