Bayer Crop Protection
With Innovation and Investment into the Future
Crop Protection
Crop Protection World Market in 2000: Recovery
Herbicides:
ì
Insecticides:
ì
Fungicides:
è
35
Europe/Intern.:
ì
30
NAFTA:
è
25
Asia/Pacific:
ì
20
Latin America:
ì
bn Currency
2000
1985
1988
1991
1994
Euro (€)
1997
US$
Source: Bayer Crop Protection Estimates
Crop Protection
2000
15
Market growth: + 13% in €
( + 0.8% in US$ )
Market Performance - Key Factors in 2000
•
•
•
•
•
Continued low commodity prices and depressed farm incomes
•
•
Economic improvement in Latin America and East Asia
Decreasing market in the EU
Ongoing decline of Japanese rice area
Continuing consolidation process (Industry and Trade)
Euro value decline against strong US Dollar
Very modest rise in green biotech crop plantings
Market increase of 13% in € (0.8% in US$) for Agrochemicals
Crop Protection
Bayer: Key Factors for Growth in 2000
New Launches
Ÿ Calypso® next generation chloronicotinyl insecticide with a new
Ÿ Everest®
Ÿ Melody®
spectrum of activity widens portfolio ensuring long term
leadership in this segment
new grass herbicide with excellent performance incl. resistant
wild oats poised to achieve significant market share in North
American wheat market
speciality oomycete fungicide already shows outstanding
potential in the biggest fungicide segment
New Products
Ÿ Win®
innovative rice fungicide achieves sales of over 50 mio €
in the third year with further potential
Ÿ Axiom®
Ÿ Teldor®
Ÿ Impulse®
Crop Protection
high performance graminicide in corn with strong market
acceptance in the US incl. perfect fit in herbicide tolerant crops
new class botrytis fungicide doubling sales in the second year
to over 20 mio €
speciality fungicide against mildew in cereals and grapes with
further 20% sales increase
Bayer: Key Factors for Growth in 2000
Outperformers
Ÿ Confidor® / Gaucho®
Ÿ Folicur® / Raxil®
Ÿ Seed Treatments
increased sales again by over 15% to a record high of
over 560 mio €
consolidated sales at 250 mio € against fierce
competition
sales increase to 285 mio €, achieving a market share
of 35 %
business unit grew again by 30 % to over 260 mio €
Ÿ Garden / Prof. Care
Strategic Acquisitions
Ÿ Misung Ltd.
successful integration in Korea doubled Bayer
market share
Ÿ Bayer-Pursell
Ÿ PBI Home & Garden
Ÿ Flint®
Ÿ Mikado®
Crop Protection
established as key player in the US Home & Garden
market, now 100% owned by Bayer
strengthening the European Home & Garden business
highly profitable second generation strobilurin
fungicide
the leading corn herbicide in Europe
Crop Protection Breakdown by Business Units 2000 (E)
Bayer
World Market
2.46 bn € / MS 8.1 %
30.3 bn €
11%
8%
26%
18%
42%
46%
20%
Insecticides
Crop Protection
29%
Fungicides
Herbicides
GPC
Crop Protection Regional Breakdown 2000 (E)
World Market
Bayer
30.3 bn € / + 13%
2.46 bn € / + 13%
12%
14%
(9%)
24%
14%
15%
36%
(14%)
(41%)
13%
16%
(14%)
31%
25%
(22%)
Europe
NAFTA
International
Latin America
North East Asia
(1999 figures in brackets)
Crop Protection
Bayer´s Operating Margin is Consistently Ahead of the Industry Average
(excl. special items)
Operating Margin (%)
Bayer profit 2000 expected to be in the same range as 1999
1998
1999
2000E
Bayer Crop Protection
Ø Top Six Crop Protection Companies*
*Calculations based on Reports of - JP Morgan, Lehman Brothers, Credit Suisse First Boston, Dresdner Kleinwort Benson
Crop Protection
Bayer`s Strength in Insecticides & Fungicides Secures High Profitability
Insecticides
Fungicides
250
250
193
200
150
100
50
Index
262
156
100
250
140
141
2000
2005
50
Index
144
2000
2005
100
1995
Market Development
Bayer Sales
143
100
Crop Protection
100
142
188
150
50
Index
100
Herbicides
200
100
158
150
100
1995
200
145
100
109
1995
2000
2005
(Bayer Estimates based on €)
Bayer`s Strength: Growth by Capturing Opportunities
3500
Crop Protection Sales in mio €
3250
3000
350
Product Acquisitions
400
New Business and
Product Opportunities
2500
2000
1500
1000
2046
2178
1998
1999
2455
2500
2500
2000 E
2003
Plan 2000
2003
Plan 2001
500
0
Crop Protection
Imidacloprid No.1 Insecticide - Innovative Chemistry and
New Applications Boost Sales to Over 560 mio €
Seed treatment
Soil treatment
Leaf treatment
Stem treatment
dressing, pelleting
granules, tablets,
liquid applications
sprays
brush applications,
“painting”, injection
- sugar beet
- cereals
- corn
- sunflower
- cotton
- rice
- vegetables
- potatoes
- lawns
- ornamental plants
- tobacco
- pome and
stone fruits
- cotton
- grapes
Crop Protection
- citrus fruits
- hops
- pome fruits
- ornamental trees
The Glassy-Winged Sharpshooter - Evolution Creates New Markets
Glassy-Winged Sharpshooter
migrates from Citrus to Grapes
Uncontrollable bacterial Pierces
Disease transmitted by GWSS in Grapes
Serious Crop Damage traditionally
controlled by Chain Saw
Innovate and effective Chemical
Control with Imidacloprid
Crop Protection
FLINT® - the New Blockbuster Product Line
®
Trifloxystrobin (TFX)
1.
