Dow AgroSciences’ introduction of a promising new product is helping transform the Indianapolis company as it transitions
from a focus on traditional agricultural chemicals to genetically altered seeds.
The subsidiary of Michigan-based
Dow Chemical Co. partnered with St. Louis-based Monsanto Co. to develop what could become its biggest blockbuster, a genetically
modified corn variety it calls SmartStax.
SmartStax is set to hit the market next year and could improve crop yields
as much as 10 percent by better protecting the plants against herbicides and bugs. Analysts predict annual sales of the corn
seed could peak at $6.6 billion by 2015.
Dow AgroSciences officials declined to speculate on SmartStax’s
revenue potential, but acknowledged its importance to the company’s growth.
“We are very much working
on balancing our portfolio,” spokeswoman Kenda Resler-Friend said. “Today, our bread and butter is our chemicals,
but we’re looking to pump up the seed business.”
Indeed, the growing seed sector last year accounted
for 11 percent of Dow Agro sales.
Parent Dow has acquired 11 seed companies in the past two years to build a distribution
network for SmartStax. The lion’s share of sales would go to Monsanto, which dominates the seed business, particularly
with its popular DeKalb brand. But Dow could steal market share from other seed companies.
eight genetically modified traits, four from each company and the most ever contained in one seed, which makes it deadlier
for insects and harder for them to develop resistance.
Furthering its marketability, the U.S. Environmental Protection
Agency and its Canadian counterpart said farmers could plant SmartStax seed on nearly all their land. Farmers typically must
plant conventional seed in a “refuge” to guard against insects’ becoming resistant to the genetically modified
Christian Krupke, an assistant professor of entomology at Purdue University, said it is unusual for agricultural
rivals to collaborate on a product. Dow’s existing Herculex insect killer is marketed by Pioneer, and Monsanto has its
YieldGard crop protector.
“It’s hard to get these people to the table when essentially they are competitors,”
Krupke said. “To see these toxins put together and stacked is not something very many people saw coming. I know I didn’t.”
Dow and Monsanto embarked on the partnership four years ago as part of a mission undertaken by former Dow Agro CEO
Jerome Peribere to take the company from an average-performing maker of low-margin chemicals to a thriving seed biotechnology
Dow recently promoted Peribere to lead its advanced materials business in Philadelphia. He has been
replaced by Antonio Galindez, who served as vice president of Dow Agro’s crops business. The company also makes pesticides
for household and other uses.
At IBJ’s Life Sciences Power Breakfast in July, Peribere described
the alliance with Monsanto that produced SmartStax as groundbreaking.
“Do you think that Monsanto, which
is a big giant in plant biotechnology, would have done it on their own if they could have?” he asked. “Yes, they
would [have], and why didn’t they? It’s because they couldn’t put the two together, so we did that in collaboration
and we are going to allow the farmer and the customers around the world to take great benefits from this.”
Dow Agro has enjoyed explosive growth in recent years, helping to bolster its parent’s overall performance. In fact,
Dow would not have been profitable in the first quarter if not for the agricultural unit. Dow slid to a loss in the second
Still, Dow Agro’s success prompted its parent to back away from statements made earlier this year
that Dow might spin off the unit, sell it, or team with another agricultural company in order to cut its debt from its April
buyout of Philadelphia-based Rohm & Haas.
“Unlocking the value of Dow AgroSciences has always been on
our radar screen,” Dow CEO Andrew Liveris said Sept. 16 at the Credit Suisse Chemical and Agricultural Science Conference.
“We will not let that value go out the door.”
That security makes it easier for Dow Agro to forge ahead
on research and development. The company in July signed a 15-year lease that is spurring construction of an 80,000-square-foot
research-and-development building, to be erected adjacent to its headquarters in the northwestern corner of Indianapolis.
Dow Agro’s commitment is just part of the growing agricultural research being conducted in the state, Indiana
Agriculture Director Anne Hazlett said.
“There are very few companies in the world that are able to conduct
the type of research and push the new technologies like Dow AgroSciences,” Hazlett said, “and they are right here
in our back yard.”
The company plans to hire dozens of additional researchers. Dow Agro currently employs
1,200 in Indianapolis.•