Page 5: Challenges and benefits of R&D
R&D plays a huge role in Syngenta's business growth. However, there are a number of challenges involved in any research and development activity:
- High costs - Syngenta spent $1 billion on R&D in 2009.
- Long timescales - it typically takes Syngenta ten years to bring a new product to market.
- Uncertain outcomes - there are always uncertainties about whether the product will meet the original brief and customer requirements. For example, pests may develop resistance to the product over time.
- Difficulties in anticipating how conditions will change in the market and whether customer needs will change during the long R&D process. Competitors may come up with a rival product that is just as effective.
However, businesses gain considerable benefits from investing in research and development:
- Unique products - these can give businesses a unique selling point (USP). They can then acquire patents for these products. The patent is a legal protection that prevents other companies from copying them.
- Competitive advantage - through R&D Syngenta is able to build advantage over its competitors by bringing innovative products to the market.
- Long term income - once a product has been developed it can generate a strong stream of profits for many years.
- Ongoing research also leads to new opportunities - researchers cannot always anticipate what the results of their research will be. Often chance discoveries open up whole new channels of research.
- Enhanced reputation - engaging in research helps to build Syngenta”s brand. Farmers and growers are more likely to trust a company with a strong scientific research and development base.
In order to enhance its research base, Syngenta also participates in exchanging technology with other research organisations. Although patents protect a business' intellectual property, they can slow down the speed of research. By agreeing to exchange technology with similarly placed organisations, Syngenta and the agrichemical industry keep R&D moving forward and gain mutual benefit.