UPDATE 3-DuPont sees market gains in lasering seeds

(Adds analyst comment)

By Carey Gillam

KANSAS CITY, Mo., Aug 26 (Reuters) - Carbon dioxide lasers have been used for years for resurfacing wrinkled skin and for engraving sports trophies.

Now, DuPont Co (DD.N) is betting the high-tech lasers can carve DNA from seeds to speed the development of its biotech crops and help it steal market share from rivals such as Monsanto Co. (MON.N)

DuPont's Pioneer Hi-Bred International division on Tuesday unveiled its "laser-assisted seed selection" technology as a key part of an effort to halve the time it takes to roll out higher-yielding corn, soybeans and other crops genetically modified to fight drought, disease and insects.

"The whole name of the game is speed," said Pioneer President Paul Schickler.

Pioneer has applied for more than 10 different patents related to the laser technology, which officials said will help increase the scope and size of research five-fold in the next three years.

The company plans to increase research and product development investment by 15 percent to 20 percent increase in 2009 and will boost the percentage of revenues it commits to research from about 10 percent in past years to 12 percent, Schickler said.

Schickler sees the laser tool as a vast improvement over the "slow and tedious" traditional process of planting promising seeds in test fields, cultivating those plants, then punching out parts of their leaves to analyze.

Such physical analysis of plants took several years of field trials but Pioneer believes that time frame can be trimmed using the lasers in combination with modern methods to analyze and select a seed's genetic qualities without having to wait for a plant to grow.

The company aims to increase corn and soybean yields by 40 percent in the next 10 years and to start increasing its share of the U.S. market, where St. Louis-based Monsanto leads, company executives said.

"We have had some challenges in the marketplace in the United States. Now given our genetic platform, we intend now to grow share in 2009 in the United States and beyond," Schickler said.

Morningstar analyst Ben Johnson said Pioneer's enhanced technology should significantly speed research, but he cautioned that market growth was dependent upon development of the "right product in the right quantities."

He added, "There is no doubt this increases the rate at which these processs are able to compile the data that is the fuel that fires these R&D pipelines. But this is just one piece in a giantic puzzle."

Monsanto has already been using its own version of a similar technology. Monsanto's "seed chipper" uses automated blades to grind off bits of seeds in ways that allows for fast genetic analysis without destroying the germination capabilities of the seed.

The company said next year it will roll out its first product of that new technology - an herbicide-tolerant, higher yielding soybean called "Roundup Ready 2 Yield."

Monsanto is considered the market leader in crop biotechnology and has surpassed DuPont as the largest U.S. corn seed producer. In addition to its popular herbicide-tolerant crops are those that resist pests and disease.

Monsanto, DuPont and rivals Dow AgroSciences, a unit of Dow Chemical Co (DOW.N) Syngenta AG (SYNN.VX) and others are also hot in pursuit of drought-tolerant corn amid strong world demand and surging needs for both increased food and fuel. And like Monsanto and DuPont, Dow and Syngenta are pursuing ways to speed the time it takes to get their products to market.

DuPont officials will not say how many lasers they are deploying but said they are able to streamline 25 North American centers that once were doing leaf tissue sampling into no more than three kernel sampling facilities.

Through the automated process, corn cobs are sprayed with magnetic paint, shelled and then each paint-coated kernels is grabbed and held by a magnet as the laser shears off a small portion that is then shipped to the lab.

"It is a very simple procedure that doesn't require a lot of complex software or motors," said Jason Cope, a Pioneer lab systems manager. "Simple is always the best solution."

Dupont shares were up 51 cents to $44.19 in midday trading on the New York Stock Exchange, while Monsanto shares were up 38 cents to $116.20. (Editing by Derek Caney)