Genus is a specialist in applying biotechnology to the science of animal breeding and genetic improvement. The technology is applicable to all kinds of livestock and they currently commercialize dairy, beef and pork.
Genus operates through two business divisions: Genus ABS-Bovine Genetics and Genus PIC-Porcine Genetics. In the porcine business division, PIC combines genomic selection with years of breeding data to produce a herd from which producers can breed healthier animals, picking and choosing from a shop window of desirable attributes.
The porcine business is Genus’ crown jewel with their unique royalty model in the centre. Under this agreement a customer receives their ‘grandparent pigs’ from Genus with no up-front payment and then pays a royalty per pig once they begin producing slaughter pigs. This is clearly advantageous for the customer but also has the effect of smoothing out Genus’ revenues which helps mitigate the effects of the infamous hog cycle.
Bovine lags porcine in its quality and product differentiation (they buy in most of the semen they sell) and as such represents a much smaller portion of the profit. The aim is to move towards a similar model for this business, as well as taking advantage of new proprietary sexed semen technology. If they can bring bovine up to the operating level of porcine, the effect on the business profitability should be considerable