FMC Corporation (FMC) Earnings Call Transcript & Summary

Hello, everybody, and good afternoon. Thank you for joining us for another in our series on -- our virtual series on synthetic biology and its practical applications. Joining me for this discussion is FMC's Chief Technology Officer, Dr. Kathleen Shelton, and also Zack Zaki from Investor Relations. Before we dive in, I'd just like to mention, as we have done with the other calls today, if you have any questions, please e-mail me at [email protected] or you can use the web interface. If you have that website up, please feel free to enter your questions that way. I guess without any further ado, Kathleen, maybe just jump right in. Could you give a brief sketch first of all, of how you became involved in researching biologicals and crop science at DuPont and then, obviously, sort of how that then brought you over to FMC?

Sure, Laurence. And first, let me start by saying what a pleasure it is to be here today and to be talking about something I'm so passionate about. So I look forward to the engagement and the questions, and I hope I will get some challenges as well to maybe have me think a little differently than I do today. So as you say, I was the Technology Director of the Crop Protection business in DuPont in 2017 when it was acquired by FMC. And as I've often said in my remarks about that acquisition about that transaction, it was an incredibly complementary joining of 2 organizations. While we brought a very strong synthetic chemistry bias and focus from our discovery efforts and from all of our work around the world, FMC had already started some of its efforts in biologicals and already had products in their development pipeline. And so when we came together, in so many ways are we complementary. Bringing a discovery organization that added to a development organization, bringing in the strong formulations capabilities that FMC had, adding together a breadth and depth around the world to an already existing business has been a great opportunity for all of us on both sides. And I'm thrilled, again, on the growth that FMC has demonstrated since that acquisition as well. So when I was in DuPont, we were very much focused on the synthetic chemistry routes. And of course, we were working diligently on our pipeline, some of which went to Corteva and some of it which stayed with us as we become part of the FMC pipeline. And really, our singular focus was in the synthetic chemistry area. We had started a small effort around biologicals. I want to say maybe it was 2014 or 2015. And yet, it struggled a little bit with finding its place in its home within DuPont. We did -- we really didn't have those innate capabilities and competencies that I think would have taken it to the next level. And so it was stopped shortly before the entire transactions and merger discussions or maybe it was in the midst of them. It really stopped that program. And so when we came over to FMC, we were really maybe a one-trick pony, if I want to call us that, or may be very strong in one area. And what we've added and what we've learned and what we have built at FMC in the biologicals area, I think, is a tremendous advantage to what we have now as a much stronger portfolio.

Okay. Great. That's a great introduction. Can we start just with a sketch of the scale of FMC's biologicals franchise currently and then how it fits within the overall portfolio I mean to the degree it is integrated or it's a separate effort?

Sure. Sure. So let me start with some definitions because what I really want to do is make sure that we're all talking about the same things. And so we think of biologicals as either organisms that occur in nature or naturally occurring materials. And if you think of that as a definition, you can then create 2 broad categories of activity. One is biostimulant or inoculant or biofertilizer, although those words are not interchangeable, they tend to be used somewhat in a similar fashion, and then the biopesticide area. And so within FMC, we sell products in both of those areas. We have a lot of our focuses on seaweed extracts, and we apply those for the biostimulant biofertilizer area. And then we have our biopesticides, whether it be nematicides, biofungicides or bioinsecticides. And if you think -- some of those molecules are still in our development pipeline. The seaweed extracts are on the market today, and we continue to grow that market. And it's -- overall, we have a $250 million business at FMC. Half of that is in the biological space. The other half is in the micronutrient space, which is micronutrients that are sold for soil enhancement.

And so can you talk a little bit about how the growth rates differ across the categories in the biologicals market and also the competitive intensity of each category?

Sure. So biopesticides, and I do have notes with me, and I think I'm going to refer to them for some of the numbers so that I make sure that I'm accurate. So in the biopesticide space, we think of that as a $4 billion to $6 billion market. In the biostimulant, biofertilizers, again, this is not FMC. This is the total market. We think of that as a $1 billion to $3 billion market. And for both those subsegments, we are anticipating and have seen historically a compound annual growth rate from 2015 to 2025 in the range of 10% to 15%, so markets that are reasonable sized with growth that we think we can take advantage of.

