Monsanto Company

800 North Lindbergh Boulevard
St. Louis, Missouri 63167
U.S.A.
(314) 694-1000
Fax: (314) 694-6572
Web site: http://www.monsanto.com

Public Company
Incorporated: 1933 as Monsanto Chemical Company
Employees: 21,900
Sales: $8.64 billion (1998)
Stock Exchanges: New York Amsterdam Brussels Chicago Frankfurt Geneva London Paris Tokyo ZÜrich
Ticker Symbol: MTC
NAIC: 325412 Pharmaceutical Preparations; 325311 Medicinal & Botanical Manufacturing

An agricultural and pharmaceutical stalwart, Monsanto Company is a leading producer of herbicides, prescription drugs, and genetically engineered seeds. Originally a chemical company, Monsanto sold its chemical business in 1997 to build a presence in biotechnology, scoring much-publicized success in developing soybeans able to resist the affects of its market-leading herbicide, Roundup. The company also produced NutraSweet, the dominant sugar substitute in the United States. A sprawling global corporation, Monsanto operated sales offices, manufacturing plants, and research facilities in more than 100 countries.

Early 20th-century Origins

Monsanto traces its roots to John Francisco Queeny, a purchaser for a wholesale drug house at the turn of the century, who formed the Monsanto Chemical Works in St. Louis, Missouri, in order to produce the artificial sweetener saccharin. By 1905 John Queeny’s company was also producing caffeine and vanillin and was beginning to turn a profit. In 1908 Queeny felt confident enough about his firm’s future to leave his part-time job with another drug house to work full time as Monsanto’s president. The company continued to grow, with sales surpassing the $1 million mark for the first time in 1915.

While prior to World War I America relied heavily on foreign supplies of chemicals, the increasing likelihood of U.S. intervention meant that the country would soon need its own domestic producer of chemicals. Looking back on the significance of the war for Monsanto, Queeny’s son Edgar remarked, “There was no choice other than to improvise, to invent and to find new ways of doing all the old things. The old dependence on Europe was, almost overnight, a thing of the past.” Monsanto was forced to rely on its own knowledge and nascent technical ability. Among other problems, Monsanto researchers discovered that pages describing German chemical processes had been ripped out of library books. Monsanto developed several strategic products, including phenol as an antiseptic, in addition to acetylsalicyclic acid, or aspirin.

With the purchase of an Illinois acid company in 1918, Monsanto began to widen the scope of its factory operations. A postwar depression during the early 1920s affected profits, but by the time John Queeny turned over the company to Edgar in 1928 the financial situation was much brighter. Monsanto had gone public, a move that paved the way for future expansion. At this time, the company had 55 shareholders and 1,000 employees and owned a small company in Britain.

Under Edgar Queeny’s direction Monsanto, now the Monsanto Chemical Company, began to substantially expand and enter into an era of prolonged growth. Acquisitions expanded Monsanto’s product line to include the new field of plastics and the manufacture of phosphorus.

By the time the United States entered World War II in 1941, the domestic chemical industry had attained far greater independence from Europe. Monsanto, strengthened by its several acquisitions, was also prepared to produce such strategic materials as phosphates and inorganic chemicals. Most important was the company’s acquisition of a research and development laboratory called Thomas and Hochwalt. The well-known Dayton, Ohio, firm strengthened Monsanto at the time and provided the basis for some of its future achievements in chemical technology. One of its most important discoveries was styrene monomer, a key ingredient in synthetic rubber and a crucial product for the armed forces during the war.

Expansion and New Leadership in the Postwar Period

Largely unknown by the public, Monsanto experienced difficulties in attempting to market consumer goods. However, attempts to refine a low quality detergent led to developments in grass fertilizer, an important consumer product since the postwar housing boom had created a strong market of homeowners eager to perfect their lawns. In the mid-1950s Monsanto began to produce urethane foam, which was flexible and easy to use; it later became crucial in making automobile interiors. In 1955 Monsanto acquired Lion Oil, increasing its assets by more than 50 percent. Stockholders during this time numbered 43,000.

Having finally outgrown its headquarters in downtown St. Louis, Monsanto moved to the suburban community of Creve Coeur in 1957. Three years later Edgar Queeny turned over the chair of Monsanto to Charles Thomas, one of the founders of the research and development laboratory so important to Monsanto. Charlie Sommer, who had joined the company in 1929, became president. Under their combined leadership Monsanto saw several important developments, including the establishment of the Agricultural Chemicals division, created to consolidate Monsanto’s diverse agrichemical product lines. Monsanto’s European expansion continued, with Brussels becoming the permanent overseas headquarters in 1962.

In 1964 Monsanto changed its name to Monsanto Company in acknowledgment of its diverse product line. The company consisted of eight divisions, including petroleum, fibers, building materials, and packaging.

According to Monsanto historian Dan Forrestal, “Leadership during the 1960s and early 1970s came principally from... executives whose Monsanto roots ran deep.” In 1964 Edward O’Neal became chairperson. O’Neal, who had come to Monsanto in 1935 with the acquisition of the Swann Corporation, was the first chair in company history who had not first held the post of president. Another company leader was Edward J. Bock, who had joined Monsanto in 1941 as an engineer. He rose through the ranks to become a member of the board of directors in 1965 and president in 1968. Edgar Queeny, who left no heirs, died in 1968.

Although Bock had a reputation for being a committed company executive, several factors contributed to his volatile term as president. High overhead costs and a sluggish national economy led to a dramatic 29 percent decrease in earnings in 1969. Sales were up the following year, but Bock’s implementation of the 1971 reorganization caused a significant amount of friction among members of the board and senior management. In spite of the fact that this move, in which Monsanto separated the management of raw materials from the company’s subsidiaries, was widely praised by security analysts, Bock resigned from the presidency in February 1972. After a nine-month search, John W. Hanley, a former executive with Procter and Gamble, was chosen as president. Hanley also took over as chairperson in 1975.

Under Hanley, Monsanto more than doubled its sales and earnings between 1972 and 1983. Toward the end of his tenure, Hanley put into effect a promise he had made to himself and to Monsanto when he accepted the position of president, namely, that his successor would be chosen from Monsanto’s ranks. Hanley and his staff chose approximately 20 young executives as potential company leaders and began preparing them for the head position at Monsanto. Among them was Richard J. Mahoney. When Hanley joined Monsanto, Mahoney was a young sales director in agricultural products. In 1983 Hanley turned the leadership of the company over to Mahoney. Wall Street immediately approved this decision with an increase in Monsanto’s share prices.

Legal Challenges in the 1970s-80s

During this time, public concern over the environment began to escalate. Ralph Nader’s activities and Rachel Carson’s book Silent Spring had been influential in increasing the U.S. public’s awareness of activities within the chemical industry in the 1960s, and Monsanto responded in several ways to the pressure. In 1964 the company introduced biodegradable detergents, and in 1976, Monsanto announced plans to phase out production of poly chlorinated biphenyl (PCB).

In 1979 a lawsuit was filed against Monsanto and other manufacturers of agent orange, a defoliant used during the Vietnam War. Agent orange contained a highly toxic chemical known as dioxin, and the suit claimed that hundreds of veterans had suffered permanent damage because of the chemical. In 1984 Monsanto and seven other manufacturers agreed to a $180 million settlement just before the trial began. With the announcement of a settlement Monsanto’s share price, depressed because of the uncertainty over the outcome of the trial, rose substantially.

Also in 1984, Monsanto lost a $10 million antitrust suit to Spray-Rite, a former distributor of Monsanto agricultural herbicides. The U.S. Supreme Court upheld the suit and award, finding that Monsanto had acted to fix retail prices with other herbicide manufacturers.

Company Perspectives:

Monsanto has reinvented not only itself, but an industry. We’re now a life-sciences company, exploring the natural connections between food, medicine and health. We’re developing products previously inconceivable, confirming our conviction that such a new way of looking at things will help us all to thrive.

In August 1985, Monsanto purchased G. D. Searle, the “NutraSweet” firm. NutraSweet, an artificial sweetener, had generated $700 million in sales that year, and Searle could offer Monsanto an experienced marketing and a sales staff as well as real profit potential. Since the late 1970s the company had sold nearly 60 low margin businesses and, with two important agriculture product patents expiring in 1988, a major new cash source was more than welcome. What Monsanto didn’t count on, however, was the controversy surrounding Searle’s intra-uterine birth control device called the Copper-7.

Soon after the acquisition, disclosures about hundreds of lawsuits over Searle’s IUD surfaced and turned Monsanto’s takeover into a public relations disaster. The disclosures, which inevitably led to comparisons with those about A. H. Robins, the Dalkan Shield manufacturer that eventually declared Chapter 11 bankruptcy, raised questions as to how carefully Monsanto management had considered the acquisition. In early 1986 Searle discontinued IUD sales in the United States. By 1988 Monsanto’s new subsidiary faced an estimated 500 lawsuits against the Copper-7 IUD. As the parent company, Monsanto was well insulated from its subsidiary’s liabilities by the legal “corporate veil.”

Toward the end of the 1980s, Monsanto faced continued challenges from a variety of sources, including government and public concern over hazardous wastes, fuel and feedstock costs, and import competition. At the end of the 99th Congress, then President Ronald Reagan signed a $8.5 billion, five-year cleanup superfund reauthorization act. Built into the financing was a surcharge on the chemical industry created through the tax reform bill. Biotechnology regulations were just being formulated, and Monsanto, which already had types of genetically engineered bacteria ready for testing, was poised to be an active participant in that field.

In keeping with its strategy to become a leader in the health field, Monsanto and the Washington University Medical School entered into a five-year research contract in 1984. Two-thirds of the research was to be directed into areas with obviously commercial applications, while one-third of the research was to be devoted to theoretical work. One particularly promising discovery involved the application of the bovine growth factor, a way to greatly increase milk production.

In the burgeoning low-calorie sweetener market, challengers to NutraSweet were putting pressure on Monsanto. Pfizer Inc., a pharmaceutical company, was preparing to market its product, called alitame, which it claimed was far sweeter than NutraSweet and better suited for baking.

In an interview with Business Week, senior vice-president for research and development Howard Schneiderman commented, ’ To maintain our markets—and not become another steel industry—we must spend on research and development.” Monsanto, which has committed eight percent of its operating budget to research and development, far above the industry average, hoped to emerge in the 1990s as one of the leaders in the fields of biotechnology and Pharmaceuticals that are only now emerging from their nascent stage.

By the end of the 1980s, Monsanto had restructured itself and become a producer of specialty chemicals, with a focus on biotechnology products. Monsanto enjoyed consecutive record years in 1988 and 1989—sales were $8.3 billion and $8.7 billion, respectively. In 1988 the Food and Drug Administration approved Cytotec, a drug that prevents gastric ulcers in high-risk cases. Sales of Cytotec in the United States reached $39 million in 1989.

The Monsanto Chemical Co. unit prospered with products like Saflex, a type of nylon carpet fiber. The NutraSweet Company held its own in 1989, contributing $180 million in earnings, with growth in the carbonated beverage segment. Almost 500 new products containing NutraSweet were introduced in 1989, for a total of 3,000 products.

Monsanto continued to invest heavily in research and development, with seven percent of sales allotted for this area. The investment began to pay off when the research and development department developed an all-natural fat substitute called Simplesse. The FDA declared in early 1990 that the product was “generally recognized as safe” for use in frozen desserts. That year, the NutraSweet Company introduced Simple Pleasures frozen dairy dessert. Monsanto hoped to see Simplesse used eventually in salad dressings, yogurt, and mayonnaise.

