Department of Economics Management and Quantitative Methods

Ferrazzi Giovanni, Frisio Dario G., Ventura Vera, Siletti Elena

PATENT ANALYSIS AND M&A OPERATIONS IN THE AGBIOTECH: A

POSSIBLE KEY TO UNDERSTAND DIFFERENT STRATEGIES OF

BIOECONOMY FIRMS?

17th ICABR Conference, Ravello (Italy): June 18 - 21, 2013

Department of Economics, Management and Quantitative Methods

Research objective• Contribute in improving the knowledge of the

agbiotech industry: – Database of agbiotech patents at worldwide level

(1982 – 2012)– Data base of M&A operations in which were directly

or indirectly involved the big six multinational firms (SBC's)

• Evaluate different strategic pathways in the time and between different actors

• A particular focus is also devoted to the most important agbiotech independent firms in the past and in the present

Department of Economics, Management and Quantitative Methods

The IP AgBiotech Database DATA SOURCE (1982-2012)

More than 60.000 agbiotech patents worldwide, granted in 87 different patent offices

Data have been extracted from espacenet.com website by using as query the IPC code: C12N15/82.

We have standardized the collected patents with a weight related to the concentration ratio of each patent system on total amount.

Patent portfolios of SBCs and independent firms involved in M&A operations have been valued taking into account both magnitude, the sum of the weighted patents, and composition.

Analysis of the patents through ECLA’s technical classification codes: we identify four technical macro-areas, two for “Methods” (Gene Introduction and Gene Expression) and two for “GM crops” (Output Traits and Input Traits)

We have identified the main M&A operations, related to the agbiochemical industry, in which the SBCs were directly or indirectly involved in the last 30 years

DATA SOURCE (1982-2012)• Data were obtained from companies’ websites, annual reports

and press releases• we have recorded above 200 operations (90 in the period

2003-2012, only 14 with agbiotech implications)• A 5-digit code is assigned to each operation, the first digit

indicates one of the six major companies, the others create a sort of family tree, representing the different operations carried out directly or indirectly.

Department of Economics, Management and Quantitative Methods

M&A Database

Agbiotech Patent Amounts of the Big Six Companies (SBCs)

Department of Economics, Management and Quantitative Methods

• The total amount of patents' weight increased significantly during the last ten years

• DuPont, the leader (6.200 patents and a total weight above 700 units), and Monsanto: similar increases at around 150%

• Bayer and DAS: perform a growing trend (+101% and 92%)

• Syngenta reveals the slowest trend, the decennial growth is below 50%

• Basf presents a record increase, 450%, bypassing both DAS and Bayer in this peculiar ranking.

Results

The changes in agbiotech research pathways can be observed in the patent distribution among the four ECLA macro-areas is presented with regard to the SBCs’ patent stock in 2002 and to the amount of the last ten years.

Department of Economics, Management and Quantitative Methods

ResultsPatent Distribution in the Four Macro-Areas: Total Amount of the SBCs

• A growing interest for the “GM crops” field, whereas “Methods”, more important in the first stage of technology, are declining.

• predominant macro-area is “Input Traits”

• Output Traits” remains stable

Patent Distribution in the Four Macro-Areas: the IP portfolios of SBCs

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Results

Big Six Companies, M&A operations and IP rights at a glance 1/4

Department of Economics, Management and Quantitative Methods

Results

AveragePatent

Weight Number WeightPortfolio 2002 54,8 804 0,068Portfolio 2012 302,2 3.395 0,089GR 2002-12 451,1% 322,3% 30,5%CAGR 2002-12 16,8% 14,0% 2,5%

CropDesign (2006) 48,4 515 0,094Amylogene (2008) 2,4 36 0,067

WorldwideAgbiotech

PatentsBASF AveragePatent

Weight Number WeightPortfolio 2002 158,8 2.080 0,076Portfolio 2012 319,1 3.785 0,084GR 2002-12 101,0% 82,0% 10,4%CAGR 2002-12 6,6% 5,6% 0,9%

