Please ensure Javascript is enabled for purposes of website accessibility

Monsanto Kills the Love

By Brian Orelli, PhD – Updated Apr 6, 2017 at 1:11AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Suing its partner. Again.

That's the problem with holding hands with the enemy. Eventually a joy buzzer appears and someone gets their hand stung.

Yesterday Monsanto (NYSE:MON) announced that it's suing DuPont (NYSE:DD) over a claimed misuse of Monsanto's herbicide-tolerant Roundup Ready technology. DuPont has licensed the right to use the technology, but Monsanto doesn't want the Roundup Ready gene combined with a similar gene developed by DuPont. For its part, DuPont claims Monsanto is trying to set up a monopoly -- every Fool's dream company. Combining the genes would likely result in seeds superior to Monsanto's Roundup Ready alone, so it's understandable how both sides want to get their way.

I've commented before about how the friendliness of agricultural companies is a bit weird. Syngenta (NYSE:SYT) and Monsanto have a deal to swap licenses to their seed traits, Syngenta and DuPont are developing chemicals together, and Monsanto has a deal with BASF to discover new traits.

Don't get me wrong; the combination of forces is good for farmers because it usually results in a superior product. And if companies can make more money from combining traits than from selling them individually, I guess investors can't complain. But the amount of friendliness among foes has always seemed a bit odd to me.

Drug companies often combine drugs in a similar fashion. Bristol-Myers Squibb (NYSE:BMY) and Gilead Sciences (NASDAQ:GILD) have an HIV drug based on the combination of the two company's drugs, and GlaxoSmithKline (NYSE:GSK) and Pfizer (NYSE:PFE) are setting up a similar arrangement. But I don't know of any example where a company has licensed the right to combine drugs to so many different competitors.

When companies set up that kind of system, there's bound to be a tussle. Monsanto and DuPont have fought in the past over one of Monsanto's other technologies, so I doubt this will be the last time someone busts out a joy buzzer.

No joking, our Foolishness is for real:

The Motley Fool's Rule Breakers newsletter is always on the hunt for cutting-edge picks. Click here to see all of our latest discoveries with a free 30-day trial subscription.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Pfizer is an Inside Value recommendation. Glaxo is a former Income Investor pick. The Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

E. I. du Pont de Nemours and Company Stock Quote
E. I. du Pont de Nemours and Company
DD
Monsanto Company Stock Quote
Monsanto Company
MON
Pfizer Inc. Stock Quote
Pfizer Inc.
PFE
$44.08 (-1.10%) $0.49
Bristol Myers Squibb Company Stock Quote
Bristol Myers Squibb Company
BMY
$70.71 (-0.81%) $0.58
Gilead Sciences, Inc. Stock Quote
Gilead Sciences, Inc.
GILD
$62.86 (-1.43%) $0.91
GSK Stock Quote
GSK
GSK
$29.36 (-2.17%) $0.65

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.