Despite these successes, Monsanto remained frustrated by delays in obtaining FDA approval for bovine somatotropin (BST), a chemical used to increase milk production in cows. Opponents to BST said it would upset the balance of supply and demand for milk, but Monsanto countered that BST would provide high-quality food supplies to consumers worldwide.

The final year of the 1980s also marked Monsanto’s listing for the first time on the Tokyo Stock Exchange. Monsanto officials expected the listing to improve opportunities for licensing and joint venture agreements.

Early 1990s Transitional Period

Monsanto had expected to celebrate 1990 as its fifth consecutive year of increased earnings, but numerous factors—the increased price of oil due to the Persian Gulf War, a recession in key industries in the United States, and droughts in California and Europe—prevented the company from achieving this goal. Net income was $546 million, a dramatic drop from the record of $679 the previous year. Nonetheless, subsidiary Searle, which had experienced considerable public relations scandals and headaches in the 1980s, had a record financial year in 1990. The subsidiary had established itself in the global pharmaceutical market and was beginning to emerge as an industry leader. The Monsanto Chemical Co., meanwhile, was a $4 billion business that made up the largest percentage of Monsanto’s sales.

Monsanto continued to work at upholding “The Monsanto Pledge,” a 1988 declaration to reduce emissions of toxic substances. By its own estimates, the company devoted $285 million annually to environmental expenditures. Furthermore, Monsanto and the Environmental Protection Agency agreed to a cleanup program at the company’s detergent and phosphate plant in Richmond County, Georgia.

The company restructured during the early 1990s to help cut losses during a difficult economic time. Net income in 1991 was only $296 million, $250 million less than the previous year. Despite this showing, 1991 was a good year for some of Monsanto’s newest products. Bovine somatotropin finally gained FDA approval and was sold in Mexico and Brazil, and Monsanto received the go-ahead to use the fat substitute, Simplesse, in a full range of food products, including yogurt, cheese and cheese spreads, and other low-fat spreads. In addition, the herbicide Dimension was approved in 1991, and scientists at Monsanto tested genetically improved plants in field trials.

Furthermore, Monsanto expanded internationally, opening an office in Shanghai and a plant in Beijing, China. The company also hoped to expand in Thailand, and entered into a joint venture in Japan with Mitsubishi Chemical Co.

Monsanto’s sales in 1992 hit $7.8 million. However, as net income dropped 130 percent from 1991 due to several one-time aftertax charges, the company prepared itself for challenging times. The patent on NutraSweet brand sweetener expired in 1992, and in preparation for increased competition, Monsanto launched new products, such as the NutraSweet Spoonful, which came in tabletop serving jars, like sugar. The company also devoted ongoing research and development to Sweetener 2000, a high-intensity product.

In 1992, Monsanto denied that it planned to sell G. D. Searle and Co., pointing out that Searle was a profitable subsidiary that launched many new products. However, to decrease losses, Monsanto did sell Fisher Controls International Inc., a subsidiary that manufactures process control equipment. Profits from the sale were used to buy the Ortho lawn-and-garden business from Chevron Chemical Co.

Monsanto Reinvents Itself in the 1990s

Monsanto expected to see growth in its agricultural, chemical, and biotechnological divisions. In 1993, Monsanto and NTGargiulo joined forces to produce a genetically altered tomato. As the decade progressed, biotechnology played an increasingly important role, eventually emerging as the focal point of the company’s operations. The foray into biotechnology, begun in the mid-1980s with a $150-million investment in a genetic engineering lab in Chesterfield, Missouri, had been faithfully supported by further investments in the ensuing years. Monsanto’s efforts finally yielded tangible success in 1993, when BST was approved for commercial sale after a frustratingly slow FDA approval process. In the coming years, the development of further biotech products moved to the forefront of Monsanto’s activities, ushering in a period of profound change. Fittingly, the sweeping, strategic alterations to the company’s focus were preceded by a change in leadership, making the last decade of the 20th century one of the most dynamic eras in Monsanto’s history.

Toward the end of 1994, Mahoney announced his retirement, effective the following year in March 1995. As part of the same announcement, Mahoney revealed that Robert B. Shapiro, Monsanto’s president and chief operating officer, would be elected by Monsanto’s board of directors as his successor. Shapiro, who had joined Searle in 1979 before being named executive vice-president of Monsanto in 1990, did not waver from exerting his influence over the company he now found himself presiding over. At the time of his promotion, Shapiro inherited a company that ranked as the largest domestic acrylic manufacturer in the world, generating $3 billion of its $7.9 billion in total revenues from chemical-related sales. This dominant side of the company’s business, representing the foundation upon which it had been built, was eliminated under Shapiro’s stewardship, replaced by a resolute commitment to biotech.

Between the mid-1980s and the mid-1990s, Monsanto had spent approximately $1 billion on developing its biotech business. Although biotech was regarded as a commercially unproven market by some industry analysts, Shapiro pressed forward with the research and development of.biotech products, and by the beginning of 1996 he was ready to launch the company’s first biotech product line. Monsanto began marketing herbicide-tolerant soybeans, genetically engineered to resist Roundup, and insect-resistant cotton, beginning with two million acres of both crops. By the fall of 1996, there were early indications that the first harvests of genetically engineered crops were performing better than expected. News of the encouraging results prompted Shapiro to make a startling announcement in October 1996, when he revealed that the company was considering divesting its chemical business as part of a major reorganization into a life-sciences company.

By the end of 1996, when Shapiro announced he would spin-off the chemical operations as a separate company, Monsanto faced a future without its core business, a $3 billion contributor to the company’s annual revenue volume. Without the chemical operations, Monsanto would be reduced to an approximately $5-billion company deriving half its sales from agricultural products and the rest from pharmaceuticals and food ingredients, but Shapiro did not intend to leave it as such. He foresaw an aggressive push into biotech products, a move that industry pundits generally perceived as astute. “It would be a gamble if they didn’t do it,” commented one analyst in reference to the proposed divestiture. “Monsanto is trying to transform itself into a high-growth agricultural and life sciences company. Low-growth cyclical chemical operations do not fit that bill.” Spurring Shapiro toward this sweeping reinvention of Monsanto were enticing forecasts for the market growth of plant biotech products. A $450 million business in 1995, the market for plant biotech products was expected to reach $2 billion by 2000 and $6 billion by 2005. Shapiro wanted to dominate this fast-growing market as it matured by shaping Monsanto into what he described as the main provider of “agricultural biotechnology.”

As preparations were underway for the spin-off of Monsanto’s chemical operations into a new, publicly owned company named Solutia Inc., Shapiro was busy filling the void created by the departure of the company’s core business. A flurry of acquisitions completed between 1995 and 1997 greatly increased Monsanto’s presence in life sciences, quickly compensating for the revenue lost from the spin-off of Solutia. Among the largest acquisitions were Calgene, Inc., a leader in plant biotech, which was acquired in a two-part transaction in 1995 and 1997, and a 40 percent interest in Dekalb Genetics Corp., the second-largest seed-corn company in the United States. In 1998, the company acquired the rest of DeKalb, paying $2.3 billion for the Illinois-based company.

By the end of the 1990s, Monsanto bore only partial resemblance to the company that entered the decade. The acquisition campaign that added dozens of biotechnology companies to its portfolio had created a new, dominant force in the promising life sciences field, placing Monsanto in a position to reap massive rewards in the years ahead. For example, a rootworm-resistant strain under development had the potential to save $1 billion worth of damages to corn crops per year. The company’s pharmaceutical business also faced a promising future, high-lighted by the introduction of a new arthritis medication named Celebrex in 1999. During its first year, Celebrex registered a record number of prescriptions. As Monsanto entered the 21st century, however, there were two uncertainties that loomed as potentially serious obstacles blocking its future success. The acquisition campaign of the mid- and late-1990s had greatly increased the company’s debt, forcing Monsanto to desperately search for cash. Secondly, there was growing opposition to genetically altered crops at the decade’s conclusion, prompting the United Kingdom to ban the yields from such crops for a year. A great part of the company’s future success depended on the resolution of these two issues.

Principal Subsidiaries

Calgene Inc.; Asgrow Seed Co.; DEKALB Genetics Corp.; DEKALB Swine Breeders Inc.; Nutrasweet Co.; Monsanto Agricultural Co.; G. D. Searle & Co.

Further Reading

Crisafulli, Patricia, “Monsanto, EPA Resolve Superfund Cleanup,” Journal of Commerce, April 12, 1991, p. 13A.

Desloge, Rick, “Is a Divided Monsanto a Target for Purchase?,” St.Louis Business Journal, December 30, 1996, p. 3.

Donlon, J. P., “After Restructuring, What?” Chief Executive (U.S.), March-April, 1988, p. 50.

Ellis, James E., “Monsanto and the Copper-7: A ‘Corporate Veil’ Begins to Fray,” Business Week, September 26, 1988, p. 50.

Forrestal, Dan J., Faith, Hope, and $5,000: The Story of Monsanto: The Trials and Triumphs of the First 75 Years, New York: Simon and Schuster, 1977.

“The Green Gene Giant,” The Economist, April 26, 1997, p. 66.

Henkoff, Ronald, “Monsanto: Learning from Its Mistakes,” Fortune, January 27, 1992, p. 81.

Jaffe, Thomas, “How Do You Top This?,” Forbes, June 1, 1998.

Kiesche, Elizabeth S., “Monsanto Cultivates Lawn and Garden Line with Ortho Buy,” Chemical Week, January 20, 1993, p. 7.

Steyer, Robert, “Going It Alone,” Knight-Ridder/Tribune Business News, October 19, 1998.

Stringer, Judy, “Monsanto Poised to Reap BioTech Harvest,” Chemical Week, November 6, 1996, p. 51.

—Marinell Landa

—updated by Jeffrey L. Covell

Monsanto Company

800 N. Lindbergh Blvd.
St. Louis, Missouri 63167
U.S.A.
(314) 694-1000

Public Company
Incorporated: April 19, 1933 as Monsanto Chemical Company
Employees: 56,100
Sales: $6.879 billion
Market value: $6.077 billion
Stock Index: New York Zurich Geneva Brussels Amsterdam Frankfurt London Paris

Weight-conscious Americans at the turn of the century may have not known it, but after 1901 America was finally producing saccharin, the low-calorie sweetener. John Francisco Queeny, a purchaser for a wholesale drug house, was unable to persuade his firm to produce saccharin rather than import it from Germany. As a result, with $5000 Queeny began his own company in St. Louis, Missouri and called it the Monsanto Chemical Works after his wife’s family name. Eighty-four years later, the company returned to its roots with the purchase of G.D. Searle, a pharmaceutical company known for its extremely successful low-calorie sweetener Nutra-Sweet. Along the way, Monsanto grew from a one-product company to one of the United States’ largest corporations and one of its most important agrichemical concerns.

By 1905 John Queeny’s company, now producing caffeine and vanillin as well as saccharin, was beginning to turn a profit. In 1908 Queeny felt confident enough about his firm’s future to leave his part-time job with another drug house, and become Monsanto’s full-time president. The company continued to grow, with sales surpassing the million dollar mark for the first time in 1915.

