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Agrow biologicals review 2019

As in previous instalments of Agrow’s annual review of the biologicals sector, for the 2019 review Agrow talked with big crop protection companies as well as niche biological ones to get a balanced view on various factors influencing the sector.

At the time of the publication of Agrow’s 2018 review of the biologicals sector, the competitive landscape within the crop protection industry as well as biologicals was being redefined. At this time last year, the last (Bayer/Monsanto) of the three mega deals (including Dow/DuPont and ChemChina/Syngenta) was on the verge of completion. The year following that has witnessed further changes in the competitive landscape. There has also been some progress in the regulatory process of biological products as well as an increasing recognition of the need for faster and easier approval process for such products.

The completion of the Bayer/Monsanto deal has had a two-pronged effect on the biologicals landscape. Firstly, as part of divestment conditions for Bayer’s acquisition of Monsanto, BASF acquired some of Bayer’s Crop Science division assets, which included Poncho Votivo (Bacillus firmus + clothianidin) seed treatment. The second major impact was that of the coming together Bayer’s portfolio of biopesticides with Monsanto’s inoculants developed in conjunction with Danish company Novozymes through the BioAg Alliance.

Since then, the shape of the Alliance has changed. The BioAg Alliance ended on that exclusive basis although Novozymes and Bayer continue their joint commercialisation of the BioRise 2 technology for upstream maize application and the co-development of next-generation upstream maize inoculant strains with a co-funded R&D model. Bayer will be Novozymes’ distributor for downstream microbial products for soybean and pulse crops, except in the Canadian market, with both companies having the possibility to engage with other parties. Novozymes began pursuing multi-partner set ups with UPL and US-based chemical distributor Univar Solutions through its BioAg business.

In the meantime, another big acquisition, that of Platform Specialty Products’ agrochemical business, Arysta LifeScience, by UPL, made further changes to the competitive landscape. That was by enhancing the geographical reach of the biostimulant offerings of Arysta, which was one of the early entrants to the sector.

What has been the impact of the mega-M&As on the biologicals sector?

Syngenta points out that while the mega-M&A’s have not specifically impacted the sales or adoption of biologicals in the market, the biological portfolio of select major multinationals has expanded. “Driven by grower demand and improved technology, the emphasis of biologicals remains a high priority for the mega-ag companies and is driving growth in this important segment,” says the company’s head of biologicals and Syngenta Ventures, Corey Huck.

BASF expects the growth in demand for biologicals-based products to endure. The company will continue to develop biologicals-based solutions for seed, foliar and soil applications in the developing marketplace.

US company Marrone Bio Innovations’ (MBI) founder and CEO, Dr Pam Marrone, feels that the mergers have slowed the large companies in the areas of licensing, the launch of new active ingredients and the acquisition of biologicals.

US microbial products company BioConsortia concurs with the view. “The mega mergers are understandably a huge distraction for these companies,” says the company’s chief executive officer, Dr Marcus Meadows-Smith. He points out that many of the companies’ staff are assigned to integration and synergy projects, and are focused internally. “Therefore, engagement with external parties has possibly slowed a little.”

UK company Eden Research says that the mega-mergers seem to have created opportunities for emerging suppliers of biologicals as they have diverted resources and management attention during the sometimes lengthy integration processes following the mergers. Eden also points out that a fair number of experienced people have entered the job market with many looking to join exciting growth companies where they are able to leverage their experience in “this high-growth area”.

Will niche biological companies find it harder to operate in the post-M&A scenario?

Bayer points to increased opportunities for niche biological companies. “There will be more opportunities for niche biological companies to enter the market based on licence and distribution agreements due to increasing and short-term needs for innovative biological solutions, which often are being invented by smaller enterprises,” says Bayer’s global segment manager biologics, Karl Muenks.

BASF concurs with the view. Niche biologicals specialist companies will continue to have an important role with the development of biologicals – continuing to focus on developing new technologies and implementing use in specific high-value markets, the company says. It points out that products with consistent performance from these companies at marketable pricing will be of interest to BASF.

FMC foresees a scenario of further acquisition of niche biological companies. “As larger companies will be looking to de-risk R&D activities by licensing and acquiring, niche biological companies may well be a target and so could cease to be independent,” says FMC’s head of plant health global R&D and director of EMEA [Europe, Middle East and Africa] R&D, Duncan Aust. Consolidation of several niche payers is a potential, he points out.

