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Bayer offers more favorable conditions for the transfer of germplasm to Russian breeders

 Russian breeders that receive germplasm transferred by Bayer, as part of the execution of the Federal antimonopoly Service of Russia (FAS Russia) order issued following the consideration of the deal to acquire Monsanto by Bayer will be fully exempted from royalties on the sale of varieties and hybrids bred using the transferred genetic material, except when used directly as a hybrid parent.

As a result of negotiations between Bayer, FAS Russia and the Center for Technology Transfer of the National Research University Higher School of Economics (TTC), an agreement was reached on further simplifying the conditions for technology transfer in the breeding sector. Bayer has decided to decline to receive royalties based on the commercialization of breeding achievements that will be bred by Russian breeders receiving Bayer germplasm, except when used directly as a hybrid parent. This decision applies to all Russian germplasm recipients who are or will be selected by the TTC as recipients and who will use the genetic material transmitted by Bayer in the breeding process to create new varieties. Recipients will be exempted from paying royalties for using Bayer germplasm to create new varieties of wheat and soybeans. Also, recipients will be able to use the genetic material free of charge if it is involved in the breeding process to create a parental line for corn and rapeseed. Royalties will not be charged regardless of the proportion of germplasm in bred varieties and hybrids. The need to pay royalties persists only in one case: in hybrid crops of corn and canola, if Bayer's genetic material is used directly as a hybrid "parent" for a new hybrid of corn and canola.

At the same time, all the benefits provided by the FAS order for the payment of royalties (a 25% discount from the royalty rate applied in market conditions), in the case of using the transferred germplasm as a parent line in the production of a hybrid, remain.

In accordance with this decision, the licensing agreements, which were previously concluded by Bayer with selected Russian breeding companies, will be amended accordingly. Three recipients have already signed licensing agreements: Agroplasma, Otbor and Astra. The Astra company has already received the appropriate import permits and the delivery of germplasm will be carried out in the near future.

"The agreements reached will make it possible to significantly simplify the process of transferring germplasm to Russian breeders and will remove all risks associated with the identification of transferred germplasm in varieties and hybrids newly created by the germplasm recipients. Also, in my opinion, new conditions may open up an opportunity for participation in the technological transfer of state breeding centers. Initially, we viewed royalties as an additional incentive for Bayer to work more effectively with recipients, but the position of Russian breeders is key for us. In conditions when the need to pay royalties becomes a significant basis for making a decision to participate in a transfer, I consider Bayer's concession to waive royalties to be the right decision," said Pavel Zaborshchikov, Deputy Head of FAS Russia.

"The achieved solution is the result of a consistent and constructive dialogue with the Federal Antimonopoly Service and with all participants in the technology transfer. The decision not to charge a fee for the use of Bayer's intellectual property is our contribution to stimulating the achievement of new heights in Russian breeding and the realization of the goal of efficient implementation of technology transfer. The proposed approach is quite special for international practice in the field of transfer of intellectual property rights and implies more favorable conditions for technology recipients. Company-recipients of the technology transfer will be able to conduct their breeding activities relying on simplified requirements from Bayer, including the payment of royalties, since upon reaching an agreement, payment is expected only when Bayer germplasm is used as a hybrid parent for hybrid crops - corn and rapeseed," said Natalia Smolyarenko, Head of the Crop Science Division of Bayer in Russia and the CIS.
 
Alexey Ivanov, Director of the Skolkovo & Higher School of Economics Institute for Law and Development (ILD), and scientific director of the CTT, explains: “The licensing conditions for the transfer of germplasm were very beneficial for the recipients from the very beginning: the royalty percentage was set at a level much lower than the market level, and payment obligations came only after the new Russian variety was introduced to the market. However, in the course of communication with our breeders, we encountered a certain cultural barrier. The global practices of working with intellectual property in the breeding field have not yet become as widespread in our country as in other industries, which is also confirmed by the data of the scientific report “Breeding 2.0” prepared by the CTT and the ILD. Our institution of intellectual property rights does not work well in the breeding industry. We were looking for compromise solutions for structuring licensing relations between Bayer and recipients that would be consistent with international practices and would be agreeable to Russian breeders. But at the current level of development of the breeding market in Russia, it became clear that what the worker really needed was a radical solution. We welcome this unprecedented step by Bayer, and in the current environment, as it is clearly in the interests of Russian breeders."

The transfer of germplasm in the first directive of the Bayer technical transfer will take place in the coming months. The second transfer area involves the transfer of molecular breeding agents for crops such as corn, soybeans, rapeseed, wheat, tomato, cucumber and cabbage with up-to-date use protocols. The CTT has already selected applicants, they are awaiting approval by the Supervisory Board. At the moment, applications are being accepted for the third directive of technical transfer - for obtaining a digital database of historical agronomic data.

As a reminder, the FAS approved the deal to buy Monsanto by Bayer by issuing an order containing required commitments in relation to Bayer aimed at promoting competition in the agro-technological sector. According to the FAS regulation, in particular in the field of breeding, Bayer is obliged to ensure the transfer of molecular breeding agents and germplasm necessary for the development of highly productive new varieties and hybrids of agricultural crops with the desired elements; to provide training to recipients in applied breeding technologies and to finance the creation in Russia of a scientific and educational center for modern plant biotechnology. In accordance with the instructions of FAS Russia, the Center for Technological Transfer was created under the aegis of the National Research University Higher School of Economics, whose functions, among other things, include monitoring the implementation of the FAS instructions.