OXFORD - The consolidation of the global agrochemical and seeds industries has created a whole new raft of opportunities for agbio start-ups. And paralleling the experience of their biopharmaceutical cousins, the focus of most of the new generation of plant science companies will be on enabling technologies rather than products.

The market's perception of plant biotech is that of failure. Yet this is not wholly true, because the first generation companies were able to develop a science and technology that is now having a major impact on the agrochemicals and seeds businesses, even though the first genetically modified plants were created less than 15 years ago. However, investors never realized the full value of the first-generation technology because the agrochemical companies stepped in and acquired them.

And, while most investors have lost interest, industry analysts are finding continuing reasons to predict that plant biotech will have an impact in the future. It is clear that in the agrifood world, biotechnology will have a major impact and probably only those companies with a handle on the science will survive.

For companies in the $30 billion agrochemicals sector, the issue appears fairly simple. "Insect resistant seeds are reducing the need for insecticides, and herbicide tolerant seeds are driving a shift in herbicide market shares," noted analyst Mark Wiltamuth of NatWest Securities.

"Because of this technology, we expect to see slow growth ahead in the agrochemicals segment, with the technology haves - Monsanto, Novartis, AgrEvo, DuPont and DowElanco - benefitting, while the technology "have nots" - Bayer, Zeneca, American Home Products and Rhone-Poulenc - could see declining sales in their insecticide and herbicide businesses."

Moreover, the seed companies, once dogged by poor margins, also are emerging as significant beneficiaries of plant biotech. "For seed companies, the 'gene fees' charged on the new biotech seeds translate to higher margins and earnings growth rates," said Wiltamuth (see chart). "Over the next three years, we estimate that the ramp into these new seeds will drive compound annual earnings growth of approximately 30 percent to 40 percent for Delta and Pine Land, 40 percent for DeKalb Genetics and 16 percent for Pioneer Hi-Bred."

As it has become clear that biotech is as crucial to the sustainability of the agrochemicals and seeds companies as it is to the pharmaceutical industry, many of the leading agrochemicals companies have been busy ensuring that they have the necessary intellectual property positions to move forward.

Most obvious among them has been Monsanto Co. (St. Louis, Mo.), which thus far has spent more than $1 billion acquiring both first generation companies such as Calgene Inc. and accessing the genomics capabilities of the likes of Millennium Pharmaceuticals Inc. (MLNM, Cambridge, Mass.). and Incyte Pharmaceuticals Inc. (INCY, Palo Alto, Calif.).

However, this strategy does not guarantee Monsanto will get its own way all the time. Only last week, Pioneer Hi-Bred International Inc. (Des Moines, Iowa), the most influential corn seed company, sent a letter to its customers telling them that it will not carry the Roundup herbicide resistance trait in corn. Pioneer blamed what it characterized as restrictive terms proposed by Monsanto.