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

1. Departmentof Economics Management and Quantitative Methods Patent Analysis and M&A Operations in the Agbiotech: a Possible Key to Understand Different Strategies of Bioeconomy Firms? Ferrazzi Giovanni, Frisio Dario G., Ventura Vera, Siletti Elena 17th ICABR Conference,Ravello(Italy): June 18 - 21, 2013

2. Research objective • Contribute in improving the knowledge of the agbiotechindustry: • Database of agbiotechpatents 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

3. 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) Department of Economics, Management and Quantitative Methods

4. M&A Database • Wehaveidentified the main M&A operations, related to the agbiochemicalindustry, in which the SBCsweredirectly or indirectlyinvolved in the last 30 years • DATA SOURCE (1982-2012) • Data were obtained from companies’ websites, annual reports and press releases • wehaverecordedabove 200 operations (90 in the period 2003-2012, only 14 with agbiotechimplications) • 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

5. AgbiotechPatent Amounts of the Big Six Companies (SBCs) Results • 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. Department of Economics, Management and Quantitative Methods

6. Patent Distribution in the Four Macro-Areas: Total Amount of the SBCs 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. • 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 Department of Economics, Management and Quantitative Methods

7. Patent Distribution in the Four Macro-Areas: the IP portfolios of SBCs Results Department of Economics, Management and Quantitative Methods

8. Big Six Companies, M&A operations and IP rights at a glance 1/4 Results BASF Bayer • 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%. Department of Economics, Management and Quantitative Methods

9. Big Six Companies, M&A operations and IP rights at a glance 2/4 Results DAS DuPont • 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 agbiotechR&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

10. Results Big Six Companies, M&A operations and IP rights at a glance 3/4 • 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&PineLand and De Ruiter Seeds • a few, Alellyx and Divergence, descend from a mere agbiotech strategy Monsanto • these acquisitions have contributed around 10% to Monsanto’s agbiotechgrowth Department of Economics, Management and Quantitative Methods

11. Results Big Six Companies, M&A operations and IP rights at a glance 4/4 • slowestgrowth in agbiotechpatent portfolio with CAGRsaround 3% • Several M&A operationswererealized from 2002 to 2012, butonlytwo show some impacts on agbiotechR&D: • Goldsmith Seeds, a family company specialized in flowers • Devgen’s acquisitionis more important(input traits) Syngenta • the two acquisitions have played a minor part, below 9%, in the rise of Syngenta’s patent weight. Department of Economics, Management and Quantitative Methods

12. Who is the next? Results • 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.

13. Top Ten Patents AgbiotechIndipendent Firms (2003-12) 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 Department of Economics, Management and Quantitative Methods

14. Conclusion Wehaveanalyzed the evolution of SBCs’ agbiotechpatentportfolios in the last decade (weightand technologicalcomposition) and the M&A operations in the sameperiod. There are manyevidencesthatseem to come out: • the SBCs concentrate 40% of the worldwideagbiotechpatents • 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.

15. Conclusion • SBCs’ agbiotechR&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.