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Agrochemical R&D Expenditure

Phillips McDougall

Agrochemical Industry Research and
Development Expenditure.

A Consultancy Study for CropLife International

September 2005

Phillips McDougall
Suite 2
Vineyard Business Centre
Saughland
Pathhead
Midlothian
EH7 5XP
United Kingdom
Tel :44 1875 320 611
Fax :44 1875 320 613
E-mail :phillipsmcdougall@dial.pipex.com

Phillips McDougall 1 September 2005

Agrochemical R&D Expenditure

Contents
Section Page

Executive Summary 3-5

Background, Study Scope and Methodology 6-9

Study Scope 6

Study Definitions 7

Study Results Part 1 10-19

Research and Development Expenditure – 2004 10

Results of Survey 11

R&D Expenditure Split By R&D Phase 12

R&D Costs of New Product Discovery and Development 13

R&D Costs Associated with Managing the Existing Business 14

R&D Expenditure Split By Scientific Discipline and Activity 15

External R&D Expenditure 17

Study Results Part 2 20

Research and Development Staff Numbers 20

Discussion 21-23

Appendix 1 – Company Questionnaire 24-29

Appendix 2 – Study Variance 30

Phillips Suite 2 For private circulation only. The information in
McDougall Vineyard Business Centre, this report constitutes our best judgement at the
Saughland, time of publication, but it is subject to change.
Copyright Pathhead Phillips McDougall does not accept any liability
2005 Midlothian EH37 5XP for any loss, damage or any other accident
arising from the use of the information in this
report.

2 0 The highest level of R&D expenditure in 2004 was incurred in new product discovery followed by the R&D costs involved in managing the existing business (excluding re-registration costs). How the R&D budget is allocated according to the key disciplines involved.5% of the agrochemical sales of the companies surveyed.8 New Product Development Discovery 500 705.. human risk assessments. 2500 Total $2250 m. 82. The proportion of R&D budget that is targeted at new product discovery.excluding re-registration 1000 506. Re-registration costs incurred by the ten companies surveyed were equal to $397..7% of the total R&D budget.2 m. environmental risk assessment and regulatory. a value equivalent to 7. or 17. Ten companies were surveyed and the aggregated total cost of industry R&D expenditure in 2004 was found to be $2250 m. Agrochemical R&D Expenditure Executive Summary This study presents the results of a survey of the leading crop protection companies in order to determine: The overall level of expenditure devoted by the agrochemical industry to the research and development process. Phillips McDougall 3 September 2005 .1 Patents 2000 397.2 Re-registration 1500 558. biology. namely chemistry.7 Manging Existing Business . development and managing the existing business including re- registration costs. What proportion of the industry R&D budget is spent on studies undertaken by external organisations The total staff headcount involved in agrochemical product R&D and how that headcount is split between the various R&D disciplines. The following figure outlines how this total value was split amongst the main R&D activities: Agrochemical Industry R&D Expenditure by R&D Phase $m.

1 Phillips McDougall 4 September 2005 . The most important areas for this expenditure.4 Human Risk Assessment 77. 2500 Total $2250 m. the most significant scientific and regulatory activity was biology-based studies with $708.) and patents ($82.1 Patents 35.1 m.). Agrochemical R&D Expenditure R&D Expenditure by Scientific Discipline and Activity $m.).3 Environmental Risk Assessment 57.6 m. regulatory activities ($279. $361. The results of the company survey into determining the proportion of overall R&D budget.) Chemistry 63. environmental risk assessment ($174. were biology-based studies.).9 Patents 320.1 m.9 0 Overall. 82.6 174.9 m.4 m. Agrochemical R&D Expenditure Spent on External Studies Sector Value ($m. based on value.).0 Biology 100.1 m. human health risk assessment ($320. followed by chemistry ($684.3 Registration Activities 28.4 Regulatory 1500 Environmental risk assessment Human Health risk assessment 708.9 m.1 1000 Biology Chemistry 500 684. excluding registration fees.0 Total 361.. that was devoted to external studies revealed that in 2004.1 2000 279. was targeted at external studies.

