By Kevin Kipp
Century-old firm reinforces region’s leadership in life sciences.
Belgian heritage makes Hendrik Verfaillie a better man to lead Monsanto.
“Belgians are very flexible because of our history,” says the St.
Louis-based company’s president and CEO. “You can find us all over
the world. We are internationally oriented and can adapt to any
kind of environment.”
That matches up well with an agriculture company with seed facilities
in 55 countries and whose flagship product, Roundup, is sold in
130 countries.
More Verfaillie: “Belgium has been occupied by almost everyone in
Europe. You have to be adaptable to survive that.”
These days, Verfaillie (pronounced ver fi yay’) and 14,500 other
Monsanto employees are adapting to a quick series of metamorphoses
in the once-and-again publicly held corporation’s ownership structure.
Pharmacia & Upjohn combined with Monsanto through a merger of equals
in March 2000. The newly-christened Pharmacia Corporation then offered
15 percent of Monsanto to the public in an IPO in October 2000.
In November 2001, Pharmacia announced that the remaining 85 percent
of Monsanto would be spun off to its shareholders as a stock dividend
(returning it to full independence) sometime after July 1, 2002.
This is just the most recent corporate cha-cha-cha.
Perhaps because results of scientific research & development don’t
always fit neatly into a company’s strategic plan—perhaps because
strategic plans change—innovative products and subsidiaries to market
them come and go at Monsanto with the same regularity as music lovers
at Powell Symphony Hall. Visiting the company’s website history
is a little like a flipping through a family album. Familiar faces:
What are they doing now?
Sharing in some Monsanto bloodlines are Solutia (the chemical division
spun off in 1997), G.D. Searle (bought in 1985 to crack into health
care) and NutraSweet Co. (broken out from Searle in 1986, sold in
2000). Included in the companies and divisions sold by Monsanto
since 1985 are Fisher Controls, AstroTurf, Permea and Table Top
Sweetner (Merisant). Among those bought are Calgene, Asgrow and
DeKalb Genetics.
Through it all, Verfaillie says, “Monsanto remains a company based
on science.”
However, these days, Monsanto’s science leads to products considerably
more controversial than aspirin, of which Monsanto was the largest
manufacturer until the 1980s.
At the heart of the controversy is genetic modification of plants,
aiming to, say, increase crop resistance to pests and disease. Or
aimed to make crops—but not weeds—tolerant of Roundup herbicide.
Or aimed to produce a growth protein and increase cows’ milk production.
Detractors worry that insects will evolve into resistant breeds
by adapting to the genetic modification, or that the engineered
traits of Monsanto seeds might migrate to other plant species, creating
unintended, undesirable consequences. And Europeans want to know
what consuming genetically modified food does to human beings (not
to mention heavily subsidized farmers).
Some might be tempted to contradict the critics with a farmyard
expletive.
Monsanto’s former senior vice president for public policy, Virginia
Weldon, M.D., is considerably more polite, but unequivocal: “The
critics will never go away because they make their living at it.
The large environmental organizations have big paid staffs. People
give them money based on whether they're battling corporate America.
It always surprises me that people think there is something inherently
evil about corporations, but that these critics have no conflict
of interest.
“Monsanto is extremely careful to make sure that its science is
good,” she continues. “I think it has been impeccable. I know it
continues that way under Hendrik’s leadership.”
Verfaillie—speaking with that combination of accent, precision and
creative syntax that frequently identify educated, foreign nationals
who have lived in America for a long time—seems to understand the
company’s critics.
In fact, he almost sounds flattered: “Especially in biotechnology,
Monsanto is a leader in research and development and has a significant
share of the biotech market. So they look at Monsanto as leaders
and focus their attacks on us.”
More Verfaillie: “We realized that our new technology—really cutting
edge stuff, including biotech and genomics—causes people to have
questions around ethics, religion, control, safety and the environment.
We may not have been as open as we should have been.”
But the mistakes were honest, he believes. “We have, coming from
a customer-oriented background, simply marketed to the farmer. If
you do that with a good product, then you succeed. That’s what we
did for the biotech products. We believe these are absolutely exciting
products in making farming more productive and safer, but they also
impact the consumer. We didn’t appreciate the importance of communication
with consumers and others...for instance, in developing countries
discussing who controls the food chain.
