Morningstar | FMC's Crop Chemical Pipeline Reduces Patent Expiration Risk
Through acquisition, FMC has transformed itself into one of the five largest patented crop chemicals companies from a collection of disparate chemical businesses. FMC acquired Cheminova in 2015, increasing exposure to Europe and expanding the company's portfolio of crop chemicals. In late 2017, FMC acquired DuPont's divested crop chemicals portfolio, which included blockbuster insecticide Rynaxypyr, in exchange for FMC's health and nutrition business, cash, and working capital. The company is now fairly balanced from a geographical standpoint among North America; Latin America; Asia; and Europe, the Middle East, and Africa, with each region contributing about a fourth of revenue.As emerging-market food consumption rises, the patented crop chemicals industry should see growth to facilitate yield improvements. FMC's pipeline should allow the company to continue growing faster than the general crop chemical industry. Both acquisitions greatly enhanced FMC’s research and development pipeline, which should allow the company to continue producing new crop chemicals as older products roll off patent. The company plans to launch six new molecules over the next decade, including two new modes of action. These new products should help farmers fight resistant pests, which is increasingly rendering older crop chemicals ineffective and requires new crop chemicals.FMC product portfolio currently skews toward insecticides, which generated over 50% of revenue in 2018. As genetically modified seeds, which are equipped with traits to fight insects, expand to new markets such as China and India over the next decade, we see insecticide demand falling over the long term. Conversely, GMO seeds increase herbicide demand. For FMC, all six of the company's new products in the pipeline are herbicides and fungicides, which should result in a more balanced portfolio among the three primary types of crop protection chemicals over the next decade.FMC is an agricultural sciences company. The company provides solutions to growers around the world with a product portfolio fueled by a discovery and development pipeline in crop protection, plant health, and personnel pest and turf management. This combination of technologies includes insect control products based on Rynaxypyr? and Cyazypyr? active ingredients; Authority?, Boral?, Centium?, Command? and Gamit? branded herbicides; Talstar? and Hero? insecticides; and flutriafol-based fungicides. The company's products are used in agriculture to improve crop yield and quality by controlling a range of insects, weeds and disease, as well as in non-agricultural markets for pest control.
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