Open Innovation vs. Internal Research is a Balancing Act

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Crop input companies develop value through the development and commercialization of useful products that meet growers’ needs. Traditionally, large companies have sizeable research and development (R&D) departments that concentrate on discovering new technologies. But now open innovation versus internal research is more of a balancing act.

This effort generates new active ingredients with inherent intellectual property (IP). These sizeable development departments transform active ingredients into novel product concepts, with enhanced performance. The combination of novelty, performance, and IP translates into higher margins and higher revenues. However, this paradigm is shifting.

The rising cost of exploratory research, the challenge of discovering active ingredients that meet regulatory requirements, and the narrow scope of new product categories, such as biologicals, are making the traditional model less productive. This has created the conditions for a shift toward open innovation, like that of the pharmaceutical industry.

In today’s cottage industry, many agricultural innovations are developed by small research entities. Innovation often begins without the many development strategies needed to overcome barriers associated with user adoption. Thus, the potential for mutual benefits between the innovators and the established ag businesses.

Research entities looking to join forces with the large companies is an open conversation as Corteva Agriscience is just one example. “Through open innovation, Corteva Agriscience aims to collaborate with the global research community to tackle challenges in agriculture.” Their model for developing a best-in-class biological portfolio combines open innovation, R&D collaboration, licensing and distribution.

History of Ag Innovation

Agricultural research and development (R&D) began with the Hatch Act of 1887 that gave federal funds to state land-grant colleges. These funds were the start of experiment stations that were the foundation of extension services. It was the public sector that dominated the ag R&D in the U.S. until 1970 when private companies started investing in R&D. At that time, public investment in R&D fell to around 50 percent and was consistent until the early 2000s. By 2013, the public investment in R&D had fallen to under 30 percent.

The growth of R&D in the private sector transitioned the U.S. ag industry to a more competitive era. Companies expanded to large R&D teams, which grew the innovations and therefore the value of the private companies. This led to the “Big Six” dominating the crop input industry through mergers and acquisitions and increasing R&D budgets and staff. That trend has led to a perception that big players develop new innovations and small players license or operate in the post-patent space.

The Rise of Open Innovation in Ag

Open innovation is exactly as it sounds – companies being open to innovation coming from internal or external sources. It allows companies to focus their internal R&D staff and look at acquiring or licensing new technologies. Open innovation also increases flexibility and helps manage fixed costs. But it still requires as much or more development as part of the internal R&D model.

“Companies now are balancing external innovation with in-house research,” says Gloverson Moro, Ph.D., AgriThority® Chief Technology Officer. “You can capture a lot of value with more concentration of in-house knowledge, but the negative side is the growing cost of generating a new product. The cost of developing a new active ingredient was recently estimated at $300 million. Taken together with the time and regulatory risks make that type of investment justifiable only for very large players.”

Multiple approaches are evolving with open innovation agreements. According to AgFunder News, 86% of surveyed companies from Europe and the Americas were willing to invest in open innovation in 2023, and 93% were planning to invest in the next three years. However, more than 90% were more interested in collaborating with universities or technology centers over startups and entrepreneurs.

For companies to be successful in this new world with constant technology development, Moro encourages them to:

  1. Focus on their main strength. Is researching and discovering new technologies the strength? Or is it creating product concepts and developing them? Focus on the strength of the company.
  2. Find a balance of collaboration. Consider the funds, the talent and strengths, and execute in a way that makes sense for each company.
  3. Use a systematic approach to scout for new products or for collaboration partners. Reserve part of the budget for new innovations, strategy development and the most appropriate model to move forward.


“With conventional chemistry, one active ingredient can translate into several different formulations that translate into several different business opportunities,” Moro says. With biologicals, many times, they have a narrow product scope. This makes the internal investment less attractive, giving open innovation or collaboration more potential.

Investing in some early biological research may not always translate into the revenues needed to justify the expenditure. Collaborating and licensing proven biological products can help manage the risk of bringing a biological to market. This isn’t a new approach. Many generic companies have been operating this way for years with success, and that could be a model for some companies to bring biologicals to market.

Whether the approach is still internal research, open innovation or a combination of the two, a strategic plan is important for a systematic approach and solid execution of that plan. Learn from the successes and mistakes of other companies and other industries to determine the best path forward.

Forward-thinking agriculture experts with deep scientific experience are the core of AgriThority®. As an independent agricultural authority for innovation development, we focus on exploring potential, expanding market access, and evolving production for greater food security and sustainability. Reach out to AgriThority® today to discuss opportunities for scientific business, market, and product development expertise.