THE BIOPESTICIDE MARKET
AN ANALYSIS OF THE BIOPESTICIDE MARKET NOW AND WHERE
IT IS GOING
Sara Olson, Research Analyst, Agro Innovation, Lux Research Inc., 100 Franklin Street, 8th Floor, Boston, MA,
02110, USA
Keywords: biopesticides, plant-incorporated protectants, open innovation,
approaches like direct genome editing and the seed treatment-
integrated pest management based method pioneered by Morflora (www.morflora.com).
Our fourth category is the application of predatory insects for
crop protection. Using insects like ladybugs that predate on
pests like aphids is a familiar application of predatory insects
for biocontrol.
The prototype biopesticides all come from Bacillus thurin-
gensis (Bt), a bacterial species that produces a toxin (called the
Bt toxin) which disrupts the insect gut when ingested. Biopes-
ticide products derived from the Bt bacterium and its toxin
include microbial, biochemical, and PIP varieties. Currently,
approximately 75% of all biopesticide use consists of Bt-based
products. The live microbe form is an effective microbial
pesticide, purified toxin from this strain is the world’s most
widely used biochemical biopesticide, and the DNA encoding
the Bt toxin makes a powerful PIP as well. This microorgan-
Sara Olson
ism dominates the current biopesticide landscape, but emerg-
ing approaches are poised to capture additional market share
going forward, thanks in large part to emerging resistance to
Introduction Bt-based biopesticide products.
Biopesticide use began in the late 1800s with fungal spores Biopesticides are gaining popularity as lower environmen-
used to control insect pests. One of the first documented cases tal impact alternatives to conventional synthetic pesticides.
of biopesticide use was by Agostine Bassi, who in 1835 demon- Attributes like low-to-no re-entry intervals following applica-
strated that spores of the white-muscadine fungus (Beauveria tions and less restrictive (sometimes non-existent) maximum
bassiana) could protect silkworms from disease. Since then, residue limits are enticing growers to trade portions of their
biopesticide use has continued uninterrupted through modern synthetic crop protection portfolios for biocontrol options.
agricultural history, but to date it has been a small market Especially popular are integrated pest management (IPM)
compared to conventional crop protection. The major attribute strategies that employ a combination of synthetic and biologi-
that differentiates biopesticides from synthetic pesticides is the cal crop protection products in order to achieve synergies
mode of action. While most, if not all, synthetic insecticides of action and lowered overall use. In these strategies, prop-
are neurotoxic to pests, many biopesticides have other modes erly timed applications of biological products can decrease
of action including mating disruption, anti-feeding, suffoca- a grower’s total need for synthetic pesticides. This sets up a
tion, and desiccation. The U.S. Environmental Protection unique growth situation for biopesticides. Part of the market’s
Agency (EPA) identifies three classes of biopesticides: micro- growth comes from gaining market share previously held by
bial, biochemical, and plant-incorporated-protectants (PIPs) synthetic crop protection. Additional growth of biopesticides
(www.epa.gov). We classify predatory insects as a fourth cate- is due to new applications for biocontrol that are not possible
gory as their functions in agriculture are fundamentally simi- with synthetic crop protection.