Until the start of World War I, America relied heavily on foreign supplies of chemicals. However, with the U.S. entry into the war becoming more of a possibility with each passing year, it was clear that the country would soon need its own domestic producer of chemicals. Looking back on the significance of the war for Monsanto, Queeny’s son Edgar remarked, “There was no choice other than to improvise, to invent and to find new ways of doing all the old things. The old dependence on Europe was, almost overnight, a thing of the past.” In fact, Monsanto was forced to rely on its own knowledge and nascent technical ability. Monsanto researchers discovered that pages of technical descriptions of German chemical processes had actually been ripped out of library books. Yet Monsanto produced a number of strategic products, including phenol, used as an antiseptic, and acetylsalicyclic acid, or aspirin. Even today, Monsanto is the world’s largest producer of bulk aspirin, with plants in St. Louis, Thailand and the United Kingdom.

With the purchase of an Illinois acid company in 1918, Monsanto began to widen the scope of its factory operations. A postwar depression during the early 1920’s depressed profits, but by the time John Queeny turned over the company to Edgar the financial situation was much brighter. Monsanto had gone public, a move that paved the way for future expansion. At this time, the company had 55 shareholders, 1000 employees and owned a small company in Britain. It was under Edgar’s direction, however, that Monsanto began to substantially expand and enter into an era of prolonged growth.

At preparatory school, and later in the chemical department at Cornell University, Edgar had been an indifferent student. Because of this, according to Monsanto company historian Dan Forrestal, Edgar’s father was quite concerned about his ability to lead the firm. However, from 1928, when John Queeny stepped down after learning he had an incurable form of cancer, to 1962, Edgar directed Monsanto with a large degree of success.

Monsanto, now the Monsanto Chemical Company, began to expand rapidly during the 1930’s under Edgar’s supervision. Acquisitions expanded Monsanto’s product line to include the then new field of plastics, and to include the manufacture of phosphorus. Queeny also made significant changes in the shareholder’s reports, making them more understandable and informative. Although Queeny strongly opposed Roosevelt’s New Deal policies, he nonetheless felt it necessary to point out, in one of these reports, that the 40 hour employee work week had been a Monsanto policy since 1932.

By the time the United States entered the war in 1941, the domestic chemical industry had attained far greater independence from Europe. Monsanto, strengthened by a number of acquisitions, was also prepared and able to produce such strategic materials as phosphates and inorganic chemicals. Most importantly, however, was the company’s acquisition of a research and development laboratory called Thomas and Hochwalt. The well-known Dayton, Ohio firm strengthened Monsanto at the time, but also provided the basis for some of its future achievements in chemical technology. One of its most important discoveries was styrene monomer, a key ingredient in synthetic rubber and a crucial product for the armed forces during World War II. Another important development occurred in 1949, when Monsanto entered the synthetic fiber era. Problem after problem plagued the joint venture with American Viscose, but a later agreement with Du Pont made it into a successful operation.

Generally considered a low profile company in the public eye, Monsanto’s early attempts to directly market consumer goods were beset with difficulties. However, attempts to refine a low-quality detergent led to important developments in grass fertilizer. The postwar housing increase had created a strong market of homeowners eager to have perfect lawns.

Monsanto undertook two substantial ventures in the mid-1950’s, and a major reorganization in 1954. One of these ventures involved urethane foam which was flexible and easy to use; it later became crucial in making automobile interiors. With the acquisition of Lion Oil in 1955, the second of the company’s ventures, Monsanto assets increased more than 50%. Stockholders during this time numbered 43,000.

Having finally outgrown its downtown headquarters, Monsanto moved to the suburban community of Creve Coeur in 1957. And, in 1960, Edgar Queeny turned over the chairmanship of Monsanto to Charles Thomas, one of the founders of the research and development laboratory so important to Monsanto. Charlie Sommer, who joined the company in 1929, became president. Under their combined leadership Monsanto saw a number of important developments, including the establishment of the Agricultural Chemicals division, created in order to consolidate Monsanto’s diverse agrichemical product lines. European expansion occurred as well, with Brussels becoming the permanent overseas headquarters in 1962.

In 1964 Monsanto changed its name to Monsanto Company, a long overdue acknowledgement of the current diversity of the company’s product line. Monsanto now consisted of eight divisions, ranging from petroleum and fibers to building materials and packaging.

According to Monsanto historian Dan Forrestal, “Leadership during the 1960’s and early 1970’s came principally from... executives whose Monsanto roots ran deep.” In 1964 Edward O’Neal became chairman. O’Neal came to Monsanto in 1935 with the Swann Corporation acquisition. He was the first chairman in company history who had not first held the post of president. Another company leader was Edward J. Bock, who had started working at Monsanto in 1941 as an engineer. He rose through the ranks to become a member of the board of directors in 1965, and president in 1968. Bock was the first president to rule “Queenyless” when Edgar Queeny, who left no heirs, died in 1968.

Although Bock had a reputation for being a committed company executive, a number of factors contributed to his volatile term as president. High overhead costs and a sluggish national economy led to a dramatic 29% decrease in earnings in 1969. Sales were up the following year, but Bock’s implementation of the 1971 reorganization caused a significant amount of friction among members of the board and senior management. In spite of the fact that this move was widely praised by security analysts, in which Monsanto separated the management of raw materials from the company’s subsidiaries, Bock resigned from the presidency in February of 1972.

The acceptance of Bock’s resignation led to another major problem for Monsanto. Since there was no immediate replacement for Bock, indications of a lack of management developed in Monsanto. This feeling ended in 1972 when, after a nine month search, John W. Hanley, a former executive with Procter and Gamble, was chosen as president. Hanley also took over as chairman in 1975.

Under Hanley, Monsanto more than doubled its sales and earnings between 1972 and 1983. Toward the end of his tenure, Hanley put into effect a promise he had made to himself and to Monsanto when he accepted the position of president, namely, that his successor would be chosen from Monsanto’s ranks. Hanley and his staff chose approximately 20 young executives as potential company leaders and began preparing them for the head position at Monsanto. Among them was Richard J. Mahoney. When Hanley joined Monsanto, Mahoney was a young sales director in agricultural products. In 1983 Hanley turned the leadership of the company over to Mahoney. Wall Street immediately approved this decision with an increase in Monsanto’s share prices. Mahoney is currently listed as Monsanto’s chief executive officer.

Public concern over the environment began to escalate during the 1960’s. Ralph Nader’s activities and Rachel Carson’s book Silent Spring were two important influences in increasing the U.S. public’s awareness of activities within the chemical industry. Monsanto responded in a number of ways to the pressure. In 1964 the company introduced biodegradeable detergents and later, in 1976, Monsanto announced plans to phase out production of polychlorinated biphenyl (PCB).

Although Monsanto did make an effort to respond to public concerns about pollution, the past came back to haunt the company in 1979 when a suit was filed against Monsanto and other manufacturers of Agent Orange, a defoliant used during the Vietnam War. Agent Orange contained a highly toxic chemical known as dioxin, and the suit claimed that hundreds of veterans had suffered permanent damage because of the chemical. In 1984 Monsanto and seven other manufacturers agreed to a $180 million settlement, immediately prior to the beginning of the trial. With the announcement of a settlement Monsanto’s share price, depressed because of the uncertainty over the outcome of the trial, rose substantially.

Also in 1984, Monsanto lost a $10 million antitrust suit to Spray-Rite, a former distributor of Monsanto agricultural herbicides. The U.S. Supreme Court upheld the suit and award, finding that Monsanto had acted to fix retail prices with other herbicide manufacturers.

In August of 1985, Monsanto purchased G.D. Searle, the “Nutra-Sweet” firm. Nutra-Sweet had generated $700 million in sales that year. Monsanto needed what Searle had to offer, namely, a marketing and a sales staff, and a real profit potential. Since the late 1970’s the company had sold nearly 60 low margin businesses and, with two important agriculture product patents expiring in 1988, a major new cash source was more than welcome. What Monsanto didn’t count on, however, was Searle’s Intrauterine Device called the Copper 7.

Soon after the acquisition, disclosures about hundreds of law suits over Searle’s IUD surfaced and turned Monsanto’s takeover into a public relations disaster. The disclosures, which inevitably led to comparisons with those about A.H. Robins, the Dalkan Shield manufacturer that eventually declared Chapter 11 bankruptcy, raised questions as to how carefully Monsanto management had considered the acquisition. In early 1986 Searle discontinued IUD sales in the United States, but the matter remains far from resolved.

In the next decade Monsanto will face continued challenges from a variety of sources, including government and public concern over harzardous wastes, fuel and feedstock costs, and import competition. At the end of the 99th Congress, President Reagan signed a $8.5 billion, five-year cleanup Superfund reauthorization act. Built into the financing is a surcharge on the chemical industry created through the new tax reform bill. Biotechnology regulations are only just now being formulated and Monsanto, which already has types of genetically engineered bacteria ready for testing, can be expected to be an active participant in that field.

In keeping with its strategy to become a leader in the health field, Monsanto and the Washington University Medical School entered intc a five year research contract in 1984. Monsanto provided the school with $23.5 million for research focusing on proteins and peptides. Two-thirds of the research is to be directed into areas with obviously commercial applications; one-third of the research is to be devoted to theoretical work. One particularly promising discovery involves the application of the bovine growth factor, a way to greatly increase milk production.

In the burgeoning low-calorie sweetener market, challengers to Nutra-Sweet are putting pressure on Monsanto. Pfizer Inc., a pharmaceutical company, is hoping to soon market its product, called alitame, which it claims is far sweeter than Nutra-Sweet and suitable for baking.

In an interview with Business Week, senior vicepresident for research and development Howard Schneiderman said, “To maintain our markets—and not become another steel industry—we must spend on research and development.” Monsanto, which has committed 8% of its operating budget to research and development, far above the industry average, may emerge in the 1990’s as one of the leaders in the fields of biotechnology and pharmaceuticals that are only now emerging from their nascent stage.

Principal Subsidiaries

Bolgen NV Collagen Corp.; Fisher Controls International, Inc, Monsanto PLC; Monsanto Canada Inc.; Monsanto Electronic Materials Co.; Monsanto Enviro-Chem Systems Inc.; Monsanto Europe S.A.; Monsanto International Sales Co., Inc.; Monsanto Oil Co.; Monsanto (Suisse) S.A.; Nutra Sweet Co.; Polyamide Intermediaries Ltd. (50%); RDI Inc.; G.D. Searle & Co.

Further Reading

Faith, Hope, and $5,000: The Story of Monsanto: The Trials and Triumphs of the First 75 Years by Dan J. Forrestal, New York, Simon and Schuster, 1977.

Monsanto Company

800 North Lindbergh Boulevard
St. Louis, Missouri 63167
U.S.A.
Telephone: (314) 694-1000
Fax: (314) 694-8394
Web site: http://www.monsanto.com

Public Company
Incorporated: 2000 as Monsanto Ag Company
Employees: 12,600
Sales: $6.29 billion (2005)
Stock Exchanges: New York
Ticker Symbol: MON
NAIC: 325412 Pharmaceutical Preparations; 325311 Medicinal and Botanical Manufacturing

Monsanto Company is a leading global supplier of herbicides and seeds. Monsanto leads the world market for genetically modified (GM) seed; it produces GM varieties for corn, soybeans, and cotton. Monsanto also makes the leading brand of herbicide, Roundup, and has developed genetically engineered seeds for crops to resist Roundup. Monsanto owns one of the world's top suppliers of fruit and vegetable seeds, Seminis, and has acquired a number of regional seed producers through its American Seeds Inc. subsidiary.

