SWOT Analysis Indian Veterinary Pharmaceuticals Industry


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The animal health care market in the world has grown remarkably over the past few years due to the growth in the emerging markets such as China, India, Indonesia, Thailand, Malaysia and Taiwan followed by US and Europe. The animal health industry’s SWOT analysis provides animal health solutions to society depends on its in-depth knowledge of both cutting-edge technologies and classical veterinary science to innovate and keep up with the animal and human health challenges of new and emerging diseases. The main finding of this project indicates India is one of the important markets and can be seen as a key growth area in global animal health care industry.
- The Indian animal healthcare industry is responsible for maintaining the health and productivity of the over 640 million livestock and 2 billion poultry in India and ensuring the wholesomeness and abundance of the food they produce. Apart from, the industry must also cater to the health and well being of companion animals. Despite this, the global animal healthcare market is 50 times larger than the Indian animal healthcare combined market for all nonhuman species. In spite of this India’s largest milk and 3rd largest meat producer, and blessed with largest cattle population 20% of the world population, and largest buffalo more than 50% of the world. Veterinary Pharmaceutical is yet not considered as big industry as compared to Human Pharmaceutical. The reality is that the global animal health market is very complex, operating under stringent and increasingly strict regulations similar to those for human health, yet the market opportunities are considerably smaller. In an increasingly risky environment for new product development and innovation, the difference between success and failure in the future usually lies in successfully identifying the next growth segment, developing the right product candidates and being the first to market. The situation in developing countries like India is varied and economic and institutional framework of the live stock is often quite different in several respects to that encounter in developed world.

A challenging aspect of the overall market is within the animal food industry as consumers continue to express concern about the conditions under which their daily food is produced. Indian consumers are becoming more health conscious, willing to pay any amount and demanding healthy and balanced diets. By implementing a feeding plan that provides vitamins and supplements, consumers enjoy additional nutritional benefits. Additionally, healthy feeding results in minimized impact on the environment.

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SWOT Analysis Indian Veterinary Pharmaceuticals Industry

  1. 1. Title:-Animal Health Care Industry in India: An analysis of Strength, Weakness, Opportunity and Threats K.S.Niranjan (Senior Researcher & Consultant at Public & Private Value Added Marketing
  2. 2. Cattle 1400 Buffalo 195 Poultry 22000 Goat 875 Sheep 1043 Pigs 963 Pets 260 Source: FAOSTAT World Livestock Population (in Mn. Heads)-2011 2K.S.Niranjan
  3. 3. 0 5000 10000 15000 20000 25000 Global Animal Healthcare Market :2005-2011 2005 2006 2007 2008 2009 2010 2011 Year USDMillion 3 K.S.Niranjan
  4. 4. North America 33% Latin America 14% Europe 32% Asia-Rest of World 21% Total Market: 22 Billion USD Geographical Segmentation: Global Animal Health Market-2011 4 K.S.Niranjan
  5. 5. 62% Pharmaceutical 26% Biologicals 12% Medicinal Feed Additive Global Animal Healthcare Market by Product:2011 •Anti-infective •Paraciticides •Others 5 K.S.Niranjan
  6. 6. 60% Food Animals 40% Companion Animal/ Others -Cattle -Poultry -Pigs -Sheep -Goat Global:- Species-wise Market Share: 2011 6 K.S.Niranjan
  7. 7. Companion Animal 39% Ruminants. 30% Swine. 18% Poultry 11% Aquaculture 2% 13% Global Animal Health Market -(22Bn) Global Animal Healthcare Market by Species:2011 7 K.S.Niranjan
  8. 8. 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 2007 2008 2009 2010 2011 Global AH Market trend: 2007 to 2011 Companion Animals Cattle Pigs Poultry Sheep Aqua Sales in Mn.USD Source: Vetnosis 8K.S.Niranjan
