FMC buys BioPhero for $200 million to bolster biologics portfolio
US agribusiness giant FMC has agreed to acquire BioPhero, a Danish startup producing pheromone-based biocontrols for the grow industry.
- A statement from FMC says the company will buy BioPhero for “approximately” $200 million.
- BioPhero will be part of FMC’s phytosanitary business, also based in Denmark.
- The deal includes the startup’s technology, intellectual property and supply agreements, while the entire BioPhero team will also join FMC.
- The acquisition is expected to be completed by the end of the third quarter of 2022.
- FMC projects revenue from pheromones and pheromone-based insect control products of approximately $1 billion per year by 2030.
For its latest funding round – its Series A in March 2021 – BioPhero raised $17 million from lead investor DCVC Bio and the VC arms of FMC and fellow ventures Novo Nordisk and Syngenta.
How it works:
BioPhero contributes to the development of biological controls for the agricultural industry that are more durable than traditional chemical insecticides.
It does this by tapping into pheromones: the chemical “messages” emitted by an individual animal that elicit some form of social response from members of the same species, including with regard to reproduction.
- Farmers have used pheromones as a pest control for decades, applying the factor to their crops to thwart and confuse insect mating activities, which reduces insect numbers.
- Pheromones offer a less toxic alternative to chemical insecticides and their negative impacts on the environment and biodiversity due to their excessive use. Since insects do not develop resistance to pheromones, which they themselves produce naturally, there is no risk of overapplication.
- However, many “artificial” pheromones used by growers are still produced by chemical synthesis, which leads to high costs and sustainability issues.
BioPhero has built an advanced fermentation platform that allows it to produce pheromones at significantly lower cost and in higher volumes than conventional chemical-based processes.
It uses yeast fermentation techniques on renewable raw materials – mostly by-products from the manufacture of vegetable oils and sugars – to produce pheromones that can be added to pest control inputs for corn, rice, soybeans and a variety of other row cultures.
Why is this important:
The deal marks the latest major exit into the maturing agtech space.
Speaking on a conference call with shareholders, FMC CEO Mark Douglas said the company’s purchase of BioPhero was “driven by their highly efficient yeast fermentation process.” [which has] lower costs and fewer steps than competing technologies.
He said BioPhero’s technology and products will benefit from “market access to FMC’s row crops in all geographies,” adding that he sees further opportunities in integrating the startup’s solutions. to FMC’s existing digital agricultural offerings.
“We don’t see this as cannibalistic to our existing business at all. In fact, we see it as an opportunity to expand our market share […] so the billion dollars [annual revenue] that we’re talking about when it comes to pheromones is totally additive,” he told analysts.
Douglas also said FMC is likely to make new acquisitions of innovative agtech startups, saying the BioPhero purchase aligns with the company’s earlier indications that it would accelerate M&A activity in the areas of technology. plant health and biological inputs.
“BioPhero is a good link between [both] from these. But it won’t be the last,” he said. “You should expect to see us do more of that. This is the type of acquisition we want to make.
The bigger picture:
The organic agricultural inputs market is expected to reach $18.5 billion by 2026, from $10.6 billion today, as consumers, regulators and farmers push for more sustainable food production methods , according to a forecast from Research and Markets.
- The same analysis suggests that biological control agents – which include biological alternatives to chemical pesticides – already constitute the largest market segment for biological products and are expected to remain so by 2026.
- Data from venture capital firm AgFunder shows that startups developing organic crop inputs raised around $892 million from investors around the world in 2021, well over double their total funding. last year [disclosure: AgFunder is AFN‘s parent company.]
What they say:
Kathleen Shelton, Executive Vice President and Chief Technology Officer, FMC:
“We are excited to add BioPhero’s innovative pheromone molecules to our new product portfolio, and we plan to launch five new pheromone products over the next three to five years. The possibilities offered by cutting-edge biomanufacturing technology extend far beyond insect control. By working together, we can greatly expand the use of fermentation technologies to a wider set of crops targeting a variety of pests, including fungi and weeds.
Søren Møller, Managing Partner, Novo Holdings:
“The technology developed by BioPhero is an excellent example of using nature’s pheromones to control pests safely and effectively. Novo Holdings has invested in BioPhero since its inception and has renewed its commitment to the company with each round of funding. We are very pleased to see the rapid development of the business, and this sale demonstrates that FMC shares our vision of bringing new sustainable solutions to agriculture.
BioPhero says the competitive cost of its technology means that pheromones can now be widely applied in row crops using agricultural sprayers. Image credit: fotokostic/iStock