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Bayer CropScience Plans 7 Billion Euro Investment

Bayer CropScience Plans 7 Billion Euro Investment

22 September 2012

ANALYSIS – Through 2016, Bayer CropScience plans to invest heavily in Research and Development (R&D) and an expansion of production capacities and seed processing facilities, writes Sarah Mikesell, TheCropSite senior editor.

At the company’s annual press conference in Monheim, Germany, CEO Sandra Peterson, said Bayer CropScience is "on track for above market growth". Demand for increased global agriculture production is a major factor in their plans.

"We have limited arable land, so we have to work harder, better and smarter everyday to meet the needs of the 7 billion people on the planet today and that number is only going to go up," Peterson said. "Based on general predictions, by 2050 we have to increase food production by about 70 per cent to meet the increased demand of an ever-hungry world. We have to do it the right way - in a sustainable manner, a socially responsible manner."

Members from the Executive Committee of Bayer CropScience at the Annual Press Conference. From left to right: Lykele van der Broek (Chief Operating Officer), Michael Schulz (Chief Financial Officer), Rüdiger Scheitza (Head of Strategy & Business Management), Sandra Peterson (Chief Executive Officer), Achim Noack (Head of Product Supply), David Nicholson (Head of Research and Development), Steffen Kurzawa (Head of Communications).

With a program running through 2016, Bayer CropScience has committed €5 billion for its R&D operations to develop new farmer solutions in seeds, traditional chemicals and biological crop protection. The company anticipates that products launched during this period will have a combined peak sales potential of at least €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 €2 billion for such investments within the same time frame. Bayer plans to build up capacity for top crop protection products including Liberty/Basta herbicide (alternative to glyphosate), the Fox fungicide family and Prosaro fungicide.

“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 $500 million acquisition of US biological company AgraQuest, securing its foothold in the biologics market, which is expected to triple to almost $4 billion by 2020.

Peterson said the company’s Seeds business is expected to contribute about 20 per cent growth to the company’s overall sales by 2016 by doubling in size. The unit recorded a 21 per cent leap in sales in the first half of this year on the back of significant growth in broad acre crops.

The growth of the Seed business will come from expansions in geography and additional crops.

"If you would have looked at us five to eight years ago, we would have had canola in Canada, cotton in the US, rice in India and vegetables globally," said Lykele van der Broek, Bayer CropScience Chief Operating Officer. "We have been expanding the last two years into other geographies. We'll go into oilseeds in Canada; we are present in oilseeds in Europe. As for cotton, we've gone into Brazil and we'll go into India. The additional expansion is our recent entry into soybean seed in North and South America. Also in wheat breeding - the European market is one of our target markets."

Bayer's R&D Portfolio

Bayer's R&D strategy is at the core of an aggressive plan that will see the company increase it's R&D spend. This strategy focuses on reinforcing the company’s 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
  • 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. David Nicholson, Head of R&D. “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.”

Pipeline Peak Sales Potential of at Least €4 Bn (2011-2016*)

Investing in Capacity

Bayer CropScience is also expecting to secure future growth by investing in production capacities and seed processing facilities.

The company plans to invest in advanced process technology, substantially increase its global asset footprint, while at the same time enhancing its global supply flexibility.

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 world class production and supply chain expertise to our rapidly growing global seed production and processing infrastructure,” Achim Noack, Head of Product Supply, said.

Sandra Peterson's Departure

During the press conference, Peterson responded to a question regarding her pending departure as CEO of Bayer CropScience, noting that it was a personal decision to return to the US to be closer to her family.

Peterson will begin her new role as Group Worldwide Chairman with Johnson & Johnson on December 1.

Sarah Mikesell, Senior Editor

Sarah Mikesell, Senior Editor

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