  9. 9. Company Revenue-2011( $ Mn.) % share Growth % Over 2010 Pfizer Animal Health Ltd. 4170 18.9 8.7% Merck 3195 14.5 10.6% Sanofi Aventis (Merial) 2783 12.7 7.4% Elanco 1729 7.9 13.1% Bayer Healthcare 1500 6.8 7.4% Boehringer Ingelheim 1319 6.0 11.8% Novartis 1187 5.4 7.0% Virbac 811 3.7 12.5% Ceva 740 3.4 12.3% Vetoquinol 398 1.8 4.3% All others 4260 19.4 11.3% Total 22092 100.0 9.7% Market Share of Major Players of Global Animal Healthcare Industry -2011 9K.S.Niranjan
  10. 10. Pfizer 18.9% Merck 14.5% Merial 12.6% Elanco 7.8% Bayer 6.8% Boehringer 6% Novartis 5.4% Virbac 3.7% Ceva 3.3% Vetoquinol 1.8% All others 19.3% MarketShare GlobalAnimal HealthcareCompany 10 K.S.Niranjan
  11. 11. Mega Trends $ 22 billion Market in 2011 7% CAGR ( 2005-2011) Growing global affluence drives protein consumption. Continuing growth in largest segment companion animals.  The general trend in animal health is towards quality, safer and more efficacious products. Growth Drivers Focus R&D investment on innovation and state of the-art &science.  Capitalize on rapid growth of companion animals segment and geographical expansion in developing nations. Transformation from many disease control and prevention through bio-security and usage of biological products. Global Animal Healthcare Market: Snapshots 11K.S.Niranjan
  12. 12.  AHC Industry Highly Fragmented  Largest Animal population Heads.  Large Untapped Potential  Political factors Moderately favourable  Economic condition poor  Used traditional medicine  Superstitiou s belief  Companion animals & aqua segment set to grow  Trend of therapeutics and Medicinal feed Supplement  Price Competitive  Copy cat Brands  Regional Players in Many Products  Moderate competition  Emergence of new Diseases  Entrance of MNC  Expansion of Field Force  Awareness Campaign Market Structure Long Term Trend Majors Growth Drivers Evaluate • Strengthen the Rural Markets • Diverse products Portfolio • Optimal Utilization of Human Resources Environmental Scanning Future Objective & Strategies Intensity of Competition Conceptual Framework Indian Animal Healthcare 12 K.S.Niranjan
  13. 13. Conceptual Framework Indian AHC 1 2 3 4 6 5 Market Structure • Highly Fragmented, Untapped • Largest Animals Population heads 1 Environmental Scanning • Political factors: Moderate • Economy: Poor, Traditional Medicine, Superstitious 2 Long Term Trend • Therapeutics, Feed Supplement • Pets & Aqua Segment 3 Competition Intensity • Price: Competitive, Copy Cat Brands, Moderate competition • Regional Players, 4 Majors Growth Drivers • Emerging New Diseases • MNC,Field force Expansion 5 Future Objectives & Strategy • Strengthen Rural Market • Diverse Products Portfolio • Optimal Utilization of HR 6 13 K.S.Niranjan
  14. 14. Indian Animal Healthcare Market 14K.S.Niranjan
  15. 15. Cattle 210 Buffalo 113 Poultry 968 Goat 157 Sheep 75 Pigs 9.5 Pets 14 Aqua-80,000 Hectares Source: FAOSTAT Indian Livestock population: 2011(in Million Heads 15K.S.Niranjan
  16. 16. Sheep-75 Million Heads Goat-139 Million Heads Pigs -26 Million Heads Pets-14 Million Heads India Biological Market:2011 Source: Complied from CLFMA, Govt. of India, American Soya bean Association Total Cattle: 592 Million Heads 16 K.S.Niranjan
  17. 17. 9% 5% 35% 10% 12% 8% 7% 0% 5% 10% 15% 20% 25% 30% 35% 40% 0 5000 10000 15000 20000 25000 2005 2006 2007 2008 2009 2010 2011 Rs.Million Years Indian Animal Healthcare Market Growth 2005-2011 %Growth 17 K.S.Niranjan
  18. 18. GrowthSales(Rs.Mn) Years 18 K.S.Niranjan
  19. 19. Pharmaceuticals 46% Medicinal feed Additive 26% Biological /Bio- Security 28% Indian Animal Health Market By Products- 2011 0 2000 4000 6000 8000 10000 12000 10050 5800 6150 Market(Rs.Mn) 19 K.S.Niranjan
  20. 20. Indian Animal Healthcare Market by Segment :2011 Cattle 51% Poultry 36% Companion Animal 6% Aqua 4% Sheep & Goat 3% 0 2000 4000 6000 8000 10000 12000 11220 7920 1320 880 660 Cattle Poultry Companion Animal Aqua Sheep & Goat Market Share in (mn.INR) 20K.S.Niranjan
  21. 21. 0 2000 4000 6000 8000 10000 12000 2007 2008 2009 2010 2011 SalesinMillionINR Indian Animal Health Market Trend: 2007 to 2011 Cattle Poultry Companion Animal Aqua Sheep & Goat 21K.S.Niranjan
