Marcus Meadows-Smith describes the turn-around story of bio-pesticide company AgraQuest during his time as chief executive. The company was sold to Bayer CropScience for $425 million in 2012 and raised the overall awareness and respect of the pesticide industry.
When I moved into the bio-pesticide sector in 2008 to join AgraQuest as chief executive, they had little publicity despite decades of use, and even less credibility was given to their effects. Historically, bio-pesticides were considered less effective, inconsistent and hard to use compared to their synthetic counterparts. Their relevance was limited to organic food and some low residue management programs; this niche gave them only a $1.5 billion share of the then $45 billion crop protection market in 2008.
But what are bio-pesticides? They are naturally-occurring products derived from materials such as plants, bacteria, viruses and minerals. As defined by the EPA, their key benefits include lower toxicity, specific target effect, effectiveness at low quantities and an ability to decrease the use of conventional pesticides. At a time of tension between the growing population and the over-stressed environment, such innovations were key to progress.
When I joined AgraQuest in 2008 I found great people, a good product, and some useful intellectual property. I also found a depleted bank account, flat revenues, an unclear strategy, and a market unprepared and unwilling to support bio-pesticides.
So the first plan of action was to focus on strategy. My team defined what success meant for all involved: investors, employees, customers and the environment. And then, to place the company within the market context, we completed an evaluation of strengths, weaknesses, opportunities and targets (SWOT) and Porter’s five forces, as well as studying the macro drivers.
The key here was honesty; we had to be realistic about our internal capabilities and potential, and position ourselves to capitalize on external market drivers. Most importantly we gave AgraQuest focus – targeting a differentiated strategy and attainable goals.
The external drivers motivating the development of natural crop protection methods were reduced residues, resistance management, regulatory pressures delisting older chemistries and the need for better plant health and yields as the population continues to grow. While other companies in the industry were chasing revenue growth in this new era, the AgraQuest team chose to focus on value creation.
We planned to become the go-to research and development (R&D) partner for big agribusiness companies such as BASF, Bayer, DuPont, Monsanto and Syngenta. This decision to focus on mainstream agriculture allowed us to work with rather than against the huge companies guiding the agricultural industry. So we positioned our products to become an integral part of conventional spray programs and to work with synthetic chemistries to ease market entrance; we had a chance to educate the industry and the growers on the potential of bio-pesticides.
To maintain the strategic focus, I stressed the importance of alignment. I restructured the organisation and defined key performance objectives for everyone in the company around the new strategy, investing in the company values of innovation, teamwork,and the environment. The research and development projects were prioritised and minimised, as it was better to be excellent in a small number of projects than stretched too thin trying to do too much. Once the whole company was aligned with this strategy, we were able to execute.
The execution came from a winning strategy, correct product positioning, respected R&D, credible partnerships and a great team. By 2012 AgraQuest had substantial non-dilutive cash, 30 percent compound annual growth rate and a significantly increased company valuation. The strategy was clear and well-practiced and we had followed through with the plan to partner with mainstream big agribusiness.
The activity and energy going into 101 projects was reigned in to focus on just six, and the R&D and sales teams systemically hit their targets. Externally, our impressive team had improved industry perceptions of not only their company, but bio-pesticides as a whole.
In 2012, Bayer CropScience acquired AgraQuest for $425million, nearly $500 million with milestones. The small company’s reach grew, as part of Bayer, to 21,000 people working in 120 countries – doing more good for agriculture and the environment.
Subsequently BASF, Monsanto, Syngenta and many others announced M&As, totaling around $2 billion, for natural crop input companies. Bio-pesticides are now part of mainstream agriculture.
The success story continues with cross-industry collaborations, continued support from big agribusiness and superior products being launched on to the market. There are different leaders now but the excitement and innovations continue to grow as the industry prepares for 9 billion mouths to feed and a struggling environment to protect.
Marcus Meadows-Smith now leads BioConstoria Inc, a microbial company using a revolutionary R&D platform to improve plant traits and increase crop yields for agriculture; linking plant-breeding techniques, high-throughput screening and DNA sequencing to identify microbial consortia.