Monday, December 4, 1995
It sometimes appears as if the agricultural biotechnology companies are disappearing before our eyes. Monsanto plans to buy half of Calgene Inc., biosys has acquired AgriDyne Technologies Inc. and Crop Genetics International, and ESCAgenetics Corp. has let most of its employees go. There are hardly enough companies to call ag bio a sector, stocks of the public companies trade at an average price of $3.86, and if biotech companies on the pharmaceutical side think venture capital is scarce, they should talk to their ag bio cousins.
But while a superficial look at ag bio might lead to reports of its untimely demise, a closer inspection reveals a more complex - and interesting - picture.
As in drug development, biotechnology has been fully integrated into the tools of plant breeding and pest control. The regulatory issues surrounding transgenic crops, herbicides and pesticides have largely been resolved. With the exception of bovine somatotropin, the anti-biotech forces have been unable to mobilize consumers against transgenic foods. And most importantly, the number of marketed ag bio products is much larger than a casual observer might guess, with numerous new products coming through the pipeline.
To understand why investors have abandoned the sector and, more importantly, to understand what ag bio companies must accomplish going forward, it pays to look at where companies have stumbled in the past.
Ag bio started later than biopharmaceuticals, and from a lower science and funding base. Work in the early 1980s focused on the basic enabling technology to transform plants and express genes. Only in the latter half of that decade was there any true commercial development, according to Simon Best, CEO of Zeneca Plant Science.
"When we started in 1981, no one knew how to get a gene into a plant," said Russell Smestad, co-general manager of Agracetus Inc., a Middleton, Wis., subsidiary of W.R. Grace. "We invested a lot of time and energy coming up with a toolkit that was enabling. As a result the timeline seemed atrociously long. Now the development cycle is a more normal seven to 10 years."