R&D Investor Day 2015 Discover more Safe harbor This - - PowerPoint PPT Presentation

R&D Investor Day 2015

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This document contains forward-looking statements, which can be identified by terminology such as ‘expect’, ‘would’, ‘will’, ‘potential’, ‘plans’, ‘prospects’, ‘estimated’, ‘aiming’, ‘on track’ and similar expressions. Such statements may be subject to risks and uncertainties that could cause the actual results to differ materially from these statements. We refer you to Syngenta's publicly available filings with the U.S. Securities and Exchange Commission for information about these and other risks and uncertainties. Syngenta assumes no obligation to update forward-looking statements to reflect actual results, changed assumptions or other factors. This document does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer, to purchase or subscribe for any ordinary shares in Syngenta AG, or Syngenta ADSs, nor shall it form the basis of, or be relied on in connection with, any contract there for.

Our claims today

Continued grower demand for innovation: long term scope for value creation through technology Syngenta R&D is the most innovative and productive in the industry Rate of innovation accelerating and productivity improving R&D as percent of sales expected ~9% Leverage opportunity at three levels: platforms, technologies, crops

Continuing grower demand for innovation

Biotic stress – Weeds, insects, disease – Resistance management – Regulatory changes Abiotic stress – Climate change – Constrained natural resources – Change in input factors Major pest shifts

~$900bn

Estimated total economic value Current needs

~$300bn

Future needs

~$600bn

Yield

Pluesia Helicoverpa Spodoptera Other

Biotic stress and resistance management

2014 estimated area affected by glyphosate resistance Glyphosate resistance increasing Global lepidoptera (chewing pest) market

5 10 15 20 25 30 35 40 Brazil Argentina USA

Up 20% year on year to ~1/3 of total US crop area

21

resistant weeds globally

58%

US farmers affected in 2014

>$2bn

market value

Mha

Insect resistance in Brazil

33 122 88 78

2013 2014 Sucking Chewing

– Bt resistance results in tripling of lep control market – Viptera the only trait to control Fall armyworm

$m

Regulatory change: Syngenta capability creates competitive advantage

Time and cost of innovation increasing

– Additional study requirements – Protracted regulatory approval timelines – Application of cut-off criteria

Cabbage stem flea beetle damage in oilseed rape in UK and Germany due to suspension of neonicotinoid seed treatments

4:1

EU product withdrawals

• utpacing new product

introductions

Some key products no longer available to growers Example: neonicotinoid seed treatment

Agricultural land use

Total planted area ~1.6 billion ha Potential area for agricultural expansion 4.9 0.14 3.3 3.0 0.3 1.2

0.3

Billion hectares

Yield improvement remains an imperative

“Up to 25 percent of the world’s food production may be lost by 2050 due to climate change, land degradation, cropland losses, water scarcity and infestations.”

Achim Steiner

UN Under-Secretary General and UNEP Executive Director at the GFFA

Rolling 10 year average growth in crop yields World population

Billions of people

Innovation lifecycle

• 20 leads in early Research
• 5 leads in late Research
• 4 leads in Development
• We maintain and register

60 AIs¹

• ~ 600 projects currently

in PLCM²

• ~ 80 years of experience

Chemistry

8 major crops >500 launches per year Varieties replaced every 3.5 years³

Breeding

• 12 leads with late Research

potential*

• 10 leads in late Research
• We maintain and register

8 traits

• Introgressed into 3 crops
• ~ 20 years of experience

GM Traits

Evolution of R&D spend by capability

– Sustained investment in chemistry – Registration of full GM trait portfolio – Global development platform in Seeds – Investment in new capabilities

R&D

+5%

Breeding

+7%

GM Traits

+8%

Chemistry

+3%

200 400 600 800 1000 1200 1400 1600 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

R&D investment $m

New Technology

CAGR 2001-2014

Syngenta R&D is the most productive in the industry

Cumulated Sales $bn 2005-2014 Cumulated R&D expenses $bn 2005–2014 Sales/R&D

117 11.0 10.7

51 4.8 10.5 95 9.7 9.8 113 11.8 9.6 80 8.3 9.6 54 7.0 7.7

– Period of investment in Seeds platform – Early investment in new technologies – Sustained returns on Crop Protection R&D