Icon Genetics (2006) 30,0 355 0,085Athenix Corp (2009) 26,5 268 0,099

WorldwideAgbiotech

PatentsBayer

Small number of agbiochemical acquisitions and only 2 are relevant for agbiotech R&D:

• CropDesign (2006), its portfolio covers about 20% of the whole BASF’s increase

• Amylogene (2008)

14 M&A operations, only 2 are important for agbiotech R&D:

• Icon Genetics (2006)• Athenix (2009)

the contribution of the two acquisitions is around 35%.

Big Six Companies, M&A operations and IP rights at a glance 2/4

Department of Economics, Management and Quantitative Methods

Results

AveragePatent

Weight Number WeightPortfolio 2002 86,2 935 0,092Portfolio 2012 166,0 1.679 0,099GR 2002-12 92,5% 79,6% 7,2%CAGR 2002-12 6,1% 5,5% 0,6%

Northwest Plant Breeding (2011) 2,9 26 0,113

WorldwideAgbiotech

PatentsDAS AveragePatent

Weight Number WeightPortfolio 2002 295,8 2.966 0,100Portfolio 2012 730,0 6.264 0,117GR 2002-12 146,8% 111,2% 16,9%CAGR 2002-12 8,6% 7,0% 1,4%

Verdia (2004) 15,6 130 0,120Danisco (2011) 25,0 287 0,263

WorldwideAgbiotech

PatentsDuPont

• numerous acquisitions in the last decade, only one of the last ones, NorthWest Plant Breeding, is relevant for agbiotech R&D (patent related to pioneering technology for double haploid production from pre-pollen grains of wheat. )

• growing trend both in number and weight

• only 2 acquisitions play an appreciable role in agbiotech R&D: Verdia (2004) andDanisco(2011), together with its enzymes division Genencor. Their contribution to the last decade’s growth has been around 10%.

Department of Economics, Management and Quantitative Methods

Results

AveragePatent

Weight Number WeightPortfolio 2002 213,3 2.247 0,095Portfolio 2012 548,0 4.882 0,112GR 2002-12 156,9% 117,3% 18,2%CAGR 2002-12 9,0% 7,3% 1,5%

Seminis (2005) 12,6 116 0,109Delta&Pine Land (2007) 2,9 29 0,099De Ruiter Seeds (2008) 5,6 62 0,091Alellyx (2008) 6,1 60 0,101Divergence (2011) 3,8 29 0,132

WorldwideAgbiotech

Patents

Big Six Companies, M&A operations and IP rights at a glance 3/4

Monsanto• Monsanto presents a vigorous

growth of patent portfolio in the last ten years

• Almost 30 acquisitions. Like in the past :• many are only seed market

oriented

• some of them have a predominant seed market’s target with implications also in the agbiotech area, like Seminis, Delta&Pine Land and De Ruiter Seeds

• a few, Alellyx and Divergence, descend from a mere agbiotech strategy

• these acquisitions have contributed around 10% to Monsanto’s agbiotech growth

Department of Economics, Management and Quantitative Methods

Results

AveragePatent

Weight Number WeightPortfolio 2002 264,7 3.390 0,078Portfolio 2012 394,6 4.507 0,088GR 2002-12 49,1% 32,9% 12,2%CAGR 2002-12 3,7% 2,6% 1,0%

Goldsmiths Seeds (2008) 1,8 16 0,111Devgen (2012) 9,5 108 0,088

WorldwideAgbiotech

Patents

Big Six Companies, M&A operations and IP rights at a glance 4/4

Syngenta • slowest growth in agbiotech patent portfolio with CAGRs around 3%

• Several M&A operations were realized from 2002 to 2012, but only two show some impacts on agbiotech R&D:• Goldsmith Seeds, a family

company specialized in flowers

• Devgen’s acquisition is more important (input traits)

• the two acquisitions have played a minor part, below 9%, in the rise of Syngenta’s patent weight.