  22. 22. Shift towards increase milk production Focus on cross breeds & high yielding animals Professionalization of poultry industry, treating to prevention Advance feed production Pelleted to Global std. Changing structure of farming more towards integration Willingness of pet owner to spend more on their health Development of growing Aqua (fisheries) segment Emerging Trend: India AHC 22 K.S.Niranjan
  23. 23. Pfizer Animal Health Virbac Animal Health(I) Pvt. Ltd. Venky,s India Ltd Provimi Animal Nutrition (I) Pvt.Ltd Zydus Animal Health MSD Animal Health I Pvt. Ltd Intas Pharmaceuticals Ltd Alembic Veterinary Novartis Animal Health Vetoquinol Animal Health Top 10 Major Players in Indian Animal Healthcare Industry 2011 (Not Ranked) 23 K.S.Niranjan
  24. 24. GLOBAL Species-wise Pharmaceuticals 62% Biological 26% Feed Additive 12% Products INDIA Cattle 52% Poultry 37% Pets 6% Others 5% Species-wise Pharmaceuticals 46% Biological/ Bio-security 28% Feed Additive 26% Products Cattle 30% Pets 39% Poultry 11% Swine 18% Aquaculture 2% Glocal Animal Health Market:2011 24 K.S.Niranjan
  25. 25. 0 5000 10000 15000 20000 25000 30000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Sales ( Rs.million) India Animal Health Market Estimated Sales: 2006-2015 25 K.S.Niranjan
  26. 26. Livestock industry contributes 6% to GDP next to agriculture 2nd largest contributor to GDP – the future food factory of the world India is world largest milk produced 122 million ton. Poultry 3rd largest egg and meat producers in the world Ranks 4th in Sheep & 6th in Fish production in the world Has 58% of World buffalo heads. Per capita consumption levels Milk: 265 gm Tgt: 400 gm Meat: 2.6 kg Tgt: 3.5 kg What's Makes India Attractive pet owners to spend more on the health of the animals 26 K.S.Niranjan
  27. 27. Concern (Main Barrier) of Indian Animal HealthCare Industry Lack of Official Market Data Lack of linkage between industries and academician for marketing research and advance drugs discovery Lack of Growth : Value Vs Volume Unethical Marketing Practices Low Export Opportunity Direct Selling by Sales Staff/ Handling Cash High Attrition Rate of the Sales personnel's Very High Territory Development Cost Varying Customers Perception No New Products (Copy Cat Branding) Classification of Feed Supplements (No Stringent Law) Unclear Value of Rx from Veterinarian/Para/Customers High WC: Cattle: 21 - 120 days, Poultry : >120 days Parallel Manufacturing & Marketing by 3rd party Formulators 27 K.S.Niranjan
  28. 28. PEST Analysis: India Animal Healthcare Industry Socio-cultural Factors Poverty and associated inadequate nutrition exacerbate the incidence of many disease. India farmers prefer using household treatments handed down for generations for common ailments. The use of magic/tantrics/ozhas/hakims is prevalent in India. Ignorance of inoculation and vaccination has prevented the eradication of diseases like FMD,HSBQ,Anthrax,RD,IBD and others. Superstitious beliefs and any sort of ailment is Political Factors Industry threatening to impose even more stringent price control. DPCO nullifies the market forces from encouraging competitive pricing of goods dictated by the market. 2005 the country goes in for the IPR (Intellectual Property Rights)regime, popularly known as the Patent Act. Excise Duty on the cost of manufacturing to the MRP thereby making the finished products more costly. Subsides in specific area, others place are not suitable for Mfg. Technological Factors Advanced automated machines have increased the output and reduced the cost. Computerization has increased the efficiency of the animal Pharmaceuticals Industry. Ayurveda is a well recognized science and it is providing the industry with a cutting edge. Advances in Bio-technology, Biological research have given India a step forward Economic Factors Customers spend a very small proportion of its income on animal health, until severely sick. Per capita income of farmers is very low. The incidence of Taxes are very high. There is Excise Duty (State & Central), Custom Duty, Service Tax, Profession Tax, License Fees, Royalty, Pollution Clearance Tax, Hazardous substance (Storage & Handling licenses) income tax. High interest rate regime cost of funds is double Adequate storage and transportation facilities for animal health drugs is lacking. Poor infrastructure like roads & rail network 28 K.S.Niranjan
  29. 29. Porter’s Five Forces Model(AHC) 29 K.S.Niranjan
