Biotech hybrid finds its
Monday, February 27, 2006
Monday, February 27, 2006
By Shelley Emling
Combining two companies with three cultural pedigrees and billions in annual sales would be a challenge for any executive - let alone one who had just broken his leg in a nasty skiing accident.
For Michael Pragnell, who negotiated the merger that created the agricultural biotechnology company Syngenta in 2000, finalizing the deal after having a metal plate placed in his leg turned out to be the easy part.
Source: International Herald Tribune
Since then, as chief executive of Syngenta, Pragnell, 59, has grappled with integrating two work forces, managing the departure of 4,500 employees, and keeping business and the stock price growing amid strong consumer opposition in Europe to one of his company`s major business lines: genetically modified produce, or "Frankenfood" as it is sometimes derisively called.
Today, things seem to be moving Syngenta`s way. The combination of the agriculture businesses of AstraZeneca and Novartis posted a 35 percent increase in net profit for 2005, to $622 million, on sales of more than $8 billion, because of strong growth not only in its core chemical business but also in its sideline seeds division, which boasts hand-size watermelons and other tasty-looking innovations.
The company, which is also a major player in biofuels in the United States and one of the biggest manufacturers of crop chemicals in the world, looks to be a major beneficiary of two recent developments: high oil prices, which have heightened worldwide interest in alternative energy, and the recent World Trade Organization ruling that Europe cannot legally bar genetically modified products. Syngenta`s stock shot up 38 percent in 2005 after surging more than 47 percent in 2004.
Pragnell, who commutes weekly from his home in England to Syngenta`s headquarters in Basel, Switzerland, draws on reserves of strength - he is an avid cyclist as well as a skier - and organization habits built from a lifetime in management.
"In general, the bottom line is to plan well, be decisive, and stick to your principles," he said during an interview.
After studying modern languages at Oxford, his first job was with First National Bank in Chicago, a position that allowed him to complete his master`s degree in business administration and then move to New York. He returned to Britain when Courtaulds, the giant textile company, offered him a job. After working his way up to chief financial officer, he left to head Zeneca Agrochemicals in 1995, which later merged with Astra of Sweden to become AstraZeneca. Pragnell headed that division for the combined company until the deal that created Syngenta.
One of the first steps after the merger was an important symbolic one: the decision to put the headquarters in Basel, where none of Syngenta`s ancestor companies had a history.
"It became clear that if we were to succeed as a new company, all of us would have to surrender our attachments to the old ways of doing things," he said.
Pragnell and his team also "developed a completely new set of strategic criteria and corporate values to which neither company had previously ascribed," he said.
At the same time, the disruption meant that Syngenta needed to pay attention to other issues. Pragnell said it was also important to hire outside consultants to make objective recommendations when it came to the need to lay off or reassign employees.
"And when people left we made sure that we honored them in some way," he said. "You can`t just forget the past."
As for the future, the signs are promising. The WTO ruling on genetically modified foods could have "a huge global impact," according to Gregory Conko, a trade analyst at the Competitive Enterprise Institute in Washington, because once the European market was cracked, others would follow suit.
Pragnell called the ruling "a step in the right direction" but added, "I don`t think we`ll see a change in European consumer attitudes toward this technology in the short-term." European consumers, he said, still do not recognize that the technology is potentially "a huge force for good."
On biofuels, Syngenta recently announced that it had developed a new enzyme that would allow corn seed to more efficiently be processed into ethanol - one of the world`s most popular crop-derived fuels. Pragnell said that 13 percent of U.S. corn was converted to ethanol last year.
"Ever since oil crossed the $60-a-barrel threshold, the enthusiasm for biofuels has become more than just a passion" for the environmentally conscious, he said.
Not surprisingly, competition from other biotech giants is heating up.
Mark Gulley, an analyst at Soleil Securities Group in New York, pointed out that Monsanto was also making gains in its market share - not just in the United States, its home market, but also in Europe, "which is Syngenta`s backyard," he said.
Pragnell acknowledged the challenge. "We still have a lot to prove, and we still have to do a lot of extensive trials to do this year," he said. "But we have enough knowledge under our belts now to say with confidence that we`re really on to something."
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