FLINT® product line targeted to
reach 300 mio € annual sales by
2004, with initial sales in 2001 of
130 - 150 mio €
2.
FLINT® growth supported by
growing demand for high
performance strobilurin based
products
3.
Strobilurin fungicide sales
expected to achieve 1 bn €
in 2000 and increase further to
1.25 bn € in 2005
®
TFX + Propiconazole
®
TFX
TFX + Cyproconazole
TFX + Cyproconazole
®
TFX + Cymoxanil
®
TFX
®
TFX
Crop Protection
®
Bayer Regains Technology Leadership in Fungicides
2000
Main Brands
2005
Main Brands
Broad Spectrum
(Azole type)
High Performance
Specialties
Basics
Crop Protection
Flint® / Stratego®
Folicur® / Raxil®
Baycor® / Sibutrol®
Bayfidan ® / Baytan ®
Bayleton ®
Melody ®
Teldor ®
Win®
Impulse ®
Monceren®
Antracol®
Euparen M®
Others
> 150
> 150
> 300
Folicur® / Raxil®
Baycor® / Sibutrol®
Bayfidan ® / Baytan ®
Bayleton ®
Cyproconazole ® (EU)
Melody ®
Teldor ®
Win®
Impulse ®
Monceren®
Antracol®
Euparen®
Others
> 250
< 150
>350
New
Compounds
Broad Spectrum
(Strobilurin type)
New
Compounds
Fungicide
Business Segment
> 400
Bayer Joins Top League in the European Corn Herbicide Market
Acquisition of Sulcotrione (Mikado®) and in-licensing of Metosulam (Tacco ®)
Grasses
Grasses and
and some
some
broad-leaf
Broad-leaf weeds
weeds
Axiom
Axiom®®
Broad-leaf
Broad-leaf weeds
weeds
Tacco
Tacco ®®
Mikado
Mikado ®®
Broad-leaf
Broad-leaf weeds
weeds
and
and some
some grasses
grasses
Market share (index)
100
100
50
10
Novartis Zeneca
(Source: Agroaccess 1999)
Crop Protection
BASF
Aventis
Bayer
Syngenta
Bayer
BASF
Aventis
(Pro forma based on 1999)
Bayer`s Garden Professional Care Business (GPC)
Marketing of Products for
Non-Agricultural Markets to
Consumers
(Home & Garden)
and Professional Users
(Turf, Termites)
Home & Garden
Termites
Crop Protection
Turf
Bayer`s Rapid Expansion in GPC Continues
3000
20
2700
15
mio €
2000
2000
1000
10
120
260
440
0
5
1997
World market GPC
Crop Protection
% market share
2450
2000E
Bayer sales GPC
2005
Market share Bayer GPC
Seed Treatment : Win Win Situation for Farmers and Bayer
Corn: Seed Treatment
Pest: Corn Rootworm
Launch: 2001 (USA)
Traditional
Furrow Treatments
New Gaucho®/Poncho®
Seed Treatment
Active Ingredient / Acre*
100
25
Efficacy*
100
120
Total Costs / Acre*
100
≥100
≥ 100
⇒ product cost
⇒ farmer convenience
No of Products
Market Size**
Bayer Market Share
*Based on Indices
**Total est. Market Size (USA farmer level, mio US$)
Crop Protection
100
100
150
5
1
250
12 %
250
40 %
Leading Production Know-how at Bayer Dormagen Site
Multi-Purpose-Production – Investment 110 mio €
• State-of-the-art facility
MPTankstorage
MP Production
• Designed to handle wide
range of actives
• Development of high
active substances
reduces capacity
requirements
• Streamlined innovative
process-development
activities
NewPowerstation
MP Services
Logistics
OperationsCentre/
Laboratories and Offices