  30. 30. Porter’s Five Force Analysis: India Veterinary Pharmaceuticals – Bottlers INDUSTRY COMPETITORS Rivalry among existing firms BUYERS – High, Moderate • In oral nutritional supplement the buyer power is very high, implying strong downward pressure on prices •The treatment products such as antibiotics which is prescribed by veterinarian leads to compulsion for buyer. •Switching cost is somewhat low •Rivalry between one company to another is heavily severe. •processes are similar as human pharma, creating similar high costs to develop and release new drugs. ENTRANTS -Moderate •Primary threat for entrance from generic drug. • Making products available to all the retailers is hard and time taken. •Animal drug competition is less susceptible to generic influence except some oral supplement as well as nutritional products. • Large economies of scale that create high barriers to entry. Small scale start-ups require a large amount of capital and face many risks, SUBSTITUTES - High •Retailers can be easily replaced by other products. • Generic manufacturer and local company create substitute for pioneer drugs, these represent a copy cat strategy in feed supplement and anthelmintics. • High margin and high promotional discount is also another reason for substitutes. • In pets products and biological products there is less substitute as compare to large animal products. SUPPLIERS - Moderate • Feed Supplement- Low • Therapeutic- Moderate •Biological & Hormonal preparation- High. •The animal health industry is a primary manufacturer and has few and diversified suppliers. • Some chemical and other ingredients used by pharmaceuticals company has very high quality standard ,this can lead to a form of market power so there are relatively few supplier of a products who can provide those quality assurance Bargaining power of suppliers Threat of new entrants Bargaining power of buyers Threat of substitutes 30K.S.Niranjan
  31. 31. Porters Five Forces Model:- Indian Animal Healthcare Industry Buyer Power: High, Moderate Buyers: Stockist,Retailers, Veterinarian, Dairy & Poultry Farmers Medicinal feed supplement the buyer power is very high. •In Therapeutics, customers have very little bargaining power. Most of the medication is prescribed by the Vet. practitioners. Customers will have to buy the drug at any given price if they need it. More educated customers may buy a generic alternative (which have the same impact but less expensive) if available in the market. Switching cost is somewhat low and customer can easily switch from one products to another cost effective products, with the influence of the retailers. Retailers buyer power is very high, because of the regional company and some new entrants who offer high promotional discount and credit facility to make availability of the products. Governments in most of the state are generally the important customers, and therefore, enjoy substantial pricing leverage. Pricing pressure – The India remains one of the few developing markets where drug manufacturers have significant pricing flexibility, and this is in jeopardy due to increasing pressures from consumers and legislators to control health care costs. Bargaining Power of 31K.S.Niranjan
  32. 32. Supplier Power: Moderate Suppliers: Chemicals, Raw materials, Bulk Drugs Medicinal Feed Supplement-Low Therapeutics- Moderate Biological & Hormonal-High There are few supplier because of less number of companies in the market. The Switching cost is high then company cant easily switch from one to another's The product is not standardized so that they don’t have many choices. Animal healthcare industry is a primary manufacturer and have few & diversified suppliers. Some chemical and other ingredients used by pharmaceuticals company has very high quality standard ,this can lead to a form of market power so there are relatively few supplier of a products who can provide those quality assurance. Suppliers generally have little room for negotiation. Large AH pharmaceutical companies generally enjoy significant buying power. Bargaining Power of 32 K.S.Niranjan
