The Rise of AgriTech: How Agriculture is Changing with Technology
Considering the always present, ever-developing changes and evolvement occurring in the world, it comes as no surprise that the sector of Agriculture changes at the same time. The latest technological advances discovered should never be undermined nor overlooked when it comes to their applications in Agriculture. Especially due to the fact that these same technological developments may also represent the future of the industry as a whole. That being said, this article takes an in-depth look at the Global Biotechnology industry report performed by IBISWorld, a company that specialized in performing extensive research for various kinds of global industries, all to present a full outlook on the overall impact of technology on agriculture. Besides summarizing the industry analysis of Global Biotechnology, this article will also touch upon the existing and growing challenges inside the agricultural sector that prompt opportunities for the development of countless innovative technological solutions.
The Rise of AgriTech
AgriTech simply entails the use of technology in agriculture to achieve the goal of improving sustainability, efficiency, and profitability. In today’s times, AgriTech startups are attempting to scale through the use of technology all to positively disrupt the sector as a whole.
As it is expected for the world population to grow to more than 9 billion people by the year 2050, the need for food is consequently rising as well. To satisfy the existential needs of the world population, the products gained through agriculture will necessarily need to increase. But besides just meeting the essential needs of society, there needs to be an established way of achieving the already mentioned goal sustainably.
More specifically, the latest farming practices are exhausting the farm soil, and are therefore worsening deforestation as well as water scarcity. The increase in middle class inside developing economies is leading to the demand for products that entail the collection of intense resources, such as meat and dairy. As the countries belonging to the West are wasting more food, farmers are putting in their absolute best efforts to produce products that will compensate the greatest share of food for the poor. In addition, climate change, urbanization, as well as global trade are all factors presenting new challenges to the agriculture sector as a whole.
All of the reasons enlisted above prompt opportunities for entrepreneurs and innovators to aid the agriculture sector by urgently developing creative solutions for food production as well as preservation of natural resources.
Global Biotechnology Industry Definition
Having defined the term known as AgriTech as well as having explained the challenges that exist within the sector, we can now dive into analyzing the Global Biotechnology industry as well as its latest key factors and occurrences.
The Global Biotechnology industry operators mainly use either living organisms or molecular and cellular techniques to produce products that find their application in agriculture, food, industrial, and medicine production.
As stated in the IBISWorld report, the major companies involved in this industry include Merck & Co. Inc., Johnson & Johnson, F. Hoffmann-La Roche AG, Novartis AG, Gilead Sciences Inc., and Amgen Inc. The main actions establishments in this industry perform are DNA coding, mapping, as well as sequencing, processing biotechnologies, subcellular organism research, cell, and tissue culture and engineering, protein sequencing, synthesis, and engineering, as well as producing biopharmaceuticals. Results of all of the above-mentioned activities include products and services such as human health technologies, industrial technologies, animal health technologies, agricultural as well as environmental technologies, and others.
That being said, the key external drivers for the Global Biotechnology industry include global research as well as development funding, global investor confidence, as well as the global number of adults aged 65 and older, and the number of students in OECD countries.
According to the IBISWorld report, the indirect suppliers for the industry include global oil as well as refining and marketing, and other global agriculture. On the other hand, direct suppliers for the Global Biotechnology industry include global basic inorganic chemicals manufacturing, global basic organic chemicals manufacturing, as well as global resin and synthetic rubber manufacturing.
Similarly, first-end buyers for the Global Biotechnology industry are other global agriculture, food as well as product manufacturing, fertilizers and agricultural chemicals manufacturing, as well as global pharmaceuticals and medicine manufacturing. That being said, the industry’s second-end buyers are global customers as well as the global wholesale trade.
When taking a look at the overall structure of Global Biotechnology, it can be acknowledged that its positive impact includes the industry’s life cycle growth, as well as its low capital intensity, revenue volatility, and lastly its high industry assistance. The mixed impact of Global Biotechnology entails its medium concentration, barriers to entry, and competition. In contrast to all of the above, the Global Biotechnology industry’s negative impacts include heavy regulation, high globalization, as well as high technology change.
The products and services segmentation of the Global Biotechnology industry, as stated in the report conducted by IBISWorld include, as already stated, human health, industrial, animal health, agricultural and environmental, and other technologies. The exact percentages of each of the mentioned products and services of the industry are depicted in the chart below.
When analyzing the strength of the Global Biotechnology industry, it is worth mentioning that it has high profit about its sector average, high revenue per employee, and low capital requirements. In contrast, the weaknesses of the industry represent high customer as well as high product/service concentration. As analyzed by IBISWorld, it is predicted that the opportunities for Global Biotechnology will be high revenue growth in the upcoming five years, as well as high-performance drivers. Lastly, the factors representing threats to the industry are the so-far established extremely low revenue growth, as well as a low outlier growth.
Latest News for the Global Biotechnology Industry
With the outbreak of coronavirus, Global Biotechnology has worked on creating treatments as well as vaccines for the disease. As the occurred events have caused a significant increase in the overall industry demand, revenue declines have been held off.
In addition, the concentration of the Global Biotechnology industry is also set to rise for the time being, as major establishments with various products become capable of performing within the given extreme economic circumstances.
Lastly, the industry’s competition is also predicted to rise as more and more establishments race up to be the primary ones that succeed at developing the extremely needed treatments as well as vaccinations for the coronavirus.
All of the above-mentioned occurrences will be analyzed in more detail in the sections that follow.