Crop Protection
• Cost effective
concentration of smallscale production and pilot
plant facilities
Pressure on Crop Protection Markets has Led to Consolidation
Prices down
stagnating markets
generics
One Strategic Alternative:
Crop Protection Industry
Consolidation
regulatory
environment
Cost up
Crop Protection
Consolidation in Crop Protection has Halved the Number of Companies
ISK, Merck, Maag, Stauffer, Sandoz, Ciba Geigy, Zeneca / ICI, Novartis
Syngenta
Union Carbide, Schering, Hoechst, RhonePoulenc
Aventis
Celamerck, Shell, Cyanamid
BASF
Monsanto
Bayer
Shell USA
DuPont
Elanco
Dow
Driving Factors
for M&A
Makhteshim
Sumitomo
Synergies
FMC
- product
portfolio
- bundling
- market
penetration
Rohm & Haas
Ishihara
Kumiai
Critical mass
Cost savings
-R&D
- operations
- head count
Uniroyal
0
Crop Protection
2
4
1999 Agrochem Turnover in bn €
6
Accelerated Innovation in Crop Protection will Secure Growth
Prices down
stagnating markets
generics
Crop Protection Industry
regulatory
environment
Cost up
Crop Protection
The Way Forward:
Innovation
... in Chemistry
... and Biotechnology
Milestones from Bayer’s Agrochemical Research
< 2005 4 Herbicides
< 2005 3 Fungicides
2002 XXX
(Envidor ®)
®
2001 Fentrazamid (Lecspro )
< 2005 3 Insecticides
®
2001 Propoxycarbazone (Attribute )
2000 Iprovalicarb (Melody®)
2000 Thiacloprid (Calypso®)
2000 Flucarbazone (Everest®)
1999 Fenhexamid (Teldor ®)
1998 Carpropamid (Win®)
1998 Flufenacet (Axiom®)
1997 Spiroxamine (Impulse®)
1995 Tebupirimfos (Aztec®)
1991 Imidacloprid (Confidor® )
Crop Protection
2-3
New Compounds
per year
Bayer`s Innovative Technology Platform
Advanced Seed
Treatments
Termite Control
Genomics Research
Gel-Formulations
Crop Protection
Seedling Box
Applications
Injector & Paint
Applications
O-DAT
Treatments
Aggressive R & D Budget in Comparison to
TOP 10 AgChem Companies Secures Future Growth
300
9,6
11,9
12,4
10,0
12,5
12,6
9,9
mio €
200
11,4
100
10,5
0
1996
1997
∅ Top Ten as
% of sales
Source: Wood MacKenzie
Crop Protection
1998
Bayer as %
of sales
1999
2000E
Bayer R&D Spending
Shift of Development Spending will Double
Innovative Research Investments
20
0
200
100
50
12
5
Index
150
12,7
12,4
12,6
11,9
12,5
11,4
9,3
0
1995
1996
1997
1998
R-Spending
1999 2000E
D-Spending
2004
R&D-Investment
as % of Sales
Crop Protection
Intelligent Research Brings Bayer Into a Leading Position
Goals
Milestones
Innovative AgChem Products With
New Modes Of Action
Ÿ
Ÿ
Ÿ
Ÿ
Ÿ
Ÿ
Crop Protection
High Efficacy
Targeted Resistance Management
Lower Dosage per Acre
Higher Crop Quality
Environmental Improvements
Consumer and Applicator Safety
Change of Paradigm in Bayer’s Research Strategy
Innovation through...
CompoundLibraries
Test
Systems
...New
TechnologyPlatform
Conventional Research
Identification
and
Optimization
(U) HTS
Action
Targets
(Mode of Action)
Crop Protection
New
Trade Products
2-3 p.a.