based on FTEs. Agrochemical Industry Headcount Headcount (FTEs) Chemistry 2501 Biology 3383 Human Risk Assessment 1094 Environmental Risk Assessment 583 Regulatory 1210 Patents 119 Total 8890 Phillips McDougall 5 September 2005 . Agrochemical R&D Expenditure The results of the companies surveyed indicated that the total headcount employed in agrochemical industry research and development. was 8890 in 2004.

human health risk assessment. Identify how the total R&D headcount is split according to the various R&D disciplines as noted above. Measure the proportion of the R&D budget that is targeted at the different R&D phases: new product discovery. Agrochemical R&D Expenditure Background In 2002. Methodology The results of this study are based on the responses to a questionnaire. Whilst this study provided information on the costs involved in bringing a new agrochemical active ingredient from the initial discovery process to the market place. environmental risk assessment and regulatory/registration. this current study was designed to measure two main factors associated with the R&D process in the agrochemical industry. the main aims were: Determine the level of expenditure devoted annually by the agrochemical industry to the research and development process as it relates to agrochemicals for crop and non-crop use. Study Scope As outlined above. and managing the existing business. Phillips McDougall 6 September 2005 . Firstly. For the financial investment component of the study. development and registration of a new conventional chemical crop protection product. biology. which was sent to the following group of companies that were considered to be representative of the industry: The questionnaire that was sent to the companies is outlined in Appendix 1 of this report. Phillips McDougall undertook a study on behalf of the European Crop Protection Association (ECPA) and CropLife America that was designed to determine the level of expenditure involved in the discovery. For the staff numbers. This current study was designed to provide not only a greater understanding of the level of annual overall expenditure made by the agrochemical industry on research and development. but also provide details of the number of staff involved in the overall R&D process. new product development. Identify how the R&D budget is allocated according to the key disciplines involved. the level of financial investment made by companies and secondly the number of staff involved in the overall agrochemical R&D sector. it was not designed to provide information on the overall level of R&D expenditure made by the agrochemical industry or how the industry R&D budget is invested. namely chemistry. the principal aim of the study was to: Determine the total number of individuals involved in agrochemical product R&D.

For those companies reporting their expenditure in non-US dollar terms.11 Australian Dollar: 1. The companies included in the survey were: BASF Bayer CropScience Dow AgroSciences DuPont FMC Monsanto Makhteshim Agan Nufarm Sumitomo Chemical Syngenta Each company was sent a questionnaire and on receipt of their response. developmental and regulatory processes associated in managing and maintaining the commercial and regulatory status of the products of each company following their introduction. In addition to the various studies associated with new product discovery. the results were added to a database in which each company was allocated a code number. Typically.36 The results of each company. Both these stages involve a number of related scientific and regulatory disciplines that are designed to determine the relative efficacy of the product. Increasingly. Some of these studies will be undertaken to extend the application and use of the product following launch to other crop pest situations or to other country markets. a number of studies are also being undertaken to satisfy the re-registration requirements of regulatory bodies such as the EU and the US EPA. Study Definitions The overall scope of the R&D process within the agrochemical industry encompasses both the discovery of new agrochemical products and the research. the R&D process for new products can be split between the discovery process and product development.805 Yen: 108. whilst ensuring that the new active ingredient satisfies the various tests established by regulatory bodies to demonstrate that the product is safe from both a human and environmental viewpoint. the questionnaire was designed so that the data in company responses would be based on the specific R&D functions rather than reflecting individual company organisations. Agrochemical R&D Expenditure As detailed in Appendix 1. the values were converted to US dollar equivalents using average year exchange rates as follows: Average Year Exchange Rates to the US Dollar (2004): Euro: 0. the agrochemical industry undertakes a significant amount of research and development aimed at maintaining and developing the existing product portfolio. Phillips McDougall 7 September 2005 . in US dollar terms. were subsequently aggregated so that a collective total was produced to represent the overall agrochemical industry.

