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The animal health landscape
Learn about our industry!
The global animal health sector encompasses every category that directly or indirectly touches animals. The bulk of revenues comes from livestock animals, companion animals, and aquaculture. The core animal health industry is projected to be worth over $30 billion with complementary categories such as nutrition, diagnostics, and digital technology adding another $30 billion. Adjacent categories such as pet insurance, pet food, and agritech combine for an overall market size of $350 billion. In 2018, out of the top general 6,000 products, the top 25 generates over 75% of total sales. More impressively, the top 15 products generated over $100 million each; totaling to a collective net revenues between $2.2billion and $3.2 billion. Over the last decade this market has outpaced the market S&P 500 index with over 44% growth. When looking at product categories, pharmaceuticals captured the largest revenues at 58%, followed by biologicals at 30% and medicinal feed additives (MFAs) at 12%. The surge of medicated feed additives and biologicals can be correlated with the shifting mindset of the animal health industry from a treatment perspective to preventiave model of care for animals.
Medicated Feed Additives
The Big Fish in a Small Pond
One of the most notable differences which has happened in the past 20 years has been the break away of large animal health corporates from their parent human health companies and the swift mergers and acquisitions activity that follow suit. Probably the most notable move, which threw the animal health industry into the spotlight, was in 2013 with Zoetis, Pfizer's animal health subsidiary, split from the parent company; becoming at the time the biggest IPO since Facebook, with an initial public offering of over $2 billion. This move brought much needed validity to the industry and proved that animal health focused ventures could stand alone as robust, multi-billion dollar corporations.
To see how we got to where we are today, we need to see where we came from. Looking at the industry in a 20 year review, you will see many of the top players stemmed from their human health counterparts, either being acquired, merged, spun-off, or going public. Thus, the leaders of the industry may switch between the 1 to 4 top block, growing by "eating the other fish" in the proverbial pond. Below is a timeline which will walk you through the past 20 years in the animal health industry showcasing the big moves by the big players.
All animal health subsidiaries were still part of their human health parent companies
Intervet launched the first marker vaccine for classical swine fever
Pfizer acquired Pharmacia Corporation which moved the company to the first spot in the industry adding a variety of assets to its cattle product portfolio
Pfizer acquires Embrex and expands into the poultry devices and vaccines business
Merck acquires all assets from Intervet/Schering-Plough Animal Health
Merial becomes a wholly-owned subsidiary of Sanofi
Elanco acquires Ivy Animal Health and launches its Pet Animal businesses
Pfizer's animal health business spins-off as its own company called Zoetis with an IPO of $2.2 billion
Merck Animal Health becomes official name of Merck's animal health unit
Zoetis acquires PHARMAQ and gains access to leading assets in aquaculture
Elanco acquires Novartis Animal Health
Boehringer Ingelheim acquires Merial from Sanfoi to form Boehringer Ingelheim Animal Health thrusting them into the #2 spot in the industry
Eli Lilly Co's animal health unit, Elanco, spins-off as independent company with an IPO of $1.5 billion
Zoetis names Kristin Peck as new CEO making her the first female CEO of the top players in the industry
Elanco acquires Bayer Animal Health for a deal size vlaued at $6.69 billion pushing them into the #2 spot of the industry
Trends and Insight
As of 2020, the two largest animal health companies - Zoetis and Elanco -are independent, public companies. The sale off these assets proves that this is not only a growing industry, but a lucrative one as well. The other two top spots, Merck Animal Health and Boehringer Ingelheim, remain divisions of their big pharma parent. Though this has not stopped them from making big moves, with Merck's purchase of digital technology animal health company Antelliq in December of 2018 for $2.4 billion. As you can see from the timeline above, the flurry of activity in the industry correlates with the size of deals being executed. In 2018, the most notable acquisition was Elanco's bold move to acquire Bayer Animal Health. This resulted in 2019 being one of the biggest "spend" years for animal health acquisitions; with public disclosures totaling to over $8.1 billion. Although a lot of the industry's focus is on the big players, the trends of the industry tell a much wider story. Below are some of the defining features that make up the animal health ecosystem as a whole.