And can we just talk about the basic signs behind biologicals as a product category? In terms of the -- once you identify organisms, first of all, how hard is it to find organisms? And then how hard is it to get them to behave properly and have the shelf life to be commercially viable?

Well, as you know, the biologicals market is a fairly fragmented set of players, and FMC is one of the largest. And I think part of that is due to both the challenges of what you just acknowledged, finding those molecules, finding them with the biological activity, finding them with the attributes that the market needs, and then being able to apply them as broadly as we can around the world. So I'm happy to talk a little bit about that. . As I said, we think of biologicals as naturally occurring materials or as organisms. So if I go down the organism set right now for a couple of minutes, what we have done in the past is we've had an alliance with Chr. Hansen, and that alliance has gone on for several years. And through that alliance, we discovered molecules, FMC discovered molecules that are in the Bacillus strain. And those Bacillus molecules confer biological activity, whether it be a biostimulant like ACCUDO or a biopesticide like Presence and Quartzo, those molecules were discovered as naturally occurring in the soil. Now one of the challenges is to take a molecule that has happily lived in the soil and now get it to thrive and grow and reproduce at fairly high titers or commercial quantities in a fermentation environment. And so that is one of the first challenges. Not every microorganism that's going to be found in nature is actually culturable in the conditions in which we define -- that we create fermentation or in laboratory conditions. But if you can find a particular molecule, and what we now try to do is we try to make sure that we are only looking at one single molecule and not a mixture of molecules, and we can talk a little bit about those challenges, but we want to have a molecule that can exist in a fermentation process that has biological activity. So first thing we'll do is we'll look in the soil. We will separate that soil and separate it enough that we believe we have single cells in our cultures. We'll then try a variety of culturing material and conditions and, we'll see if we can get enough material and then we'll test it for biological activity. And the testing is pretty straightforward, whether it be in the -- for the same kind of pests and the same kind of attributes that we're looking for in chemistry. It has to have some ability to control pests. And normally, we look at it in biologicals, we're looking at diseases and we're looking at some insecticides. So once we find that it has biological activity, we'll then go through that process of seeing, well, can we scale it up to commercial quantities at a price and cost that would be attributable to sale? Can we create a formulation that will go into the plant or get into the pest in an effective and efficient way so that we don't have to create too high a loading rate. And does the biological activity makes sense for the grower? Is it solving a problem the grower has? Does it provide enough activity to control the pest? Does it provide the activity at the right time for the grower? Does it fit into their entire pest management protocols? So those are some of the challenges that we're looking at when we're trying to discover brand-new molecules. Because they're naturally occurring, we will not, in any way, change those molecules. We won't genetically engineer them. We won't try to, in any way, affect how they exist in nature. So really, what we have to find is molecules that exist today that have some biological activity that can be made at commercial scale that will meet a grower's needs. And as you can imagine, it's a very big challenge. I can go on a little bit about some of the advances we've made in the science, but I don't want to go on too long before I pause and ask if you want me to continue.

Can I just cut that, Laurence, that does also imply fragmentation, right? Because what Kathy described then leads to limitations on movement of those organisms beyond borders.

And so I want to unpack a couple of things and just to make sure they're clear before we move into how you've improved on the capability set and where the science is going. The first is just to be -- just to underscore one point you made that you were not genetically engineering the organisms to optimize production yields. I mean that's -- I mean I know some in the industry are sort of taking that route. But you're taking the stance of we're going to be pretty clear on -- this is a completely natural straight-out-the-forest bug.

Yes.

And so as you think about -- you've made a comment about wanting a single molecule rather than a cocktail. Can you talk a little bit about sort of the moat (sic) [mode], the difference about the ease of discovering identifiable modes of action with biologicals compared to the challenges, the synthetic chemistry industry has had over the last 20 years? It seems to be getting more and more difficult to find modes of action through that route. Can you just compare those 2?

