Innovation Case Study
Monsanto Roundup Ready Soybean
Introduction – A Brief History of Monsanto
Monsanto was created in 1901. The company focused primarily on basic industrial chemicals and during the 1940’s became the leading manufacturers of synthetic fibers and plastics. They continued to be one of the US top ten chemical companies. Following the Second World War, Monsanto championed the use of chemical herbicides in agriculture and created such agrochemical products as DDT, Lasso and Agent Orange, which was widely used as a defoliant by the US government in the Vietnam War until it was shown to be highly carcinogenic. Following the ban of Agent Orange and increasing criticism of Lasso, Monsanto developed a new herbicide, Roundup that became their most profitable product. From the 1980’s onward Monsanto was hit hard by a series of lawsuits concerning the production of pollutants that posed a serious threat to the environment and human health. In response to this they needed to radically transform the company and relaunched itself as an agricultural biotechnology company. The company claimed that their new technology could achieve goals such as ensuring adequate food production, responding to the challenge of global warming and reduce agriculture’s negative impacts on the environment. Monsanto went on to become the dominant player in commercial genetically engineered (GE) crops. The product I am going to look at in this case study is Monsanto’s Roundup Ready soybean.
How Development was Influenced
The development of this product was encouraged by the need to support another existing Monsanto product that was already on the market. Round-Up, a weed killer developed by Monsanto, was launched in 1976. This herbicide was a replacement for previous herbicides that had been banned such as Agent Orange and Lasso. Round-Up had global success and helped to make Monsanto the world’s largest producer of herbicides. Within a few years of its launch Roundup was being marketed in 115 countries and soon became Monsanto’s most profitable product.
By 1990 Monsanto’s agriculture division was significantly outperforming their chemicals division in terms of operating income and this was increasing annually. Although Roundup was a blockbuster product and the profits were increasing, Monsanto’s directors felt uncomfortable relying on a single brand for profits and with the patent for Roundup due to expire in 2000; the market would be open to new competitors. The company needed to develop a strategy to prolong the life of their best selling product.
Over the next few years Monsanto moved into biotechnology, this was a relatively new industry that today is worth over £30 billion. During this time they also spent $10 billion globally buying up seed companies, as a result they are now the world’s largest seed company. The company began then to take on a new narrative; Monsanto claimed genetic engineering could help to feed the world. This ground-breaking technology was a once in a generation opportunity for Monsanto to dominate a whole new industry. Genetic engineering offered the chance to preserve the life of their most profitable product even after the patent expired. By 1996 Monsanto had introduced the Roundup Ready soya bean to the market. The genetically modified crop contained a gene that gave a resistance to glyphosate (the active ingredient in Roundup). This meant that farmers could spray Roundup onto their fields even during growing season without harming the crop. The introduction of this new product allowed Monsanto to expand the market for Roundup and continue to do so after the patent expired through a marketing strategy that would couple proprietary Roundup Ready seeds with continued sales of Roundup. When the soybean was launched, growers adopted it at a very rapid rate. There were clear potential cost savings attached to the product which drove adoption, however the primary...
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