New launches and lifecycle management bring share gain

Crop Protection market share

2005 2014

18% 20%

18% 18% 13% 13% 9% 10% 9% 9% 7% 7% Others 26% 23%

2008–2014

Average 1 new AI per year Focus on blockbuster opportunities

~600

New product launches per year*

Formulation and lifecycle management excellence

Traits

Seeds: leading innovator in trait technology

Revenue stream to double in next 5 years following China approval of MIR162 Corn trait revenue and royalty income – cash basis

Complete independent corn trait platform Comprehensive insect control including Refuge In a Bag MIR604: Pioneer enabled for dual CRW control in USA MIR162 licensed to Monsanto, DuPont Pioneer, Dow: most efficacious broad lep trait, leading in Fall armyworm control in Brazil

Access to market

• 100

200 300 400 500 600 700 800 900 1'000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 SYT Brands GLG licensees Direct licensees $m Access independent seed companies Branded business enablement Direct licensing to

• ther majors

2.5X

Crop Protection: R&D productivity increasing

Post merger Building SYT pipeline Globalization of R&D

Period 2000–2004 2005–2009 2010–2014 Total # of launches 4 3 4 Annual peak sales $bn 1.0 1.6 2.0 Average sales per launch $bn 0.2 0.5 0.5

Higher sales per launch than competitors

Productivity Effectiveness

Rate of innovation accelerating

Innovation across all product lines

Enhancing R&D Productivity

Period 2015-2020 2021–2022 Total # of launches 4 6 Annual peak sales $bn 1.8 2.5 Average sales per launch $bn 0.5 0.4

Productivity Effectiveness

Innovation overview

Seguris Vibrance Clariva Elatus Fortenza Acuron Lead 1 Lead 4 Orondis Adepidyn Lead 2 Lead 3 Lead 5 Lead 6 Lead 7 Year of launch

Insecticides Herbicides Fungicides Seedcare

2012 2017 2022

Peak sales potential >$500m >$200m >$100m

• 4. Free cash flow contribution
• 100

ADEPIDYNTM: the next SDHI blockbuster

– Time to peak sales often 3-5 years – Chemistry design ensures full registrability across regions – Focus on Fusarium: broad crop applicability – Low cost to manufacture with COGS optimization 5 years from launch – Free cash flow break even 3 years from registration

• 1. Sales by Region
• 3. Economies of scale in COGS
• 2. Sales by Crop at peak
• 250

$m

Peak sales >$750 m

>$750m AI Volume ‘000 kg AI COGS $/kg

$m

NPV @ 8% ~$1.2 bn

Track record of delivering GM traits

Industry faces lower rate of innovation over the next decade Focus on upgrades, stacks

Post merger Building SYT pipeline Globalization of R&D

Period 2000–2004 2005–2009 2010–2014 Total # of launches 1 3 5 Annual peak sales $bn 0.1 0.4 0.9 Average sales per launch $bn 0.1 0.1 0.2

– Rich early GM pipeline with no route to market – Enhanced trait development capabilities: successful launches

• f proprietary traits

– Leadership in above and below ground insect control – Multiple modes of action to manage insect resistance

Productivity Effectiveness

Next CRW Next broad lep New HT Corn drought Carb yield Soybean rust

Rich early pipeline and strong biotechnology platform

Next CRW (corn rootworm) – Attractive market driven by resistance to existing MoAs Next broad lep – Driven by resistance (Brazil, Southern US) New HT (herbicide tolerance) – New resistance-breaking herbicides – Value in combined trait and chemistry sales Soybean rust – Convenience and resistance management Sucking insect – No trait yet for this type of pest Drought or yield – Abiotic traits: new area of opportunity

Replacement Traits New Traits

Abiotic Traits New Traits Replacement Traits for Insect Control

10 15 Years 20 Relative probability

Sucking insects

More than 20 Corn trait leads in research: 10 already in late research

Target

Research leads High level description Insect control (Lepidoptera) 3x in late research 3x with late research potential* – Current research leads cover wide spectrum of economically important Lepidopteran pests – Potential new modes of action based on activity against Cry1F resistant fall armyworm biotypes Insect control (Corn rootworm) 2x in late research 1x with late research potential* – Non-Bt protein and RNAi insect control leads – Potential new modes of action based on activity against Cry3 resistant western corn rootworm colonies Water optimization 5x in late research 6x with late research potential* – Several leads for manipulation of ABA pathway – Multiple drought tolerance genes Yield 2x with late research potential* – Members of gene families associated with increases in seed number and grain weight