“That's why we launched the Monsanto Pledge,” he says. “We are committed
to transparency and dialogue, to be more open to answer critics
more effectively.”
The Monsanto
Pledge
Respect
We will respect the religious, cultural
and ethical concerns of people throughout the world. We will
act with integrity, courage, respect, candor, honesty, humility,
and consistency. We will place our highest priority on the
safety of our employees, the communities where we operate,
our customers, consumers, and the environment.
Transparency
We will ensure that information is available, accessible and
understandable.
Dialogue
We will listen carefully to diverse points of view and engage
in thoughtful dialogue to broaden our understanding of issues
in order to better address the needs and concerns of society.
Sharing
We will share knowledge and technology to advance scientific
knowledge and understanding, improve agriculture and the environment,
improve subsistence crops, and help small-holder farmers in
developing countries.
Benefits
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.
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“The Pledge shows you a lot about Hendrik,” Weldon says.
Peter Raven, director of the Missouri Botanical Garden also cites
the “clear and cogent terms” of the Monsanto Pledge in praise
of Verfaillie. “He understands completely that their efforts won’t
be successful from a business point of view if they are not also
environmentally sustainable.”
And the success of the business, according to Raven, will require
that “everyone understands the process and everyone is represented.
From my knowledge of Hendrik, I’d say he’s committed to running
the company that way.”
Raven has a foot in the environmental camp. Nevermind his internationally
recognized leadership in biodiversity conservation. Here’s a fellow
who joined the Sierra Club in 1948 and Nature Conservancy in the
early ’60s. In 1999, he was named one of several “Heroes for the
Planet” by Time magazine.
At the same time, he has close ties to Monsanto. “They’ve supported
the Garden generously for research, education and display,” he
says. “I have advised them on biodiversity conservation and the
environmental impact of their activities for 20 years.”
Raven thinks deliberation and caution are reasonable. “Continued
concern is healthy,” he says, “and so is answering those concerns.
Additional proposals will continue to warrant scrutiny, including
the acceleration of resistance among pests for both existing and
future products.”
Meanwhile, he is constructive on Monsanto science and products.
“After 10 years of sorting out genetically modified crops, we
can draw a few conclusions. One is in regard to food safety. There’s
no longer a case to be made for distrusting these products. Many
groups of scientists have been over the evidence carefully. It’s
clear to them, as it is to me, that food safety is assured.
“However, if consumers want labeling, and if it’s feasible, it
should be done,” Raven adds. “And people should have a right to
go on questioning.”
As far as the environmental impact of genetic modification, Raven
says, “That needs to be studied on a case-by-case basis, and that
implies government regulation.”
Thus far, he believes that the various Roundup Ready crops, as
well as the Bt toxin that promotes insect resistance in cotton
and corn “seemed to have passed muster, answering credible critics.”
“Ultimately biotechnology is more environmentally friendly for
controlling insects and weeds, because it reduces the use of pesticides,”
says Verfaillie, “and the farmers love it because it works. The
technology we develop fits particularly well in developing countries.”
Verfaillie mentions the small farmer in South Africa growing cotton:
“He may not have the sophisticated knowledge to apply insecticide
to control insect pests. But we offer a seed that is designed
to control them. Now he can grow cotton as efficiently as his
Western counterpart. That helps him climb up the economic ladder.”
Monsanto also invokes the teach-a-man-to-fish theory of feeding
the hungry. Asked which Monsanto Pledge-point is most important,
Verfaillie couldn’t choose between Transparency (making information
available) and Sharing (helping farmers in developing countries).
He settled by citing an example of how the two work together.
“Monsanto spends a lot on genomics and biotech research for four
major crops: corn, soybeans, cotton and wheat. The technology
that we develop for those major crops also has application to
indigenous crops like sweet potatoes and cassava. We can make
the technology available to developing countries for use in those
crops.
“So we make the money in commercial applications,” he continues,
“but allow our technology to be used on indigenous crops. We go
one step beyond that, helping developing countries adapt these
technologies to their local crops.
