The world’s largest manufacturer of off-patent crop protection products is setting up shop in Canada in anticipation of hordes of products coming off patents.
“There’s a lot of competition going to be coming into Canada in the next few years,” said Dale Kushner, commercial business manager for Mana Canada.
Mana Canada is a subsidiary of Makhteshim Agan, an Israeli agrochemical manufacturer that posted global sales of $2 billion US in 2007, $1.6 billion of which came from its crop protection business.
Kushner said 80 percent of all herbicides, insecticides and fungicides are off patent in the United States compared to 20 percent in Canada.
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“In general, there is a lack of competition in Canada,” he said of the generic market.
But that is about to change as an increasing number of products are scheduled to come off patent.
Mana Canada has 14 generics registered and another seven in the queue at the Pest Management Regulatory Agency. Some of its products include Silencer, a Matador substitute, Arrow 240EC, a generic version of Select, and Bumper 418, which can be used in place of Tilt.
Kushner said 28 percent of the $30 billion global crop protection market is still patented. Half of those patents are to expire between 2006 and 2012. The remainder will come off patent after 2012.
“That’s why you’re seeing a whole flurry of activity,” he said.
Getting a generic registered in the U.S. is a straightforward and inexpensive process compared to Europe, Japan and Canada. In the U.S., it costs $2,000 and the U.S. Food and Drug Administration guarantees it will take no longer than one year.
The PMRA process is more cumbersome despite the agency’s stated intention of streamlining its generic registration process.
“It’s such a bureaucratic system,” said Kushner.
For instance, Mana Canada recently received the PMRA’s final stamp of approval for Silencer, which was supposed to be followed by a 45 day waiting period.
“We’re probably on day 100 of that 45 days and I don’t understand why,” said Kushner.
He is scheduled to meet with the director of the PMRA in coming weeks to discuss the status of Mana’s various submissions.
Kushner said heightened competition in the farm chemical arena would help address problems like this year’s shortage of glyphosate, Reglone and various insecticides.
It should help lower prices, although Mana’s strategy is to price its products “darn close” to the base manufacturer’s branded chemical.
What the generic company will offer retailers in addition to a slight price discount from the branded items is simplicity. There will be no “smoke and mirror” programs with rebates and discounts on related products.
“We’re not going to do any of that. It’s going to be – here’s the product, here’s the price and here are the terms. Take it or leave it.”
Mana expects to take eight to 12 percent of the market for the products it produces and believes there are enough frustrated retailers who will appreciate the company’s simple pricing policy enough to make the switch.
The company has no intention of marketing its products directly to farmers.
“We’re going to embrace the existing channels out there,” said Kushner.
Makhteshim Agan ranked seventh in global crop protection sales in 2007, behind the big six of Bayer CropScience, Syngenta, BASF, Dow AgroSciences, Monsanto and DuPont. Kushner expects the company will overtake DuPont within two years as more products come off patent.
The company has 92 active ingredients, 1,200 formulations and co-formulations sold worldwide, and 4,000 registrations in 120 countries.
Company sales have been growing at a pace of 13 percent annually between 1992 and 2007, compared to the industry average of two percent.
“We’re going to be part of that big six culture,” said Kushner.
