Kuaida Agrochemical's IPO on the Beijing Stock Exchange: Independence raises concerns; necessity of capacity expansion questioned

Kuaida Agrochemical is an integrated agrochemical enterprise primarily engaged in the research, development, production, and sales of pesticide active ingredients, formulations, and intermediates. Its product portfolio covers herbicides, insecticides, fungicides, and fine chemical intermediates. Among these, sulfonylurea-, substituted urea-, and amide-class herbicides constitute Kuaida’s core products, granting the company a certain competitive edge in crop protection for rice and wheat fields. As of December 31, 2022, Lier Chemical held a 51.00% equity stake in Kuaida Agrochemical and served as its controlling shareholder. Lier Chemical is listed on the Shenzhen Stock Exchange’s main board (SZ.002258). Lier Chemical is the first company globally—after U.S.-based Dow AgroSciences—to fully master the industrialized chlorination technology for cyanopyridine. It has successively developed herbicide products including picloram, fluroxypyr, clopyralid, and aminopyralid—all belonging to the chlorinated pyridine series. Currently, Lier Chemical is China’s largest R&D and production base for chlorinated pyridine herbicides and also the country’s largest producer of glufosinate-ammonium technical material. Given that both Kuaida Agrochemical and Lier Chemical operate in pesticide production and sales, Kuaida’s independence has drawn scrutiny from the Beijing Stock Exchange. In its reply to the first round of inquiries, Kuaida stated that glufosinate and its enantiomer, glufosinate-ammonium, produced by Lier Chemical and its other controlled entities are non-selective (i.e., broad-spectrum) herbicides, whereas all herbicides manufactured by Kuaida are selective. Thus, glufosinate and glufosinate-ammonium do not serve as substitutes for Kuaida’s primary products. However, an article titled “【Women Learning Agriculture】Scientific Use of Herbicides (I)” published by the Heihe Women’s Federation—and reprinted by The Paper—notes that the distinction between selective and non-selective herbicides is not absolute: selective herbicides exhibit selectivity only under appropriate dosages, application timing, and methods. Increasing dosage or altering application methods can convert a selective herbicide into a non-selective one. (Screenshot sourced from The Paper’s website) According to the prospectus, Kuaida Agrochemical maintains independent management and operational teams, with no overlap in personnel or organizational structures vis-à-vis its controlling shareholder, Lier Chemical. Kuaida’s management team is appointed by Kuaida’s Board of Directors and none hold positions at Lier Chemical. Nevertheless, Yin Yingsui serves as chairman of both Lier Chemical and Kuaida Agrochemical. Per the prospectus, Yin Yingsui has served as Chairman and General Manager of Lier Chemical since November 2011; he has concurrently served as Chairman of Kuaida Agrochemical since March 9, 2014. Additionally, Kuaida asserts that its principal raw materials and key suppliers differ significantly from those of Lier Chemical and its other controlled entities. Kuaida’s main raw materials include thiodiazole, 3,4-dichloroaniline, 3,5-dichloroaniline, and toluene, whereas Lier Chemical and its controlled entities rely primarily on chlorine gas, cyanopyridine, natural gas, phosphorus trichloride, and sodium cyanide—materials clearly distinct from Kuaida’s. Kuaida’s major raw material suppliers likewise differ from those of Lier Chemical and its controlled entities. Yet Lier Chemical itself is one of Kuaida’s top suppliers. Between 2020 and 2022, Kuaida purchased glufosinate formulations and other products from Lier Chemical, with procurement amounts totaling RMB 53.7983 million, RMB 36.0315 million, and RMB 30.5802 million, respectively. The inquiry response further reveals that Kuaida and Lier Chemical share another overlapping supplier—Shanghai Zhuochen Industrial Co., Ltd.—which was not disclosed in the prospectus.

Bill Anderson to become CEO of Bayer: What impact will this have on the company?

In its Q1 2023 report, Bayer discontinued four drug development programs—including two Phase I assets and two Phase II assets—without elaborating on the reasons behind the decision, such as for BAY 2395840. In March 2022, Bayer had paid Evotec—a collaboration partner—€3 million in milestone payments upon advancing this BDKRB1 receptor antagonist into Phase II clinical trials. These developments appear to reinforce external perceptions of Bayer as an ‘agricultural giant’ rather than a ‘pharmaceutical giant.’ 03 A Tripartite Division? Bayer’s strategic focus on crop science dates back to last century, but it was a five-year-old acquisition—orchestrated by Baumann—that truly elevated Bayer to the forefront of this sector: the acquisition of Monsanto. In February 2016, Bayer’s Board announced that Marijn Dekkers would step down as CEO, with Board member Werner Baumann assuming the role. Shortly before this transition, Bayer had spun off its materials science business as an independent listed entity. Upon stepping down, Dekkers proudly declared that the company had taken all necessary strategic measures to position Bayer as a pure life sciences company. By the numbers, Bayer thrived in 2015: profits reached €10.3 billion, up 18.2%; revenue totaled €46.3 billion, rising 12.1%. Dekkers projected continued growth for 2016—but Baumann chose agriculture as his priority. A year before assuming the CEO role, Baumann had already expressed strong interest in acquiring Monsanto, only to be rebuffed by Dekkers. Immediately upon taking office, Baumann revived the acquisition plan. Despite shareholder objections—citing risks associated with corporate transformation and concerns over mounting debt and integration pressures accumulated from prior acquisitions—Baumann pushed forward and completed the acquisition of Monsanto in 2018 for over $60 billion. Baumann’s rationale was clear: Bayer’s crop science business urgently needed strengthening—or risk marginalization amid intensifying competition. At the time, Dow and DuPont had merged, surpassing Monsanto to become the world’s largest seed and pesticide company; meanwhile, ChemChina acquired Syngenta, a global agrochemical leader. Baumann believed that combining Bayer’s agrochemical expertise with Monsanto’s crop science strengths would unlock tremendous growth potential. Indeed, the crop science business became a powerful engine—but Baumann could not have foreseen how quickly that engine would sputter. In Q3 2023, Bayer’s crop science division generated €4.365 billion in revenue, up just 0.6% year-on-year; for the first nine months, sales totaled €17.64 billion, down 6.4% year-on-year. Although sales volume of the herbicide Roundup rose this year, falling prices offset the gains. Declining profitability in crop science significantly dragged down Bayer’s overall performance, resulting in a net loss. Moreover, the relentless litigation surrounding Roundup has forced Bayer into a defensive posture—spending heavily to settle claims. On November 17, a U.S. district court ruled that Bayer must pay $1.56 billion in damages to four plaintiffs due to Roundup’s alleged carcinogenicity.

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