Syngenta says that the efficacy of biological products is often influenced by the local environment, and the success of niche biological companies is driven by their ability to properly position their technologies into local environments. “Those who focus on the needs of the grower and positions their biological products where the grower experiences the best return on investment will be the most successful in the market,” points out Mr Huck.

MBI’s Dr Marrone negates the view that niche biologicals companies will find it harder to operate following the big consolidation. “The farmers still want to try new, effective biologicals offerings that offer them added ROI [return on investment]. These can come from small or large companies,” she points out.

BioConsortia’s Dr Meadows-Smith agrees. “The mega companies will want to launch the best products and likely will be agnostic as to whether it is discovered internally or by a third party,” he says. Dr Meadows-Smith points out that large companies find it hard to be innovative on multiple fronts as R&D project prioritisation is a necessary benefit (and evil), so opportunities will persist as seen in the biopharma industry. “It is likely that some of the breakthrough in the improved performance of biologicals will come from experienced, well-resourced and well-funded independent, biological start-ups,” he says.

Eden Research has a similar view. “We do not believe that to be the case assuming that the niche companies have truly differentiated products and a strong value proposition for growers and their commercial partners,” says the company’s chief executive officer, Sean Smith.

Biopesticides in the EU

In July 2018, the European Commission issued a list of 57 ais approved under old EU agrochemical laws that may potentially be classified as “low-risk” under the EU agrochemical registration Regulation (1107/2009). That was partly because of pressure from the European Parliament, which has made numerous calls for measures to speed up approvals for low-risk ais.

Regulation 1107/2009 introduced the low-risk category, which grants benefits such as a longer 15-year approval period. Last year, new criteria for identifying such ais came into force. The 57 ais included 30 micro-organisms and 27 naturally derived substances. However, the sought-after impact of faster approvals did not seem to be on the cards because the Commission pointed out that neither the ais nor products containing them could be considered as low-risk until they had been fully evaluated.

Furthermore, the list did not include ais being considered for new approvals. The International Biocontrol Manufacturers Association (IBMA) has been calling upon the Commission to set up by the end of 2020, a "bioprotection-specific" body that will have developed and implemented a "short and precise" evaluation process for biocontrol ais and products. This should involve evidence-based procedures and tailored data requirements.

Syngenta says that biopesticides are not automatically registered as low-risk products within the EU. Information needs to be provided which supports their classification as low-risk, and this is obviously part of the registration process. “Theoretically the registration process should be faster as, (1) less information is required (compared with traditional crop protection products) for an approval decision; (2) a lot of information is also already available in the public domain and this can be used to support the registration of a biopesticide and; (3) for a low-risk ai, member states should make a registration decision (on the product), within 120 days,” points out Mr Huck. "However, our experience is that the whole process is still taking approximately the same amount of time as for a traditional product," he adds.

Bayer points to a high degree of unpredictability in terms of data requirements, mainly in the area of efficacy trials and registration timelines.

FMC says that the process for microbials is less complex insofar that the data requirements (and thus the level of complexity) are clearly reduced for micro-organisms. However, the company points out that low-risk status will always depend on the individual properties of the micro-organisms - so it is not a given. “The active registration has a potential to be faster (less amount of information to be worked through), but allocated timelines are the same,” says Mr Aust. He adds that the timing will “highly depend” on who is the RMS [rapporteur member state] and if the authority has competent personnel who understand microbials.

MBI’s Dr Marrone feels that registration of biopesticides has not become any easier within the EU, but a way seems to be evolving, which is somewhere between the US EPA process and the EU chemical process. “Meanwhile, growers are left without tools and chemicals are removed and biologicals are not coming to market fast enough,” she complains.

Biostimulants in the EU

In May, EU Ministers adopted proposals that will harmonise the regulation of plant biostimulants and bring them under the scope of revised laws on fertilisers. The proposals will create a European Economic Area (EEA)-wide market for biostimulant products by laying down rules on the labelling of biostimulants with a European conformity CE (Conformité Européene) marking for free movement and marketability within the EU. CE marking is a part of the EU’s harmonisation legislation and indicates conformity with health, safety, and environmental protection standards for products sold within the EEA.