Sure. Sure. So as you know, at FMC, we're passionate about finding new modes of action. And let me just take a moment again to say a mode of action is, at the cellular level, how that molecule is interacting within a certain target in order to basically disrupt that cell or -- in order to control the pest, okay? So whether the mode of action is like Rynaxypyr to attach the ryanodine receptor, or whether it's attached to another part of the cell, that's the mode of action. And as you said, Laurence, in the synthetic chemistry area, modes of action are pretty well documented, pretty well known. And there are not any new ones that have come into the market at a fast rate. Of course, FMC has our first new mode of action in herbicides in over 35 years on tetflupyrolimet. But if I go back to biologicals, biologicals themselves have a mode of action that they have defined by the environment they lived in, by the purpose in which they have been existing in the soil or in the crop. And that mode of action is -- has always been different to date than synthetic chemistry. We don't see overlap in the modes of actions of biologicals versus synthetic chemistry. And so biologicals become a great complement for growers to use these products in addition to the conventional chemistry that they use. It has the benefit of having no residues when you apply it so that growers can often use this closer to the harvest time. The preharvest interval is shorter when you use a biological towards the end -- closer to harvest than if you do a synthetic chemistry. So the new modes of action and the shorter preharvest interval times really are attributes. But I will say that biologicals bring on par -- they always bring new modes of action not seen by synthetic chemistry.

And one of the challenges with fungicides, if I understand properly, is the speed with which the fungi evolve and react to the stress. So the life of those chemistries is often more challenging. But presumably, the organisms in the area are also evolving to respond to the same stressors. So does that mean that the biologic, the biofungicides may have as a platform be better equipped to keep up with the evolution in the fungi?

That's such a great question. Fungi are amazing organisms. As you say, they reproduce very quickly, and overall, they are a challenge for us because their mutations, in order to kind of thwart the use of pesticides, can be very challenging. And certainly, Asian soy rust is one of those fungal diseases that has shown an ability to mutate and render some of our synthetic chemistries less effective over the years. I don't think we have enough data to make any straightforward broad sweeping statements about the use of biofungicides. What I will say is, as I always do, nature is very good at finding ways around controlling it. But I also think that biologicals, being natural products that they are, have already found a way to adapt. And they may be less -- that's the word I want, maybe less intrusive, maybe less impactful so that the fungal or the other pests don't actually mutate as quickly. But we're getting a lot more data before we can make any of these statements or any of these -- to see if these hypotheses actually are true.

And so then you had mentioned sort of the advances in the science. Can you give us a sense for -- when I start, first start looking at this area 15 years ago, I think 75% of the farmers I met would thought of it as snake oil. And most products on the shelf didn't last more than a few months. So it was very hard to find anything that lasted 2 years. It seems as if the ability to identify organisms has improved. The shelf life has improved. I mean we've been through quite a change already over the last 15 years but can you give us a sense for what FMC is bringing to the table and where this is going? Sort of how much more room for improvement is there.

Absolutely. And so I think that when you talk about what growers had, as their experiences in biologicals, maybe 10, maybe 15 years ago, there are absolutely the early adopters of the technology. And with any early technology, we look back and say, "Wow, look at all the improvements that we've made." But there's always been a need or at least a call, a market pull for biologicals because of the fact that they're deemed to have a higher sustainability profile, because they give you a new mode of action and because they are already naturally occurring. This has been a way in which growers have really gravitated towards them for long -- as you say, for longer than a decade. So what we see today, though, is those extracts, those mixtures that had biological activity at the time and were sold to growers with the belief that they would continue to bring this biological activity did have some drawbacks. We couldn't always point to what was actually causing the biological activity. They were usually very complex. Maybe there were even tens or hundreds of different molecules in those extracts. We weren't very good at really being able to understand the mode of action. And as you say, some of the attributes like shelf life and reproducibility were also a challenge. So like agriculture and like many things in agriculture, we're all pretty resilient. And I think it's testimony to the market pull of biologicals to see the investment that's been made over the past 10 years that have really changed how people think about biologicals, and the science has helped. It has helped us get there. So first of all, as we all know, in the past 10, maybe 15 years, there's been an explosion in biological sciences. We now sequence organisms much faster. We can now -- because of Big Data and the ability to share information, we can understand a lot more about the genomes of these organisms. We understand a lot more about the proteins that they're making, through the science that we call proteomics. We understand a lot more about what the holistic cells and organism are doing because of science such as metabolomics. So there's a lot that's been going on. And while it has helped us in the pharmaceutical space in medicine, certainly, those applications have also been applied in agriculture as well. And as you say, the attributes of biologicals are now fairly standard. People, growers come to expect a 2-year shelf life. They expect reproducibility in the results that they're going to get from these biologicals. So what have we done? What have FMC done? First of all, we've really spent a lot more time on the foundational science that helps us understand how these molecules act in nature about their biopesticidal activity. We've also gotten a lot better, a lot higher understanding of the formulations. What will keep a molecule stable for 2 years? What is the application -- the best way to apply it so it has a reproducibility around its biological activity? And we're very thoughtful. We have molecules that are applied through foliar. We have molecules that are applied on seed treatment and we have molecules that are applied in phero. Sometimes the same molecule can be applied to 2 out of 3 of those ways. And so we also then have been pretty flexible about picking the best way that the grower can use these products as well.

