The global animal health market was valued at $30 billion* in 2015, a growth of 7%* over 2014 (at CER)."
Dechra's International Footprint
(sales by territory at AER)
Rest of World 5.4%
The Global Market
The global animal health market was valued at $30 billion* in 2015, a growth of 7%* over 2014 (at constant currency). The market is made up of two distinct segments, Food producing Animal Products (FAP) (i.e. livestock) and Companion Animal Products (CAP) (i.e. pets), which have different financial profiles.
The FAP market is generally based on large volumes with pressure on margins due to high levels of competition, whereas the CAP market delivers higher added value especially with specialist or niche products. Animal health customers' needs vary across the world due to factors such as standards of living, disposable income, cultural differences (including dietary preferences for animal protein), pet ownership, pet care standards and veterinarians' capabilities.
Food Producing Animal Products Market
This segment covers products or services targeted at reducing the incidence and spread of disease in livestock. The global medicines and vaccines market for FAP grew by 7%* (at constant currency) in 2015 and represented 67%* of the overall market.
The growth in this segment has been driven by the rising demand for animal protein due to the increase in the global population and the need for greater farming productivity to maximise the use of limited agricultural resources.
There is, however, downward pressure in this sector in recent years as regulators have increasingly focused on reducing the use of antibiotics due to the potential risk of cross-over resistance in humans. In particular, the EU has taken actions to reduce the intensive use of broad spectrum antibiotics in farm animals. The US also issued guidance in April 2012 to phase out the use of 'medically important' antibiotics as growth promoters. In the Rest of the World, the focus remains on increasing food safety, meat quality and improving farming efficiency.
The primary customers are veterinarians, farmers and other major livestock integrators. Products are sold either directly to large integrators or through veterinarians, wholesalers and distributors.
Dechra in the Marketplace
FAP represented 15.4% of our turnover with sales in EU and emerging markets. Our range of antimicrobial water soluble powders and injectables, targeted mainly at swine and poultry, supports the prudent use of antibiotics. The acquisition of Genera in this financial year provides an entry into the poultry vaccines market, one of the fastest growing sectors of the global animal health market in the last five years*.
Our key account managers have an in-depth knowledge of the market and our customers. Our existing business is small but represents a good base from which we can either increase market share or enter into new territories.
Companion Animal Products Market
The worldwide medicines and vaccines market for CAP grew by 7%* in 2015 (at constant currency) and represented 33%* of the overall market. Product categories in this market are anti-parasiticides (i.e. products against ticks, fleas, worms), vaccines,antimicrobials and other pharmaceuticals.
Spending on companion animals is growing globally and pet ownership is increasing in both developed and emerging markets. Advances in diagnostics, greater emphasis on prevention and wellness by veterinarians, improved nutrition and the increase in treatment of chronic diseases contribute to an ageing pet population which consumes more medication and veterinary services.
Veterinarians prescribe and generally dispense drugs themselves. In the US alone, approximately two-thirds of companion animal health prescriptions are fulfilled by veterinarians in their practices. Products are sold to veterinarians mainly through wholesalers and distributors.
Dechra in the Marketplace
We offer a broad range of specialised pharmaceutical products. We do not, at this time, compete in the anti-parasiticides and vaccines markets for companion animals. We continue to grow our established brands through frequent interaction with our customers, up-to-date marketing campaigns and technical support. We are also positioning ourselves to capture the growth opportunities in emerging markets where pet ownership is increasing.
We aim to expand our geographical footprint either organically or through acquisitions."
North America and Western Europe account for about half of the global animal health market sales*. However, other regions are growing rapidly, notably:
- growth in Eastern Europe is fuelled by the increase in demand for meat, in particular poultry; and
- sales in the Rest of the World continue to increase due to economic growth and the increased use of vaccines.
Dechra's International Footprint
Dechra competes in the two largest animal health markets: over 72.8% of our sales are in Europe, 21.8% in the US with 5.4% being in the Rest of the World. We aim to expand our geographical footprint either organically or through acquisition. In the last few years we opened several subsidiaries in new territories. In the 2016 financial year, we completed two acquisitions that open access to new geographies for Dechra, including Latin America and Eastern Europe.
* Source: Vetnosis
Increased demand for new treatments and medicines as veterinary competencies rise and owners' compassion for, and spending on, their pets also grow
Preventative treatments increasingly preferred, fuelling growth of the vaccines segment
Growing worldwide demand for quality protein
Decline in the use of antibiotics in Western Europe due to concerns over antibiotic resistance
Risk of price and margin pressure due to the emergence of corporate customers, veterinary buying groups and internet pharmacies