. industrial and consumer applications. Headcount: Lists the number of FTEs (Full Time Equivalents) by R&D activity and by total in the empty fields. It ends with the registration and launch of a product in a major crop market (generally an OECD country). but outside the crop protection organisation (for those companies having R&D centres/capacities outside crop protection divisions) were also included. alliances. Discovery: All the R&D activities associated with the discovery of new agrochemical active ingredients up to the start of new product development. New Product Development: Starts at the point when a company commits a new active ingredient to full development. pest control. they are excluded as a headcount. The definition of R&D Expenditure and the main R&D phases that were included as categories in the questionnaire were: R&D Expenditure (scope): The total 2004 expenditure on all research and development activities relating to agrochemicals for both crop protection and non-agricultural uses. Activities carried out within the corporation (for those companies having R&D capacities outside crop protection divisions) are considered internal expenditure and are therefore excluded. and research agreements with third parties was included. Where contractors are working as part of internal teams or are part of operational expenditure.Other: includes activities required to satisfy regulatory requirements for registration in non-OECD countries. generally marked by the decision to commence long-term toxicity tests. This covers R&D related to conventional crop protection in agriculture. . It also includes salaries and all other staff-related costs. Agrochemical R&D Expenditure Definitions of the various disciplines and stages included in the overall R&D process for the agrochemical industry were included as footnotes to the questionnaire that was sent to each company. carried out through joint ventures. Depreciation costs related to R&D assets are also included. A copy of the questionnaire is included as Appendix 1 of this report. expenditure on joint ventures. materials. rent. as well as costs related to R&D administration. etc. Where contractors are treated as external expenditure. supplies. alliances and research agreements with third parties. Capital expenditure on R&D is excluded. equipment. External Expenditure: Includes costs for activities outsourced to contractors (see also Headcount below). Activities carried out (for the purpose of agrochemical development) within the corporation. Phillips McDougall 8 September 2005 . Someone working part-time is counted as a fraction of an FTE. public health and lawn and garden use. Corporate research programmes. they are included as FTEs.Re-registration/registration maintenance: refers to any activities or studies that must be undertaken in response to the requirements of registration authorities in order to maintain a product’s registration. but their costs are accounted for in the total and the % external expenditure (see External expenditure above). and line extensions of existing products. Managing Existing Business: All product development activities following the launch of a new active ingredient into a major market.

metabolites and radiolabelled products. Patents: Includes activities to write.Other: Includes plant metabolism. retrieval and archiving of chemical libraries for the purpose of discovery. structure-activity relationships (target-site). soil metabolism. analogues. Registration activities: All activities associated with product registration and re-registration. Does not include process chemistry. environmental fate. Field Biology: Includes field efficacy work. but excludes field demonstration trials done for commercial purposes. profiling. including combinatorial chemistry based methods. These activities include the preparation of the report and the writing of submission documents. combinatorial chemistry. Phillips McDougall 9 September 2005 . etc. file and maintain patents. etc. molecular biology. operator exposure and dietary risk assessment. Agrochemical R&D Expenditure Synthesis: Laboratory-based synthesis.Other: Includes animal metabolism. including the generation of product overview summaries and their compilation. of new candidate products. Laboratory Biology: Includes high-throughput screening. Influence activities related to regulation and registration are excluded. genomics (for product discovery). environmental modelling. water monitoring. Chemistry .Other: Miscellaneous chemistry-based activities. These activities include the preparation of the report and the writing of submission documents. such as trademark filing. biochemistry. Human health risk assessment . Environmental risk assessment . such as computer modelling. Sample and Compound Logistics: The storage. Excludes litigation costs and other legal costs.

As outlined in the study design. Responses to the questionnaire were received from all the ten companies surveyed. the survey revealed that the agrochemical industry devoted $2250 m. This value is. all the responses of the companies were aggregated and the results of this are displayed in the table on page 11. however.5% of the overall sales total for these ten companies in the same year. This value is equivalent to 7.2004 This section was designed to determine the total expenditure on all research and development activities relating to agrochemicals for both crop protection and non-crop protection uses made by the companies involved. Agrochemical R&D Expenditure Study results Part 1: Research and Development Expenditure . R&D Expenditure and Sales Total of Agrochemical Companies . it may be more meaningful to update the report by also highlighting the data for the group of seven companies with R&D expenditure greater than 6% of sales. to agrochemical research and development in 2004. while the R&D expenditure of the remaining three companies was equivalent to less than 5% of their agrochemical sales. not indicative of individual companies as there was considerable variation between the responses of the various companies with seven companies having an R&D expenditure over 6% of their sales value.(2004) $ million 35000 30003 30000 25000 20000 15000 10000 5000 2250 0 Sales R&D As shown in the above figure. as they are better indicators of companies with meaningful discovery programmes. As a result. Phillips McDougall 10 September 2005 .