Monsanto brought a Kenyan scientist to St. Louis for a year and
half. “We taught her how to insert biotech traits into crops,
and we made available a trait which makes sweet potatoes—a major
staple in Kenya—resistant to a virus that destroys 50 percent
of a farmer’s crop.”
Sharing this trait means there’s food on that farmer’s table,
says Verfaillie, “and maybe enough production that the farmer
can sell sweet potatoes, make some money, and improve the standard
of living for his family.”
For giving it away, Monsanto’s stock seems to be holding up. “Hendrik
has his hands full with the company right now,” says Weldon in
reference to preparations for the spin off, “and he's making a
huge success of it. When the stock came public it was offered
at around 20, and in spite of the market downturn, it trades [as
of mid-December] around 33.”
Investors in Monsanto, Verfaillie says, get “one of the leading
companies in the industry, with a strong base. Roundup is five
times larger that any other herbicide, and it’s still growing.
It throws off income and cash. We are also leaders in biotech.
That’s where the upside is...for the company to improve output
and make healthier crops.”
With net sales according to Monsanto’s latest financial report
at $5,493,000,000 in 2000, 10 percent of revenue is dedicated
to R&D. “Monsanto has one of the best pipelines in the industry,”
Verfaillie says.
That figure doesn’t include Monsanto’s support of the Donald Danforth
Plant Science Center, the Nidus Center, Missouri Botanical Garden,
the St. Louis Science Center or—as Verfaillie said in a speech
last November—“the effort that’s underway to make St. Louis the
buckle on the ‘BioBelt’ of the world.”
Raven credits Washington University’s former chancellor Bill Danforth
and Weldon for the initial concept of a joint effort among the
schools, the company and the Garden for a private life sciences
research endeavor. (Washington, Missouri, Illinois and Purdue
Universities have joined the partnership.)
Raven applauds Verfaillie for his key role in Monsanto’s commitment
of $50 million in cash and $14 million in land to the project.
“It’s really remarkable,” Raven says, “because the Danforth Center
is completely independent from Monsanto. They have no claim of
intellectual product.”
Fifty million is a lot for something not named Monsanto.
“They get an enhanced atmosphere for plant sciences here in St.
Louis and an environment where people would want to work,” Raven
explains. “Innovation attracts leaders for the future.”
The Nidus Center is an agricultural and medical life sciences
incubator. Its director, Bob Calcaterra, like all the Nidus employees
is on loan to the non-profit from Monsanto. The company also owns
the building, and covers any loss in operations. The center is
home to seven companies with roughly 60 employees on site.
Calcaterra says Monsanto’s motivation is four-fold. “One is truly
altruistic. They want St. Louis to be the world center for agriculture
and biotech.
“The next two work together: Nidus has potential for outsourcing
and insourcing technology. We may run across something that will
be of value to Monsanto, or they may spin off a company to develop
a new technology they uncover.”
Monsanto? Spin off a company?
“Finally—and it’s a little esoteric—if St. Louis is the world
center for life science, you can attract good employees. That
leads to an entrepreneurial culture, an environment that encourages
employees to be more innovative.”
Verfaillie, who has lived in St. Louis for 20 years, points out,
“Any company to succeed needs to attract top quality people. They
can go anywhere. We compete with San Francisco, Denver, Boston
for top researchers, scientists and other people. We have a very
high quality of life here.”
Besides the myriad projects receiving corporate support from Monsanto,
Verfaillie lends a hand personally by serving on the boards of
the St. Louis Symphony Orchestra (chaired by Weldon!) and Washington
University. He is also a member of Civic Progress.
“Hendrik and Hilda [Mrs. Verfaillie] are truly music lovers,”
Weldon says. “I see them at Powell often.” She speculates that
the Verfaillies subscribe to three series of six-concerts. “And
he is extremely generous as a contributor.”
It’s not all haute-falutin’ culture.
“Sports are important, too,” Verfaillie says. “I love the Rams.
I didn’t know what football was when I arrived 20 years ago. Now
I appreciate even baseball.”
Imagine if they served Chimay beer at Busch Stadium.
Kevin Kipp runs Bubble Communications, a creative services
and community relations firm in St. Charles.
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