|Frost & Sullivan Market Insight||Published: 15 May 2002|
by Ivan Fernandez
What does the glyphosate market look like now, two years after the Roundup patent expired and generics stepped in?
Glyphosate is a non-selective, post-emergence herbicide that is effective in eliminating grasses, broad-leafed weeds, sedges, and woody shrubs. Applied chiefly through spraying, this water-soluble herbicide is absorbed mainly through the leaves and is carried throughout the plant. It hampers amino acid metabolism in the shikimic acid pathway (which exists in higher plants, but not in animals). With the deterioration of tissue, the weed wilts and, days after exposure to the herbicide, it dies.
Monsanto’s flagship herbicide, Roundup, has given the company market leader status in the global glyphosate market. Outside the United States, Monsanto’s glyphosate-based products are marketed in a diverse variety of formulations and brand names such as Vision, Azural, Kusatoban, Spark, Fusta, Rival, Sting, Armada, and Rebel.
Roundup not only improved efficacy and reduced the cost of the weed control effort for farmers, but it also helped kick-start a revolution in the field of genetic modification of crops. Since Roundup attacked all plants, Monsanto introduced Roundup Ready crops such as soybeans and canola in the United States in 1996. These crops were genetically engineered to withstand exposure to Roundup and this ensured that the weeds were killed without any harm to the crops.
Patent Expiry and How the Market Changed
Following the expiry of Monsanto’s patent, competition from generic glyphosate producers has made the herbicide market virtually unrecognizable today. While a large number of producers sell generic glyphosate today without any branding effort, Syngenta, DuPont, Aventis, Dow, and BASF are some of the players who have developed strong brands.
The heat of competition is best understood through the battle being waged between Monsanto and Syngenta. Monsanto’s attempt to solve the surfactant addition problem for the farmer resulted in the launch of Roundup Ultra with ‘Transorb’ technology that enhanced the retention and absorption of glyphosate by the target species. Syngenta’s response was to increase the active ingredient component through the launch of Touchdown 5. Monsanto also came in with increased concentration of the active ingredient, with the launch of Roundup UltraMax. Syngenta’s Touchdown took glyphosates in an all-new direction by presenting a formulation using the trimethylsulfonium or diammonium salt as opposed to the isopropylamine salt used by Roundup and the generics. As Monsanto and Syngenta continue to innovate for increased market share, charges and counter-charges have been flying fast and hard between the two companies especially in relation to alleged "misleading" advertising campaigns and promotional efforts.
After the patent expired, prices fell, but increased usage of both generic and branded glyphosates helped push up sales volume. In fact, Monsanto started lowering prices well in advance of the patent expiry in the United States in 2000 (around $10 reduction per gallon between 1997 and 1999). This pricing strategy helped increase sales volume substantially. According to the company, the period 1994 to 2000 saw a 45 percent drop in prices but a 90 percent increase in gross profit. In addition, supply agreements with competitors for the use of the active ingredient in competing brands, and payments by generic makers for the use of registration data, helped bring in substantial revenues for Monsanto. But the company’s overall sales for the first quarter of 2002 saw a dip, primarily because of lower sales of Roundup. The company is looking forward to better performance in the second quarter, which is the peak period in North America for the sale of Roundup.
Are There Any Performance Differentials?
With a number of glyphosate-based products in the market today, each brand is being promoted with an abundance of scientific study findings to validate individual claims on performance. The question that keeps cropping up is: Does any one brand work better than the rest?
It is clear that the salt used does not impact performance decisively, since the salt is bound to the glyphosate molecule by a weak electrostatic charge. That means that in the spray tank, positively-charged salts in the water can replace the salt and eventually what acts on the weed may not be the initial salt formulation. In truth, the salt’s functionality is limited to ensuring better handling, compatibility with other products, and preventing an undesirable crop reaction. However, the nature, amount, and blending proportion of surfactants used and the timing of the application of glyphosate could play a decisive role in performance.
Despite the claims and counter-claims, several studies have found that the performance of most of the major glyphosate products on the market shows little variance, assuming that label recommendations on application rate and use of additives are adhered to.
Will the Glyphosate Success Story Continue?
Glyphosate scores favorably on the environmental-safety criterion. Its use has helped farmers move away from the application of toxic herbicides such as atrazine. Its biodegradable nature ensures no residual herbicide in the soil. In addition, it does not require tillage, which environmentalists cite as a major cause for topsoil erosion. However, cases of weeds developing glyphosate-resistance have caused concern in the scientific community and the crop protection business. Considering that glyphosate is the most widely-used herbicide globally, the potential long-term damage of this developed resistance must be reckoned with. In addition, the larger issue of using genetically modified (GM) crops remains unresolved in many parts of the world; notably in the European Union.
Increased awareness and adoption of alternative weed management techniques such as crop rotation and inter-crop cultivation may eventually lead to reduced glyphosate application. Keeping this possibility in mind, it is imperative that the efficacy levels of glyphosate-based products are raised. Research effort can help toward achieving that goal; for example, toward a better understanding of the performance differences between nonionic surfactants and oil-based adjuvants used with glyphosate and arriving at the optimum tank mix.
Thanks to more players in the market, increased usage of glyphosate is generating higher sales volume. Thanks to the synergies with GM crops, glyphosate’s relevance in the future remains assured. Also, with non-selective herbicides accounting for one-fourth of the total herbicide market and continuing to eat into the market share of more expensive, selective herbicides, the future for glyphosate-based products appears to be full of promise. If this momentum has to be sustained, the chief players in this market will have to continue along the path of product innovation and learn how best to address the safety concerns that have come to the fore today.