3 Assessment Total 8.3 Process Research and Development 29.1 1.7 13.0 14.0 Phillips McDougall 11 September 2005 .2 136.8 41.9 Chemistry Product Chemistry and Analytical Studies 79.7 133.0 143.6 Sub Totals 705.2 14.9 90.0 708.2 506.5 87.8 105.1 45.4 119.1 Biology Field biology 31.5 200.3 223.9 3.3 54.6 684.5 17.3 229.8 320.2 129.5 4.5 159.8 178.2 26. Agrochemical R&D Expenditure Cumulative Total Research and Development Expenditure for the Agrochemical Industry ($m.4 115.5 44.1 42.9 115.7 41.8 44.7 42.5 10.9 128.2 19.3 28.5 174.6 7.7 93.9 10.8 558.0 3.1 Human Mammalian Toxicity 18.3 279.2 Compound Logistics 17.5 Other 41.5 66.8 164.3 47.9 Formulation Technology 10.1 Total 1.0 5.0 43.5 34.8 Registration Activities 1.9 Greenhouse Biology 99.8 174.) -2004 $ million New Product Manage Existing Business Discovery Development Other Re-registration Total Synthesis 207.5 10.1 37.9 16.1 11.2 2167.4 Environmental Ecotoxicology 4.6 84.0 1.9 25.4 0.6 46.1 Total 386.6 0.7 127.1 Grand Total 2250.2 1.7 Regulatory US Registration Fees 0.6 24.1 30.2 1.7 397.6 0.3 413.2 39.0 Laboratory Biology 153.3 0.5 43.4 1.0 Risk Other 1.9 EU Registration Fees 0.3 Assessment Total 23.4 12.1 Health Residue Including Field and Analytical Phase 4.0 Total 284.6 25.7 134.4 19.0 6.6 24.9 80.1 35.9 36.7 43.5 123.5 0.7 49.9 15.9 Patents 82.0 87.4 24.6 Risk Other 3.

3% of the total. which was valued at $705. equivalent to 17.7 3..7 Patents 82.2 m.7 24. The following table summarises the relative allocation of industry R&D cost split between these various product life cycle stages: Agrochemical Industry R&D Expenditure Split by R&D Phase (2004) R&D Activity Expenditure ($m. which represented just over 53. equivalent to 31.5 Re-registration 397. Agrochemical R&D Expenditure R&D Expenditure Split By R&D Phase According to the results presented on page 11.8 22.3% of the total agrochemical sales of these companies last year.8 m.. while the total costs associated with product re-registration in 2004 were $397.7 m. or 1.2 17. This was followed by expenditure associated with the costs of managing the existing business (excluding re-registration costs). the costs associated with maintaining and developing the existing product portfolio and business. including product re-registration.8% of the total.7 Total 2250 2250 100.8 New Product Development 506. In contrast to this. the highest proportion of agrochemical industry R&D expenditure in 2004 was devoted to new product discovery and development.2 m. Phillips McDougall 12 September 2005 . which was equivalent to $558. were equivalent to 42.3 1212.1 82.5% of the total industry R&D budget.2 31.0 53.8 business excluding re-registration 955.1 3.9 42.0 100.0 The highest level of R&D expenditure within the above categories was devoted to new product discovery.7% of the overall industry budget for R&D.5 Costs of managing existing 558.) % of Total Discovery 705. New product development costs were $506.

