GENTECH archive 8.96-97


Fwd: Monsanto

Forwarded message:
Subj:    Monsanto
Date:    97-02-02 20:07:15 EST
To:      Purefood

Biotechnology in Monsanto's genes

By Sharman Stein

Tribune Staff Writer

CHESTERFIELD, Mo.--Despite the bitter winds and snow, it is summer these days
for the soybeans and canola growing at Monsanto Co.'s research facility here,
just west of the company's St. Louis headquarters. At the same time, it can
be winter for the wheat, and spring for the cotton and corn.

In two acres of rooftop greenhouses, and behind the vaulted doors of 122
``growth chambers,'' scientists can simulate just about any growing

In laboratories nearby, scientists are studying the genetic makeup of plants,
isolating genes that will promote specific traits like resistance to drought
or to insects. 

Some are using ``gene guns'' to shoot plant embryos with the desired genes.

This is where the ``software'' of plants is being genetically re-engineered
in hopes of creating not only new methods of growing crops, but of creating
healthier foods, pharmaceuticals and even materials like plastic.

Pundits like to say that Monsanto, a Fortune 500 company with 1996 net sales
of $9.3 billion, is betting the farm on this brave green new world.

Once primarily a chemicals manufacturer, created in 1901 to manufacture
saccharine, Monsanto last year spun off its $3 billion chemicals business
into a separately traded, publicly held company.

That leaves the rest of Monsanto focused on the ``life sciences,'' a term
that executives invoke as frequently as a mantra. ``Life sciences'' is a
three-part invention: agricultural biotechnology, pharmaceuticals
(Chicago-based G.D. Searle & Co.) and food ingredients (NutraSweet Co.).

Last spring, Monsanto widely distributed for the first time its first few
genetically engineered soybean, cotton and potato seeds.

But within the foreseeable future, company officials say, Monsanto will be
producing much more: tomatoes with higher solids; potatoes with more starch
and less water; soybeans that produce lower-density lipids to make leaner
margarine;  sweeter strawberries; and even plants that produce biodegradable
plastic and naturally colored cotton fibers.

And the anticipated developments go far beyond the supermarket shelf.

Searle President Dick De Schutter  envisions cancer-fighting and
cardiovascular drugs coming out of biotechnology. Such developments have
already begun with the synthetic production of molecules used in its highly
anticipated anti-arthritis medicine, COX-2, which is still undergoing
clinical trials.

``We would not have discovered that drug without biotechnology,'' he said.

Nick Rosa, president of the food and consumer products division, sees
Monsanto taking on tasks from major food companies to produce food
ingredients, such as potatoes for french fries that absorb less fat.

Wall street believes. Over the last year, the stock price has risen  54
percent (adjusted for a 5-for-1 stock split in June), closing up $1 at $37.75
Friday on the New York Stock Exchange.

The company took a $500 million charge in the 4th quarter to pay for the
chemical business spinoff. Excluding that one-time charge, 1996 would have
produced record net income of $885 million.

``They're making all the right moves,'' said Patrick Dunkerley, who follows
Monsanto for Securities Corp. of Iowa in Cedar Rapids. ``The stock price
speaks for itself. The scope of their biotechnology is more vast than any

Dunkerley said investors are happy with Monsanto's aggressive marketing
worldwide of its fabulously successful herbicide, Roundup, a 26-year-old cash
cow, whose sales are still growing at about 20 percent annually.

But he said the market is also quite optimistic that Searle-- which was in
the doldrums until a restructuring in the past few years consolidated the
number of projects under development-- could produce a ``blockbuster'' with
its new arthritis medicine, which promises to eliminate many of the side
effects common to such drugs.

It is in biotechnology, however, that the company is pinning its best hopes,
despite disappointments during the past few years in frost-resistant
strawberries, a hormone to boost milk production in cows, and Simplesse, a
fat substitute  that has not been very successful.

Monsanto had already concluded years ago that there was nowhere else to go
but toward biotech. The sale of fertilizers, herbicides and other traditional
chemical products had already reached the point where they could do no more
to increase crop yields.

``There were a lot of skeptics 15 years ago, but the skeptics are largely
gone; they understand the future is here, and it's going to be very
lucrative,'' said Nicholas Filippello, vice president of investor relations.

By 2005, the company expects the plant biotech business overall to be a $6.6
billion market.

Blue sky? Consider this:

Last spring, U.S. farmers planted 1.8 million acres of Monsanto's Bollgard
Cotton seed, and one million acres of so-called Roundup Ready soybeans, a
fraction of the potential U.S. acreage.

The cotton is biogenetically engineered to resist bollworms and other insect
pests that usually require multiple sprayings of insecticide. The pests die
when they eat the plant, which has been encoded with a gene for a protein
lethal to insects but not to humans.

The soybeans are engineered to withstand the spraying of Monsanto's powerful
Roundup herbicide--the weeds die but the plants thrive. Before, farmers had
to use several herbicides to kill the weeds, both before and during the
planting season.  