And how should we think about -- I guess there's a few questions that have come in on the economics, and I was going to touch on that in a way -- in any case. Let me try and tease it out into a couple of different pieces. So the first one is how should we think about the cost of developing a commercial product, so from idea through the toxicology studies and the government approvals to first commercial sale and how that compares to a synthetic?

Sure. Sure. So one of the challenges or maybe one of the things you have attributes of biologicals you have to think about is, as Zack said, there are some border limitations. Products cannot be sold in every country that -- something we have to look into what countries they can be sold in and depending on where those molecules came from. Secondly, there's a lot of specificity to the biological activity. Again, these molecules have existed in nature. We have found a biological activity, and they tend to be pretty specific about the biological activity they demonstrate. So if you think about biologicals, you're going to need a portfolio of molecules and then even better, you're going to get a portfolio of synthetic chemistry and biological molecules, to really give growers the optimum number of choices. But our experience is that biologicals take, on average, about 6 to 8 years starting from the time that we find the molecule to the time that we can go to commercialization. And the investment cost is in a range of $30 million to $40 million. And again, that's somewhat defined by what countries, what regions you're trying to introduce this product into. If we think about synthetic chemistry, as you know, the Phillips McDougall's numbers are often ones that we use or quote. And they're somewhere, again, for a global molecule that you want to -- that you want to have registered around the world is about $250 million. And the time frame of that, unfortunately, is often around 12, sometimes even a little bit longer depending on the regulatory review. So we're looking at about half the time at about maybe 1/4 of the cost.

And I guess what I find is interesting about that is as long as I've dealt with Phillips McDougall, the time to launch a synthetic keeps getting longer and the cost keeps going higher. But the estimates for how much a cost onto biological is basically the same as what we were told 15 years ago. Can you talk a little bit about the regulatory issue or what type of screening is not required for the biologicals? Like what drives that difference that inflation is happening on one side of the ledger so dramatically? I mean it's such a disparity.