lar. Microbial pesticides are whole microorganisms, including
bacteria, fungi, viruses, and others, that act as pesticides. The
core of the definition for this class of biopesticides is the use Dissecting the biopesticide market today
of whole, live organisms for biocontrol. Biochemical pesti- Today, biopesticides make up a small fraction of the total
cides are either microbial extracts or natural products from global crop protection market at approximately $3 billion in
other sources like plant extracts or yeast fermentation prod- value worldwide (Olson et al. 2013). Biopesticides today hold
ucts that control pests by non-toxic mechanisms like those just 5% of the total crop protection market. This segment of
described above. These are typically small molecules and can the industry is growing, however, with a compound annual
include semiochemicals (hormone mimics) and attractants for growth rate (CAGR) of 8.64%, a rate we expect to continue
use in traps. PIPs are pesticides that the plant produces itself through at least 2023 (See Figure 1), at which point we expect
from genetic material inserted into the plant. PIPs can result the market to reach more than $4.5 billion, or more than 7%
from transgenic events as well as through non-transgenic of the total crop protection market. In performing this market
DOI: 10.1564/v26_oct_04 O u t l o o k s o n Pe s t M a n a g e m e n t – O c t o b e r 2 0 1 5 2 0 3
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THE BIOPESTICIDE MARKET
Competing with established, powerful synthetic pesti-
cides will prove too much for many smaller developers, both
in terms of demonstrating the efficacy of biopesticides and,
more importantly, in convincing growers to convert from
their tried-and-trusted methods to new and relatively unprov-
en products. Additionally, regulatory approval pathways are
uncertain for some classes of biopesticides, especially those
derived from genetic materials or crop pathogens; this adds to
the challenge of approval and commercialization, inhibiting
biopesticide innovation and development. Finally, the major-
ity of biocontrol options require frequent, repetitive applica-
tions for optimal efficacy. The added labor and expense of
these applications is often a deterrent, inhibiting the growth
Figure 1. The biopesticide market is approximately $3 billion today, of biopesticides.
and will rise above $4.5 billion by 2023.
Biopesticides to 2020 and beyond
Myriad examples of emerging technologies replacing incum-
size analysis, we assumed that biopesticides would continue bent approaches exist in other industries, with e-books rapid-
to gain crop protection market share, taking dollars from the ly taking market share from ink-and-paper publishing and
conventional crop protection market. We also assumed that camera-equipped smartphones unseating standalone digital
growth would be regional, with Europe and Latin America cameras rather quickly after introduction. Likewise in agricul-
projected to grow most quickly in the coming three years, ture there is a history of new technologies taking market share
driven by tightening regulatory restrictions and rapidly from well-accepted approaches. Even chemical pest control
emerging insect resistance, respectively. Africa is poised for was once an emerging technology, replacing prior practices
significant growth, but in a more extended timeframe. North of culling infected and/or infested plants to minimize pest
America, which already accounts for a large proportion of the damage. Crop varieties that carry their own PIPs have taken
market, will continue to grow at a slower rate than Europe. market share from pure spray-applied crop protection strate-
gies as well, as was the case for first-generation Bt crops.
Unseating incumbent technologies is one of the most criti-
Powerful factors work in opposition to shift the cal stumbling blocks for many emerging technologies, and
biopesticide market going forward biopesticides are already struggling to do so; in the more
As is the case for any emerging technology approach, vari- than 250 year history of crop protection, biopesticides have
ous factors alternately drive and inhibit the growth of biopes- only managed to wrest 5% of the market from their synthetic
ticides. Regulatory pressures are one of the strongest single counterparts. Taking further market share from conventional
drivers for biopesticide development. The European ban on crop protection approaches will be a key part of biopesticides
neonicotinoid pesticides from 2013 to 2015 may well drive having success going forward. A very risk-averse group, grow-
many of the region’s growers to seek biopesticide alternatives ers are typically slow to shift from one technology approach
for protecting their crops. Ease-of-handling attributes like to another. Regardless of the reticence throughout the agri-
low-to-no re-entry intervals and post-harvest intervals also culture industry to shift to new technologies, incumbents
drive adoption of biopesticides, mainly by serving as a stark are regularly unseated by compelling new approaches, and
alternative to existing synthetic options and their use restric- biopesticides will continue to collect market share through
tions. Additionally, the aforementioned emerging resistance in switching.