The original Monsanto Company spun off its chemical business in 1997 and renamed itself Pharmacia Corporation following a merger with Pharmacia & Upjohn Inc. in 2000. The old Monsanto's agriculture business became the new Monsanto Company.

EARLY 20TH-CENTURY ORIGINS

Monsanto traces its roots to John Francisco Queeny, a purchaser for a wholesale drug house, who formed the Monsanto Chemical Works in St. Louis, Missouri, in order to produce the artificial sweetener saccharin. By 1905 John Queeny's company was also producing caffeine and vanillin and was beginning to turn a profit. In 1908 Queeny felt confident enough about his firm's future to leave his part-time job with another drug house to work full time as Monsanto's president. The company continued to grow, with sales surpassing the $1 million mark for the first time in 1915.

While prior to World War I the United States relied heavily on foreign supplies of chemicals, the increasing likelihood of U.S. intervention meant that the country would soon need its own domestic producer of chemicals. Looking back on the significance of the war for Monsanto, Queeny's son Edgar remarked, "There was no choice other than to improvise, to invent and to find new ways of doing all the old things. The old dependence on Europe was, almost overnight, a thing of the past." Monsanto was forced to rely on its own knowledge and nascent technical ability. Among other problems, Monsanto researchers discovered that pages describing German chemical processes had been ripped out of library books. Monsanto developed several strategic products, including phenol as an antiseptic, in addition to acetylsalicyclic acid, or aspirin.

With the purchase of an Illinois acid company in 1918, Monsanto began to widen the scope of its factory operations. A postwar depression during the early 1920s affected profits, but by the time John Queeny turned over the company to Edgar in 1928 the financial situation was much brighter. Monsanto had gone public, a move that paved the way for future expansion. At this time, the company had 55 shareholders and 1,000 employees and owned a small company in Britain.

Under Edgar Queeny's direction Monsanto, renamed the Monsanto Chemical Company, began to substantially expand and enter into an era of prolonged growth. Acquisitions expanded Monsanto's product line to include the new field of plastics and the manufacture of phosphorus.

By the time the United States entered World War II in 1941, the domestic chemical industry had attained far greater independence from Europe. Monsanto, strengthened by its several acquisitions, was also prepared to produce such strategic materials as phosphates and inorganic chemicals. Most important was the company's acquisition of a research and development laboratory called Thomas and Hochwalt. The well-known Dayton, Ohio, firm strengthened Monsanto at the time and provided the basis for some of its future achievements in chemical technology. One of its most important discoveries was styrene monomer, a key ingredient in synthetic rubber and a crucial product for the armed forces during the war.

EXPANSION AND NEW LEADERSHIP IN THE POSTWAR PERIOD

Largely unknown by the public, Monsanto experienced difficulties in attempting to market consumer goods. However, attempts to refine a low quality detergent led to developments in grass fertilizer, an important consumer product since the postwar housing boom had created a strong market of homeowners eager to perfect their lawns. In the mid-1950s Monsanto began to produce urethane foam, which was flexible and easy to use; it later became crucial in making automobile interiors. In 1955 Monsanto acquired Lion Oil, increasing its assets by more than 50 percent. Stockholders during this time numbered 43,000.

Having finally outgrown its headquarters in downtown St. Louis, Monsanto moved to the suburban community of Creve Coeur in 1957. Three years later Edgar Queeny turned over the chair of Monsanto to Charles Thomas, one of the founders of the research and development laboratory so important to Monsanto. Charlie Sommer, who had joined the company in 1929, became president. Under their combined leadership Monsanto saw several important developments, including the establishment of the Agricultural Chemicals division, created to consolidate Monsanto's diverse agrichemical product lines. Monsanto's European expansion continued, with Brussels becoming the permanent overseas headquarters in 1962.

In 1964 Monsanto changed its name to Monsanto Company in acknowledgment of its diverse product line. The company consisted of eight divisions, including petroleum, fibers, building materials, and packaging.

According to Monsanto historian Dan Forrestal, "Leadership during the 1960s and early 1970s came principally from … executives whose Monsanto roots ran deep." In 1964 Edward O'Neal became chairperson. O'Neal, who had come to Monsanto in 1935 with the acquisition of the Swann Corporation, was the first chair in company history who had not first held the post of president. Another company leader was Edward J. Bock, who had joined Monsanto in 1941 as an engineer. He rose through the ranks to become a member of the board of directors in 1965 and president in 1968. Edgar Queeny, who left no heirs, died in 1968.

Although Bock had a reputation for being a committed company executive, several factors contributed to his volatile term as president. High overhead costs and a sluggish national economy led to a dramatic 29 percent decrease in earnings in 1969. Sales were up the following year, but Bock's implementation of the 1971 reorganization caused a significant amount of friction among members of the board and senior management. In spite of the fact that this move, in which Monsanto separated the management of raw materials from the company's subsidiaries, was widely praised by security analysts, Bock resigned from the presidency in February 1972. After a nine-month search, John W. Hanley, a former executive with Procter & Gamble, was chosen as president. Hanley also took over as chairperson in 1975.

COMPANY PERSPECTIVES

We will deliver high-quality products that are beneficial to our customers and for the environment, through sound and innovative science, thoughtful and effective stewardship, and a commitment to safety and health in everything we do.

Under Hanley, Monsanto more than doubled its sales and earnings between 1972 and 1983. Toward the end of his tenure, Hanley put into effect a promise he had made to himself and to Monsanto when he accepted the position of president, namely, that his succes-sor would be chosen from Monsanto's ranks. Hanley and his staff chose approximately 20 young executives as potential company leaders and began preparing them for the head position at Monsanto. Among them was Richard J. Mahoney. When Hanley joined Monsanto, Mahoney was a young sales director in agricultural products. In 1983 Hanley turned the leadership of the company over to Mahoney. Wall Street immediately approved this decision with an increase in Monsanto's share prices.

LEGAL CHALLENGES IN THE 1970S AND 1980S

During this time, public concern over the environment began to escalate. Ralph Nader's activism and Rachel Carson's book The Silent Spring had been influential in increasing the American public's awareness of activities within the chemical industry in the 1960s, and Monsanto responded in several ways to the pressure. In 1964 the company introduced biodegradable detergents, and in 1976, Monsanto announced plans to phase out production of polychlorinated biphenyl (PCB).

In 1979 a lawsuit was filed against Monsanto and other manufacturers of Agent Orange, a defoliant used during the Vietnam War. Agent Orange contained a highly toxic chemical known as dioxin, and the suit claimed that hundreds of veterans had suffered permanent damage because of the chemical. In 1984 Monsanto and seven other manufacturers agreed to a $180 million settlement just before the trial began. With the announcement of a settlement Monsanto's share price, depressed because of the uncertainty over the outcome of the trial, rose substantially.

Also in 1984, Monsanto lost a $10 million antitrust suit to Spray-Rite, a former distributor of Monsanto agricultural herbicides. The U.S. Supreme Court upheld the suit and award, finding that Monsanto had acted to fix retail prices with other herbicide manufacturers.

In August 1985, Monsanto purchased G. D. Searle, the "NutraSweet" firm. NutraSweet, an artificial sweetener, had generated $700 million in sales that year, and Searle could offer Monsanto an experienced marketing and sales staff as well as real profit potential. Since the late 1970s the company had sold nearly 60 low margin businesses and, with two important agriculture product patents expiring in 1988, a major new cash source was more than welcome. What Monsanto did not count on, however, was the controversy surrounding Searle's intrauterine (IUD) birth control device called the Copper-7.

Soon after the acquisition, disclosures about hundreds of lawsuits over Searle's IUD surfaced and turned Monsanto's takeover into a public relations disaster. The disclosures, which inevitably led to comparisons with those about A. H. Robins, the Dalkan Shield manufacturer that eventually declared Chapter 11 bankruptcy, raised questions as to how carefully Monsanto management had considered the acquisition. In early 1986 Searle discontinued IUD sales in the United States. By 1988 Monsanto's new subsidiary faced an estimated 500 lawsuits against the Copper-7 IUD. As the parent company, Monsanto was well insulated from its subsidiary's liabilities by the legal "corporate veil."

KEY DATES

1901:

Monsanto Chemical Works is formed to produce saccharin; caffeine and vanillin are soon added.

1915:

Sales exceed $1 million.

1955:

Lion Oil is acquired.

1971:

Management of raw materials is separated from other subsidiaries in company reorganization.

1972:

Monsanto quits making saccharin.

1985:

Monsanto acquires G.D. Searle, maker of NutraSweet.

1992:

Ortho lawn chemicals business is acquired from Chevron Chemical Co.

1996:

Monsanto launches biotech line.

1997:

Chemicals business is spun off as Solutia, Inc.

1999:

Celebrex anti-inflammatory medication is introduced.

2000:

Monsanto Company merges with Pharmacia & Upjohn and is renamed Pharmacia Corporation; agriculture business becomes Monsanto Ag Company, later renamed Monsanto Company.

2004:

American Seeds Inc. subsidiary is formed to acquire regional seed producers.

2005:

Global fruit and vegetable seed maker Seminis is acquired in $1.4 billion deal.

Toward the end of the 1980s, Monsanto faced continued challenges from a variety of sources, including government and public concern over hazardous wastes, fuel and feedstock costs, and import competition. At the end of the 99th Congress, then President Ronald Reagan signed an $8.5 billion, five-year cleanup superfund reauthorization act. Built into the financing was a surcharge on the chemical industry created through the tax reform bill. Biotechnology regulations were just be-ing formulated, and Monsanto, which already had types of genetically engineered bacteria ready for testing, was poised to be an active participant in that field.

In keeping with its strategy to become a leader in the health field, Monsanto and the Washington University Medical School entered into a five-year research contract in 1984. Two-thirds of the research was to be directed into areas with obviously commercial applications, while one-third of the research was to be devoted to theoretical work. One particularly promising discovery involved the application of the bovine growth factor, a way to greatly increase milk production.

In the burgeoning low-calorie sweetener market, challengers to NutraSweet were putting pressure on Monsanto. Pfizer Inc., a pharmaceutical company, was preparing to market its product, called alitame, which it claimed was far sweeter than NutraSweet and better suited for baking.

In an interview with Business Week, Howard Schneiderman, senior vice-president for research and development, commented, "To maintain our markets—and not become another steel industry—we must spend on research and development." Monsanto, which had committed 8 percent of its operating budget to research and development, far above the industry average, hoped to emerge in the 1990s as one of the leaders in the fields of biotechnology and pharmaceuticals that were only then emerging from their nascent stage.

By the end of the 1980s, Monsanto had restructured itself and become a producer of specialty chemicals, with a focus on biotechnology products. Monsanto enjoyed consecutive record years in 1988 and 1989: sales were $8.3 billion and $8.7 billion, respectively. In 1988 the Food and Drug Administration (FDA) approved Cytotec, a drug that prevented gastric ulcers in high-risk cases. Sales of Cytotec in the United States reached $39 million in 1989.

The Monsanto Chemical Co. unit prospered with products including Saflex, a type of nylon carpet fiber. The NutraSweet Company held its own in 1989, contributing $180 million in earnings, with growth in the carbonated beverage segment. Almost 500 new products containing NutraSweet were introduced in 1989, for a total of 3,000 products.

