For twenty years, the agro-tech company Monsanto has been making life difficult for farmers. Well, first the company made it easy: Its genetically modified seeds allowed crops to thrive in the presence of pesticides, dramatically increasing farmers’ yields. But those so-called Roundup Ready seeds came with a caveat: Because their pesticide resistance genes were patented, farmers had to shell out cash to Monsanto every year, instead of potentially reusing the seeds that their crops produced.
Now, Monsanto’s reign is (seemingly) beginning to end. Earlier this year, the patent on Monsanto’s Roundup Ready soybean expired. For the first time ever, farmers can sow generic genetically modified soybeans, and they can save the next generation of these seeds to replant next season—all without paying Monsanto a penny. With Monsanto’s genetic property up for grabs, universities developing their own seed strains are entering the soybean market. But these generic seed-wielding Davids aren’t quite ready to defeat Monsanto’s Goliath.
After drug patents lift, generic drugs stand a fighting chance against their brand name counterparts. When the patent on Pfizer’s cholesterol-lowering drug Lipitor ran out in 2011, generic forms of Lipitor took almost 70 percent of the market in just six months. But GM generics aren't going to mess with Monsanto’s empire like generic drugs can with big pharma, because seeds—surprise!—are fundamentally different from drugs.
When a big pharma company is confronted by a patent expiration, they have one primary line of defense: reformulation. You’ll often see “new” versions of a drug show up on shelves (or on your doctor’s prescription pad) just around the time an original patent expires, with a different release mechanism or some other slight tweak that suggests it’ll work better or differently.
But farmers don’t buy seeds the way most people buy drugs—and a slick marketing campaign isn’t likely to sway a purchasing decision that affects a farmer’s livelihood. “If you see TV ads for drugs, they don’t say much about the medication. They’re just happy people dancing and doing fun things,” says Michael Ward, an economist at the University of Texas at Arlington who has researched the economics of both the pharmaceutical and agricultural industries. “Those types of ads are probably not going sway farmers. Seeds are core to farmers’ business,” so they’re probably going to pay much closer attention to hard numbers.
And for now, the hard numbers are in Monsanto’s favor. The company has prepared for years for this patent expiration: They released soybeans with the Genuity Roundup Ready 2 Yield trait several years ago—one that results from the modification of the same gene as classic Roundup Ready, but in a different part of the genome1. And it’s not just a sleight-of-hand “reformulation”: This modification actually works better than the original, which makes soybean plants resistant to the herbicide glyphosate. The gene modification in classic Roundup Ready can actually reduce soybean yields, whereas Roundup Ready 2 doesn’t. Many farmers will just switch to using Roundup Ready 2 rather than use the lower-yield generics, says David Zilberman, an economist who researches the economics of GMOs at the University of California, Berkeley.
That’s why the generics being sold right now are going for half the price of Monsanto’s newer seeds. “This is old technology, and everybody is looking to new technology,” says Pengyin Chen, a soybean breeder at the University of Arkansas who developed one of the first commercial generic Roundup Ready soybeans. “When the iPhone 7 comes out, no one will want to work on the iPhone 6.”
Farmers planted Chen's generic seeds for the first time this year—and while they may be able to save them for the next season, the generic seeds simply aren’t worth it because of their decreased yield. At this point, Chen estimates that his soybeans have five to seven percent less yield than Roundup Ready 2 seeds. “If the farmer can replant seeds, it would be very hard to make money off them,” Ward says. “Not too many firms can make it in this market.”
But if the unlocking of Monsanto's patent doesn't help farmers or seed companies save money, it might just help the academic world. Before the Roundup Ready gene went off-patent, researchers at universities licensed the technology to develop many varieties of soybeans—each carrying the Roundup Ready trait, but then tailored to the geographic and climate conditions of different regions in the US. For example, a seed breeder in Arkansas might make a Roundup Ready soybean variety resistant to a disease specific to that region.
Now, universities have the ability to continue that research without paying licensing fees. And since they don’t need to make money off of the seeds like a competing ag company would, academic labs can continue to experiment with slight tweaks on those seeds—potentially developing new versions that could meet the needs of a smaller subset of farmers. Chen has been working with Roundup Ready soybeans for over ten years to develop plants that are resistant to soybean diseases common to Arkansas. He’s also working to develop a generic that makes up for some of the yield losses caused by the original gene.
But Chen is still pessimistic about the market potential of his work. “This isn’t my main research,” he says. “It’s like a hobby for me. I don’t think there will be a lot of investment in this.” That will be true for most generic seeds created for niche markets.
And when those new Roundup Ready 2 patents expire, Monsanto will be ready again. In 2016, the company plans to release a soybean with this new trait that is resistant to two different herbicides, likely making the Genuity seeds irrelevant for large-scale farmers. Monsanto will continue to dominate the soybean seed market. But at least now that the technology is out in the open, more players can enter the field. “It’s one step in right direction. Actually, it’s one—little—step in the right direction,” says Zilberman. These GM generics may not be a match for Monsanto now, but they’re edging closer to the ring.
1UPDATE 8/5/15 12:30 PM This story originally referred to the Roundup Ready 2 gene as a distinct gene from Roundup Ready 1. The two varieties use the same gene but in different parts of the genome.