insects is driving interest in biological alternatives. As conven- In a prior analysis of the entire crop protection technology
tional synthetic options become ineffective due to developing space, we assembled a taxonomy to organize the currently
resistance, growers are more and more willing to try biologi- available technologies and those in development. The major
cal options. categories of classification we identified were targets, sourc-
The exceedingly high costs associated with developing es, and delivery attributes (see Figure 2). Based on our prior
synthetic crop protection chemistries are another driver for studies of start-up activity in the space, we identified two
biopesticide development; based on our interviews with tech target areas that developers have focused on to date: pests
developers, a novel synthetic typically requires $250 million and diseases. Going forward, we expect that start-up activi-
and nine years for development and regulatory approval ties will target abiotic stressors as another key area of focus,
while a biopesticide needs less than $10 million and four with protection from drought and excess heat being in very
years for the same process. As a less expensive and quicker high demand. Promising biocontrol approaches in develop-
development process, biopesticide R&D is more attractive to ment abound. The U.S. recently approved SolviNix, devel-
start-ups and small companies with limited research budg- oped by BioProdex, a first-of-kind bioherbicide that uses a
ets. As a direct result, start-ups in the biopesticide space have live plant virus as its active ingredient (Tobacco mild green
proliferated, creating a competitive and cutting-edge arena for mosaic tobamovirus strain U2 (TMGMV U2)) (bioprodex.
innovations. More novel biopesticide ingredients have been com). Additionally, efforts to use RNA interference (RNAi)
released in recent months than synthetic pesticides. for crop protection are taking off. Major companies and start-
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THE BIOPESTICIDE MARKET
Figure 2. Crop protection targets like pests and disease have histori-
cally been a focus of crop protection development efforts; biopesticide
developers are targeting abiotic stresses as a key area of focus.
ups alike are endeavoring to create sprayable RNAi products
Figure 3. The biopesticide market will continue to grow as synthetic
as well as RNAi-based PIPs for biological crop protection; in pesticides reach their apex and begin to contract; there is a high degree
this category, Monsanto’s Bio-Direct development platform is of uncertainty in this projection, demonstrated by the thickness of the
one of the most press-covered to date, and start-up APSE’s lines.
work on low-cost, high-purity RNA production holds prom-
ise as well (www.apsellc.com).
Recent major business deals in the biopesticide space
demonstrate the confidence that major agribusiness and gain additional value from underutilized fermentation capac-
chemical companies have in the potential growth of the ity by producing biocontrol products.
industry. Since 2012, multiple acquisitions, licensing agree- Going forward, we believe the biopesticide market will
ments, and partnerships with values well into the hundreds grow, even as the synthetic pesticide market continues to
of millions of dollars show the depth and breadth of invest- grow (see Figure 3). The figure shows theoretical projections
ment large companies are making in biopesticide development for the future of both biopesticides and synthetic crop protec-
(see Table 1). Well-established technologies from other indus- tion agents, using wide lines to indicate the significant degree
tries will have roles to play in biopesticides, adding to the of uncertainty inherent in such long-range projections. We
attractiveness of this technology space for large companies. anticipate that the synthetic crop protection market will peak
Fermentation, for example, which has been a core technology while the biopesticide market continues to grow. Between the
for pharmaceutical production, will be a critical production late 2040s and the early 2050s, we project that biopesticides
method for biopesticides as well, as many of the small-mole- will equalize with synthetics in terms of market size. Signifi-
cule biologicals will be most cost-effective when produced cant uncertainties in the rates of uptake, especially in geog-
through fermentation. Specialty chemical companies and raphies like Africa and Southeast Asia account for a major
pharmaceutical companies alike will have opportunities to portion of the flexibility in those projections.
Table 1. Recent development deals in biopesticides demonstrate significant interest in the space from major companies.
Company Type of deal Target Value
Bayer CropScience Acquisition AgraQuest $425 M
Partnership Flagship Ventures Not disclosed
Monsanto Development partnership Novozymes $300 M +
Start-up founding Preceres LLC Not disclosed
BASF Acquisition Becker Underwood $1.02 B
Syngenta Acquisition DevGen $526 M
Acquisition Pasteuria $113 M
DuPont License Marrone Bio Innovations Not disclosed
Acquisition Taxon Biosciences Not disclosed
Development partnership Hexima Not disclosed
Platform Specialty Products Acquisition Arysta LifeScience $3.5 B
Dow AgroSciences Development partnership Radiant Genomics Not disclosed
Sumitomo Chemical (Valent Development partnership Evolva Not disclosed
BioSciences)
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THE BIOPESTICIDE MARKET
Conclusions tion, partnering with Radiant Genomics and Evolva, respec-
While we cannot predict the growth of the biopesticide tively. Both larger companies bring biopesticide screening and
market to the dollar, we are confident in our assessment that production expertise, while the smaller partners bring genet-
the industry will continue to grow in the future. Major global ics capabilities for identifying promising candidates. Monsan-
factors may impact that growth, including shifts in regulations to and Novozymes have come together in the BioAg Alliance
and increasing development of resistance in pest organisms. with similar stated goals (portal.luxresearchinc.com). Part-
The ban on neonicotinoid pesticide use in Europe is an excel- nerships like these will serve to shorten development time-
lent example of such a situation. The two-year ban will expire lines, allowing biopesticide development efforts to bear fruit
at the end of 2015, though the path forward remains unclear. more rapidly and giving growers more biological options
Growers have turned in two directions to replace the banned from which to choose.