Monsanto continued to invest heavily in research and development, with 7 percent of sales allotted for this area. The investment began to pay off when the research and development department developed an all-natural fat substitute called Simplesse. The FDA declared in early 1990 that the product was "generally recognized as safe" for use in frozen desserts. That year, the Nutra-Sweet Company introduced Simple Pleasures frozen dairy dessert. Monsanto hoped to see Simplesse used eventually in salad dressings, yogurt, and mayonnaise.

Despite these successes, Monsanto remained frustrated by delays in obtaining FDA approval for bovine somatotropin (BST), a chemical used to increase milk production in cows. Opponents to BST said it would upset the balance of supply and demand for milk, but Monsanto countered that BST would provide high-quality food supplies to consumers worldwide.

The final year of the 1980s also marked Monsanto's listing for the first time on the Tokyo Stock Exchange. Monsanto officials expected the listing to improve opportunities for licensing and joint venture agreements.

EARLY 1990S TRANSITIONAL PERIOD

Monsanto had expected to celebrate 1990 as its fifth consecutive year of increased earnings, but numerous factors—the increased price of oil due to the Persian Gulf War, a recession in key industries in the United States, and droughts in California and Europe—prevented the company from achieving this goal. Net income was $546 million, a dramatic drop from the record of $679 million the previous year. Nonetheless, subsidiary Searle, which had experienced considerable public relations scandals and headaches in the 1980s, had a record financial year in 1990. The subsidiary had established itself in the global pharmaceutical market and was beginning to emerge as an industry leader. Monsanto Chemical, meanwhile, was a $4 billion business that made up the largest percentage of Monsanto's sales.

Monsanto continued to work at upholding "The Monsanto Pledge," a 1988 declaration to reduce emissions of toxic substances. By its own estimates, the company devoted $285 million annually to environmental expenditures. Furthermore, Monsanto and the Environmental Protection Agency agreed to a cleanup program at the company's detergent and phosphate plant in Richmond County, Georgia.

The company restructured during the early 1990s to help cut losses during a difficult economic time. Net income in 1991 was only $296 million, $250 million less than the previous year. Despite this showing, 1991 was a good year for some of Monsanto's newest products. Bovine somatotropin finally gained FDA approval and was sold in Mexico and Brazil, and Monsanto received the go-ahead to use the fat substitute, Simplesse, in a full range of food products, including yogurt, cheese and cheese spreads, and other low-fat spreads. In addition, the herbicide Dimension was approved in 1991, and scientists at Monsanto tested genetically improved plants in field trials.

Furthermore, Monsanto expanded internationally, opening an office in Shanghai and a plant in Beijing, China. The company also hoped to expand in Thailand, and entered into a joint venture in Japan with Mitsubishi Chemical Co.

Monsanto's sales in 1992 hit $7.8 million. However, as net income dropped 130 percent from 1991 due to several one-time aftertax charges, the company prepared itself for challenging times. The patent on NutraSweet brand sweetener expired in 1992, and in preparation for increased competition, Monsanto launched new products, such as the NutraSweet Spoonful, which came in tabletop serving jars, like sugar. The company also devoted ongoing research and development to Sweetener 2000, a high-intensity product.

In 1992, Monsanto denied that it planned to sell G. D. Searle and Co., pointing out that Searle was a profitable subsidiary that launched many new products. However, to decrease losses, Monsanto did sell Fisher Controls International Inc., a subsidiary that manufactured process control equipment. Profits from the sale were used to buy the Ortho lawn-and-garden business from Chevron Chemical Co.

MONSANTO REINVENTING ITSELF: 1990S

Monsanto expected to see growth in its agricultural, chemical, and biotechnological divisions. In 1993, Monsanto and NTGargiulo joined forces to produce a genetically altered tomato. As the decade progressed, biotechnology played an increasingly important role, eventually emerging as the focal point of the company's operations. The foray into biotechnology, begun in the mid-1980s with a $150 million investment in a genetic engineering lab in Chesterfield, Missouri, had been faithfully supported by further investments in the ensuing years. Monsanto's efforts finally yielded tangible success in 1993, when BST was approved for commercial sale after a frustratingly slow FDA approval process. In the coming years, the development of further biotech products moved to the forefront of Monsanto's activities, ushering in a period of profound change. Fittingly, the sweeping, strategic alterations to the company's focus were preceded by a change in leadership, making the last decade of the 20th century one of the most dynamic eras in Monsanto's history.

Toward the end of 1994, Mahoney announced his retirement, effective the following year in March 1995. As part of the same announcement, Mahoney revealed that Robert B. Shapiro, Monsanto's president and chief operating officer, would be elected by Monsanto's board of directors as his successor. Shapiro, who had joined Searle in 1979 before being named executive vice-president of Monsanto in 1990, did not waver from exerting his influence over the company he now found himself presiding over. At the time of his promotion, Shapiro inherited a company that ranked as the largest domestic acrylic manufacturer in the world, generating $3 billion of its $7.9 billion in total revenues from chemical-related sales. This dominant side of the company's business, representing the foundation upon which it had been built, was eliminated under Shapiro's stewardship, replaced by a resolute commitment to biotech.

Between the mid-1980s and the mid-1990s, Monsanto had spent approximately $1 billion on developing its biotech business. Although biotech was regarded as a commercially unproven market by some industry analysts, Shapiro pressed forward with the research and development of biotech products, and by the beginning of 1996 he was ready to launch the company's first biotech product line. Monsanto began marketing herbicide-tolerant soybeans, genetically engineered to resist Roundup, and insect-resistant cotton, beginning with two million acres of both crops. By the fall of 1996, there were early indications that the first harvests of genetically engineered crops were performing better than expected. News of the encouraging results prompted Shapiro to make a startling announcement in October 1996, when he revealed that the company was considering divesting its chemical business as part of a major reorganization into a life-sciences company.

By the end of 1996, when Shapiro announced he would spin off the chemical operations as a separate company, Monsanto faced a future without its core business, a $3 billion contributor to the company's annual revenue volume. Without the chemical operations, Monsanto would be reduced to an approximately $5 billion company deriving half its sales from agricultural products and the rest from pharmaceuticals and food ingredients, but Shapiro did not intend to leave it as such. He foresaw an aggressive push into biotech products, a move that industry pundits generally perceived as astute. "It would be a gamble if they didn't do it," commented one analyst in reference to the proposed divestiture. "Monsanto is trying to transform itself into a high-growth agricultural and life sciences company. Low-growth cyclical chemical operations do not fit that bill." Spurring Shapiro toward this sweeping reinvention of Monsanto were enticing forecasts for the market growth of plant biotech products. A $450 million business in 1995, the market for plant biotech products was expected to reach $2 billion by 2000 and $6 billion by 2005. Shapiro wanted to dominate this fast-growing market as it matured by shaping Monsanto into what he described as the main provider of "agricultural biotechnology."

As preparations were underway for the spinoff of Monsanto's chemical operations into a new, publicly owned company named Solutia Inc., Shapiro was busy filling the void created by the departure of the company's core business. A flurry of acquisitions completed between 1995 and 1997 greatly increased Monsanto's presence in life sciences, quickly compensating for the revenue lost from the spinoff of Solutia. Among the largest acquisitions were Calgene, Inc., a leader in plant biotech, which was acquired in a two-part transaction in 1995 and 1997, and a 40 percent interest in Dekalb Genetics Corp., the second largest seed-corn company in the United States. In 1998, the company acquired the rest of DeKalb, paying $2.3 billion for the Illinois-based company.

By the end of the 1990s, Monsanto bore only partial resemblance to the company that entered the decade. The acquisition campaign that added dozens of biotechnology companies to its portfolio had created a new, dominant force in the promising life sciences field, placing Monsanto in a position to reap massive rewards in the years ahead. For example, a rootworm-resistant strain under development had the potential to save $1 billion worth of damages to corn crops per year. The company's pharmaceutical business also faced a promising future, highlighted by the introduction of a new arthritis medication named Celebrex in 1999. During its first year, Celebrex registered a record number of prescriptions. As Monsanto entered the 21st century, however, there were two uncertainties that loomed as potentially serious obstacles blocking its future success. The acquisition campaign of the mid- and late 1990s had greatly increased the company's debt, forcing Monsanto to desperately search for cash. Secondly, there was growing opposition to genetically altered crops at the decade's conclusion, prompting the United Kingdom to ban the yields from such crops for a year. A great part of the company's future success depended on the resolution of these two issues.

REORGANIZING IN 2000 AND BEYOND

Three years after the spinoff of the chemicals business, the two remaining Monsanto businesses, agriculture and pharmaceuticals, were separated in 2000 as Monsanto Company merged with Pharmacia & Upjohn Inc., creating a company that, for the moment had a market cap of more than $50 billion. The agricultural products business was incorporated as a Monsanto Company subsidiary in February 2000 named the Monsanto Ag Company.

The merger became effective on March 31, 2000. Pharmacia & Upjohn became another subsidiary of Monsanto Company, which changed its name to Pharmacia Corporation. The agricultural subsidiary, Monsanto Ag Company, then became the new Monsanto Company. Pharmacia Corporation (the old Monsanto Company) offered 15 percent of the new Monsanto's shares to the public in October 2000.

In August 2002, Pharmacia distributed its remaining holdings in the new Monsanto Company to its shareholders through a tax-free stock dividend. Pharmacia was acquired by Pfizer Inc. in April 2003, while the chemicals business, Solutia, filed for Chapter 11 bankruptcy in December 2003, burdened by the cost of settlements related to the old Monsanto's PCB manufacturing (which ended in 1977).

In the meantime, a number of other strategic divestments and acquisitions were made. The sweetener ingredient business (including NutraSweet) was sold to a Boston investment group for $440 million, while Merisant Company acquired the NutraSweet tabletop brand. Roundup's main ingredient, glyphosate, came off patent in 2000, opening its herbicide market share to erosion.

Sales slipped 14 percent to $4.7 billion in 2002. After earning $295 million the previous year, the company posted a horrific $1.7 billion loss, even though it had a 90 percent share of the market for genetically engineered seeds. CEO Hendrik Verfaille, who had taken over from Robert B. Shapiro after the Pharmacia merger, stepped down in December 2002. His position was filled for a time by Chairman Frank Atlee III. Chief Operating Officer Hugh Grant, a native of Scotland, became CEO in May 2003 and chairman in October 2003.

Under Grant, Monsanto's emphasis shifted from agrichemicals to seeds, both conventional and genetically modified. In 2004, the American Seeds Inc. subsidiary was formed to acquire regional seed producers. It soon bought Indiana's Channel Bio Corp. and Nebraska's NC Hybrids. Each had significant corn seed production. Emergent Genetics' cotton seed business was added soon after. Oxnard, California-based fruit and vegetable seed maker Seminis Inc. was acquired in 2005 in a deal worth $1.4 billion (including assumed debt). Seminis's 3,500 types of seed were distributed in 150 countries. Monsanto applied its expertise in studying genes from its GM business to breeding hybrids at Seminis.

The company's genetically modified seeds were by this time sown on nearly 200 million acres, principally in the United States and Argentina. They had gained acceptance in Canada and China, but were a subject of considerable controversy in Europe. Monsanto was promoting the higher yields of its GM products to farmers in developing countries. It was also developing drought resistant crops. For trans-fat conscious consumers in more affluent markets, Monsanto was touting its Vistive soybeans, whose oil did not have to be partially hydrogenated. The company also claimed other functional properties and better taste and shelf life for a range of other genetically modified or hybrid produce.

