$120 million in 2013. For context, Novozymes calculates that agricultural microbials now total $2.3 billion in annual sales worldwide. That’s still small relative to spending on fertilizers and pesticides, which the 2012 U.S. Census of Agriculture estimated to total more than $16 billion in the United States alone. Novozymes calculates that 2012 global spending on chemical inputs was $240 billion, based on fertilizer data from Marketline and pesticide data from Phillips McDougall.
While Novozymes’ agricultural microbial revenue has grown organically, the company has continued to grow by acquisition as well. In 2010, the company acquired Turfal in Brazil. Novozymes bought EMD/Merck Crop BioScience in Milwaukee, the crop bioscience division of Merck, in 2011. A year later, Novozymes acquired Natural Industries, a Houston company that sells microorganisms that fight diseases in fruits and vegetables. And last summer, Novozymes acquired South Dakota’s TJ Technologies, a company whose microbial and micronutrient products are used in seed treatment of crops including corn, soy, and wheat. These acquisitions made Novozymes an industry leader in agricultural microbials, ISU’s Beattie says.
For its part, Monsanto had few microbial products before aligning with Novozymes. Beattie says Novozymes brings its credibility working with microbes to the partnership while Monsanto brings its commercialization strengths.
With new soil analysis tools and gene sequencing technology now available, Novozymes and Monsanto are aiming to first identify new microbes, then study them to understand how they work with plants. From there, the companies will try to develop microbial products that can be produced and sold to growers as something applied to seeds, the soil, or the plant itself.
Bletsky cautions that being derived from naturally-occurring organisms does not mean microbials have an easier or faster regulatory path. A new microbial, just like a new chemical, must still be registered with the Environmental Protection Agency, a process that can take between three and five years. The equivalent registration in Europe can take up to seven years. And within the United States, additional state regulations apply as well.
Novozymes currently sells three kinds of microbial products. Biofertility products help plants take up nutrients better. Rhizobia products help plants fix nitrogen. Novozymes also offers a product that helps plants use phosphates better, reducing the need for phosphate-containing fertilizer. Bletsky says these represent just the start of what Novozymes and Monsanto expect to offer, but he declined to specify which new targets the companies are now trying to hit.
As they pursue new microbials, they’ll face competition from big bioag companies like Bayer CropScience, Syngenta, and BASF Plant Science, as well as smaller companies like Seattle-based Adaptive Symbiotic Technologies, which is developing a bacterium that helps protect plants from drought, and the Canadian firm BrettYoung, which produces plant-growth-promoting bacteria. But by working together, Novozymes and Monsanto are betting they can make new microbial discoveries faster than either company could working alone, Bletsky says. Novozymes’ partnership with Monsanto will have the St. Louis company lead the way in field testing and commercialization of microbial products, while Novozymes will take the lead in manufacturing and production. Both companies are sharing in R&D.
Novozymes is already deploying additional R&D resources for microbials in North Carolina; in April the company announced plans to invest $36 million over three years for a new research facility in Cary, south of Research Triangle Park. Bletsky says Novozymes has already hired 50 new scientists for the site. When fully staffed, the Cary site will employ 100 scientists, making it comparable in size to existing Novozymes R&D sites in Milwaukee and Argentina.
Ultimately, Novozymes doesn’t expect microbials will replace herbicides, pesticides, and fertilizers. Bletsky says that by supplementing existing agricultural tools, microbials can help farmers grow more, sell more, and do so in a sustainable manner.
“It is about making money, it is a business, don’t get me wrong,” Bletsky says. “But [farmers] want to do what’s right and it is about protecting the asset.”