Current State of the Global Biotechnology Industry
Global Biotechnology consists of a wide range of establishments that perform various actions that are connected to the industry as a whole, including biopharmaceutical development, as well as genetic mapping for livestock breeding, and lastly, the creation of pest-resistant crops.
The establishments involved within the Global Biotechnology industry differ in terms of ways of operating. For example, small and committed biotechnology facilities function by performing intense research and development (R&D), and thus mainly work with venture capital, grants, initial public offerings, and collaborative agreements. On the contrary, major and differentiated establishments possess particular in-house R&D sources as well as well-developed production, popularization, and distribution processes.
As mentioned at the beginning of this article, the Global Biotechnology industry has contributed to the development of COVID-19 treatments and vaccines, which has resulted in the limitation of revenue decrease during 2020, as there had been extremely difficult economic circumstances. According to IBISWorld, as the industry revenue is predicted to be even more influenced by the pandemic, it is likely that the Global Biotechnology industry revenue will only continue to increase over the next five years. In addition, there is also an expected growth in revenue caused by additional R&D funding as well as consumer spending. Still, the industry profit is expected to decrease over the next period, since establishments involved in the industry will likely be forced to expand their R&D departments to prompt the necessary innovations.
Moreover, the global investor confidence has fallen for the last time period, an occurrence that resulted in overpowering revenue growth. What is more, as fuel prices have diminished during recent years, there has been an evoked moderate demand for biofuels, because establishments are now less motivated to invest in more affordable solutions instead of fossil fuels. Nevertheless, the overall global investment in research and development has continued to consistently increase during the last years, with the majority of its funding being channeled into medical biotechnology development, all to offer better care for the aging global population, and consequently strengthening the overall industry revenue.
Because countries including China, South Korea, as well as Taiwan, and Singapore are investing in capital to achieve a strong position within the Global Biotechnology industry. All major players that are still developing as profitable establishments are likely to proceed with performing low-risk strategies that include purchasing smaller industry operators to gather already performed reliable research for technologies ready to pursue promotion and also collaborating with academic facilities to encourage a moderate intellectual development. That being said, as it is found in the Global Biotechnology report performed by IBISWorld, it is predicted that overall industry revenue will increase over the following five years since global R&D, as well as total health expenses, are expected to keep growing as well.
Global Biotechnology: Overall Industry Performance
As mentioned above, the key external driers for the Global Biotechnology industry consist of factors such as global research and development funding, global investor confidence, the global number of adults aged 65 and older, as well as the number of students in OECD countries.
It is important to note that product research as well as development, is essential for Global Biotechnology because of the obligatory knowledge and information nature of the industry itself. Investing into research and development can either aid or diminish establishments, depending on the given economic conditions present, as well as on the existing competition from other fields of research and government precedence. As stated in the industry report conducted by IBISWorld, global research and development funding is expected to increase in the following period, resulting in potential opportunities for the Global Biotechnology industry as a whole.
Global investor confidence represents the level at which possible investors are prone to take investment risks. For example, various biotechnology establishments, as well as products, possess a high potential degree of failure, which ultimately has the effect of drawing investors away and them refusing to take on a chance and invest. In contrast, when investors’ confidence grows, so does their will to fund different new biotechnological establishments as well as projects. According to IBISWorld, global investor confidence is likely to grow within the next period, however, there exists a potential threat for the Global Biotechnology industry as a whole, due to its historical volatility.
Since the products and services offered within Global Biotechnology are developed to improve human health. Therefore, it is logical that those over the age of 65 will be prone to spend more on such products rather than those who are younger because of age-related medical conditions. That being said, the growth in the number of those aged 65 and over will potentially lead to growth in the demand for medical care as well as for biotechnology health products. The number of adults aged 65 and more is likely to increase within the next period.
The innovation of new products within the Global Biotechnology industry mostly is directly correlated to establishments being equipped with a highly educated as well as skilled labor force. Therefore, as more and more students attend school, the potential number of students in OECD countries will ultimately result in additional potential growth for the labor force of the Global Biotechnology industry. With an increase in a skilled labor force, industry operators are also able to deliver innovative products sooner. As it is found in the report by IBISWorld, the number of students in OECD countries is expected to increase within the periods to come.
As already mentioned, the Global Biotechnology industry is predicted to evolve and grow within the next five years because of the noted growth within research and development (R&D) expenses, as well as because of the broader macroeconomic and demographic occurrences, including the aging population and the universally present positive evolvement of the world economy.
Since the big markets involved in the Global Biotechnology industry mainly consist of products connected to human health as well as food production, they are generally less prone to be influenced by economic recessions, mainly because of the non-discretionary qualities of the majority of the products offered within the industry. Still, the Global Biotechnology industry significantly depends on investor funding and because of that, it is prone to revenue volatility, which generally entails changes in tax revenue that are caused by different economic fluctuations.
Besides investment funding, the Global Biotechnology industry also receives public funding from different governments, a factor that comes off as almost untouched by the occurring changes in the economy. However, in recent years the noted occurrences within the Global Biotechnology industry have been a negative impact on the demand for elective healthcare products, as well as the increase in demand for biofuels, caused by the decrease in fuel prices. Moreover, with the development of technology there has also been an established growth within the manufacturing sector, and consequently, overall growth in the industry itself. As stated in the IBISWorld report, it is predicted that the overall Global Biotechnology industry revenue will most likely grow within the next period, as well as that there will be a significant increase within investor confidence, as COVID-19 vaccines are being developed.
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