active ingredients: toward older, more toxic chemistries like
organophosphates and pyrethroids, and toward biological
alternatives. Other future legal actions affecting growers’ abil- References
ities to use established crop protection chemistries will likely http://apsellc.com (accessed 25 Aug 2015)
contribute to increased market share for biologicals as well. http://bioprodex.com/pdf/SolviNixLCISNOWREGISTERED_
Large agribusinesses and crop protection companies have News_2.pdf (accessed 25 Aug 2015)
been moving into the space, both through the open innova- http://www.epa.gov/oecaagct/tbio.html#Types (accessed 25 Aug
2015)
tion deals mentioned in Table 1 and through internal R&D
http://www.morflora.com (accessed 25 Aug 2015)
efforts. For these major players, biopesticides represent an Olson, S., Ranade, A., Kurkjy, N., Pang, K., & Hazekamp, C.
opportunity as well as a threat to their core businesses. While 2013. Green Dreams or Growth Opportunities: Assessing the
a portion of biopesticide use adds to the total market size, a Market Potential for “Greener” Agricultural Technologies, Lux
significant majority comes from market share shifted away Research Inc, Boston, MA, USA
from synthetic products. Large agribusinesses will approach https://portal.luxresearchinc.com/research/tidbit/15753 (accessed 25
the biological space as a means of supplementing their exist- Aug 2015)
ing synthetic portfolios, thereby mitigating much of the risk
of cannibalizing core business for new business. Meanwhile,
chemical companies and pharmaceutical companies with Lux Research provides strategic advice and ongoing intelligence for emerg-
fermentation capacity and expertise will enter the space to ing technologies. Leaders in business, finance and government rely on us to
increase the profitability of otherwise underutilized fermenta- help them make informed strategic decisions. Through our unique research
approach focused on primary research and our extensive global network, we
tion capacity.
deliver insight, connections and competitive advantage to our clients. Visit
Whereas synthetic crop protection has been dominated
www.luxresearchinc.com for more information.
by fewer than ten massive companies, biopesticide develop- As a Research Analyst at Lux Research, Sara Olson leads the Agro Innovation
ers number in the hundreds, with more than 50 companies Intelligence practice, identifying and assessing key opportunities for profit and
combining for just 60% of the total market. Large compa- technological advances within a broad range of agricultural topics including,
nies expecting few competitors in this new space will need among others, genetically modified crops, fertilizer and pesticide optimization,
to adjust their strategies to account for the universe of small- precision ag developments, and marker-assisted selection in crops.
scale developers. In some cases, those would-be competitors Sara received her PhD in Biochemistry from Texas A&M University after
can make great partners. The combination of chemistry, biol- completing her BS in Biology at the same institution. Her research focused on
ogy, agronomy, and physiology needed to excel in biopesti- quantitative functional genomics of crop plants with implications for advancing
cide development and commercialization makes the space ripe nitrogen use efficiency, drought tolerance, and biomass generation in both food
and fuel-generation applications.
for successful partnering. Companies like Dow AgroSciences
and Valent BioSciences have made early moves in this direc-
Similar articles that appeared in Outlooks on Pest Management include – 2008 19(2) 77; 2010
21(3) 132; 2013 24(5) 206; 2014 25(3) 200
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