Giant leap for GENERICS

Jan 1, 2007 12:00 PM, By Mark Moore

The year 2000 was a watershed event for agricultural chemical companies. That year, Monsanto's patent to its popular Roundup expired, and suppliers jumped into the generic glyphosate market with both feet.

Although generic ag chemicals were already on the market (2,4-D and atrazine, for example), the sheer size of the glyphosate market brought generic agricultural chemicals to the forefront. Producers, lured by lower prices and increased supplier options, welcomed their newfound marketing choices with open arms.

Approximately 85% of agricultural chemicals are off patent, which means these chemicals now can be produced by companies that did not own the original patent. Given that approximately 60% of all pesticides used in U.S. agriculture are herbicides, the market is huge.

“Several years ago, generics were a nonfactor in the agricultural herbicide market,” says John Rabby, president and CEO of Makhteshim Agan of North America. “Generic glyphosate increased the number of products, gave producers more choices and introduced producers to the concept of quality generic crop protection products.”

Sophisticated marketing

The generic-product industry, as a whole, has made tremendous strides in its marketing efforts. Take generic grocery store products, for example. No longer does generic laundry detergent come in a large, black-and-white box labeled “detergent.” A generic product often has its own brand identity, whether it is a takeoff of a name-brand supplier or a store's own proprietary brand name. These generic products are taking more and more shelf space away from the traditional brand names.

The same holds true for generic agricultural chemicals. Atrazine, for example, remains a popular active ingredient that's found in many generic herbicide formulations. The Iowa State University 2006 herbicide guide for corn and soybean producers lists 44 corn herbicides, and at least 27 of those herbicides have at least some amount of atrazine listed as an active ingredient.

Within the glyphosate industry, generic herbicides are finding an expanding market for supplementary weed and grass control. Applications of residual herbicides are being recommended to prevent early weed competition, and this includes weeds showing indications of glyphosate tolerance.

“Makhteshim Agan offers generic versions of the former Dual II and Bicep II metolachlor and metolachlor plus atrazine in our herbicides Parallel and Parallel Plus,” Rabby says. The company also offers generic clethodim, under its brand name Arrow, which controls volunteer corn in Roundup Ready soybeans.

“Today, producers are much more in tune with the active ingredients in the chemicals they use,” says Dallas Peterson, extension weed science specialist at Kansas State University. “They understand the chemistry, and there's little concern that the generic product is inferior.”

While the market continues to be dominated by the original brand names, the generics have developed their niche. Most estimates have the total generic market somewhere around 25%. “Is it growing? Yes. Is there going to be a cap on the total market share for generics? Probably,” Rabby says. “The ag chemical market is dominated by the original brands, but the acceptance of generic products continues to grow.”

New kids on the block

Founded in 2003, Etigra started as a marketing agent with a handful of generic products in its portfolio. It has only been since April 2006 that the company has offered a product for crop protection. Etigra took the active ingredient metsulfuron methyl and created its own branded product, MSM E-AG 60 EG Herbicide. The company also registered imidachloprid and introduced the products, branded Imida E AG, to the market in the fall.

According to JJ Grow, president and CEO of Etigra, his company is evaluating additional crop protection products — both products that are coming off patent and products that are now off patent.

“We look at the chemistry, evaluate the product and the market, and determine if we can do a better job of manufacturing and distribution,” Grow explains. Formulation and manufacturing processes have greatly improved through the years, and this improvement can give a fresh face to older, off-patent chemistry.

What sets Etigra apart, Grow explains, is a business model that's built on communicating with customers, good distribution, and knowing what the customers' needs are.

“You can't just walk in and say ‘Here's our new generic product, buy some’ and expect to make a sale,” Grow says. “We need to understand what our customers want. And we need to meet their needs.”

Makhteshim Agan has been in the marketplace since 1961, mostly selling technical products. The company emerged in 2001 as a major generics supplier, and it continues to grow.

“Our market approach has been to increase our market portfolio,” Rabby says. The company has grown from having four to five active ingredients in its stable five years ago, to offering more than 40 today.

In addition, Makhteshim Agan focuses on being efficient, hiring excellent personnel to serve customers and ensuring cost-effectiveness. “We strive to have a good product at a good price,” Rabby says. “The bottom line is that a producer wants a chemical partner to supply products that work.”

To be sure, there's more to each generic product than simply an active ingredient or two placed in a jug with a label added. Although the generic suppliers don't develop the actual molecule, they develop specific formulations that, they say, make their product more effective. In addition, new manufacturing techniques, new encapsulation technologies and new adjuvants are all part of the mix — all designed to differentiate one generic product from another.