Yes. Yes. That's -- and thanks for that context. I hadn't realized the numbers have stayed relatively flat, and it doesn't surprise me. So as we think about or as you experience the registration process, multiple countries have what they call low risk classification for biologicals, which means that there's a lot of the tests that are required for synthetic chemistry are not required. And some of the ones that come to mind that are our most expensive, it would be a 2-year chronic toxicology testing is not required. In fact, much of the human health testing is not needed and decreases the cost. There's a lower cost for the ecological testing and as well as some of the physical and chemical data as well. A lot of time and energy that we spend on synthetic chemistry is what happens to the molecule when it's applied? What does it break down into? Does it create any metabolites? Where do those metabolites go? Do they have any characteristics? How are they transported? There's a lot that's done on -- not only on the parent molecule but on the molecule as it may break down over time. If you think about a biological, I'm already applying a molecule that has existed in nature, and now I'm applying it in for specific uses. And so we don't have that whole level of review detail or data needed to support those. I think those are the biggest differences around the 2. Now on the time frame of it, again, we will spend between 3 and 5 years in discovery in synthetic chemistry optimizing the molecule. So we are making thousands of versions of the synthetic molecule. We might find one with a little bit of biological activity. And then the molecule that we finally progress to development is usually -- and I'm going to say it's really closer to 4 to 5 years of iterations. When we discovered Rynaxypyr, we made over 3,000 iterations, so 3,000 versions of that molecule before we found one that we said this probably can be a commercial molecule. From that moment, you move it into development, and now you're talking about another 6 to 8 years. So in the biological space, I have found the molecule. Once I can define that it has the biological activity that I think will bring value to a grower, I'm not doing that, as you say, that iterative process. I'm not spending my 3 to 5 years trying to make a different molecule. My screens will tell me I have the best molecule. And then going through the regulatory process, because there's less data, because they are considered low risk and because some of the regulatory agencies have actually prioritized biologicals to get it through the environment, the regulatory process faster, we're seeing it move through more quickly than we do this synthetic chemistry.

Yes, Laurence, just to add a little bit of geographic color to that, to the last point that Kathy was making, we have seen countries in Asia, in particular, leading the way in this. Korea is a market which does have a more streamlined process for the introduction of biologicals, and that has tended to be where we are successful, other countries in Asia as well. And then countries in Latin America have also been particularly streamlined in terms of introductions of biologicals, including Brazil. Surprisingly, the European Union is not on that list. Now more recently, the European Union has made a commitment to potentially streamline the regulatory process for biological registration. So we'd see what happens there, but that is something which a lot of folks find surprising.

So can we talk just a little bit about the size of a successful biological? If the economic -- if the cost of development is lower, is the target for peak sales lower because you don't need the same peak sales to get to the same return on capital? Or how does FMC think about managing the portfolio in terms of prioritizing IRRs or peak sales potential? Or how do you sort of approach bringing these molecules into the market?

Yes. I'll jump in here, Laurence, and Kathy can add on more. But like we spoke about earlier, right, the fragmentation leads to a potential size of the market for each individual molecule, which is much smaller. So Rynaxypyr is a multibillion-dollar molecule. It's a chemistry. On the biological front, $100 million to $200 million biological product would be a blockbuster, right? So there is an order of magnitude difference in terms of what defines a blockbuster. But at the same time, like we spoke about, about half the time and maybe, even in some cases, 1/6 to 1/10 of the cost going into the actual R&D. So it does have similar, if not even better, IRRs, right. From an investment return perspective, it is very attractive. Now I would also add, the holy grail here would be to find biologicals which can be scaled at a cost for them to be introduced to the row crop market as opposed to being limited right now predominantly to the specialty market. So I think there is the potential for biologicals to have much larger potential. It's just about that scale and the cost has to be there as well. Kathy, I don't know if you want to add anything to that.

No, I think you've said that well. I always like it. I smile on my face when people talk about blockbuster products because my other perspective is that it is really hard to decide whether or not you're going to have a blockbuster until it hits the market, until you see the market need that you're meeting. But you're right, Zack, there are certain attributes that we need to have to even start having those conversations.

Yes. Now with that in mind, we do spend almost twice as much from a percentage of sales perspective on biological R&D than we do on chemistry R&D. So we are being very intensive in our R&D there.

Yes. We are.

You mean as a percentage of the biological sales?

Yes.

Correct.

And can you talk a little bit about sort of with the regulatory environment, are the biologicals, are you seeing now that ESG mandates are having more pressure on the supply chain, are biologicals also having more demand pull from the retailers as opposed to just from the government regulators? Or is it still mostly individual governments sort of pushing the agenda?

I don't think it's regulatory agencies pushing the agenda. Certainly, you have the Farm to Fork legislation in the European Union with its very ambitious goals of decreasing the synthetic chemistry volumes by 50%. So they're certainly going to create market need for alternatives to synthetic chemistry. But I believe that biologicals are standing on their own for the attributes that they bring. I believe that these new modes of action that they bring, again, the shorter preharvest interval, the fact that they have no residues on the crops that they leave behind and the fact that they are often viewed as more sustainable or safer, I think the demand for growers will continue to strengthen even if the regulatory process remains as it is today.