The proposals also include a formal definition of biostimulants: “Plant biostimulant means a product containing any substance or micro-organism stimulating plant nutrition processes independently of its nutrient content, or any combination of such substances and/or micro-organisms, with the sole aim of improving one or more of the following characteristics of the plant or the plant rhizosphere:

(a) nutrient use efficiency;

(b) tolerance to abiotic stress;

(c) quality traits;

(d) availability of confined nutrients in soil or rhizosphere.”

Syngenta says that the standardisation of the information required means that plant biostimulants will meet the high standards European growers expect, and address the increasing challenges of sustainable agriculture under more adverse growing conditions. With the access to the European Single Market, for the first, time all farmers across the EU will have access to the same and growing product innovation platform to meet their needs, says Mr Huck.

But the company views the move as being somewhat of a mixed bag in terms of outcomes for the industry. “Regarding the timelines, on the whole we think that they won’t be significantly shorter as, in the past, many member states granted registrations in a matter of only weeks/months, though some were much longer,” says Mr Huck. However, he says that it will now be possible to gain EU wide registration as “EU fertilising product”, whereas before this was not possible. Mr Huck points out that the information requirements have been standardised, which will mean that the applicants will know exactly what they are required to submit, which is a positive development. However, the requirements have increased over what was previously required in most countries, he adds.

FMC says that it should get easier in EU member states. “But we need to clarify how to expand the micro-organism category definition (CMC 7 in Annex II), which currently only lists Azobacter spp, mychorrhizal fungi, Rhizobium spp and Azospirillum spp,” says Mr Aust. He stresses the need to have at least Bacillus spp added, and says that it is currently not clear how that is going to work. “We think we will have to go through national approvals for a few more years,” he says. Mr Aust adds that member states still have the option to regulate through national legislation and that the new EU regulation does not harmonise in the same way as Regulation 1107/2009.

Bayer expects that the move will gradually lead to a separation of “wheat from the chaff” and, thereby, higher transparency for growers leading to better decisions and better return on investments when using biostimulants for improving yield and/or quality.

MBI views the harmonisation as a good thing. Having one unified definition and process improves transparency and predictability, says Dr Marrone. “Meanwhile, we all got a surprise in the US as the EPA put out a notice to regulate certain biostimulants,” she adds.

BioConsortia’s Dr Meadows-Smith hopes that the move will bring some credibility to the products that gain the new registration and reduce the number of products with dubious and highly inconsistent efficacy that get to the market under individual country processes.

Biostimulants in the US

In December last year, the US Agriculture Improvement Act of 2018, known as the 2018 Farm Bill, led to some long-sought certainty for biostimulants by providing the first statutory language regarding plant biostimulants in any law in the US.

In April, the US EPA sought public comments on a draft guidance document that aimed to clarify which products under growing categories of products generally known as plant biostimulants would  (or not) be subject to regulation under the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) as plant regulator pesticides, and what kinds of claims could be made for them. The Agency anticipates that this guidance may reduce confusion, in the regulated community as well as regulatory agencies, as to whether specific products are or are not subject to registration as a pesticide under FIFRA.

Syngenta views the publication of the Farm Bill in 2018 by the USDA as paving the way for legislation to be developed for the regulation of biostimulants. “As such, we think that this can only been seen as a positive step forward, and it should provide a boost to the biostimulant market,” says Mr Huck. However, he points out a problem in that the definition of biostimulants and that of plant growth regulators (PGRs - regulated by the EPA under the FIFRA) overlap and this is creating some uncertainty within industry and for other stakeholders. The EPA has recently published a guidance document (for public consultation) on the definition of PGRs, but unfortunately, some open points remain, he adds.

FMC feels that the problem with biostimulant registration in the US lies in the fact that they are out of the purview of the FIFRA. “Without US EPA input on the process, every state has its own rules and regulations regarding the registration of biostimulants,” says Mr Aust. He thinks that based on the draft proposal, the Agency appears not to intend to move biostimulants under FIFRA but to define what biostimulants are and what they are not. “More specifically, they are looking to outline what claims can and cannot be used with biostimulant materials”. Some current biostimulant products in the marketplace have terms that potentially would place them into the plant growth regulator realm and thus require EPA FIFRA registration, Mr Aust adds.

Bayer feels that certain products that could be marketed under the fertiliser regime would have to be evaluated under the FIFRA regime. “That means more data requirements, higher registration costs and longer time-to-market,” says Mr Muenks.

