The most challenging pesticide market: Brazil

The Brazilian pesticide market, in terms of sales, is considered to be the world's largest pesticide market. The market has unique market characteristics such as high profitability, high concentration, longest payment deadlines, numerous barriers to the registration process, and growing sustainable agricultural development.

In recent years, the Brazilian pesticide market has maintained an annual growth rate of around 10%, and it has now become the most attractive market in the world. According to conservative estimates, the total sales of pesticides in this market will reach 16 billion U.S. dollars by 2020.

Although Brazilian agriculture maintains year-by-year growth, markets in other countries show different scenes. The growth rates in Europe, Japan, the United States, and Argentina are low, and some are even close to stagnation. Although Russia and China will experience greater growth in the next 10 years, it is optimistic that the growth of these two countries will be about 40% less than Brazil's. This situation has caused many pesticide companies to target Brazil.

However, it is not easy to enter this lucrative market. The top 8 agrochemical companies in Brazil occupy 72.24% of the market's market share (2012 figures). These companies are engaged in R&D themselves. They not only compete with each other, but also keep the prices low. Non-patent companies grab the market.

The remaining 27.76% of the market share is divided by more than 100 companies including non-patented and independent R&D companies. The market competition is extremely fierce.

In the past 8-10 years, most Chinese and Indian companies have come to realize that compared to merely supplying original drug products to local distributors, establishing their own distribution system in the Brazilian market, or/and registering their own products, profits Bigger.

In addition, new pesticide management regulations for “same products” passed at the end of 2006 made more explicit provisions for the registration of such products, and many companies have foreseen the possibility of obtaining registrations faster and entering the market. Since then, not only foreign companies, but many local companies including many new market entrants have also initiated registration applications. As of January 2014, there were a total of 499 original drug registration applications in the review waiting queue, 124 of which were under review, and 319 had been registered. The huge number of applications plus the time required for the review will make the registration of a pesticide take about 3-5 years.

However, 26% of the original drug product review applications were rejected. If this ratio remains constant, there will be a total of about 160 applications rejected in the coming years. It should be emphasized that if the corresponding original drug registration is not obtained, the preparation product will not be registered. Only after the registration of the original drug has been completed, preparation registration will be approved. Therefore, it takes an additional 6-18 months to obtain the final registration of the product.

Conquering this world's most sophisticated registration system is not a guarantee of success for a company. As expected, local distribution channels are tightly linked to previously existing companies, and are usually those companies with a broad portfolio of products, such as the top eight companies. Dealers and cooperatives provide customers with complete solutions in this way. There are still many regional distributors in the market that are eagerly looking for products to sell, which is very attractive to newcomers. If the regional distributor's purchase/sales volume is small, the purchase price can be raised and the payment time can be shortened accordingly. In addition, having one distributor in each different state also reduces credit risk.

In order to maximize the sales capacity and expand product richness, some companies have even added fertilizers, bio-fertilizers, inoculants, bio-stimulators, sunscreens, and plant extracts to the product portfolio. Products used for ranch are also sold through companies involved in the animal health market. In addition, bio-pesticides are a market segment that is experiencing rapid growth and has plenty of development opportunities.

For all companies involved in the market, the payment period provided to farmers is also a big problem. In some cases, this period can be as long as 540 days. However, since the monthly interest rate is close to 1.75%, profits can also be generated on this basis. This may lead to higher-than-expected profits from producers or sellers of a certain product. On the other hand, there are also distributors who give considerable discounts to make farmers pay in advance so that the risk is minimized.

In addition to the above-mentioned difficulties that companies may face, there will be more obstacles in the short and long term to increase the cost and time cost of market access.

-ANVISA plans to increase registration fees from current $80-800 to $8,000-800,000

- Reassessment of several products (Imidacloprid, acephate, fipronil, paraquat, avermectin, etc.), which may lead to limited use or disablement in certain crops

- Patent Competition: Products, Synthetic Routes, Mixtures, Uses

- The waiting queue for registration applications is expected to expand and may further increase the review time

- Distribution channels tend to focus on large distributors

- As the entry system is too expensive for new entrants, the proportion of direct sales is increasing

However, even with the above-mentioned various unfavorable factors, it is still unable to prevent pesticide companies from influxing into this world's most important pesticide market. More and more market participants are actively competing. This is a market where challenges and opportunities coexist.