mHealth Israel- Animal Health Landscape
September 19, 2022 presentation about Animal Health Landscape- by Andras Bolcskei, Executive Vice President & Global Commercial Lead, CEVA Sante Animal Health. Three part agenda covers Global macroeconomic outlook, Animal Health industry trends, Implication on the Animal Health industry. Inflation Growth and Unemployment Costs. China’s consumer Inflation. CASH- Cost and availability of cash is changing which means that there is again a cost associated to taking risk = investors start being more selective. ATTRACTIVITY- In this context, attractivity of the AH sector is increased, especially in Pets, given the track record of resilience of the sector vs. other investment opportunities. We will continue to see M&A activity and R&D investment in the sector. CORPORATIZATION- Despite the increased cost of money, the predictability and history of AH and veterinary business in the last financial crises and the early stage of vet clinics consolidations in many markets are strong drivers for continued, fast-paced corporatization to continue. PET PARENT AND CONSUMER POWER- It will continue to increase in the AH, with megatrends like online 24/7 availability omnichannel, pet as family member, steady increase of pet plans / pet insurance / data driven personalization. This creates value in the market for agile companies. Transactional Customers- Know what they want, Treat you as commodity, Digital interaction, Cost focus, Buy on price, Short term. Consultative Customers- Share problems, Value your value add, Digital & analogue interaction, Advice focus, Buy on expertise and trust, Long term. Vet Landscape Evolution 2022-2025. Market consolidation. Independent Vet clinics. Companion Animals. Corporates. GPOs. Corporate landscape in Europe (data Q2 2022)- A number of large, well capitalized veterinary strategic accounts are expanding. Global trends in pet population. There are currently billions of pets worldwide. Pet ownership is rising globally, particularly in millennial households. Expanding middle class is driving pet population growth in emerging markets. Pet ownership leads to improved human health outcomes for people including better heart health, lower levels of depression and anxiety, etc. Brands & blockbusters. Increasing brand value. Zoetis, Elanco (and BI indirectly through their sales reporting) qualify blocbkusters as products > $100m – 25 brands. One Heath Concept. Sustainability. Technology innovation. Veterinary / Nurse shortage. Farms, trades, on-line shop, independent. More customers are moving to the extremes. More want deeper consultative relationships. More buy transactionally
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mHealth Israel- Animal Health Landscape
- 1. Animal Health Landscape Andras Bolcskei DVM
- 2. Global macroeconomical outlook AH industry trends Implication on AH industry AGENDA 1 2 3
- 4. Impacts on Animal Health Industry Currency & energy prices War in Ukraine weakens € Europe’s gas and oil = risk of recession Outlook Dip briefly below parity and to rally in the next 18 month at 1,02 to 1,08 Consensus Lower oil price strating from autumn-end 22 and for the Brent price to decline $90-95 in 23 and lower $85-90 in 24 The US dollar is greatly exagerated Interest rates are rising faster in the US = More appealing Stronger US growth -> increased invest in the US increased demand for dollars The mid term PUSH FOR GREENIFICATION AND RENEWABLES
- 5. Impacts on Animal Health Industry Inflation Growth Unemployment Costs Recessionary figures Lower growth (ELAN-) High demand labour =War fot Talent One-off bonuses Rising Inflation Producers/Inputs costs is rising Growth margins squeezed Costumers overall want value for money High single digit price increase in 2023
- 7. Impacts on Animal Health Industry Implications CORPORATIZATION PET PARENT AND CONSUMER POWER ATTRACTIVITY CASH Cost and availability of cash is changing which means that there is again a cost associated to taking risk = investors start being more selective In this context, attractivity of the AH sector is increased, especially in Pets, given the track record of resilience of the sector vs. other investment opportunities. We will continue to see M&A activity and R&D investment in the sector. It will continue to increase in the AH, with megatrends like online 24/7 availability omnichannel, pet as family member, steady increase of pet plans / pet insurance / data driven personalization. This creates value in the market for agile companies. Despite the increased cost of money, the predictability and history of AH and veterinary business in the last financial crises and the early stage of vet clinics consolidations in many markets are strong drivers for continued, fast-paced corporatization to continue.
