Syngenta Flags $6 Billion R&D Pipeline to Deflated Investors

  • Crop protection products have $3.6 billion sales potential
  • Revenue from seeds and traits set to more than double

Syngenta AG, which rebuffed a $47 billion bid from Monsanto Co., said it’s accelerating the pace of innovation and has a pipeline of new technology with combined sales potential of more than $6 billion as the agrochemical supplier looks to build investor confidence in its go-it-alone strategy.

The developer of the Orondis vegetables fungicide, based in Basel, Switzerland, is keen to underscore the value of new products being developed in laboratories after it repeatedly rejected Monsanto’s approaches. In a test to Chief Executive Officer Mike Mack, one survey by brokerage Bernstein suggested Syngenta’s shareholder base partly backed engaging with the U.S. company.

In crop protection, Syngenta has 15 new and pipeline products, with
potential peak sales of more than $3.6 billion from nine new active ingredients, it said in a release Wednesday, ahead of an investor day focused on research and development. A new hybrid wheat variety will go on sale by the end of decade, worth more than $3 billion in peak sales, it added.

Today’s event rounds off earlier roadshows where Mack and other executives sought to bolster investor sentiment in Syngenta’s prospects. Seeds received a disproportionate share of spending on research and development compared to crop protection chemicals when the figures were last disclosed in 2011, yet it remains a "problem area" for the company, according to analysts at Bernstein.

Monsanto’s advances spurred Mack to accelerate a portfolio review that’s prompted Syngenta to find a new owner for vegetable and flower seeds businesses. The company also plans to buy back more than $2 billion of shares to appease investors after it snubbed Monsanto’s last offer, a cash-and-stock bid worth 470 francs.

Until today, Syngenta shares had declined about 11 percent since Aug. 25, the day before Monsanto announced it’s walking away after failing to get management to engage in deeper negotiations. The stock closed at 337.90 Swiss francs yesterday. It traded 0.4 percent higher at 339.3 francs at the open of Wednesday’s trading session in Zurich.

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