Analysis on the Hot Spot of Pesticide Industry in the Future

Pesticide industry after so many years of development, has been a lot of formal, many small and medium-sized lack of innovation ability of enterprises will be gradually mergers and reorganization or face the fate of the future pesticide industry will be greatly different from the present, then the future of pesticide industry consumption hot spots where?

To promote the construction of “all the way” is the current and future period of China’s most important strategy. “Along the way” along the majority of countries and regions, agriculture is still the most important part of the national economy, large demand for pesticides. Recently, the China Petroleum and Chemical Industry Association issued a “global opportunity for China’s chemical industry,” the report for the Chinese pesticide companies through international mergers and acquisitions to achieve international decision-making reference.

The report shows that in 2016 the global agrochemical market (herbicide, fungicide, pesticide and other crop chemicals) is about $ 54 billion in total size and is expected to grow to $ 64 billion by 2020. Among them, herbicides in the 2016 market share accounted for 43%, pesticides and fungicides accounted for 28% and 26%. It is predicted that by 2020, the annual compound growth rate of pesticides and fungicides will reach 3.8% and 5.3% respectively, and the annual growth rate of herbicide compound is about 4.4%.

The long-term growth drivers of the agrochemical market include population growth, rising consumption expenditure and restrictions on available arable land until large-scale use of new agricultural growth patterns such as genetically modified seeds, automatic harvesting robots, and so on. In the short and medium term, weather and agricultural income also affect the demand for agrochemicals and drive their cyclicality.

Unlike other chemical industries, agrochemicals are not dominated by demand in Asia, and the largest demand market is Latin America. Latin America’s market capacity is expected to reach $ 18.1 billion by 2020, followed by the Asian market ($ 17.8 billion), the European market ($ 15.6 billion), the North American Free Trade Area ($ 10.4 billion) and the Middle East and Africa $ 2.6 billion). In terms of growth rates, Latin America is expected to lead at an average annual growth rate of 6.5 per cent in 2016-2020, followed by the Asian region (5 per cent), the Middle East and Africa (4.5 per cent), the European region (3.4 per cent) And the North American Free Trade Area (2.0%).

The agrochemical industry has higher profit margins but is cyclical. The high profit margins of the original drug producers are mainly due to the entry threshold, namely, innovation and R & D and related costs (for the development of new, less toxic and efficient products), patent retention and regulatory review. The market is led by large agricultural companies such as Syngenta, Bayer, BASF, DuPont, Monsanto and Dow. Is now experiencing a global wave of integration, announced the transaction, including China Chemical and Syngenta, Bayer and Monsanto, Dow DuPont merger and follow-up agricultural spin-off. For the original drug and generics manufacturers, strong product development, registration and marketing capabilities are the key to maintaining profit margins. The cost of raw materials is not the main profit factor of the original drug manufacturer, but it is a key value driver for generics manufacturers.

Due to the high growth rate in the agrochemical sector (expected annual compound growth rate of 4.5%), especially in Latin America, Asia and North America, with high growth rates and huge consumer markets, the higher entry threshold makes M & The preferred investment in the process of globalization. Traditionally, countries that are attractive to global investors include the United States, Canada, Brazil, Mexico, India and Poland.