Off-Patent/Off-Kilter: How the Patent Cliff Is Redrawing the Crop Protection Playbook

For decades, the U.S. crop protection industry for agriculture has functioned in a straightforward manner. Major multinational companies introduced proprietary products, discovered through a long research and development effort, steadily building market sales. Eventually, when these active ingredients came off patent, other suppliers would step in and begin building market share through lower priced alternatives.

To maintain share, multinationals would offer end users their own price breaks, usually in the form of rebates.

However, according to Bob Trogele, CEO of Verdelis Investments/ProAgInvest LLC, this long-standing pattern of market dynamics for crop protection products is rapidly changing into something different.

“The traditional discover/patent/defend/rebate/sell model is no longer viable for Bayer, BASF, Syngenta, Corteva, or FMC,” says Trogele. “The next five years will be defined by patent-cliff disruption, generic proliferation, data package warfare, ag retail margin compression, and a shift toward service-based business models.”

Brent Marek, CEO and COO at Sipcam Agro USA, Inc., agrees with Trogele’s assessment.

“If I had to describe the next five years in one word, it would be volatile,” says Marek. “Since COVID, it seems every year brings a new disruption: Shipping challenges, evolving EPA and Endangered Species Act requirements, perfluoroalkyl and polyfluoroalkyl substances concerns, geopolitical conflicts, raw material shortages, tariffs, and even issues such as water levels in the Panama Canal. The industry has learned that adaptability is no longer a competitive advantage; it’s a necessity.”

Crop Protection’s Generic Revolution

Industry experts point to multiple reasons why this rapid shift in today’s crop protection products business is happening.

The first ties back to the simple cost of doing business for the major crop protection product suppliers. According to the data, the R&D costs associated with new molecule discovery for multinationals have increased significantly over the past two decades. For example, in 1995, a company would spend approximately $152 million to research and develop a new active ingredient for the market. Today, that figure has soared to more than $350 million.

In addition, the time it takes to bring a new active ingredient to market has lengthened. Back in the mid-1990s, a new product could go from research to development to registration with the EPA in six to eight years. Today, due to heightened registration requirements, that timeline has stretched out from 10 to as many as 12.5 years.

The second reason for the changes now taking place in the crop protection industry also comes down to numbers — as in the number of products now coming off patent. Between 2026 and 2028, major agricultural active ingredients such as chlorantraniliprole (an anthranilic diamide insecticide), pinoxaden (a post-emergence grass herbicide), and prothioconazole (a broad-spectrum fungicide) are coming off patent.

Then there’s the Group 15 herbicides. Several key active ingredients in this group, such as pyroxasulfone, are now coming off patent. According to Amy Asmus, Co-Owner of Asmus Farm Supply, Rake, IA, this will affect approximately 58% of the company’s post-emergence products, 65% of its soybean pre-emergence products, and 50% of its soybean post-emergence products.

“In the corn pre-emergence space, 10 out of the 11 products, or 91% of the products that we use, have a Group 15,” says Asmus.

In all, the value of the number of crop protection active ingredients coming off patent during this wave is estimated at $1.15 trillion globally. Furthermore, this will push the percentage of active ingredients off patent within the U.S. market from 70% to 90%.

“This is the largest patent expiration wave in crop protection history,” says Trogele. “The expected impact of this will be price declines of 20% to 60%, depending upon the category and margin compression for multinationals. The U.S. will become a generic-dominant market, similar to China, Brazil, Mercosur, and India.”

Moving this transition along will be the grower-customers themselves. As reliability issues with post-patent products have eased and commodity prices have stayed low, many U.S. growers have shown a willingness to try post-patent products in their crop fields.

“Some generics are still suspect, but for companies such as ours, we have a strong data package submitted to the EPA,” says Tom Wood, General Manager at Belchim Crop Protection USA. “This offers flexibility and provides us with technical credibility we can go to the market with.”

The Retailer’s Plan Forward

For U.S. ag retailers, all of these crop protection market changes are adding to the host of uncertainty already dogging the industry.

“It’s scary,” says Jeff Pritchard, CEO at WestLink Ag Group, Meridian, ID. “Seriously, we expect more than $2 billion in market capitalization to disappear as the remaining major patented products come off patent. Where will these margins be captured in the channel, which is critical to continued and progressive investment in talent, facilities, and farmer service? It is going to require patience and intuitive planning to ensure that you have marketable product supply to feed our very much decentralized channel down to the farmgate.”

Griffin Evans, Director of Crop Protection, Seed and Specialty Products at RW Griffin, Douglas,
GA, agrees.

“[The move to generic is] going to be good for the grower,” says Evans. “But from a retail standpoint, we’re going to be upside down on a lot of inventory if [these products don’t] move.”

To successfully navigate through this market transition, ProAgInvest’s Trogele recommends U.S. ag retailers begin building their businesses around service-based agronomy such as scouting and integrated pest management programs. They should also start bundling newer biological brands with traditional crop protection products, giving growers more options for price/pest control.

This approach could also be utilized with the post-patent products themselves, he adds.

“Retailers should build generic-plus portfolios, pairing trusted generic products with enhanced service bundles,” says Trogele. “They should also partner with manufacturers that have strong regulatory assets and formulation capabilities.”

He also advises ag retailers to invest in new technologies as well.

“Artificial intelligence (AI) can be a big help with this,” says Trogele. “Using these kinds of systems can strengthen data-driven agronomy offerings. But AI can also help as ag retailers prepare for price compression and rebate reduction, helping them reduce costs and improve efficiency in their operations.”

Besides AI, Trogele says other ag technologies can also help ag retailers with these changing
market dynamics.

“They should invest in new application services,” he says. “In particular, drone-enabled programs will be important to help growers maximize their crop protection product purchases.”

Finally, Trogele suggest ag retailers look at developing their own branded products as more crop protection active ingredients come off patent.

“Ag retailers that have the resources should evaluate private label opportunities,” he says. “In this environment, retailer-owned mixtures and custom formulations will have their place in the mix.”

Ultimately, Ryan Rubischko, Vice President of Marketing, WinField United, believes U.S. ag retailers will do what they’ve historically done when the markets they conduct business with evolve.

“We’ll continue to see greater emphasis on agility throughout the crop protection supply chain,” says Rubischko. “As more products move off patent and regulatory requirements continue to evolve, the industry will need to respond quickly while maintaining product quality, reliability, and stewardship.

“At the same time, retailers are looking for more options to help meet the needs of different growers and operating environments,” Rubischko continues. “That includes access to products at a range of price points, backed by the confidence that they’ll perform as expected and be available when they’re needed. Post-patent products will continue to play an important role, but so will innovation from the major manufacturers. Retailers are best positioned when they have access to a broad range of choices and the ability to match products to individual grower needs.”