Europe: Biotechnology Mega-Merger

LONDON -- The merger of two biotech corporations -- the
Swiss Novartis and British AstraZeneca -- to create the world's
biggest agribusiness is alarming some of Europe's largest
development agencies.

The two companies' shareholders agreed the merger to create
Syngenta at a meeting in London last week.

According to Paul Collins of Britain's ActionAid, Syngenta
will be ranked number one in the world for agrochemicals -
herbicides, fungicides and insecticides. It will be number two for
seed treatments and the third largest seed supplier.

That Syngenta will be a truly global concern is underlined by
the pro forma regional turnovers of the two companies for 1999.

In Europe, Africa and Middle East - with 40 research and
production sites - the turnover amounted to 2,877 million US

In the NAFTA region, comprising of the US, Canada and Mexico,
with 18 research and production sites, the turnover was 2,463
million dollars.

Seven research and production sites in Latin America fetched
955 million dollars, and 21 establishments in the Asia-Pacific
region 1,040 million dollars.

Syngenta's is to be floated on the Swiss, London, New York and
Stockholm stock exchanges. Its combined sales will amount to 7.34
billion US dollars.

Both Novartis and AstraZeneca have been researching 'Genetic
Use Restriction Technologies' (GURTS), the most famous of which is
'Terminator Technology'.

The Terminator Technology generates sterile seeds that force
farmers to buy need seed or new chemicals each year.

GURTS-dubbed 'Triator Technology' - relate to the control of
other plant characteristics or traits. These traits can be
switched on or off by the application of a proprietary - or
company licensed - chemical.

The implications of the creation of the mega corporation are
examined in a study entitled 'Syngenta: Switching Off Farmers'

Conducted by ActionAid in conjunction with the Swiss agency
Berne Declaration, the Swedish Society for Nature Conservation and
Gene Watch UK,the study says, poor farmers may find they have no
choice but to use GURTS seeds.

Founded in 1972, ActionAid works with over five million of the
world's poorest people in more than 30 countries across Africa,
Asia, Latin America and the Caribbean.

The report points out that farmers have always saved seed, and
1.4 billion people still rely on them as their primary seed

''Terminator means farmers would have to buy new (patented)
seed or chemicals which will switch off the sterility each year -
at an increased and annual cost. Such a cost would be felt heavily
by poor farmers in the South.''

The study says this needs be viewed in the context where
multinationals are buying up local seed companies and dominating
national seed markets in the South - for example, the corn market
in Brazil where Monsanto now control 60 percent of the market.

Collins said, at the shareholders' meeting Oct 11, Zeneca
Agrochemicals' chief executive officer Michael Pragnell had
repeated a commitment not to commercialise the Terminator

''But ActionAid doubts this statement after the firm took a 20
percent shareholding in ExSeed Genetics, a US firm with a
Terminator patent,'' Collins told IPS.

Last year Zeneca Agrochemicals had assured ActionAid that they
were ''not developing any system that would stop farmers growing
second generation seed, nor do we have any intention of doing

Pragnelli wrote to ActionAid stating: ''Zeneca has no interest
in trying to change farmers' traditional practice of saving seed
and in fact we decided in 1993 not to develop and bring to market
any system which would prevent farmers from doing this. We have no
intention of revising this decision.''

Novartis said February this year, that they had ''a long-
standing policy that we will not use genetic use restriction
technology to prevent seed germination.''

But where does the merger leave their promise? Collins says:
''These companies have said no to Terminator, but they have left
themselves clear to develop Traitor, which will oblige farmers to
buy chemical inducers each year.''

According to the study, the merger into Syngenta will not be
without human costs. 3,000 jobs are expected to be lost worldwide
and the restructuring costs are estimated to be around 850 million
US dollars.

The new management will be led by Novartis' Heinz Imhof as
president and David Barnes of AstraZeneca as vice-president, with
Zeneca Agrochemicals' Pragnelli taking on the role of Syngenta
chief executive officer.

The European Commission, acting as competition watchdog for the
15-nation European Union, required that each company make a number
of disinvestments before the merger was authorised.

This, according to the study, was due to concerns about the
creation or strengthening of dominant positions in certain

The cereal fungicides based on strobilurin and flutriafol, as
well as maize herbicides sulcotrione and acetochlor, were sold as
part of this deal.

For example, in the herbicide protection of maize, the merger
would have created a market share of up to 65 percent in some
countries, four times bigger than the nearest rival, Aventis, the
ActionAid report adds.

AMP Section Name:Food and Agriculture
  • 181 Food and Agriculture

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