MBI feels that the draft guidance could increase regulations on certain types of biostimulants. “The BPIA [Biological Products Industry Alliance] has asked for and received more time to comment on these proposed new rules, which could have serious implications for seaweed extracts and humic and fluvic acid types of products,” says Dr Marrone.

Syngenta sums up the industry view on the registration of biologicals in various jurisdictions around the world. “For biologicals, the development of legislation should be positive as in the past there was little/outdated regulation, and industry requires a stable environment, with clear requirements, if it is going to invest significant resources in developing products that can take many years to get to the market,” says Mr Huck. However, the legislation for biologicals should not merely be a ‘cut and paste’ from existing legislation for traditional crop protection products, he adds. “Such legislation should be drawn up in conjunction with a risk-based approach with clear and transparent requirements, timelines and decision-making process.”

Formulation improvements

Bayer points to BioAct as an example of taking formulation quality for fungal strains to a new level. “Bayer achieved a shelf life of minimum two years at a storage temperature of 20°C or minimum six months at constant 30°C,” says Mr Muenks.

FMC mentions several convenient-to-handle liquid systems, which have been developed, as well as granule and powder formulations.

MBI highlights a bioherbicide that it has been working on, in which the company has used new formulation technology to increase the shelf life and field residual life. “The rest of our products already have three plus years of shelf life and are easy to use,” claims Dr Marrone.

BioConsortia says that products in its pipeline have at least a two-year stability in the package, and further can have up to two years life on seed for seed treatments. “We have reduced shelf life (one year) for crops and markets where that is appropriate, such as wheat and soybean seed treatments, as these crops are not stored from one season to the next,” says Dr Meadows-Smith.

Eden says that the core of its technology offering is a micro-encapsulation system suitable for biologicals. “Indeed, it was the discovery of this system that enabled the use of our actives, which are volatile compounds derived from botanical extracts,” says Mr Smith. "Through the use of our ‘Sustaine’ system, we are able to improve efficacy, reduce phytotoxicity and provide stable formulations with ease of use and shelf lives comparable to conventional formulations," he adds.

Market trends

Syngenta says that many of the new technologies awaiting approval will be solo biological products. “However, we expect to increasingly incorporate tank mix and IPM-based rotation recommendations with conventional synthetic chemistries,” adds Mr Huck.

Bayer feels that better formulated plant extracts will become a highly regarded alternative and addition for conventional growers to chemical pest and disease management products. “Virus products or plant extracts for combating lepidopteran pests will be supplementing conventional products, in particular in horticulture, mainly driven by resistance development and lack of new mode of actions,” says Mr Muenks.

BASF points out that biologicals will continue to be an element of what agriculture needs and what it can offer. How the products can be used with chemical products, either in separate or combination approaches, will develop further, the company adds.

FMC sees good opportunities for combining biological and synthetic solutions. “Further R&D activities, more money invested and some clarified/reduced regulatory requirements will ensure that new and more effective products will seek and gain approvals,” says Mr Aust.

BioConsortia emphasises the need for biologicals with superior efficacy and higher levels of consistency across all locations and growing conditions. “Biologicals with the current level of efficacy are unlikely to have value to move forward to registration; another “me-too” will receive very low market share and hardly be worth the investment to develop,” says Dr Meadows-Smith. He feels that combination products of chemical and microbial ais are less likely to be registered because that would require a chemical pesticide registration, which is long and costly, and usually this can be achieved as tank mix or rotational spray programmes. “Also, combo products would not get the benefits of residue management or organic status,” Dr Meadows-Smith adds.

STK expects continued double-digit growth in the use of botanical-based biopesticides. The company also sees “big growth” in the use of “hybrid products” incorporating chemical and biological ais. “These hybrids are easy-to-use pre-mixes, so they will be tried by many current non-users of biological products,” the company says.

Eden views combination products as an inevitability. “Eden is actively working on the development of formulations pairing conventional active ingredients with its own plant-derived active ingredients,” says Mr Smith. These combinations can provide equivalent efficacy with reduced amounts of conventional actives while avoiding pesticide resistance.

MBI says that the biggest trend is “finally” momentum behind integrated programmes. Dr Marrone points out that chemicals and biologicals used together provide greater ROI than either alone. She foresees continued launches of stacked biological and chemical seed treatments and new launches of all-biological seed treatments. Dr Marrone also expects tightening of regulations on biostimulants in the US.
 
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