Novozymes and Monsanto on Tuesday announced the BioAg Alliance, a long-term plan to transform research and commercialization of sustainable microbial products.
Through the alliance, Novozymes' capabilities with microbial discovery, development and production will be combined with Monsanto's microbial discovery, advanced biology, field testing and commercial capabilities.
Microbial-based solutions are derived from various naturally-occurring microorganisms such as bacteria and fungi. They can protect crops from pests and diseases and enhance plant productivity and fertility, a joint company statement said.
With faster development cycles compared to other agricultural innovations, as well as broad geographic and crop applicability, microbial solutions offer the potential to deliver cost-effective solutions that can increase yield using fewer inputs.
The companies said that microbial solutions are a large part of the agricultural biologicals industry, which today represents roughly $2.3 billion in annual sales and has posted mid-teens sales growth each of the last several years.
"As the world population grows at tremendous pace over the next decades, we need to significantly increase the output from our land without increasing the pressure on the environment," says Peder Holk Nielsen, CEO of Novozymes.
"The combined capabilities of Novozymes and Monsanto create an innovation powerhouse with a unique opportunity and approach to unleash the transformational opportunity in naturally derived microbial solutions in agriculture," Nielsen concluded.
Robb Fraley, Ph.D., Chief Technology Officer of Monsanto, said the partnership in microbials represents a natural extension of the company's core business.
"We see this collaboration as being the same type of catalyst for taking our biologicals work from a technology to a full-fledged platform that represents the next layer of opportunity for growers to drive yield and productivity while helping the preservation of finite natural resources in our precious planet," he said.
In bringing together Novozymes' and Monsanto's capabilities, the companies are poised to deliver an entirely new category of more effective microbial solutions for global broad-acre crops, fruit and vegetables, a company statement said. Under the collaboration:
• Monsanto and Novozymes will maintain independent research programs to identify microbial targets with the potential to help farmers.
• Novozymes will be responsible for production and supply of the microbial solutions to Monsanto; Monsanto will serve as the lead for field testing, registration and commercialization of all alliance products.
• The companies will co-manage the alliance and co-fund research and development efforts.
• Monsanto will pay Novozymes an aggregate upfront payment of $300 million net in recognition of Novozymes' ongoing business and microbial capabilities, and for Novozymes to supply alliance products.
• Marketing responsibility for Novozymes' current product portfolio in agricultural biologicals will be transferred to Monsanto along with much of the Novozymes commercial organization currently responsible for that work.
• Both companies will benefit from profits on commercialized products resulting from this alliance and those products brought into the alliance by the parties. Through the alliance, the companies will also test and sell commercial microbial products purchased from other suppliers to bring additional value to farmers.
The agreement is subject to the approval of the relevant national antitrust authorities to the extent required. The alliance is expected to close in early 2014. Further terms of the alliance were not disclosed.