Wheat area opportunity (in Mha)

Hybrid wheat: game-changing non-GM technology with peak sales potential >$3bn

Hybrid wheat launch plan

2020 2019 2021 2022 2023 2024 2025

Strongest germplasm in the industry, leading expertise Technical proof of concept achieved in 2014 Yield performance of hybrids Robustness of sterility system Seed production capability

$bn 3 2 1 2020 2022 2024 2026 2028 2030 2032

Leverage in R&D: platforms enable flexible use of expertise and resources

Combine CP and Seeds portfolio teams 20% reduction in employees Early decision making to reduce late development attrition Outsourcing >50% of re-registration activities Product safety cost 33% below industry average Site consolidation: ~$40m cost saving Genotyping: cost per data point reduced by one third Winter nurseries moved to low cost locations

1.

Portfolio platforms

2.

Product safety & regulatory

3.

Biological assessment

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Multi-crop sites Single crop sites 2012 2017

Biological assessment sites

New design Existing chemistry

Leveraging technology in genetics, chemistry and computational science

Using our deep understanding of mode

• f action to drive innovation

Genetics – We actively monitor for the first signs of evolution of herbicide resistance in weeds – We understand in detail how the shape of the target has changed in the resistant plant Chemistry – Making the herbicide fit again – Resistance breaking chemistry by design

Activity against target restored Fails in the resistant weed

+

Computational science

+

Leveraging our breadth and global crop presence

Capabilities

– Technical platforms leveraged to other crops: genomics, molecular marker analysis, precision trialing – Yield heterosis: genotype x genotype interaction – Germplasm adaptation to environment for yield stability – Discovery and development

• f native genetics for pest &

pathogen resistance

Crops

Global breeding managed as a function with methodology and technology approaches (e.g. native trait) developed principally for corn and applied in broader geographies and crops Rice Barley Wheat Hybrid seed production Sunflower WOSR Soybean Yield potential Grain quality Seeds Product Development Corn Yield heterosis Yield stability: abiotic stress tolerance Vegetables Fruit quality and uniformity Pest and pathogen resistance

Our claims today

Continued grower demand for innovation: long term scope for value creation through technology Syngenta R&D is the most innovative and productive in the industry Rate of innovation accelerating and productivity improving R&D as percent of sales expected ~9% Leverage opportunity at three levels: platforms, technologies, crops

New crop protection pipeline

Peak sales >$3.6bn

New blockbusters in large markets Large products in smaller segments

Product Indication Crops Status Launch year Peak sales

ADEPIDYN™/pydiflumetofen Fungicide Cereals, corn, soybean, specialty vegetables Stage 3 2016 >$750m Lead 1 Insecticide Multiple crops Stage 2 2021 >$550m Lead 2 Herbicide Corn Stage 1 (late) 2022 >$600m Lead 3 Fungicide Cereals, soybean Stage 1 (late) 2022 >$600m

Product Indication Crops Status Launch year Peak sales

Fungicide Vegetables, specialty Stage 3 2016 >$150m Lead 4 Insecticide Vegetables, specialty Stage 3 2020 >$250m Lead 5 Seedcare Cereals, corn, soybean Stage 1 (late) 2021 >$400m Lead 6 Seedcare Multiple crops Stage 1 (late) 2022 >$200m Lead 7 Seedcare Multiple crops Stage 1 (late) 2022 >$100m

Four waves of innovation in seeds and traits

Scaling seed production capability Hybrid wheat launches in 3 regions Corn trait revenue and royalty income Further HYVIDO expansion Native traits development New phase of GM trait innovation – Replacement traits for insect control – New insect traits – Disease control New phase of GM trait innovation – Abiotic stress – Carb yield 2015-2020 2020-2025 2025-2030 2030-2035

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