And you alluded to earlier in a comment about sort of mixing the biologicals with the synthetics. Can we unpack that? I mean, there was a long time, there was a framework of the biologicals will displace the synthetics because everybody likes the David and Goliath story. But in practice, how do those 2 complement each other? And I guess, in particular, I'd like to tease out kind of the -- how far you can extend the pass and protection for the synthetics with -- by using biological blends? But can we sort of unpack what's going on there?

Sure. And I had a little -- you broke up a tiny bit at the very end there. So let me see if I explain, and if I missed something that you said, please jump back in. So when we think about biologicals and we think about the synthetic chemistry, mostly today, we think about it as rotational partners. So you apply one and then you would apply another, and that's really a lot of the new -- a lot of alternating modes of action is also one of those benefits. And again, as I said, by having the shorter preharvest intervals, there's a lot greater use of biologicals towards the end, towards close to harvest than you have at the beginning. And it does depend on whether these attributes are preventive or curative or whether or not they -- how long this protection lasts to define how you use them and when you would use them. We are working on and we have in our pipeline a few, what we call, product concepts, which is a product that we believe would be valuable to the grower. We then create that product in our R&D organization. And we will take it out and test it in the field to see whether or not it actually meets the commercial standards that we hold it to. And so we do have a few product concepts in our development pipeline today where we're looking at mixing a biological with synthetic chemistry. But generally speaking, it really is about how the grower is going to establish their own practices and whether these fit into those. And I think it's going to continue to be more of an alternate use than we're going to see necessarily the mixtures coming out. Having said that, brand-new molecules can change the opportunities that there are. But that's really the reason and I think that we haven't seen the 2 come together more in the recent past.

And as you think about sort of the potential applications, one area that you didn't mention was -- and maybe I missed it, was bioherbicides. And there's been some discussion in the industry of nonselective bioherbicides as being a potentially significant opportunity for organic farmers. Would FMC have a path to be -- to participate in that? Or is there a sort of a scientific challenge to that where maybe people are glossing over it and it's a little bit harder than they think? Can you just sort of give us some perspective on what's going on there?

Sure. And I can speak as we have gone out and talked to other companies that have products that they are either discovering, developing, there are very few bioherbicides. I think people are creating platforms to look for them. Bioherbicides are extremely challenging given really the resilience of leads to overcome a lot of control mechanisms. FMC would happily and wholeheartedly join in on any opportunity that we think could respond to a grower's needs. And certainly, bioherbicides would be one of those areas as well. What we see in the market is that we are broadening how we think about biologicals and the different collaborations that we have. And you may have followed us on some of our recent press releases that we have a collaboration now with Novozymes. And with Novozymes, we're trying to take advantage of the enzymes that they produce that they have so well characterized and they understand and see whether or not they have application in the agricultural market with -- in concert with some of our synthetic chemistry or actually as a stand-alone product. So that's been a novel area that we invested in and are working closely in. The other is a small company based in France, which is called Micropep. And Micropep is looking -- and we are -- have an active collaboration that we are working with them, and that is in the area of looking at small micro peptides that could have a regulatory effect on genes in the plant. And so one of the potential opportunities or product concepts would be in the herbicide area. And the third area that where we've been collaborating in is in BioPhero. It's a small start-up in Denmark, where they have made yeast cells be able to produce pheromones. And as we know, pheromones have been used by agriculture for a long time, I think, since the 1970s, but the cost has always been very prohibitive as they're made through a chemical synthesis process. So we ourselves have expanded into very new areas in the biological space. And I don't think there's any limits to where we're willing to expand into.

I want to come back to then how that ties into sort of the organism versus the extract and the degree of meddling one does in the genetic structure of the organism or the, yes, sort of there's a very -- there's a kind of blurring line between intense revolutionary pressure in gene editing. You sort of slide from one into the other because it's still within the realm of genetic potential of the organism. And so is there a -- as you look more at the extracts, is there more room to play in that gray zone where -- because it's a natural chemistry, but it's produced by something that was produced through intense revolutionary pressure that would not have happened until we orchestrated it? Can you -- is there a way to sort of steer that to the chemistries you want? Or is that too far afield currently?