Who is the next?

• we have also analyzed role and profile of the major independent firms involved in agbiotech patenting.

• The ranking has been individuated by the weighted amount of patents, while the profile is based on the percent shares of the four ECLA macro-areas.

• The companies in the rank could be considered as possible next targets of future acquisitions for the SBCs, but indeed the objective of the analysis is to verify the correspondence between the results of the adopted methodology and the companies’ activity in agbiotech research.

Results

Top Ten Patents Agbiotech Indipendent Firms (2003-12)

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Results

• Ceres Inc. concentrates about one third of the group total; with the next threes (Mendel Biotechnology, Exelixis, Biogemma) the concentration reaches about two thirds.

• The single profiles seem to reflect well the character of the specific agbiotech research pathways described in companies’ websites

Rank NameAveragePatent

Weight Number Weight1 CERES INC (US) 60,5 396 0,153 0,3% 31,4% 18,2% 50,0%2 MENDEL BIOTECHNOLOGY INC (US) 22,3 183 0,122 4,7% 10,0% 7,7% 77,6%

3 EXELIXIS (US) 1 22,5 230 0,216 5,9% 6,2% 66,9% 21,0%- AGRINOMICS LLC (US) 17,8 191 0,093 0,0% 0,7% 75,6% 23,6%- EXELIXIS PLANT SCIENCES INC (US) 4,8 39 0,123 27,6% 26,4% 34,5% 11,5%

4 BIOGEMMA (FR) 2 20,6 244 0,085 17,8% 20,6% 31,6% 30,0%5 EVOGENE LTD (IL) 12,1 120 0,101 0,0% 30,5% 11,5% 58,0%6 J.R. SIMPLOT CO (US) 11,1 90 0,123 31,3% 15,2% 46,5% 7,0%

7 KEYGENE NV (NL) 3 9,4 106 0,089 28,3% 13,0% 5,4% 53,3%8 PERFORMANCE PLANTS INC (CDN) 7,1 66 0,108 5,2% 10,4% 1,9% 82,5%9 SEMBIOSYS GENETICS INC (CDN) 6,7 91 0,073 0,0% 25,0% 75,0% 0,0%

10 HEXIMA LTD (AU) 6,4 61 0,105 0,0% 7,8% 14,7% 77,5%

AGBIOTECH 178,7 1.587 0,113 7,1% 20,4% 26,6% 45,9%

Inputtraits

Gene Introduction

Gene Expression

Outputtraits

Worldwide ECLA Agbiotech Macroareas (%)Agbiotech Methods GM Crops

Patents

BIOTECH & BIOPHARMA 120,8 1152,0 0,105 8,3% 17,3% 65,7% 8,7%

ConclusionWe have analyzed the evolution of SBCs’ agbiotech patent portfolios in the last decade (weight and technological composition) and the M&A operations in the same period.There are many evidences that seem to come out: • the SBCs concentrate 40% of the worldwide agbiotech

patents• the total amount of patents' weight increased

significantly during the last ten years. • all the SBCs show an increase in their patent portfolio,

but there are differences in their magnitude that could be related to the role of agbiotech in the whole company’s strategy.

• SBCs’ agbiotech R&D– are clearly GM research oriented and “Input Traits” are still

predominant on “Output Traits”– seems to approach a mature stage as regards to “Methods”,

but is still mainly going on first GM generation. • only a very little share of the M&A operations have

been really important for portfolios’ growth (CropDesign, Icon Genetics, Danisco and Athenix)

• these results seem to indicate that the reaching of a maturity stage is not so far by a mere technological point of view.

• the standardized patent weight seems to reflect well the knowledge amount, but it needs further checks to be considered a real proxy of patent portfolio’s value.

Conclusion