Chemistry
Hits
Goal
Fungi
Plants
Insects
Bayer Genomics: Broad Biotechnology Platform Covers All 3 Indications
Blueprint of life
Genome
Cooperation
Organism
(3 Indications)
Plan for building blocks
Gene
Paradigm
(Herbicides)
l Arabidopsis
Inhibitor
Instructions
Lion / Prof. Kahmann, TU Munich
(Fungicides)
l Ustilago
m-RNA
Inhibitor
Building block
Protein
Genoptera
(Insecticides)
Essential
Function
Crop Protection
l Drosophila
l Caenorhabditis
l Heliothis
Investment: > 25 mio € / year
Worldwide Access to Chemical Libraries
Conventional Chemistry
internal, external
Status 1999
250,000
Cooperation
225,000
Combinatorial Chemistry
internal
100,000
external
(Oxford Asymmetry,
ArQule, ComGenex, Specs)
525,000
Natural Products
Total
Crop Protection
Compounds
15,000
Target 2001 865,000
Oxford
l 200,000
ArQule
l 250,000
ComGenex
l 50,000
Specs
l 25,000
Investment: > 50 mio €
New Test Compounds Multiplied
Leading Cutting Edge Research Technology
Quantum Leap
UHTS: 2001
HTS: 1999
l
l
l
l
10,000 - 30,000 Compounds/day
< 500,000 Compounds/library
96/384-well test plates
Cost/Compound: 0.1 - 0.5 €
Crop Protection
l
l
l
l
100,000 - 200,000 Compounds/day
>> 500,000 Compounds/library
384/1536-well test plates
Cost/Compound: < 0.1 €
Scientific Computation: Intelligent Data Evaluation
Bioinformatics
Cheminformatics
Library design
Fungus
Plant
Insect
?
Chemical
Diversity
Lead Structure
Identification/
Optimization
Analysis of
HTS Data
Design of Lead
Structures
in Proteins
Co-operation Project with Lion/Tripos: > 25 Mio €
Crop Protection
New High Tech Logistics as Support Tool
l Bottle store
(> 2 Mio spaces)
l Test plate store
(> 100,000 test plates)
l Test plate
replicator
l Compound
bottling
Store Robot
Crop Protection
Compound bottling
Test plate grab arm
Test plate replicator
Investment: > 20 mio €
The New Route from Idea to Commercial Product
Development
decision
Lab
Field
Registration
application
Development
Stage
Chemistry
Chemical
libraries
Test systems
Biological
Activity
Compound evaluation for
(U) HTS
Fungus
Plant
Insect
Targets
£ biological
£ toxicological
Profile
£ ecological
£ Production costs
£ Market potential
0
Years
Crop Protection
1
2
3
Product development
4
5
6
7
8
Crop Protection Research Success Rates Increase
Hit Rate
New Launches/Year
1:11,000
2.5
>2
1:20,000
1.4
1:38,000
1:46,000
0.5
?
19601969
Crop Protection
19701979
19801989
19901999
20002009
19651974
19751984
19851994
19952004
Intelligent Research Multiplies Chances for New Compounds
Milestones
Goals
Innovative AgChem Products With
New Modes Of Action
Deadline
Goal
End 1999
start routine operations HTS
with 12 runs
JV Genoptera integration
start routine operations UHTS
with 1 run
Delivery of > 25 assays
logistic centre in operation
≥ 10 lead structures
Q 1 2000
End 2000
End 2000
Q 2 2001
End 2001
Crop Protection
Status
14 runs
successful
6 runs
> 30
in time
Crop Protection: New Targets and New Markets
Fungicides
€
l total no of targets known
Targets
Herbicides
€
17
Targets
Insecticides
€
41
Targets
25
l whole market
6 bn
13
15 bn
18
9 bn
15
l 75 % of whole market
4 bn
6
11 bn
6
6 bn
2
Due to resistance and environmental concerns new
active ingredients with novel mode of action are necessary
Crop Protection
Europe: Nearly 700 AI´s Have to be Re-registered Until 2004
CALL FOR NOTIFICATION
Crop Protection
TOTAL CALLS
EXP. INCLUSION
IN ANNEX I
(ECPA ESTIMATE)
FIRST LIST
90
75
SECOND LIST
148
50
T HIRD LIST
448
100
IN TOTAL
678
225
Bayer Portfolio Europe: Streamlining and Rejuvenation
Sales and No. of Bayer Active Ingredients in Europe
Total Sales: 1250 mio €
Total Sales: 890 mio €
59 AI´s
21 AI´s
Defense
No.
AI´s
No.
AI´s
12
8
4
> 50 mio
10 - 50 mio
6 AI´s
Crop Protection
18
< 10 mio
€
New Launches
> 50 mio
10 - 50 mio
16 AI´s
2005
2000
49
11
< 10 mio
€
Bayer Crop Protection is Well Positioned for the Future
• Good performance in 2000
• Industry leader in profitability
• Future growth well above industry average
• Technology leader in Insecticides, Fungicides,
Seed Treatments and GPC
• Young product portfolio
• 2-3 new products per year from innovative research pipeline
• Cutting edge genomics research platform
• Well positioned for future options incl. acquisitions in
Crop Protection and Biotechnology
Crop Protection