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ASTRAZENECA REVEALED last week that it is carrying out a radical review of its agrochemicals and plant biotechnology operations, which could result in a disposal of the two businesses. The company has been hurt by a downturn in the global agriculture market, which has caused a sharp decrease in demand for agrochemicals.
Analysts warn that other leading life sciences companies may also be considering divestments or joint ventures in crop protection because of the market's gloomy outlook.
The companies are particularly worried about the long-term implications for their plant biotechnology operations because of public hostility to genetically modified (GM) foods, particularly in Europe.
AstraZeneca's agriculture business will be restructured in the second half of the year in an effort to raise profitability during a time of poor market conditions. "Our intention is to make significant cost savings," Michael Pragnell, chief executive officer of Zeneca Agrochemicals, told a London press conference last week.
At the same time, the company is reexamining its whole strategy in agricultureonly a few months after the completion of the merger between Astra and Zeneca into one of the world's leading life sciences operations.
All or part of the agrochemicals and plant sciences activities could be divested or placed into a partnership, according to Mr. Pragnell.
The company is taking a particularly hard look at its plant sciences business, in which it will have to wait at least five or six years for any returns on its R&D expenses for GM technologies. One option could be a separate divestment of the plant biotechnology business.
In the first half of the year,...