The partnership, dubbed the BioAg Alliance, will borrow from Novozuymes' commercial biological operations and microbial discovery and Monsanto's microbial discovery, advanced biology, field testing and commercial capabilities.
Under the agreement, the two companies will maintain separate internal and external discovery research programs to identify possible organisms for development.
Novozymes will be responsible for production and supply of the microbials to Monsanto. The Danish firm will draw from its expertise in fermentation.
Monsanto will lead field testing, registration and commercialization of any products.
Monsanto also will make an upfront payment of $300 million to Novozymes in recognition of the Danish firm's ongoing business and microbial capabilities.
Marketing of Novozymes' existing biologicals will be transferred to Monsanto along with current marketing personnel.
Biologicals, which are derived from living organisms, account for about $2.3 billion in annual sales and have been growing in the mid-teens for the past several years, according to a news release.