Well, and maybe I should have mentioned also the agreement that we have with Zymergen, which was a research collaboration that we announced, gosh, I think, 1.5 years ago now, where we are working with them to screen their own library of desert soils and the genes in those soils to look for naturally occurring products. So naturally -- natural products is another area that other companies have invested in. Certainly, it's an area that many people talk about as really the opportunity, as you say, maybe it's an extract or maybe it's an expressed molecule that is able to confer biological activities. And so I would say that we are very interested in them as well. Again, hard to find. It takes a lot of effort to screen to look for how these naturally occurring molecules that often occur in extremely small levels to actually find their presence in these natural environments. But that's another area that we're looking at, and I think it gives us -- takes some advantage of some of the opportunities you just talked about.

So can you speak about how this fits on my end...

Yes, Laurence, I'd just add that we're not limiting ourselves to any technologies, right? As Kathy had mentioned before, we're looking at all the different technologies before we sort of get into the specifics of are we changing any of the genetic makeup or not.

Understood. So has we think about sort of the way this scales up, if you compare this with the conventional synthetic chemistry model, can the return on capital be -- approach the same levels? I mean R&D to sales presumably would be lower because you don't have all the toxicology burden. But how do you think about where this goes as a business within FMC? Like is it accretive? Is it dilutive? Is it -- hopefully, if everything goes well, it's about the same. But how do you think about the 5, 10 years out, what the profile looks like?

Yes. I think Kathy had already mentioned the size and scale of our business today, right? We are looking at about $250 million business in 2022, and it has been growing for the last 5 years at roughly 1.5x the market growth rate. So it is a rapidly growing business within FMC. And we don't see that slowing down anytime soon and, in fact, have an ambition to double in size by 2025, '26. So when we're looking at that kind of growth rate, it is obviously accretive to our business, and that's why we're putting the resources behind it and the R&D dollars behind it. So from a margin perspective, our plant health and our biologicals business, in particular, are accretive to us. And we see that, like you said before, because of some of the lesser burden on R&D, on the regulatory front, it does tend to pay off more, even though there's fragmentation.

And can you talk about how the science around screening, organisms and compounds is changing? I think the question I received is about second order. Do you screen for second order effects, so things that are not themselves directly have an impact but, over time, over a planting season has an impact? Or is there -- are there ways that you can either encourage competitors to a particular pest so that, that then basically indirectly creates a stress but then boosts the crop yield? Can you give us some sense of how you're thinking about sort of the more -- screening for more indirect and more complex rather than just a direct mode of action and the insect has its feet in air?

Well, mostly, we worry about [ whether it stops feeding ]. So I wouldn't be a Chief Technology Officer if I didn't, at some point, talk about artificial intelligence and machine learning, right? We are employing some new techniques certainly to be able to make ourselves as everyone else wants to be in this area, faster, smarter and make fewer errors or maybe pick the winner sooner when we can. So we have some active engagements going on in those areas. And I would say that for an organization that's probably screened products the same way, generally speaking, for many years, they are very excited about these new technologies and new opportunities. And I do think that we will find a way to move faster. The other piece I'll talk briefly about, too, is we think a lot about dead insects. We think about insects that are eating. We think about disease and it's how long it takes to propagate it. So disease actually by eye when we test it in the greenhouse is actually takes, septoria tritici, for example, can take a couple of weeks before a human eye can detect whether or not it is growing. And so one of the things that we are interested in, as the other companies are, is there a faster way to detect that particular disease on a plant to save some time. And those are some of the areas that we're looking at. So when we're in the screening process, when we're in discovery, we're pretty singular focused. We're thinking about does it have biological activity because, after that, then we can ask ourselves a lot of other questions. But until we can answer that question, yes, the other question is only get an opportunity to even be discussed. So in this discovery screening process, we are absolutely looking at biological activity. As we move into the development or even the late discovery area, we are expanding into many more questions. And as you say, what are the secondary effects, what is the ultimate value and impact to the grower. Is there going to be control at the right time in the growers' needs? Is there any increase in yield that we might see? How has the soil changed? Are we in any way impacting the makeup of the soil? How does the plant react over time to having these molecules be in the soil after we've applied them either in phero or in seed treatment or foliar. So there are a lot of questions that we ask ourselves, many of that cannot be answered until we get into the field. Many molecules look great in the greenhouse where we can control all the conditions where we've decided what soil they're going to grow in, where we moderate the temperature and the humidity. But when we get in the field and we have field stations around the world is really when we can start to test those molecules and ask ourselves the more challenging questions that you've mentioned.

