Monsato
LEONARD N. STERN SCHOOL OF BUSINESS
NEW YORK UNIVERSITY
Monsanto
When Pharmacia (which was acquired by Pfizer in 2003) merged with troubled Monsanto in 1999, investors complained that Monsanto would weigh down Pharmacia’s profits. Pharmacia apparently felt the same way, keeping Monsanto’s drug unit, Searle, but selling 15% of the remaining company as a precursor to dumping it altogether.
Investors couldn’t have been more wrong. Between Monsanto’s IPO in October 2000 and August 2001, its share price jumped 80%. Shares of Pharmacia (which still owned 85 percent of Monsanto during that period) fell almost 20%.
How did Monsanto do it?
Monsanto
St Louis-based Monsanto was founded in 1901 to manufacture Saccharine. It soon added vanilla, phenol, and aspirin. By 1990, Monsanto was a large diversified chemical company producing nylon, plastics, films, hydraulic fluids, aspartame (Nutrasweet), and pharmaceuticals (the last two through its Searle unit, acquired in 1985).
In the mid-1990s, Monsanto positioned itself as a high-growth “life sciences” company, focusing on agriculture, food ingredients, and pharmaceuticals. When Robert Shapiro took over as CEO in 1995, he pursued a vision of using cutting-edge science to generate profits, raise living standards in developing countries, and produce a cleaner environment. He added seed and genomics companies and spun off the basic chemicals business. The strategy was to use the revenue generated by its hugely profitable Roundup to finance research and development. Uncertainties associated with biotechnology research and consumer fears of genetically modified foods, particularly in Europe, led to the departure of Shapiro and the merger with Pharmacia.
Roundup
Monsanto’s leading product was Roundup, the trademarked name of glyphosate, a chemical herbicide developed and patented by Monsanto in the 1970s. Roundup is referred to as a nonselective herbicide, meaning it kills most plants. In the late 1990s, it became
NEW YORK UNIVERSITY
Monsanto
When Pharmacia (which was acquired by Pfizer in 2003) merged with troubled Monsanto in 1999, investors complained that Monsanto would weigh down Pharmacia’s profits. Pharmacia apparently felt the same way, keeping Monsanto’s drug unit, Searle, but selling 15% of the remaining company as a precursor to dumping it altogether.
Investors couldn’t have been more wrong. Between Monsanto’s IPO in October 2000 and August 2001, its share price jumped 80%. Shares of Pharmacia (which still owned 85 percent of Monsanto during that period) fell almost 20%.
How did Monsanto do it?
Monsanto
St Louis-based Monsanto was founded in 1901 to manufacture Saccharine. It soon added vanilla, phenol, and aspirin. By 1990, Monsanto was a large diversified chemical company producing nylon, plastics, films, hydraulic fluids, aspartame (Nutrasweet), and pharmaceuticals (the last two through its Searle unit, acquired in 1985).
In the mid-1990s, Monsanto positioned itself as a high-growth “life sciences” company, focusing on agriculture, food ingredients, and pharmaceuticals. When Robert Shapiro took over as CEO in 1995, he pursued a vision of using cutting-edge science to generate profits, raise living standards in developing countries, and produce a cleaner environment. He added seed and genomics companies and spun off the basic chemicals business. The strategy was to use the revenue generated by its hugely profitable Roundup to finance research and development. Uncertainties associated with biotechnology research and consumer fears of genetically modified foods, particularly in Europe, led to the departure of Shapiro and the merger with Pharmacia.
Roundup
Monsanto’s leading product was Roundup, the trademarked name of glyphosate, a chemical herbicide developed and patented by Monsanto in the 1970s. Roundup is referred to as a nonselective herbicide, meaning it kills most plants. In the late 1990s, it became