Wednesday, October 19, 2011

Chemical pesticides, antivirus software, education and medicines-conflicts of interest galore

While analyzing the business models of the chemicals, pharma and technology industries, I began to connect the dots and notice some interesting common threads, some of which I explore in this post.

Chemical pesticides are needed if the seeds are inherently weak or are not able to cope naturally against their pests. Agribusiness companies often produce both the seeds and pesticides, thus sparking an inherent conflict. Better seeds resistant to pests need less pesticides, which affects the business performance of that division. And pesticides ARE likely to be more profitable, because they cannot be reused/recycled unlike seeds(as Bt terminator gene is not widely used in India). of course, there are likely to be be Chinese walls as well as specialized seeds and pesticides companies which will keep a healthy competition-but care should be taken that consolidation sprees does not destroy that.

Similarly, writing robust code slowens the time to market and reduces the demand for anti virus. Why not kill two birds with one stone by leaving known errors, which you can then solve with your proprietary anti virus? A few techie friends of mine accuse microsoft of this.

And while pharma companies do not(yet) sell food, they do sell nutritional supplements of doubtful efficacy. And given the low awareness even among medical professionals of the interaction effects of drugs, cocktails of drugs may cause resistance and other unknown effects, thus boosting the demand for new drugs to combat that issue as well!

Some Indian education majors like NIIT, Educomp, Everonn, EdServ, Manipal Group etc are present/entering into both school/college education and also coaching/tutorials. This begs the question-which segment will be canibalized? Will a good school remove the need for tutorials or vice versa?

In all the above, the risk is greater when conglomerates take over independent and competing businesses. Therefore, having independent focussed players cuts the risk for consumers.

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