Monsanto was navigating a number of legal and PR challenges, including the pirating of its genetically modified soybean seeds in Brazil. The Brazilian farmers eventually agreed to pay Monsanto royalties for using the company's seeds. Monsanto, which had been selling the artificial bovine growth hormone Posilac for ten years, was suing a Maine dairy whose packaging allegedly disparaged artificial hormones. The company was also fighting attempts to label products as containing genetically modified ingredients.

PRINCIPAL SUBSIDIARIES

Asgrow Seed Company LLC; Channel Bio Corp.; Corn States Hybrid Service L.L.C.; DEKALB Genetics Corporation; Emergent Genetics, Inc.; Holden's Foundation Seeds L.L.C.; Mahyco-Monsanto Biotech Ltd. (India); Monsanto Ag Products LLC; Monsanto Argentina S.A.I.C.; Monsanto Australia Ltd.; Monsanto Canada, Inc.; Monsanto do Brasil Ltda. (Brazil); Monsanto Europe S.A./N.V. (Belgium); Monsanto India Limited; Monsanto Inter SARL (France); Monsanto Nordeste S.A. (Brazil); Monsanto SAS (France); Monsanto Seeds (Thailand) Ltd.; Monsanto Technology LLC; Semillas y Agroproductos Monsanto, S.A. de C.V. (Mexico); Seminis, Inc.

                                   Marinell Landa

               Updated, Jeffrey L. Covell; Frederick C. Ingram

PRINCIPAL DIVISIONS

Seeds and Genomics; Agricultural Productivity.

PRINCIPAL COMPETITORS

BASF Aktiengesellschaft; Bayer CropScience AG; Dow AgroSciences LLC; DuPont Agriculture & Nutrition; Pioneer Hi-Bred International, Inc.; Syngenta AG.

FURTHER READING

Baldwin, Virginia, "Monsanto Shifts Focus of Biotech Sales to Poor Countries; Use of Bioengineered Crops Is Greatest in U.S., China, Argentina, Canada," St. Louis Post-Dispatch, February 12, 2002, p. D1.

Barboza, David, "Monsanto Picks Top Executive As It Works Through Slump," New York Times, Bus. Sec., May 30, 2003, p. 6.

――――――, "Monsanto Sues Dairy in Maine Over Label's Remarks on Hormones," New York Times, Bus. Sec., July 12, 2003, p. 1.

Crisafulli, Patricia, "Monsanto, EPA Resolve Superfund Cleanup," Journal of Commerce, April 12, 1991, p. 13A.

Desloge, Rick, "Is a Divided Monsanto a Target for Purchase?," St. Louis Business Journal, December 30, 1996, p. 3.

Donlon, J. P., "After Restructuring, What?," Chief Executive (U.S.), March-April, 1988, p. 50.

Ellis, James E., "Monsanto and the Copper-7: A 'Corporate Veil' Begins to Fray," Business Week, September 26, 1988, p. 50.

Forrestal, Dan J., Faith, Hope, and $5,000: The Story of Monsanto: The Trials and Triumphs of the First 75 Years, New York: Simon and Schuster, 1977.

Gilpin, Kenneth N., "Pharmacia Planning Spinoff of Its 85% Stake in Monsanto," New York Times, November 29, 2001, p. 2.

"The Green Gene Giant," Economist, April 26, 1997, p. 66.

Henkoff, Ronald, "Monsanto: Learning from Its Mistakes," Fortune, January 27, 1992, p. 81.

Jaffe, Thomas, "How Do You Top This?," Forbes, June 1, 1998.

Kiesche, Elizabeth S., "Monsanto Cultivates Lawn and Garden Line with Ortho Buy," Chemical Week, January 20, 1993, p. 7.

Lambrecht, Bill, "Monsanto Battles Effort to Require Labeling of Genetically Modified Food; Industry Opposes Oregon Ballet Initiative," St. Louis Post-Dispatch, September 19, 2002, p. A1.

Melcer, Rachel, "Monsanto Is Delivering on Promises It Made; Its Newest Products Help Foods Taste Better While Being Healthier and Easier to Process, Ship and Store," St. Louis Post-Dispatch, November 27, 2005, p. E1.

"Monsanto Pursues Seed Pirates," New York Times, June 13, 2003, p. 12.

Smith, Tony, "Brazilian Farmers to Pay Monsanto for Soybean Seeds," New York Times, Bus. Sec., January 29, 2004, p. 4.

Steyer, Robert, "Going It Alone," Knight-Ridder/Tribune Business News, October 19, 1998.

Stringer, Judy, "Monsanto Poised to Reap BioTech Harvest," Chemical Week, November 6, 1996, p. 51.

Stroud, Jerri, "Seminis, Monsanto Scientists See Synergy," St. Louis Post-Dispatch, May 1, 2005, p. E1.

Monsanto Company

800 N. Lindbergh Blvd.
St. Louis, Missouri 63167
U.S.A.
(314) 694-1000
Fax: (314) 694-7571

Public Company
Incorporated: 1933 as Monsanto Chemical Company
Employees: 33,797
Sales: $7.8 billion
Stock Exchanges: New York Amsterdam Brussels Chicago Frankfurt Geneva London Paris Tokyo Zurich
SICs: 2821 Plastics Materials & Resins; 2834 Pharmaceutical Preparations; 3823 Process Control Instruments; 2833 Medicinals & Botanicals

Monsanto is one of the largest corporations and most important agrichemical concerns in the United States. Innovative products for the agricultural industry—such as bovine somatotropin (BST), used in milk production—as well as for consumer use— such as the fat substitute Simplesse and the artificial sweetener NutraSweet—have contributed to Monsanto’s profits and renown for research and development.

Monsanto traces its roots to John Francisco Queeny, a purchaser for a wholesale drug house at the turn of the century, who formed the Monsanto Chemical Works in St. Louis, Missouri, in order to produce the artificial sweetener saccharin. By 1905 John Queeny’s company was also producing caffeine and vanillin and was beginning to turn a profit. In 1908 Queeny felt confident enough about his firm’s future to leave his part-time job with another drug house to work full time as Monsanto’s president. The company continued to grow, with sales surpassing the $1 million mark for the first time in 1915.

While prior to World War I America relied heavily on foreign supplies of chemicals, the increasing likelihood of U.S. intervention meant that the country would soon need its own domestic producer of chemicals. Looking back on the significance of the war for Monsanto, Queeny’s son Edgar remarked, ‘There was no choice other than to improvise, to invent and to find new ways of doing all the old things. The old dependence on Europe was, almost overnight, a thing of the past.” Monsanto was forced to rely on its own knowledge and nascent technical ability. Among other problems, Monsanto researchers discovered that pages describing German chemical processes had been ripped out of library books. Monsanto developed several strategic products, including phenol as an antiseptic, in addition to acetylsalicyclic acid, or aspirin.

With the purchase of an Illinois acid company in 1918, Monsanto began to widen the scope of its factory operations. A postwar depression during the early 1920s affected profits, but by the time John Queeny turned over the company to Edgar in 1928 the financial situation was much brighter. Monsanto had gone public, a move that paved the way for future expansion. At this time, the company had 55 shareholders and 1,000 employees and owned a small company in Britain.

Under Edgar’s direction Monsanto, now the Monsanto Chemical Company, began to substantially expand and enter into an era of prolonged growth. Acquisitions expanded Monsanto’s product line to include the new field of plastics and the manufacture of phosphorus.

By the time the United States entered World War II in 1941, the domestic chemical industry had attained far greater independence from Europe. Monsanto, strengthened by its several acquisitions, was also prepared to produce such strategic materials as phosphates and inorganic chemicals. Most important was the company’s acquisition of a research and development laboratory called Thomas and Hochwalt. The well-known Dayton, Ohio, firm strengthened Monsanto at the time and provided the basis for some of its future achievements in chemical technology. One of its most important discoveries was styrene monomer, a key ingredient in synthetic rubber and a crucial product for the armed forces during the war.

Largely unknown by the public, Monsanto experienced difficulties in attempting to market consumer goods. However, attempts to refine a low quality detergent led to developments in grass fertilizer, an important consumer product since the postwar housing boom had created a strong market of homeowners eager to perfect their lawns.

In the mid-1950s Monsanto began to produce urethane foam, which was flexible and easy to use; it later became crucial in making automobile interiors. In 1955 Monsanto acquired Lion Oil, increasing its assets by more than 50 percent. Stockholders during this time numbered 43,000.

Having finally outgrown its headquarters in downtown St. Louis, Monsanto moved to the suburban community of Creve Coeur in 1957. Three years later Edgar Queeny turned over the chair of Monsanto to Charles Thomas, one of the founders of the research and development laboratory so important to Monsanto. Charlie Sommer, who had joined the company in 1929, became president. Under their combined leadership Monsanto saw several important developments, including the establishment of the Agricultural Chemicals division, created to consolidate Monsanto’s diverse agrichemical product lines. Monsanto’s European expansion continued, with Brussels becoming the permanent overseas headquarters in 1962.

In 1964 Monsanto changed its name to Monsanto Company in acknowledgment of its diverse product line. The company consisted of eight divisions, including petroleum, fibers, building materials, and packaging.

According to Monsanto historian Dan Forrestal, “Leadership during the 1960s and early 1970s came principally from … executives whose Monsanto roots ran deep.” In 1964 Edward O’Neal became chairperson. O’Neal, who had come to Monsanto in 1935 with the acquisition of the Swann Corporation, was the first chair in company history who had not first held the post of president. Another company leader was Edward J. Bock, who had joined Monsanto in 1941 as an engineer. He rose through the ranks to become a member of the board of directors in 1965 and president in 1968. Edgar Queeny, who left no heirs, died in 1968.

Although Bock had a reputation for being a committed company executive, several factors contributed to his volatile term as president. High overhead costs and a sluggish national economy led to a dramatic 29 percent decrease in earnings in 1969. Sales were up the following year, but Bock’s implementation of the 1971 reorganization caused a significant amount of friction among members of the board and senior management. In spite of the fact that this move, in which Monsanto separated the management of raw materials from the company’s subsidiaries, was widely praised by security analysts, Bock resigned from the presidency in February 1972. After a nine month search, John W. Hanley, a former executive with Procter and Gamble, was chosen as president. Hanley also took over as chairperson in 1975.

Under Hanley, Monsanto more than doubled its sales and earnings between 1972 and 1983. Toward the end of his tenure, Hanley put into effect a promise he had made to himself and to Monsanto when he accepted the position of president, namely, that his successor would be chosen from Monsanto’s ranks. Hanley and his staff chose approximately 20 young executives as potential company leaders and began preparing them for the head position at Monsanto. Among them was Richard J. Mahoney. When Hanley joined Monsanto, Mahoney was a young sales director in agricultural products. In 1983 Hanley turned the leadership of the company over to Mahoney. Wall Street immediately approved this decision with an increase in Monsanto’s share prices.

During this time, public concern over the environment began to escalate. Ralph Nader’s activities and Rachel Carson’s book Silent Spring had been influential in increasing the U.S. public’s awareness of activities within the chemical industry in the 1960s, and Monsanto had responded in several ways to the pressure. In 1964 the company introduced biodegradable detergents, and in 1976, Monsanto announced plans to phase out production of polychlorinated biphenyl (PCB).