- 8. Animal health industry trends
- 9. Consultative Customers Transactional Customers Know what they want Treat you as commodity Digital interaction Cost focus Buy on price Short term Farms, trades, on-line shop, independent, etc. Share problems Value your value add Digital & analogue interaction Advice focus Buy on expertise and trust Long term IL / CA Corporates & GPOs DECADE AGO 10% of customers were one or the other, with the vast majority somewhere in the middle, willing to pay a little extra for some advice more want deeper consultative relationships more buy transactionally TODAY The middle is going away as more customers are moving to the extremes Customers’ mindset change
- 10. Vet Landscape Evolution 2022-2025 Independent Vet clinics GPO’s Corporates Companion Animals +++ Equine consolidating ++ Market consolidation UK >65% Netherlands >50% Germany; Belgium; France >25% Spain - Poland - Czech Success factor aggregating demand for smaller individual clinics to stay competitive
- 11. Corporate landscape in Europe (data Q2 2022) A number of large, well capitalized veterinary strategic accounts are expanding Founded 2011 1999 2001 2015 2011 1987 2000 Ownership EQT (Silverlake and Nestlé) Public Pets At Home BC Partners Mars Banfield/VCA CVC Capital Partners Vimian Surgeries >2.200 (>900 UK) >500 >440 >260 in UK & 250 outside UK 450 (+100 in UK) 374 4500 incl 1100 USA Direct to Pet owner PDOL and MyFamilyVet Developing online shop Yes VetUK eshop, hired Amazon managers Pilot eshop in Sweden Highland GER Geographi Presence 19 countries Global player UK, Netherlands, Republic of Ireland UK only UK, Australia, New Zealand, Italy, France 14 countries Global player UK only 9 countries Global player Planned geo- expansion US, Portugal, Pol, Czech Spain, probably Germany Eastern Europe Spain, Germany Poland, Czech
- 12. Global trends in pet population There are currently billions of pets worldwide Families in the U.S., Brazil, EU and China alone account for nearly 1 billion pets. Pet ownership is rising globally, particularly in millennial households, which tend to be smaller families and have children later in life. Expanding middle class is driving pet population growth in emerging markets. Pet ownership leads to improved human health outcomes for people including better heart health, lower levels of depression and anxiety, etc.
- 13. Brands & blockbusters Increasing brand value Limited market visibility below 50m€ High competition density in all classes, in categories where in the past there were small products only : Swine Vaccines : 22 brands > 10 m€ and several brands > 100m€ Avian Vaccines: 38 brands > 10 m€ and several brands > 50m€ Blockbusters > $100m: Zoetis, Elanco (and BI indirectly through their sales reporting) qualify blocbkusters as products > $100m – 25 brands Zoetis : 8 (Apoquel, Simparica, Cytopoint, Draxxin, Revolution, Convenia, Cerenia, Proheart) Merck : 2 (Bravecto, Porcilis PCV) Boehringer : 6 (Nexgard, Heartgard, Circoflex, Frontline, Ingelvac PRRS, Vetmedin) Elanco : 8 (Seresto, Rumensin, Trifexis, Maxiban, Interceptor, Advantix, Advantage, Galliprant) 700 170 20 6 2 1350 400 50 24 12 2+ m€ 10+ m€ 50+ m€ 100+ m€ 200+ m€ 2008 2021 Number of brands by category of revenue (Ceesa 2021)
- 14. Big trends in Animal Health One Heath Concept RUMA Zoonozis Feed the globe Animal welfare Compliance Pet-humanization Sustainability Green Initiatives Green sourcing Cattle CO2 emission Excrement environment impact NL, DK, D Technology innovation Increased use of telemedicine Diagnostics Tech. Devices OnLine shops / e-commerc PIMS Inventory Management Veterinary/Nurse shortage Automatized solutions Retain employees Increased cost
- 15. It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change. Charles Darwin
Editor's Notes
- Consolidation: increasing presence and role of corporates and buying groups, meanwhile number of independent vet clinics is decreasing. Only the bigger and more sophisticated independent clinics will remain and our focus should be there (on top of corporates and buying groups).