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Europe: Biotechnology Mega-Merger

by Jaya RamachandranInter Press Service
October 17th, 2000

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 dollars.

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' Rights?'.

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 source.

''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 Technology.

''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 so.''

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 markets.

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.

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