In 1979 a lawsuit was filed against Monsanto and other manufacturers of agent orange, a defoliant used during the Vietnam War. Agent orange contained a highly toxic chemical known as dioxin, and the suit claimed that hundreds of veterans had suffered permanent damage because of the chemical. In 1984 Monsanto and seven other manufacturers agreed to a $180 million settlement just before the trial began. With the announcement of a settlement Monsanto’s share price, depressed because of the uncertainty over the outcome of the trial, rose substantially.

Also in 1984, Monsanto lost a $10 million antitrust suit to Spray-Rite, a former distributor of Monsanto agricultural herbicides. The U.S. Supreme Court upheld the suit and award, finding that Monsanto had acted to fix retail prices with other herbicide manufacturers.

In August 1985, Monsanto purchased G. D. Searle, the “Nutra-Sweet” firm. NutraSweet, an artificial sweetener, had generated $700 million in sales that year, and Searle could offer Monsanto an experienced marketing and a sales staff as well as real profit potential. Since the late 1970s the company had sold nearly 60 low margin businesses and, with two important agriculture product patents expiring in 1988, a major new cash source was more than welcome. What Monsanto didn’t count on, however, was the controversy surrounding Searle’s intrauterine birth control device called the Copper-7.

Soon after the acquisition, disclosures about hundreds of lawsuits over Searle’s IUD surfaced and turned Monsanto’s takeover into a public relations disaster. The disclosures, which inevitably led to comparisons with those about A. H. Robins, the Dalkan Shield manufacturer that eventually declared Chapter 11 bankruptcy, raised questions as to how carefully Monsanto management had considered the acquisition. In early 1986 Searle discontinued IUD sales in the United States. By 1988 Monsanto’s new subsidiary faced an estimated 500 lawsuits against the Copper-7 IUD. As the parent company, Monsanto was well insulated from its subsidiary’s liabilities by the legal “corporate veil.”

As Monsanto entered the 1990s, it faced continued challenges from a variety of sources, including government and public concern over hazardous wastes, fuel and feedstock costs, and import competition. At the end of the 99th Congress, then-President Ronald Reagan signed a $8.5 billion, five-year cleanup superfund reauthorization act. Built into the financing was a surcharge on the chemical industry created through the tax reform bill. Biotechnology regulations were just being formulated, and Monsanto, which already had types of genetically engineered bacteria ready for testing, was poised to be an active participant in that field.

In keeping with its strategy to become a leader in the health field, Monsanto and the Washington University Medical School entered into a five-year research contract in 1984. Two-thirds of the research was to be directed into areas with obviously commercial applications, while one-third of the research was to be devoted to theoretical work. One particularly promising discovery involved the application of the bovine growth factor, a way to greatly increase milk production.

In the burgeoning low-calorie sweetener market, challengers to NutraSweet were putting pressure on Monsanto. Pfizer Inc., a pharmaceutical company, was preparing to market its product, called alitame, which it claimed was far sweeter than NutraSweet and better suited for baking.

In an interview with Business Week, senior vice-president for research and development Howard Schneiderman commented, “To maintain our markets—and not become another steel industry—we must spend on research and development.” Monsanto, which has committed eight percent of its operating budget to research and development, far above the industry average, may emerge in the 1990s as one of the leaders in the fields of biotechnology and Pharmaceuticals that are only now emerging from their nascent stage.

By the end of the 1980s, Monsanto had restructured itself and become a producer of specialty chemicals, with a focus on biotechnology products. Monsanto enjoyed consecutive record years in 1988 and 1989—sales were $8.3 billion and $8.7 billion, respectively. In 1988 the Food and Drug Administration approved Cytotec, a drug that prevents gastric ulcers in high-risk cases. Sales of Cytotec in the United States reached $39 million in 1989.

The Monsanto Chemical Co. unit prospered with products like Saflex, a type of nylon carpet fiber. The NutraSweet Company held its own in 1989, contributing $180 million in earnings, with growth in the carbonated beverage segment. Almost 500 new products containing NutraSweet were introduced in 1989, for a total of 3,000 products.

Monsanto continued to invest heavily in research and development, with seven percent of sales allotted for this area. The investment began to pay off when the research and development department developed an all-natural fat substitute called Simplesse. The FDA declared in early 1990 that the product was “generally recognized as safe” for use in frozen desserts. That year, the NutraSweet Company introduced Simple Pleasures frozen dairy dessert. Monsanto hoped to see Simplesse used eventually in salad dressings, yogurt, and mayonnaise.

Despite these successes, Monsanto remained frustrated by delays in obtaining FDA approval for bovine somatotropin (BST), a chemical used to increase milk production in cows. Opponents to BST said it would upset the balance of supply and demand for milk, but Monsanto countered that BST would provide high-quality food supplies to consumers worldwide.

The final year of the 1980s also marked Monsanto’s listing for the first time on the Tokyo Stock Exchange. Monsanto officials expected the listing to improve opportunities for licensing and joint venture agreements.

Monsanto had expected to celebrate 1990 as its fifth consecutive year of increased earnings, but numerous factors—the increased price of oil due to the Persian Gulf War, a recession in key industries in the United States, and droughts in California and Europe—prevented the company from achieving this goal. Net income was $546 million, a dramatic drop from the record of $679 the previous year. Nonetheless, Searle, which had caused considerable public relations scandals and headaches in the 1980s, had a record financial year in 1990. The subsidiary had established itself in the global pharmaceutical market and was beginning to emerge as an industry leader. The Monsanto Chemical Co., meanwhile, was a $4 billion business that made up the largest percentage of Monsanto’s sales.

Monsanto continued to work at upholding ‘The Monsanto Pledge,” a 1988 declaration to reduce emissions of toxic substances. By its own estimates, the company devoted $285 million annually to environmental expenditures. Furthermore, Monsanto and the Environmental Protection Agency agreed to a cleanup program at the company’s detergent and phosphate plant in Richmond County, Georgia.

The company restructured during the early 1990s to help cut losses during a difficult economic time. Net income in 1991 was only $296 million, $250 million less than the previous year. Despite this showing, 1991 was a good year for some of Monsanto’s newest products. Bovine somatotropin finally gained FDA approval and was sold in Mexico and Brazil, and Monsanto received the go-ahead to use the fat substitute, Simplesse, in a full range of food products, including yogurt, cheese and cheese spreads, and other low-fat spreads. In addition, the herbicide Dimension was approved in 1991, and scientists at Monsanto tested genetically improved plants in field trials.

Furthermore, Monsanto expanded internationally, opening an office in Shanghai and a plant in Beijing, China. The company also hoped to expand in Thailand, and entered into a joint venture in Japan with Mitsubishi Chemical Co.

Monsanto’s sales in 1992 hit $7.8 million. However, as net income dropped 130 percent from 1991 due to several one-time aftertax charges, the company prepared itself for challenging times. The patent on NutraSweet brand sweetener expired in 1992, and in preparation for increased competition, Monsanto launched new products, such as the NutraSweet Spoonful, which came in tabletop serving jars, like sugar. The company also devoted ongoing research and development to Sweetener 2000, a high-intensity product.

In 1992, Monsanto denied that it planned to sell G. D. Searle and Co., pointing out that Searle was a profitable subsidiary that launched many new products. However, to decrease losses, Monsanto did sell Fisher Controls International Inc., a subsidiary that manufactures process control equipment. Profits from the sale were used to buy the Ortho lawn-and-garden business from Chevron Chemical Co.

In the 1990s, Monsanto expected to see growth in its agricultural, chemical, and biotechnological divisions. In 1993, Monsanto and NTGargiulo joined forces to produce a genetically-altered tomato. The companies expected that the new tomato would be on the market in three to five years.

Principal Subsidiaries

Bolgen NV Collagen Corp.; Monsanto PLC; Monsanto Canada Inc.; Monsanto Electronic Materials Co.; Monsanto Enviro-Chem Systems Inc.; Monsanto Europe S.A.; Monsanto International Sales Co., Inc.; Monsanto Oil Co.; Monsanto (Suisse) S.A.; Nutra Sweet Co.; Ortho Chemical Co.; Polyamide Intermediaries Ltd. (50%); RDI Inc.; G. D. Searle &Co.

Further Reading

Crisafulli, Patricia, “Monsanto, EPA Resolve Superfund Cleanup,” Journal of Commerce, April 12, 1991, p. 13 A.

Donlon, J. P., “After Restructuring, What?” Chief Executive (U.S.), March-April, 1988, p. 50.

Ellis, James E., “Monsanto and the Copper-7: A ‘Corporate Veil’ Begins to Fray,” Business Week, September 26, 1988, p. 50.

Forrestal, Dan J., Faith, Hope, and $5,000: The Story of Monsanto: The Trials and Triumphs of the First 75 Years, New York: Simon and Schuster, 1977.

Kiesche, Elizabeth S., “Monsanto Cultivates Lawn and Garden Line with Ortho Buy,” Chemical Week, January 20, 1993, p. 7.

Monsanto Company Annual Reports, St. Louis: Monsanto Company, 1988–92.

—updated by Marinell Landa

Monsanto Company

800 N Lindbergh Blvd.
St. Louis, Missouri 63167
USA
Telephone: (314) 694-1000
Fax: (314) 694-8394
Web site: www.monsanto.com

MONSANTO IMAGE CAMPAIGNS

OVERVIEW

In 1994 St. Louis-based agribusiness giant Monsanto introduced Posilac, a drug designed to raise cows' milk production. Sold through the company's dairy division, formerly known as Protiva, the product was marketed to dairy farmers; yet in order to gain larger acceptance for Posilac, it became necessary to sell the public on the drug, which contained the genetically engineered chemical BST, or bovine somatotropin. The company began a limited image campaign for the product in 1994, and it used methods that by 1998 gained much wider exposure for its genetically modified (GM) food products, primarily in Europe. Concerns over GM foods both at home and abroad, where one of Monsanto's outspoken critics was England's Prince Charles, motivated the company to invest $1.6 million in its European campaign in 1998, along with an undisclosed amount on U.S. advertising. British ads were created by the firm of Bartle Bogle Hegarty and in the United States by the St. Louis office of the Sargent & Potratz advertising agency. Monsanto spent $80 million overall on consumer advertising in 1998.

Monsanto made a variety of chemical products, including Roundup, one of the world's leading herbicides; and NutraSweet, the leading artificial sweetener; and a number of pharmaceuticals, marketed through its Searle line. Monsanto products had not been without controversy, however, and that was particularly true of Posilac and GM foods. From a financial standpoint and in terms of distribution, Posilac had proven a success by the end of 1998, with Monsanto reporting that 100 million doses of the drug had been distributed since it began marketing more than four years before. But image concerns remained, suggesting an uncertain future for consumer advertising on the part of the company. Trade advertising, on the other hand, seemed relatively stable.

HISTORICAL CONTEXT

Despite the fact that its products were as much a part of daily life as the areas they addressed, Monsanto itself was hardly a household name. Founded in 1901 by John Queeny in St. Louis, the company's first product was saccharin, a popular sugar substitute until the advent of Monsanto's own NutraSweet. The company went public in 1927, by which time its products included caffeine, aspirin, and other chemical goods. During World War II, it supplied the first synthetic tires used by the U.S. Army.

In the 1960s and 1970s the company introduced several herbicides, the most successful being Roundup, which debuted in 1973. In the preceding year, Monsanto discontinued saccharin production, and later bought the licensing rights to NutraSweet, the brand name for the artificial sweetener aspartame. This occurred in 1985, the same year the company acquired the G.D. Searle pharmaceuticals firm. In 1993 it enhanced its already large lawn-care line with the purchase of Ortho from Chevron.

