* Aims to triple plant biotech sales to 1.4 bln eur by 2018
* Trains sights on Syngenta's No.3 spot in GM seeds market
* Earmarks 3.5 bln eur for biotech R&D through 2018
* CropScience unit head says 25 pct margin goal "ambitious"
By Ludwig Burger and Frank Siebelt
MONHEIM, Germany, Sept 17 Bayer BAYG.DE aims
to boost its genetically-modified (GM) seeds business and
challenge Syngenta SYNN.VX of Switzerland for the No. 3 spot
among the world's largest supplier of GM crops, it said.
Bayer, also jostling with its Swiss rival for market
leadership in conventional pesticides, needs to shore up its
plant biotech operations because old and new approaches
to crop protection were gradually converging, the head of
Bayer's CropScience unit told Reuters.
"Without biotech you're not seeing the whole picture," unit
head Friedrich Berschauer told Reuters late on Wednesday. "I'm
thoroughly convinced that you need to combine crop protection,
seeds and biotech."
The company aims to triple its annual sales from biotech
seeds to 1.4 billion euros ($2.1 billion) by 2018, it said.
It had the "ambitious" goal to become the third or fourth
largest supplier in that market in 10 years, the head of
strategy at CropScience, Ruediger Scheitza, said.
Bayer, even though the world's largest supplier of modified
cotton and rape seeds, is a distant sixth in the overall market
for GM crops, trying to reach 500 million euros in sales from
such products this year.
Market leader Monsanto (MON.N) posted $6.4 billion in sales
at its Seeds and Genomics unit last year, out of a total $11.4
billion for the group.
Runners-up in the $26 billion global market are DuPont's
(DD.N) Pioneer unit and Syngenta.
AMBITIOUS MARGIN TARGET
Bayer expects the GM seeds market to gain 6 percent annually
over the next 10 years, while it sees growth in conventional
crop chemicals gaining only 1-2 percent per year.
It plans to spend a combined 3.5 billion euros on research
and development in that area through 2018 and to pursue smaller
acquisitions to meet its growth target, Bayer added.
Research ventures include manipulating genes to make wheat
grow with less nitrogen fertilisers or to help rice plants
Berschauer said that Bayer needed to begin tailoring package
deals for farmers that comprise modified seeds, traditional
pesticides and services.
A pesticides-only business would eventually come under
threat from cheap copies of off-patent pesticides, mainly out of
China, and from plants that were engineered to produce their own
insecticides, Berschauer cautioned.
He said the CropScience unit's margin target was now
"ambitious". The business aims for earnings before interest,
taxes, depreciation and amortisation (EBITDA) excluding special
items of 25 percent of sales.
Falling prices for wheat and corn as well as unfavourable
weather conditions in Europe had weighed on business in the
third quarter, he added.
The second half of the year traditionally accounts for only
about a quarter of annual core earnings at the division because
farmers on the northern hemisphere, its largest customer group,
typically apply crop chemicals in the first half.
The division posted 6.4 billion euros in sales last year, up
almost 10 percent from the year earlier, accounting for about 20
percent of Bayer's total revenue.
Bayer, one of the few remaining companies that combine
chemicals and drugs businesses, has stressed its reliance on its
solid pharmaceuticals and pesticides units, while its
plastics unit was drawn into the maelstrom of the economic
(firstname.lastname@example.org; +49 69 7565 1311; Reuters