In both cases, growers sprayed far less insecticide (many did not have to
spray at all) and reported yield improvements and cost savings.

Monsanto collects a technology fee (on top of the cost of the seed).

In the case of the Roundup Ready soybeans, farmers use about one $20 bag of
soybean seed per acre; the technology fee is $5 a bag. Monsanto expects 8
million to 10 million acres of Roundup Ready soybeans to be planted in the
U.S. this spring, earning the company a potential $40 million to $50 million
this year just on the technology fee alone.

Illinois farmer Dennis Wentworth is convinced the new plants are worth the

Wentworth, who farms about 2,000 acres of corn and soybeans in Downs, Ill.,
just southwest of Bloomington-Normal, planted the Roundup Ready soybeans last
year. The yield was at least as good, he said, and in some instances better
than other soybeans. And he spent half as much for weed-killing chemicals.

He defies anyone to tell the difference between the regular crops and the new

``The seeds are the same, with the same oil content, yield content, and
there's probably only a handful of people in the world, through elaborate
tests, that could tell the difference between one product and the other,''
Wentworth said. ``And this puts a lot less stress on the plants because
you're using fewer chemicals.''

But farmers are also wary, Wentworth said. Given that they are risking a lot
on the new technology, they are demanding that Monsanto back up the new

``We do not expect them to force us to get 100,000 farmers to drag them into
court'' if anything goes wrong, Wentworth said. 

As with any new technology, there have been bumps in the road. U .S. farmers
were worried at first about acceptance of the new crops in Europe, but
European regulators last year approved the import of genetically engineered
crops. In the U.S., consumer protests have been minimal, aside from a few
demonstrations by Greenpeace.

When there was a higher than usual bollworm infestation in the Cotton Belt
last year, farmers using the bollworm-resistant cotton found they still had
to spray insecticides. Monsanto said it had always explained that spraying
could be necessary.

Entomologists have other concerns. With Monsanto's Bollgard cotton, the
entomologists worry that insects may become resistant to B.t. (Bacillus
thuringiensis) protein gene, which was inserted into  the plants, ruining the
use of B.t. for organic farmers and others who use it already. 

The technology has also introduced other new issues.  Many farmers were
angered last year by Monsanto's insistence that they sign documents pledging
not to hold back any seed for future planting, and to allow the company to
conduct spot checks to make sure they had not done so. 

Monsanto has since dropped the spot-check requirement.

``Eventually they are going to have to make that technology fee cheap enough
so that it won't be worth keeping your own seed back,'' said Missouri soybean
farmer Blake Hurst.

William Young, who follows the company for Donaldson, Lufkin & Jenrette, New
York, said Monsanto has more projects and more technology than any other
single company.

But that alone won't ensure that they have the market to themselves, Young
warned. Competitors include Du Pont, Novartis, Zeneca and Germany's Hoechst

``An awful lot of their earnings come from Roundup,'' Young said. Monsanto's
agricultural segment made up about one-third of sales last year, but more
than half of operating income. ``The challenge is to get the technology
converted over time into other areas--like improved traits in crops, rather
than just using more Roundup. That will be the key to the whole process.
Right now, Roundup is such a dominant part of the agricultural earnings.''

Monsanto has no shortage of plans for the burgeoning technology.

In the past few years, Monsanto has been on a $2 billion buying spree,
acquiring stakes--or purchasing outright--a number of firms to acquire the
biotechnology and seed distribution systems to help it on its way, including
Calgene Inc., which develops bioengineered crops; Holden's Foundation Seeds
Inc.; Asgrow; and DeKalb Genetics Corp.

Robert Fraley, head of the agricultural biotechnology business, compares the
new industry's growth to the way in which advanced electronics are bringing
together the telephone and video industries.

When a seed company reprograms a plant with a new bit of information--placing
an insect-resistant gene into cotton germ plasm, for example--it has moved
from being a seed provider to being a provider of insect control, Fraley
points out.

``Suddenly the seed business and the crop-protection business come
together,'' Fraley said.

Just 23 products have already been approved in agricultural biotechnology,
from insect resistant cotton to corn. Those 23 have come from the study of
500 to 600 genes, Fraley said, while in the next four of five years,
scientists will have looked at 50,000 to 100,000 genes--producing unlimited
numbers of new products.

Arnold Donald, president of Monsanto's crop-protection business, points out
that these advances in agriculture are desperately needed in the parts of the
world, such as Africa, where the growing population and agricultural problems
cause terrible food shortages. 

In the rice fields of Indonesia, he said, the use of Roundup to kill weeds
efficiently means that farmers spend less time, and can plant two crops in
the same time they previously planted one.

``They don't have to flood the fields, or work with oxen, just to get rid of
the weeds,'' Donald said. ``This is transforming the way food is produced;
it's much more than killing some weeds.''

Copyright Chicago Tribune (c) 1997