3 3.8 1. Within this.4 50 23.2 39.7 400 350 284.4 8.5 0 Chemistry Biology Human Health Enviromental Risk Regulatory Risk Assessment Assessment Expenditure on New Product Discovery and Development (2004) Split By Research Activity Expenditure Chemistry Biology Human Environmental Regulatory Total Health risk Health risk Assessment Assessment Discovery % of total 54. followed by biology-based studies for product development. Discovery New Product Development 450 386.6 100 Phillips McDougall 13 September 2005 .9 150 93. Expenditure on New Product Discovery and Development (2004) Split By Research Activity $m.6 18.3 0. the results of the survey outlined that $1212 m.8 200 127.4 1.8 40.5 300 250 200.2 100 New Product development % of total 25.0 100 41.7 43. Agrochemical R&D Expenditure R&D Costs of New Product Discovery and Development In total.7 8.and biology-based research programmes for new product discovery. or 53.8% of the total industry R&D budget is devoted to the process of new product discovery and development. the most significant sectors in terms of expenditure were chemistry.2 8.

0 100 As with the new product discovery and development process.5% of total industry R&D in 2004.0 43. However.0 160.0 60.0 178.9 40.3 120.0 128. industry R&D expenditure on managing the existing business is mainly focussed on chemistry and biology-based studies.0 41.0 15.0 87.8 115.8 180.0 115. Agrochemical R&D Expenditure R&D Costs Associated with Managing the Existing Business Industry expenditure on R&D activities associated with managing the existing business.1 29.9 21.5 11. Managing Existing Business -Other Re-registration 200.9 80.6 44.3 29.0 0.4 140. including product re-registration.Spit By Research Activity $m. were $955. Phillips McDougall 14 September 2005 .4 100 Re- registration % of total 10. or 42.5 80.7 119. Expenditure on Managing the Existing Business (2004) .0 20. the other activities associated with human health and environmental risk assessment and registration are also significant areas of expense.0 32.1 20.0 Chemistry Biology Human Health Enviromental Risk Regulatory Risk Assessment Assessment Expenditure on Managing the Existing Business (2004) Split By Research Activity Expenditure Chemistry Biology Human Environmental Regulatory Total Health risk Health risk Assessment Assessment Managing Existing Business - Other % of total 23.0 100.7 7.9 million.

closely followed by chemical synthesis with $223. human health risk assessment (14. Thereafter. Although biology-based studies overall represented the area with the highest level of R&D investment in 2004. closely followed by chemistry-based activities (30. irrespective of the phase of the R&D process in which they are undertaken. Phillips McDougall 15 September 2005 .4%).4% Environmental Chemistry 30. representing the most significant investment area..1 m. Agrochemical Industry Research and Development Expenditure (2004) - Split By Scientific Discipline and activity Patents 3. which include laboratory.4% of the total R&D expenditure.2% Biology 31. equivalent to 18.8% Human Health Risk Assessment 14. Agrochemical R&D Expenditure R&D Expenditure Split By Scientific Discipline and Activity The following figure presents the results of the survey on the overall R&D expenditure total in 2004 split by the various scientific disciplines and activities. for both new products in development and those in the existing product line. the next leading area on the basis of cost was registration activities with $229. greenhouse and field-based research. within these broad categories the activity that attracted the highest level of R&D expenditure was field biology-based studies with costs of $413 m..2%) and regulatory studies (12.3 million.4%) represented the next most cost intensive areas of R&D. accounted for 31. Biology-based studies.7% Regulatory 12. Thereafter.5% Total = $2250 m.4% Risk Assessment 7.5% of total industry R&D expenditure.

4 Other 54.1 82. Synthesis 223.2 Compound Logistics 19.1 Biology Field biology 413.1 Laboratory Biology 159.1 Greenhouse Biology 136. Total $m.0 Phillips McDougall 16 September 2005 .9 Risk Assessment Other 90.9 684.9 Formulation Technology 133.0 708.0 320.1 Risk Assessment Residue Including Field and Analytical Phase 143.3 Environmental Ecotoxicology 84.6 Registration Activities 229.3 EU Registration Fees 24.6 174.7 Regulatory US Registration Fees 25.1 Patents 82.3 Process Research and Development 129.9 Chemistry Product Chemistry and Analytical Studies 134. Agrochemical R&D Expenditure Agrochemical Industry Research and Development Expenditure (2004) Split By Scientific Discipline and activity $m.8 279.0 2250.5 Other 44.0 Human Health Mammalian Toxicity 123.1 Total 2250.

