The firms say the BioAg Alliance will allow companies to leverage employees, technologies and commercial assets in the companies’ agricultural biologicals portfolios.
Microbial products are a part of the agricultural biologicals industry, which Monsanto says represents about $2.3 billion in annual sales and has posted mid-teens sales growth each of the last several years.
Microbial-based products 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. Monsanto says because they have faster development cycles compared to other agricultural innovations, as well as broad geographic and crop applicability, microbial products have the potential to deliver sustainable, cost-effective solutions that can increase yield using less input.
Novozymes’s agricultural biologicals products’ 2012 revenue was about $120 million. Meanwhile seed giant Monsanto has a research team working on microbial products, which will help accelerate microbial development through the alliance, the firms say. Last year Monsanto introduced its agricultural biologicals platform and earlier this year acquired the assets of the agricultural company Agradis.
Under the agreement, Novozymes will be responsible for production and supply of the microbial solutions to Monsanto, building on its expertise within fermentation. 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.
In October Monsanto bought the Climate Corporation for about $930 million in an effort to help farmers use big data to produce more crops while using fewer natural resources.