  33. 33. Substitutes Power: High The switching cost is low. Customers can find substitute medicine if the original product is more expensive. However, if it is a new product the consumer generally will have no choice for an alternative. Retailers can be easily replaced by other high margin products. Generic manufacturer and regional players create substitute for pioneer drugs, these represent a copy cat strategy in feed supplement and anthelmintics. High margin and high promotional discount is also another reason for substitutes. In Pets products and Biological products there is less substitute as compare to large animal products Threats of 33 K.S.Niranjan
  34. 34. Threats of New Entrants: Moderate Primary threat of entrance from regional company as well as generic. Very low barrier to entry Govt. Policy supportive(100% FDI) Making products available at all the retail outlets is expensive and time taken. Animal drug competition is less susceptible to generic influence except some oral supplement as well as nutritional products. Large economies of scale that create high barriers to entry. Small scale start-ups require a large amount of capital and face many risks Heavy invest capital required Threat of 34 K.S.Niranjan
  35. 35. Highly competitive top 10 players have mere 80% market share The exist barriers are very high Industry growth is slow and time taken. Lower fixed cost and high working capital Rivalry between one company to another is heavily severe. Processes are similar as human pharmaceuticals, creating similar high costs to develop and release new drugs. Huge competition based on the price of the product among the various companies Competitor Rivalry: High 35K.S.Niranjan Competitors
  36. 36. SWOT Analysis: Indian Animal Healthcare Industry: Strength Animal healthcare drugs are similar to human pharmaceuticals drugs and no specialized machinery is required for manufacturing them. Sizeable population of high yielding cows and buffalo; large domestic market for milk and milk products. Animal-health research and development is much faster, less expensive and more predictable than human pharmaceuticals. India’s large number of 9527 Veterinary Hospitals/Polyclinic 20897 Veterinary Dispensaries, 24482 Veterinary Aid Centre/Mobile dispensaries, 335 Disease Diagnostic Labs 28 Veterinary Vaccines Production Units. 36K.S.Niranjan
  37. 37. India with a largest animal population heads is a largely untapped market. The penetration of animal health products is less than 15% in India. Indian manufacturer are one of the lowest cost producers of drugs in the world, drug manufacturing in India is up to 50 percent cheaper than in western industrial countries, and well developed industry with strong manufacturing base. Animal healthcare companies promotional strategy is based on direct contacts with customer like dairy farmers, poultry farmers and indirect selling through veterinarians, livestock supervisor etc. Animal drug competition is less susceptible to generic influence except some oral supplement as well as nutritional products. 37 K.S.Niranjan
  38. 38. There is no any stringent law for nutritional products so that most of the mall practices are using by the regional and local player. Distribution channel are highly fragmented, difficult to make availability of products and increasing distribution costs for animal health products. Industry is highly dependence on import from China due to unmatched costs of power and high capacity build up leading to low cost of production. Inadequate Infrastructure like power, roads and cold chains lack of advance labs and related infrastructure for drug testing and appropriate treatment method. There is a conspicuous lack of strong linkage between industries and academician for marketing research and advance drugs discovery. Low capability and motivation for cutting edge research, diagnosis labs, drug sensitivity and platform Weakness 38 K.S.Niranjan
  39. 39. Fragmented nature of cattle population mostly non- descript animals in rural India, it’s more expensive to penetrate the market by the sales force and time taken, which increase the sales and distribution costs to the animal health companies. Price Regulation-Reduce the pricing ability of companies, leads to lower profitability for the companies. Lack of products patent-prevent global pharmaceuticals companies to introduce new drugs in the country, but this has provided on upper hand to the Indian pharmaceuticals companies. Very low barrier to entry , animal healthcare pharma is highly fragmented, leads to increasing competition and price competitive. Negligible expenditure on animal healthcare research & development. Lack of appropriate marketing research before 39 K.S.Niranjan