1 12.1 8 Biology Field biology 413.5 8 Chemistry Product Chemistry and 134.3 2.3 8 Patents 82.5 12. Synthesis 223.6 30.1 4.5 0.1 5.3 32.7 23.0 14.1 100.0 42.5 8 Total 684.4 14.9 16. alliances and through research agreements with third parties. This data were included in the preceding section covering total industry expenditure.2 8 Total 708.3 8 Process Research and 129.1 16. sub category aggregated values were calculated on a pro rata basis. This includes costs for R&D activities outsourced to contractors and contract organisations.2 10 Human Mammalian Toxicity 123.1 20.3 24.0 64. All of the ten companies surveyed returned responses containing quantitative data.3 8 Risk and Analytical Phase Assessment Other 54. Expenditure Total Responses $m.2 10 Greenhouse Biology 136.2 5.9 63. As a result. Agrochemical R&D Expenditure External R&D Expenditure As discussed in the Study Scope.5 8 Other 44. The actual number of responses for each scientific and regulatory category and sub category.2 35.4 37. and the aggregate values of the company responses are shown in the following table: Proportion of Agrochemical R&D Expenditure Devoted to External Studies Total External % of Number of $m.1 28.1 30 8 Assessment Total 174.3 12.1 35.Excluding Registration fees 2199.7 8 Risk Other 90. one of the survey questions was targeted at determining the proportion of overall R&D expenditure that is devoted to work undertaken by external bodies.6 10 Total .4 77.2 3.1 8 Health Residue Including Field 143. work carried out by joint ventures.4 8 Total 320.0 32.5 8 Laboratory Biology 159.3 27.9 57.9 3.8 10 Regulatory Registration Activities 229.0 9.2 9.3 32. they are not included in the above table.0 53.9 8 Analytical Studies Compound Logistics 19. Phillips McDougall 17 September 2005 .1 11.1 15.8 12.1 10 Environmental Ecotoxicology 84. but has been broken out for analysis in this section to show the cost of R&D undertaken by third parties. however not all of the company responses were complete in that they did not contain data on all the scientific and regulatory sub-categories.9 8 Development Formulation Technology 133.5 361.1 0.3 3.4 10 As registration fees are by definition an external activity.

As outlined in the table on page 17. Within this result the categories with the highest level of external R&D expenditure were biology and studies undertaken for human health risk assessment.7% Chemistry 17.3 9.1 m.4% Total = $361.) followed by residue studies associated with human health risk assessment ($53.2 10 0 Human Risk Enviromental Chemistry Registration Patents Biology Risk Phillips McDougall 18 September 2005 .) and patents ($35.9% Biology 27.8% Human Heath Risk Assessment 21. environmental risk assessment (33%) and human risk assessment (24%).4% Registration 7.8 30 24.1 % 14. External expenditure within each scientific discipline and activity was highest in patents (43%). Agrochemical Industry Research and Development Expenditure (2004) - External Expenditure Split By Scientific Discipline and Activity Patents 9.4% of the overall industry R&D budget was attributable to activities undertaken by external organisations. $361. Agrochemical Industry Research and Development Expenditure (2004) - External Studies’ Share of Overall Expenditure by Scientific Discipline and Activity (%) 50 42.1 m.8% Environmental Risk Assessment 15. Agrochemical R&D Expenditure In total.0 m.). within these summary categories the most important areas from a cost perspective were field biology ($64.4 m.2 20 12.1 million or 16.6 40 32.

2 14. US Registration 0 5.5 55.0 27.5 % 0 17.0 6.6 13.9 28.6 25. Agrochemical R&D Expenditure Registration Fees As indicated above. The results of the survey indicated that in 2004. registration fees represent another area of external expenditure for the agrochemical industry.5 100 Phillips McDougall 19 September 2005 . company expenditure on registration fees for the EU and the USA was $50. Agrochemical Industry Research and Development Expenditure (2004) – Registration Fees New Product Manage Existing Expenditure Discovery Total Development Business Re- Other registration EU Registration 0 3.7 13.4 24.5 m.0 50.8 Fees $m. Total $m.7 Fees $m. 0 8.6 7.

