Seed Prices, Proposed Mergers and Acquisitions Among Biotech Firms

Over the last two decades, the big companies—that is, Monsanto, DuPont—have led the way with massive investments in biotechnology research and with seed and biotechnology company mergers and acquisitions. Historically, the seed-biotechnology companies have been dependent on numerous small and medium scale companies as major sources of innovation (Fuglie et al., 2012). The new small and medium-sized enterprises were specializing in developments of transgenic seed traits. By 2010, however, there were fewer than 30 active small and medium-sized enterprises that were specializing in crop biotechnology, primarily due to acquisitions by larger firms.  Because of the enormous number of mergers and acquisitions that expanded agricultural biotechnology, many remaining smaller companies could not compete with large firms that owned rights to much of the transgenic resource base in seed. Also, licensing transgenic traits from these firms was costly. Hubbard (2009) reports that at least 200 independent seed companies were lost in the 13 years prior to 2009. Moreover, biotechnology research has increasingly demanded financial resources that a majority of smaller firms do not have. Large firms investing in these technologies and earning royalties from licensing agreements quickly achieved a market advantage that led to many of the buy-outs.