Ag-chems hold back biotech firms

06 August 1999

Ag-chems hold back biotech firms

MANY biotechnology companies are beginning to find the performance of their agrochemical divisions an embarrassment, reports the Financial Times.

Novartis, American Home Products, AstraZeneca and Monsanto have seen all their results dragged down by their underperforming agrochemicals operations.

Some of the companies are beginning to think of jettisoning their agrochemical divisions, the FT reports.

One analyst quoted observes that that the “complimentarity” between the two businesses is “very fragile, very small”.

Another says there are difficulties in managing a business where the margins can reach 35% for drugs but only are half that figure for agrochemicals.

Disposing of the divisions could create problems, however.

Potential mergers and acquisitions between the major nine companies which control 80% of the market can run into antitrust difficulties.

Offloading would also be difficult at the present time when the market downturn has hit valuations.

The FT expects to see some stop-gap measures take place in the meantime such as joint ventures and asset swaps.

See more