In the mid-1990s, under the leadership of former Searle executive Robert Shapiro, the company expanded its pharmaceutical offerings, and in 1996 purchased a minority interest in DEKALB Genetics. In collaboration with DEKALB, Monsanto introduced a strain of soybean which could withstand herbicides such as Roundup. During this period, it also greatly expanded its agribusiness area, moving more and more into GM foods.

In 1994 Monsanto introduced Posilac, and after winning Food and Drug Administration (FDA) approval for the use of the bovine somatotropin product, it was required to undertake a thorough post-approval study. The company presented the results to the FDA's Veterinary Medicine Advisory Committee (VMAC) in November 1996. In a hearing to assess the study, VMAC addressed two questions, according to Food Chemical News: "whether the proposed revised label for Posilac provided adequate directions for farmers [on the use of the product] and whether the results of Monsanto's Post-Approval Monitoring Program adequately addressed the safety of the milk supply. After daylong presentations, the Food and Drug Administration's advisory committee answered yes to both questions."

TARGET MARKET

The FDA and VMAC were hardly the only barriers Monsanto had to face in gaining approval for Posilac, however; there was public opinion to consider. Technically, the consumers of Posilac had no opinion, since they were cows, not humans. As for the cows' owners, dairy farmers in the United States and Europe, a large portion were enthusiastic about a product that would enhance profitability on their farms. But there were the consumers of dairy products to consider; and as with other twentieth-century technological innovations, such as nuclear power or experiments in cloning, chemical enhancement of food production frightened many people.

Almost from the beginning, Posilac encountered criticism from consumer groups concerned about the potential side effects of using drugs to enhance milk production. The company's first response in the form of advertising came with a 30-second television commercial run exclusively in the key dairy state of Wisconsin. The company targeted the February 1994 spot for that state, a Monsanto spokesman told Robert Steyer of the St. Louis Post-Dispatch, "because it's been the hotbed of activity. We thought it might get our message out better."

By 1998 Monsanto had come to increasingly position itself as a so-called life sciences company rather than as a chemical manufacturer. In so doing, it keyed in on the growing interest among the baby-boomer population in enhancing their lifestyles or, to use a variation on an old DuPont advertising slogan that fell into disfavor during the 1960s, "better living through chemistry." Stephanie Thompson reported in Brandweek in 1998 that "nutraceuticals," scientifically developed food products, were gaining acceptance among baby boomers, and Monsanto developed much of its marketing around this trend. Its food and nutrition businesses, Thompson wrote, were "all newly repositioned under the banner of 'Food, Health, Hope.'" Thus a company spokesman told her that Monsanto was well-positioned to "take the best of all areas and identify the consumer market and consumer needs that other companies aren't qualified to do."

COMPETITION

Chemicals to increase food production, or a drug that could enhance milk production by 10 to 20 percent, were bound to have their adherents, and not just among farmers. Central to the 1994 Wisconsin television spots was Dr. Ronald E. Kleinman, associate professor of pediatrics at Harvard Medical School and former chairman of the American Academy of Pediatrics's nutrition committee. In the commercials Kleinman, who reportedly received no payment for his endorsement, announced that Posilac was every bit as "safe, nutritious, and wholesome" as the milk produced by cows who had not used it. He also warned viewers, "Don't let anyone scare you into reducing milk consumption."

The primary competition for Posilac or GM foods came not from other agribusiness companies such as Archer Daniels Midland or ConAgra, but from consumer groups and others who were just as likely to oppose the efforts of those companies to create better living—and better food production—through chemistry. Taking a sardonic tone, Kirkpatrick Sale wrote in the Nation in early 1999, "The old Monsanto was a chemical company, and had been since 1901, but its chemical division was spun off into a separate company in 1997. The new Monsanto is, as it puts it, 'a life sciences company,' which means that it is interested in creating, controlling, patenting, and profiting from life." Sale went on to note that "bovine growth hormone, though it has been adopted by enough dairy farmers in the United States to make it a profitable line, is still resisted by many farmers and consumers." Much of the opposition came from the same baby-boomer population segment that, according to Thompson's 1998 Brandweek report, had become increasingly more open to the idea of scientifically enhanced food products. If ever there was a baby-boomer-style company, it was Ben & Jerry's ice cream, which according to Sale won a lawsuit that allowed it to label its ice cream as being free of all recombinant bovine growth hormones.

In fact, Ben & Jerry's home state of Vermont passed a bill requiring that suppliers of bovine growth hormones be licensed by the state agricultural commissioner. In January 1998 Monsanto challenged the legislation with a letter to Governor Howard Dean, state agriculture commissioner Leon Graves, and members of the Vermont dairy industry. Governor Dean later indicated that he would veto the bill, but only because an apparent majority of Vermont farmers opposed it.

Monsanto faced similar challenges over genetically modified foods in Europe in 1997 and 1998. When the company hired British ad agency Bartle Bogle Hegarty to create an image campaign in 1997, the agency's Soho office was besieged by a group of naked protesters. No less a figure than Charles, the Prince of Wales, weighed in against GM foods in June 1998, saying, "We don't know the long-term consequences for human health and the wider environment of releasing plants bred in this way."

MARKETING STRATEGY

Monsanto's 1998 image efforts for Posilac in the United States were muted compared to the campaign it ran simultaneously in Britain to counter fears concerning GM foods, and indeed the latter effort illustrates much about Monsanto image advertising on either side of the Atlantic. The Bartle Bogle Hegarty ads, launched in June 1998, were "designed to be objective and considered [that is, thoughtful] rather than 'adsy' or gimmicky," according to Ruth Nicholas in Marketing, "and to provide information and present the strengths of GM foods in a measured way." A Monsanto representative told Nicholas, "We want to give people information, and we are quite comfortable with the coverage."

As part of the three-month campaign, Monsanto urged customers to call a toll-free information line, visit its website—and even obtain the views of opposing organizations. Advertising warned that in the future, foods without genetically modified ingredients would become increasingly expensive. This led to a backlash from many groups, despite the company's apparent efforts at openness. A representative of the environmental activist organization Greenpeace told Alex Scott of Chemical Week, "If you compare [Monsanto's] campaign with any previous ones, it tells an interesting story—that of ignoring consumer concern. Consumers don't need a fancy advertising campaign. They need better labeling."

GETTING THE MESSAGE ACROSS—INSIDE THE COMPANY

Julekha Dash in Software Magazine compared the corporate culture at Monsanto's dairy division, formerly known as Protiva, to that of an Ivy League university. "Okay," Dash admitted, "so the St. Louis-based provider of agricultural and pharmaceutical goods isn't exactly Harvard University." But consultants with Renaissance, an information technologies firm, "say the atmosphere of the 150-person [division] … was similar to the one you find in the academic world. Employees are highly trained scientists with PhDs and specialties in areas such as biology, chemistry, and genetics. And they guard their knowledge carefully."

Naturally they guard that knowledge from Monsanto's competitors—but what happens when members of a company's brain trust keep information from each other? "That was the problem," Dash wrote. "The fiercely independent culture of this group conflicted with Monsanto's knowledge management program, a company-wide strategic initiative whose objectives necessitated that employees share information using collaborative tools." Renaissance attacked the problem by arranging regular sessions in which management explained decisions to employees and stressed the contributions of individuals to overall performance. Under the guidance of Renaissance consultants, software developers at Protiva engaged in workshops and training sessions that offered an opportunity for various professionals to gather and discuss collaboration methods. Using these and other measures, Renaissance ran a pilot phase of its new program with the objective of involving three project teams in the process. Results exceeded expectations, with a total of eight teams involved by the end of the four-week pilot phase in January 1998. "What we managed to convince" the group, a Renaissance executive told Dash, "is [that] it is their collective knowledge that brings power. That was a major milestone."

Greenpeace and other activist groups were not the only forces arrayed against Monsanto's efforts to enhance the company image and educate the public concerning its scientific innovations in food production. When Monsanto's international government affairs director Marcia Hale said that "it will become very expensive for the manufacturer and the consumer" not to use GM foods in the future, a representative of the British supermarket chain Iceland referred to this as a "frightening" sign of things to come. Iceland became the first retail chain in Britain to refuse to market foods with GM ingredients.

OUTCOME

In March 1999 the United Kingdom Advertising Standards Authority (ASA) upheld 6 of 13 complaints filed by the Green Party, the Royal Society for the Protection of Birds, and other groups of environmentalists against Monsanto. The ASA report claimed that the company had provided "misleading" information in the campaign. During the same month, Sale's lengthy article in the Nation noted that the image campaign had arrived in the United States, using the slogan "Biodiversity … matters to Monsanto."

In response to criticisms, the company produced and distributed a "Report on Sustainable Development" in late 1998. The report acknowledged that "some of what we're doing—especially in agricultural biotechnology—raises questions in the minds of many people." It also promised that "we'll continue to listen to all points of view … and to engage in honest and respectful communications." In line with the strategy of openness that Monsanto had used in its European campaign, the report even included statements from detractors such as the German Friends of the Earth, another environmental group.

Monsanto switched its U.S. advertising account in January 1999 from Sargent & Potratz, which thereupon closed its St. Louis office, to Osborne & Barr. According to the Delaney Report, the company "is finding that its problems in areas such as pharmaceuticals and biotechnology are having a spill-over impact on how it markets its products to consumers." As a result, it planned to drastically cut its $80 million global consumer advertising budget. A source told the Delaney Report, "There is a 'tomorrow' mentality at [Monsanto] right now. Marketing money for today is being put on hold while management regathers itself for the future."

Although the company had faced a number of challenges in its image marketing to consumers, products such as Posilac continued to thrive. In December 1998 Monsanto reported that 100 million doses of the drug had been sold since its introduction four and a half years before. Furthermore, a company representative told Food Chemical News, "Sales [of Posilac] are increasing. Our sales this year are 30 percent higher than in 1997, and sales in 1997 were up 30 percent over 1996."

FURTHER READING

Bentley, Stephanie. "Monsanto Warns of High Prices for 'Natural' Foods." Marketing Week, June 11, 1998, p. 8.

Dash, Julekha. "Cultivating Collaboration." Software Magazine, March 1, 1998, p. 94.

Fox, Harriot Lane. "Who Needs Corporate Brands?" Marketing, August 13, 1998, pp. 22-23.

"Monsanto Muddle." Delaney Report, June 14, 1999, p. 2.

Nicholas, Ruth. "Test-Tube Food Ads Stir Up Row." Marketing, June 11, 1998, p. 3.

"100 Million Doses of Posilac Sold in U.S., Monsanto Says." Food Chemical News, December 21, 1998.

Sale, Kirkpatrick. "Monsanto: Playing God." Nation, March 8, 1999, p. 14.

Scott, Alex. "Monsanto Begins Campaign." Chemical Week, June 17, 1998, p. 16.

Scott, Alex. "Advertising Board Slams Monsanto Publicity." Chemical Week, March 10, 1999, p. 16.

Steyer, Robert. "Monsanto Hopes Ads Counteract Critics." St. Louis Post-Dispatch, February 10, 1994, p. C-3.

Thompson, Stephanie. "Food for What Ails You." Brandweek, May 4, 1998, pp. 36-42.

"VMAC Praises Monsanto's Post-Approval Study for Posilac." Food Chemical News, November 25, 1996.

                                            Judson Knight