1% in chemistry. However. were included as FTEs.6 7. where contractors are treated as external expenditure. these results are believed to be indicative of the agrochemical industry.7 Total 8890 100 100 In total.8 Regulatory 1210 13.3 3.Research and Development Staff Numbers The following table summarises the overall survey results for staff numbers employed by the companies in agrochemical research and development. nine responses were received.1 31. 38. Agrochemical R&D Expenditure Part 2 . they were excluded from the headcount numbers.3 14. The following table gives the aggregated result of the companies surveyed.4 Biology 3383 38. contractors working as part of internal teams or as part of operational expenditure. the R&D headcount for staff in the companies surveyed was 8890. In addition.1 30. However.2 Environmental Risk Assessment 583 6. company responses were based on the number of FTEs (Full Time Equivalents) by R&D activity and by total in each company.4 Patents 119 1. In total. Part-time employees were counted as a fraction of an FTE. As outlined in the questionnaire.6 12. Of this total. Agrochemical Industry R&D Headcount (2004) Headcount % of Total Total % of Total R&D Expenditure Chemistry 2501 28. Phillips McDougall 20 September 2005 .1% were employed in biology-based activities followed by 28.5 Human Risk Assessment 1094 12.

a value equivalent to 4. in 2004. with some companies having only a limited programme in new product discovery and development. to crop protection. new product discovery costs were the most significant at 31. then the results of the study demonstrated that in 2004 the industry devoted $1212 million to new product discovery and development. there was.3% of the overall R&D costs. Another factor contributing to the study variability will have been the fact that several companies in the industry have only a very limited new product discovery programme. however. This result in itself will undoubtedly reflect the importance of chemical research to the discovery process for new agrochemical products. and also in part the technical advances that have taken place in recent years. preferring to utilise other methods to enhance their product portfolios such as product acquisition and licensing. These two scientific disciplines accounted for 51. considerable variability between company responses. which has resulted in a significant increase in the number of products being subject to biological screening. Within this. Commercially. the R&D activity that incurred the highest cost both in the discovery programme and overall expenditure was that of chemical synthesis as it relates to new product discovery. Agrochemical R&D Expenditure Discussion This study was undertaken to determine two key factors associated with the R&D process in the agrochemical industry: The overall investment made by the companies in research and development and the key components of this investment. The total staff employed by companies involved in research and development. In terms of overall value. and the introduction of combinatorial chemistry. These processes are typically cost intensive and will be a significant contributory factor towards R&D expenditure. Since that time several companies have shifted the focus of their R&D programmes by reducing their expenditure on conventional agrochemical research and expanding their in- house transgenic crop R&D effort. The results of this study reveal that the R&D budget for the agrochemical industry was $2250 m. such as GM crop technology. Phillips McDougall 21 September 2005 .5% of the overall sales total. The commercial advent of herbicide tolerant and insect resistant transgenic crops in 1996 significantly expanded the crop protection choice available to growers of several key field crops. equivalent to 7. notably the use of genomics to identify suitable product candidates. in part reflecting recent trends in the industry towards alternative approaches. As outlined in Appendix 2.1% of the overall cost of new product discovery. The two most significant components of agrochemical product discovery were chemical synthesis and laboratory biology. If the costs associated with managing the existing business and patents are excluded. the most significant area of the R&D process in the agrochemical industry is new product discovery and development with over half of the R&D budget targeted at this area. The last ten-year period has been characterised by a number of important developments that have aided the chemical discovery stage.0% of the sales total of the companies surveyed. joint ventures and generic product manufacture.

