)%20(600%20%C3%97%20400%20mm)%20(2).png)
Nufarm: Patent It or Plant It?
Agrichem powerhouse Nufarm sprouted from its 1916 roots as a New Zealand fertiliser supplier. By 2000, it had blossomed into an ag sector giant, crossed the ditch and listed on the Australian exchange.
Growing to new heights thanks to a range of premium patented products, they had bumper profit yields. But they had a looming headache because many of these patents were about to expire. Meaning, bye bye to their molocule monopoly and hello to unwelcome low-price competition.
​
Nufarm found itself needing to make a critical decision: should plow on using their reputation and skill in patented innovation? Or grow roots in the generics market?
Sowing the Seeds of Strategy
​
With the looming expiration of major patents, Nufarm knew their competitors would enter their turf and mow down prices.
Nufarm had to decide: should they stick to their roots with risky (but potentially very rewarding) R&D - or rapidly invest in growing new plant capacity to meet the growing demand for low-cost generic chemicals?
Which did they choose?
The Strategy Standoff
Strategy A: Focus on Research to Protect Their High-Margin Portfolio
​​
Double down on research & development (R&D) to dig up more proprietary products than ever. This path promised strong margins and would make the most of their research team and capability in translational science.
​​
However, R&D is expensive, so they'd have to wear a loss of market share in some formerly valuable markets as the low-cost competitors entered the field with cheap off-brand agrichem.
Strategy B: Enter Generics, Cut Price and Fight for Volume
​
Nufarm could try to harvest part the generics market by targeting the growing market segment of frugal farmers. They would have to enter the cut-throat world of high-volume, low-margin herbicides, cut research and reshape the business around low-cost (scale) operations.
Downside would be, if they couldn’t achieve economies of scale, they could lose everything as minnows fighting the worlds biggest and ruthless companies. Not to mention, they'd need to find new investors and cash to fund all that scale growth in their plant required to make any margin at all.
So, Which Did They Choose?
Cast your vote to find out!
Better luck next time, Strategy B was chosen!
Good Job, Strategy B was chosen!
.png)
But what did this mean for Nufarm...
Outcome: Facilitator Commentary
Matt Braithwaite-Young
Managing Partner
t +61 2 9002 3100
A New Harvest for Nufarm
Nufarm opted for Strategy B, deciding their future lay as a leading generic herbicide producer. They moved their focus from premium and patent protected products towards generics. What a move!
​
Most case studies like this are a warning about the risks of deciding to compete on price. In fact for most of our clients it has been a tempting option but best avoided. However, the exception proves the rule and it worked for Nufarm.
Sometimes picking a category trend is more important than anything. In this case, Nufarm correctly picked the market growth in genercis and decided to see if they could get their boat to rise with the tide. Farmers were becoming more price-sensitive and more and more accepting of generics as an alternative to the name brands they - and their parents - knew, and grew up with.
As you can imagine, this shift was huge because it required a cultural change at Nufarm from a focus on translational science and innovation (lab chemist is king) to a culture about operational efficiency and scale (plant operations manager rules). That's a completely different investment profile requiring different expectations from stockholders - not to mention a change in staff capability and skills required.
​
Critics wondered if Nufarm had sacrificed its unique edge in a crowded field but the bet they made was really about the future of generics. They had seen the same shift in human pharmaceuticals as the early 2000s had already seen a surge in human generics and the trend was hitting agrichem categories.
Fertiliser for Your Mind: Lessons from Nufarm
​
Nufarm’s decision to pivot into the generic herbicide market was risky in the sense it was not what they were known for, but it highlights a strategic principle: when your strength becomes your weakness, adaptation is your path to survival. (I think that was Sun Tzu but can't remember - you get the gist.)
​
Nufarm recognised clinging to expiring patents would leave them vulnerable. And they sensed the generics market would explode in the coming decades.
​
In commodity-driven markets, cost-efficiency often outweighs premium positioning. When we do strategy work, it is rare for anyone to seriously consider low price models – there's not much glamour at the cheap end of the market, but there are plenty still examples of low price working - just look at ALDI or even some of the low price Chinese EVs entering the market.
​
In the same vein, the transition to generics wasn’t just a business model change; it required Nufarm to rethink its identity as an innovator. It successfully managed this evolution, but not every organisation is prepared for the internal resistance changes like this can cause.
Sprouting Insights for Your Business
​
Nufarm’s story reminds us that holding on too tightly to the past can sow the seeds of future challenges. Whether you’re a CEO or a farmer, sometimes the boldest move is to plant something new.
​
At Turning Leaf, we help leaders and their teams navigate forks in the road with clarity, alignment, and actionable strategies. With our facilitators, you’ll gain insights and tools to ensure your next move is rooted in long-term success.
​
If you've read this far you are the top sprout in the nursery. Call us for a chat today - perhaps we can plant the seeds of your next winning strategy!
Get Strategy Standoff Straight To Your Inbox
Enjoying Strategy Standoff? Get new stories regularly delivered to your inbox to improve your strategic prowess!
