Business Concentrates AGRICULTURE
Ag giants fight for deal approvals Antitrust regulators still haven’t okayed three agrochemical mergers As three large agrochemical deals—the Dow Chemical-DuPont merger, Bayer’s purchase of Monsanto, and ChemChina’s buy of Syngenta—languish in front of antitrust regulators in the U.S. and Europe, the companies are going on a charm offensive in an effort to convince officials that their mergers will benefit farmers. Bayer CEO Werner Baumann and Monsanto head Hugh Grant met earlier this month with president-elect Donald Trump in New York City to pitch their deal and promise R&D investment. “The combined company expects to spend approximately $16 billion for R&D in agriculture over the next six years, with at least half of this investment made in the U.S.,” the companies said, noting that investment would create “several thousand new high-tech, well-paying jobs.” The companies said they would make St. Louis their global seeds and traits R&D headquarters. The Trump transition team touted the pledges. However, it isn’t clear if Bayer
BY THE NUMBERS
$209 billion CREDIT: BAYER
The value of mergers and acquisitions in the global chemicals and materials sector in 2016, according to the M&A intelligence service Mergermarket. The figure is up more than 18% compared with 2015, Mergermarket says. The number of deals with announced value was 468, versus 442 in 2015.
and Monsanto are merely promising to do what they intended to do anyway. During their most recent fiscal years they spent a combined $2.7 billion on agriculture R&D, a level that would add up to more than $16 billion over six years. The European Commission appears increasingly concerned about the Dow-DuPont deal’s impact on innovation. According to the Wall Street Journal, the EC submitted an 800-page statement of objections to the two companies dwelling on whether having one less large competitor in seeds and agricultural chemicals would be detrimental to technological progress. The EC declined to comment. Certainly, technology has been a theme for the EC for a while. In August, it pointed to innovation in crop protection when it launched an in-depth investigation into the merger. These concerns were reiterated by Competition Commissioner Margrethe Vestager in an interview with Bloomberg earlier this month after Dow and DuPont made
Bayer scientists in Research Triangle Park, N.C., investigate corn rootworm. their case for the deal behind closed doors. “The outcome of the merger, of course, is still very open,” she noted. Meanwhile, Syngenta CEO Erik Fyrwald sounded upbeat about his company’s takeover by ChemChina. “We are working well with the U.S. and the EU regulators now toward finalizing agreements with them,” he told a CNBC reporter on the sidelines of the World Economic Forum in Davos.—ALEX TULLO
INTELLECTUAL PROPERTY
Biogen pays $1.25 billion to protect a blockbuster drug Biogen has agreed to pay the Danish biotech firm Forward Pharma $1.25 billion to settle a patent dispute over dimethyl fumarate, the active ingredient in its multiple sclerosis drug Tecfidera. The settlement and licensing agreement will afford Biogen intellectual property rights to the drug until at least 2023. Tecfidera, Biogen’s best-selling drug, notched sales of approximately $4 billion in 2016. Its patent currently expires in 2028, but that protection is challenged in suits brought in the U.S. and Europe by Forward, which claims to have an earlier patent on the compound. Decisions in these cases are expected early this year. As a result of the patent challenges, which continue in spite of the payment,
Biogen faced the prospect of paying royalties of 10%. Under the licensing agreement, those royalties will be deferred until 2021. Without the protection afforded by the agreement, Biogen may have been required to make back payments from September 2014 and pay royalties. John Scotti, a biotech analyst at the research firm Evercore ISI, told clients that he sees the settlement as “effectively a $1.25 billion insurance policy” that provides Biogen with intellectual property for Tecfidera beyond 2023, regardless of the outcome of the patent dispute. Biogen acquired its rights to dimethyl fumarate in 2006 with the purchase of Fumapharm, a Swiss developer of therapeutics derived from fumaric acid esters.—RICK MULLIN
JANUARY 23, 2017 | CEN.ACS.ORG | C&EN
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