Innovations in the Ag Biologicals Sector:Why All the Recent Excitement?

Presentations• Biopesticides Overview Eric Sachs• Bayer CropScience Marcus Meadows-Smith• Monsanto Company Kelly Fleming• University of Capetown Jennifer Thompson

Panel Q&A

Innovative Natural Products for Pest Management in Agriculture and Water

BIOPESTICIDESPam Marrone, PhD

CEO & Founder

Defining the Basics

Page 4

Characteristics of Biopesticides

• Natural products derived from plants or other natural sources, comprised of microorganisms or other organisms

• Insecticides, fungicides, herbicides, nematicides, plant growth regulators, insect growth regulators, repellents

• Can be synthetically made • Must be nature-identical• Highly biodegradable and non-persistent• Generally comprise the lowest risk category of pest management

Products• 64-year history of safe use with no environmental or human safety

issues

Page 5

History of Biopesticides

• The first, and still most, widely used biopesticide included spores of the bacteria Bacillus thuringiensis (Bt).

• In 1901, Bt was isolated from a diseased silkworm by Japanese biologist Shigetane Ishiwata.

• Ernst Berliner in Thuringen, Germany, then rediscovered it ten years later in a diseased caterpillar of flour moth.

• The Bt pathogen was classified in 1911 as type species Bacillus thuringiensis and remains the most widely used biopesticide to this day.

• In the early 1920s, the French began to use Bt as a biological insecticide. The first commercially available Bt product, Sporeine, appeared in France in 1938.

• In the US in the 1950s, widespread use of biopesticides began to take hold as a host of research on Bt efficacy was published.

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The Majority of Biological Applications Target Insects

2/3rd

Insecticides

Plant Health

Herbicides

Fungicides

Nematicides

Nutrients

Biologicals by Region

Latin America

Asia

Europe

North America

6

Global Ag Biologicals Industry Primarily Focused on Targeting Pest and Disease Control

Naturally Derived Chemicals are 1/3 of Biologicals Market

Other Microbial Pesticides

Biochemical

Beneficial Insects

Bt

Naturally Derived Chemicals

Inoculants

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Biopesticides Size and Growth Estimates

2005 2010 2015 2020 20250

1

2

3

4

5

6

Microbials

Biorationals

Macrobials

Source: Frost & Sullivan, Nov. 2009; BCC Research Survey 2010; CPL Business Consultants 2010

bn $Short term (<3 years) Food Chain demands Sustainable Use Directive EU New Biological product introductionsMid term (>5 years) Increasing demand for biological solutions

emerging markets (Brazil, China and India) Sustainable growth of Green Product market

in the US and EU, based on existing technologies

Long term (>10 years) Introduction of new Green technologies

• Average Market Growth (2005-2025): > 10 % Biologics, Chemicals < 3% CAGR • Biologics Market (2010-2020): 1.2 – 3.7 bn. US$

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Global Market for Biologics is Growing at > 10% p.a.

461

184

141

87

28

US

Europe

Asia-Pacific

Latin America

Rest of World

748

416

281

125 48

2005 -- $900mio 2010 - $1,600mio

$’ Millions at Retail Level

Source: Biopesticides A Global Strategic Business Report, Global Industry Analysts, Inc.

Growth across all regions; largest growth in Europe

Benefits and Barriers to Use of Biologicals

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1.2 4.1 2045 85

105

185

256

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

0

20

40

60

80

100

120

140

New Leads Launches

Cost to Discover & Develop a Synthetic

Chemical ($Mil)

Fewer New Chemicals – Higher Cost

1990 1995 2000 20090

50

100

150

# of Chemicals Screened to Find One Product (‘000) # of New Chemical

Leads vs. Product Launches

(Source: CropLife)

Source: Ag Chem New Compound Review (Vol 28) 2010

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The Case for Biopesticides in Programs

Biopesticides are effective tools for production, are renewable sustainable, offer an improved impact profile, and reduce pesticide residues.

Meeting the 3 challenges of Sustainable Agriculture• Increase productivity• Promote Food Quality• Minimize Impact

IPM

Additional benefits• Resistance Management• Harvest & Labor Management• Residue Management

Biopesticides conventional crop protection products+ = Increased efficacy, higher yield,

lower chemical load.

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CA Pest Control Advisors

Golf Course Supts.

FL Distributors CA Growers

FL Growers

(n=69) (n=40) (n=26) (n=30) (n=30)Environmentally Safe 48% 63% 54% 60% 64%

All Other Replies 35% 27% 16% 11%Operator Safety 12% 42% 8% 4% 21%

Safe/Benefits Insects 14% 8% 12% 36%Public Perception 22% 8% 15% 20% 4%

More Natural/Safe 16% 4% 8% 24% 14%Crop Safety 17% 12% 4% 25%

Organic Farming 25% 12% 16% 4%

Product Effective 13% 13% 15% 8% 4%

Don't Know/Cannot Say 3% 25% 4% 8% 4%Target Specific 9% 7%

Economic Benefits 3% 4% 4%

Reasons Biopesticides are Used

13

 

CA Pest Control

Advisors

Golf Course Supts.

FL Distributors CA Growers FL

Growers

  (n=69) (n=40) (n=26) (n=30) (n=30)

Not as Effective 52% 42% 73% 68% 39%Higher Cost 36% 42% 31% 44% 43%

Lack of Awareness 39% 38% 18% 32% 43%

Don't Know 6% 17% 8% 24% 7%

Lack of Research 4% 21% 12% 8% 4%

Limited Availability 6% 8% 8% 4% 18%

Only Works in Specific Conditions 7% 17% 4% 7%

All Other Replies 26% 12%

Old Habits 3% 7% 4% 14%

Works Too Slowly 12% 4% 11%

Public Perception 4% 4%

Reasons Biopesticides are Not Used

Innovations in the Ag Biologicals Sector Are Driving Investment and Opportunity