not unexpectedly. Agrochemical R&D Expenditure Similarly. As a result. Overall the new product development sector that attracted the highest investment was field biology studies. product re-registration costs incurred by the industry were $397. One of the factors that will have contributed to the high R&D costs associated with managing the existing business is the advent of product re-registration systems in the EU and the USA. at $361. regulatory testing for both human health and environmental risk assessment were also significant costs centres. Phillips McDougall 22 September 2005 . Industry expenditure on new product development represented 22. much of the budget is targeted at regulatory activities associated with managing the existing product line. Clearly. As outlined above. Although expenditure by the industry on R&D is equivalent to 7. Field biology studies were also major areas of expenditure for the industry in terms of the R&D programme targeted at managing the existing business and re-registration. the most significant cost areas were biology- based studies followed by chemistry. for biological testing.7% of the overall industry R&D budget. the relatively high costs of laboratory biology will reflect not only the number of biological assays utilised in the screening process by the industry. Industry R&D expenditure on external studies. Clearly. the on-going requirement in the USA suggests that this sector will be a key part of R&D costs in the longer term.. the highest level of individual external R&D expenditure is incurred in undertaking field biology studies. Within this. This is exemplified by the fact that the costs associated with re-registration activities associated with managing the existing product line exceeds those utilised for chemistry research for new product discovery. Although many of the R&D studies undertaken to support product re-registration in the EU are believed to have been completed.5% of the overall R&D budget.2 million in 2004. environmental risk assessment and human risk assessment. As a result. but also the use of increasingly sophisticated and cost intensive methods. such as high-throughput screening.1 m. excluding registration fees. field biology emerged as the scientific and regulatory sector with the largest overall R&D budget. However. however external expenditure within each scientific discipline and activity was highest in patents. However. part of this will be devoted to exploring new opportunities for the existing product line such as new crop/pest sectors or additional geographic markets. is clearly a significant part (16. reflecting the importance of field efficacy studies in product development.0%) of the overall R&D budget.5% of the overall sales total in 2004. The EU re-registration scheme has been ongoing since the introduction of Council Directive 91/414/EC in 1992. in absolute numbers. The Food Quality Protection Act (FQPA) in the USA in 1996 introduced the requirement for re-registration through a 15-year review cycle. a significant portion of this expenditure will be targeted at maintaining the regulatory status of many of the companies’ product portfolio. much of this external expenditure will be targeted at specialist contract research companies. equivalent to 17.

000. which was shown to be 8890 FTEs for the companies surveyed. Agrochemical R&D Expenditure The final component of this study focussed on the R&D headcount. Phillips McDougall 23 September 2005 . are devoted to external studies. this results in the average level of industry R&D expenditure on each employee on internal R&D studies being equivalent to just over $206. excluding registration fees.4% of industry R&D costs. Taking account of the fact that 16.

Agrochemical R&D Expenditure Appendix 1: Company Questionnaire Questionnaire on behalf of CropLife International Phillips McDougall 24 September 2005 .

6 AVEDEV = 24.6 100 AVEDEV = 31.4 120 Mean value = 47. The following graph outlines the mean value and variance (as measured by average absolute deviation) within the results of the survey on overall industry R&D expenditure in 2004.2 Mean value = 70. R&D Expenditure for the Agrochemical Industry . This variability also extended to the various components of the R&D process.9 40 20 0 Discovery New Product Other Re-registration Patents Development Managing Existing Business $m.9 AVEDEV = 13.8 150 AVEDEV = 57.9 Mean value = 8.9 Mean value = 40. Phillips McDougall 30 September 2005 .5 AVEDEV = 39.1 AVEDEV = 39.7 Mean value = 28 100 Mean value = 32 AVEDEV = 23. The companies chosen to participate in the survey were those that are considered to be the most active in overall research and development in the industry.5 160 AVEDEV = 64. Agrochemical R&D Expenditure Appendix 2: Industry R&D Expenditure: Survey Variance The primary aim of this investigation was to determine the overall level of R&D expenditure made by the agrochemical industry in 2004. 200 Mean value = 68. Mean value = 70. and hence representative of the overall industry.6 AVEDEV = 8.9 80 60 Mean value = 8.9 0 Chemistry Biology Human Risk Environmental Risk Regulatory Patents Assessment assessment As depicted in the above figure.2 AVEDEV = 8.2 50 Mean value = 17. there was considerable variation between the survey results of the companies involved. with some companies devoting only a modest level of expenditure to the overall R&D process.6 140 Mean value = 58.4 AVEDEV = 58.2004 Survey Results (Mean and Average Absolute Deviation) $m.