Global animal health sector poised for growth

Growth in sector for companies big and small is said to be contributing to much healthier ecosystem in animal health.

Sarah Muirhead 1, Editor, Feedstuffs

November 9, 2018

4 Min Read
Global animal health sector poised for growth
University of Kent/BBSRC

The global animal health sector is in a solid growth period, one that is particularly positive for start-up companies as they become the target of the top players striving to expand their product line reach through partnerships and acquisitions, according to Joseph Harvey, editor of Animal Pharm.

During a Nov. 8 webinar on the changing ecosystem of animal health, Harvey noted that the $35 billion industry has discovered the power of external partnerships, and for start-up companies able to secure the necessary venture capital, that is creating some strong opportunities for the sector overall.

“There is a lot of growth out there for companies big and small, and this is contributing to a much healthier ecosystem in animal health,” Harvey said.

At the same time, Harvey noted that the animal health industry is changing. The traditional core continues to exist, but there are a lot of other industries now circling that center, including those involved in genetics and nutrition.

“Animal health companies are looking outside their field of expertise to third parties that can contribute their own research capabilities. It is a broadening of the animal health sector,” Harvey said, noting that this is happening partly as a result of outsider influence, specifically from consumers and regulators focused on pushing an animal welfare agenda.

As for whether the animal health divisions of such companies as Bayer and Merck will strive to go public, Harvey said it likely depends on how well Elanco's move to public ownership goes. Zoetis has proved that it works, and Elanco is certainly off to a great start, he said.

Harvey also noted that he would not be surprised to see China make a run at a major North American or European animal health company. There are a lot of acquisitions happening within China in the animal health arena at this time, and it just makes sense that China also would look outside its borders, he said.

Inevitably, Amazon will be major force in the animal health sector. Harvey said Amazon will go beyond just a distributor role and will become a provider of generic drugs as well.

The technology revolution is well underway within the global animal health sector with increasing adoption of such things as sensors and other digital technologies. This, Harvey said, will continue to be a growth sector. At the same time, he noted that animal health technology companies will be key merger and acquisition targets over the next few years.

As for whether cell-based meats poise a risk for the traditional meat sector, Harvey said that is a big question mark. While the technology is certainly here, the market is still very much niche, he said. In fact, in his estimation, it will take 70-80 years for the industry to even get to a point where it can produce enough product to overtake the current meat production system. “There is so much growth to be realized in animal health that it really shouldn’t be a distraction at this time,” he said.

In regard to challenges in animal health, Harvey said the availability of venture capital has proved to be a struggle. There is simply a lack of investors with a substantial enough understanding of animal health to make a play in the sector, he said.

Also, a lot of competition exists in animal health at this time, and that is pushing up the price of external partnerships. That is good for the start-ups and such, but it does mean higher costs for those looking to do business with them, Harvey said.

Finally, from a sector challenge standpoint, Harvey said many companies are trying to figure out how to monetize digital technology. Those that have such technology are taking a hard look at whether it is just cool to have or if it actually adds value and provides a return either in the form of dollars or customer retention.

Animal Pharm recently published its "Top 50 Companies 2018" report ranking the top 50 global animal health companies. The report provides a global perspective of the animal health industry, featuring companies from North America, Europe, Asia and Latin America. It displays the trends that drive revenue growth in different sectors, charts the successes and failures of the top 50 companies and provides an in-depth look at future trends. More information is available by contacting [email protected].

About the Author(s)

Subscribe to Our Newsletters
Feedstuffs is the news source for animal agriculture

You May Also Like