  40. 40. Key opportunities for growth are the willingness of pet owners to spend more on the health of their animals and the ability of veterinarians to meet that need. Very lucrative high profit making market with the high chances of growth, increase awareness among people about nutrition, vaccination, bio- security, animal health and productivity. Future trends include product development for growing segments like parasitic ides and biological products for companion animals, increased shopping at retail outlets and through internet and over-the-counter (OTC) products posing stiff competition to prescription. The professionalization of poultry industry, changing focus of farmers from treating to preventing disease are other factors will drive Opportunities 40 K.S.Niranjan
  41. 41. Emergence of new diseases, changes in animal production practices, high yielding cattle’s and new product introductions and ongoing food safety concerns. The companion animal and Aqua (fisheries) segment would be tomorrow market, while poultry will remain at the centre of animal health industry, as the functional food market is likely to grow in India. Frequent outbreaks of animal diseases such as avian influenza, anthrax, and other viral and bacterial infections, animal healthcare companies has gained tremendous significance across the Indian Territory. There is a large unorganized sector, estimated at Rs 40,000 million, comprising regional players and local importers of animal health products from others Asian countries. Opportunities 41K.S.Niranjan
  42. 42. Increasing the feed cost of poultry as well as cattle, and inflationary pressure continue to be areas of concern. Inadequate infrastructure and cold storage facilities, impact prospects for export and cause price fluctuation in the poultry segment. Marketing in the village include some unplanned taxi tour and non availability of public/ private transport as well as travelling by two-wheeler is highly expensive to the companies. Poorly educated rural population, lack of adequate qualified veterinarian, lack of awareness of ailments or symptoms, cultural gaps in urban marketers and rural dairy farmers, scant availability of marketing research. Increase competition to country like India from emerging manufacturer in China and east Europe Threats 42K.S.Niranjan
  43. 43. and not increasing the milk, eggs and meat in the same manner as compare to feeds and drugs. High cost of sales and marketing, competition particularly from regional players in the feed supplement products. Unregulated competition from generics as well as local and regional veterinary pharmaceuticals companies. Diversion from dairy farming, poultry farming to agri-business nearby tier-2 & tier-3 cities due to increase the land prices. Drug Price Control Order puts unrealistic ceiling on product prices and profitability and prevent veterinary pharmaceuticals companies from generating investible surplus. The uncertainty in the pricing policy ( Governed by the national pharmaceuticals pricing committee % 43 K.S.Niranjan
  44. 44. Integration Merger & Acquisition New Product Line Increase Pet owner Awareness Consistent Animal healthcare Market Size Market Size 2007 2011+ 44 K.S.Niranjan
  45. 45. Current Situation Demanding customers Unethical Marketing Practices Proliferation of Generics Price War Customer Knowledge > Sales Force Target Branding & Marketing Excellence Strong Brand & Product Range  Efficiency in Procurement to Compete Generics  Vaccines, Bio-security & New Drug Delivery System Current Situation Holding From Reaching the Target 45 K.S.Niranjan
  46. 46. (Medicinal Feed Supplement, Antibiotics & Antiparaciticides) (Bio-security/ Preventive products (Biological, Hormonal Products) (Rumen-tonics/DPCO Products/ Others) Low HighLow High Invest Select a Few Remainder Divested Liquidate Market Growth Market Share BCG Matrix: Indian Animal Healthcare Industry Star Dog 46 K.S.Niranjan
  47. 47. THANK YOU 47 K.S.Niranjan
  48. 48. 48 K.S.Niranjan