Okay. Great. And so do you see biologicals having a significant impact in row crops within, say, the next cycle? Or is it a pipe dream? I guess that's sort of the phrasing, I've see -- would take it as it is.

Before I jump into the science, did you want to give that any further context?

Yes. I think just consistent with what I've said before, but Kathy, please back it up with the science, I think right now, the fragmentation and really, the scale has limited biologicals to specialty markets where we do have a significant competitive advantage in terms of market access with our current product portfolio. I do believe that the row crops are a sizable market, right? You're talking about an order of magnitude larger market that you can address if you are able to scale up your volumes as well as lower your cost for it to be efficient and effective. But from a science perspective, Kathy, Please go ahead.

Yes. So I think row crops, we will get there. We will because there is a demand from growers. And whether those growers are growing specialty products fruits and vegetables or row crops, I think that there's a universal demand for these products. As Zack mentioned, it is a different market. We are looking at cost and price very much. We look at efficiency of what the grower practices would be and how these materials -- these products can be applied to be also more efficient. So I think there are additional challenges that we are addressing. We are absolutely looking at the opportunity within row crops today. We are not limiting ourselves to thinking that molecules have to be in fruits and vegetables first before they can move to row crops. We are looking at row crops as a primary opportunity. But we're also challenging ourselves with a very high standard of what those products need to be able to do both in the performance, in the economics and, again, to fit into the grower practices that they have set in place for the row crops.

And then I guess, since you answered all the questions that have come in, the last question I wanted to touch on to bring us back to where we started. As you think about sort of the DuPont research culture and their approach of how they integrated fundamental research with commercial investigations, how much of a culture shock is that for FMC? And how do you see kind of the contributions of the 2 cultures sort of fitting together?

Sure. Well, thanks, Laurence, for this question because I will say that the best job that I ever had in my entire 25-plus-year career is to be the CTO of FMC. I love this job. I have been given the support and the acknowledgment to be a senior leader in this company that far exceeds my dreams of my career a long time ago. So first, I want to acknowledge how both exhilarating and thrilling it is to be in this role. But additionally, I was extremely fortunate to have a very rich career at DuPont as well. And I spent a fair amount of my career in the research organization. I was part of central research for several years. I was part of the Haskell center for toxicology and ecological excellence. I ran a group of an organization that was much of the enabling technologies, as we call it, for central research as well. So research, R&D, technology, science and technology was certainly core to what DuPont identified themselves as and believed that, that is the future of how they were going to create new products and differentiate themselves in the market. As Technology Director for the Crop Protection business in DuPont, we shared our agricultural space with the pioneer side, with the seed side, as you say. And I will tell you that I believe that we are liberated at FMC by not having anything tied to seed. We are agnostic when it comes to how these molecules -- which seed it will be applied to, whether it's Bayer seed or Corteva seed or anyone else's. We bring and we think about growers as they are applying products around the world. We think about the challenges they have, we think about the things they need to decide to do to make the maximum impact from the land that they have. And while it is a rich and strong culture of Corteva and of DuPont, I believe that we excel in what we're trying to do in the agricultural space.

Okay. Great. And I think that's a good point to close on. There are no other questions that have come in. So thank you very, very much for the discussion today. And if anyone has any further follow-ups, please either reach out to me or to Zack.

Thank you. Thank you for this opportunity today. It's a pleasure speaking with you.

Thank you, Laurence, for your time.