Driven by technological advancements in veterinary care, the animal health industry has almost tripled in the last two decades. In 2019, it was valued to be worth $47.1bn.
This growth has been enjoyed by animal health giants like Elanco and Boehringer Ingelheim, while also attracting major corporations from other industries to the marketplace – like Pfizer with their subsidiary Zoetis.
The presence of these multinationals has made it harder for start-ups and smaller companies to compete.
It’s already a tough environment for start-ups, with R&D, testing, trials and market entry for vaccines, medicines, feed additives, technology and devices lengthy and costly processes.
But with M&As helping larger companies to increase their market share, diversify their offerings and stay at the bleeding-edge of innovation; start-ups are beginning to recognise their limitations within the market and major players are enjoying the mammoth share.
Despite the global turmoil caused by COVID-19, there’s been a considerable amount of deals done in 2020 with more companies taking advantage of M&A growth strategies.
Merck Animal Health have been busy diversifying their offering with new technology from IdentiGEN in DNA-based animal traceability for livestock and aquaculture.
IdentiGEN’s technology combines each species’ unique DNA (deoxyribonucleic acid) and data analytics to provide an evidence-based animal traceability solution, called DNA TraceBack. It accurately traces beef, seafood, pork and poultry that is verifiable from farm-to-table.
This deal came after exciting news of a $100m manufacturing cash injection into their Desoto site. This will ramp up their animal vaccine production and pave the way for future innovation.
Boehringer Ingelheim’s acquisition of Belgian biotech, GST, seems to be all about diversification of their offering and innovation too.
The deal strengthens Boehringer Ingelheim’s stem cell capabilities in animal health, taking advantage of GST’s state-of-the art stem cell products for horses and pets.
The acquisition follows two years of partnership that brought the first-ever registered stem cell-based veterinary medicine to the European market.
This decision to acquire GST is fully aligned with part of Boehringer Ingelheim’s Animal Health strategy, aiming to strengthen its portfolio capabilities to accelerate innovation and growth.
Major players aren’t just acquiring start-ups, they’re acquiring each other too.
In April, US company, Heska Corporation, made a move to become the global leader in veterinary point-of-care diagnostics. They acquired Europe’s frontrunner in this area, scil animal care.
Scil animal care’s network and localised resources are ready to help Heska conquer the region. Plans for expansion are in place and should see Heska offer their service to over 25 countries around the world with major market shares in the US (≈12.5%), Canada (≈13%), Germany (≈40%), Spain (≈40%), France (≈30%), and Italy (≈19%). Heska also aim to leverage a strong and growing presence in the Czech Republic, the Netherlands, Poland, the UK, Australia, Latin America and Malaysia.
Heska are a company going places, servicing millions of pets through tens of thousands of veterinarians and active point of care analysers around the world. This M&A confirms them as the major power in veterinary point-of-care diagnostics.
In August, Elanco completed a $7.6bn acquisition of Bayer Animal Health in the biggest deal of the year so far.
Bayer bring new strengths to Elanco, including sterile injectable products which are manufactured locally, plus well-known pet products like Advantage and Seresto.
Bayer’s expertise in retail and consumer marketing will also be advantageous when capitalizing on trends accelerated by the COVID-19 pandemic. This includes pet owners’ increased desire to access care and products via online, retail, telemedicine and direct to the doorstep.
The new entity is now equally strong in the livestock and companion animal markets. I expect to see them go from strength to strength from here on out and wouldn’t be surprised to see a continuation of an aggressive M&A strategy that’s already seen acquisitions of Prevtec Microbia, Aratana Therapeutics and Janssen Animal Health.
M&A’s are proving a successful way for major companies to expand their market shares, diversify offerings and innovate. I expect to see this trend continue for the rest of the year.
While it’s hard to see how smaller companies will compete in this market, all is not lost. The animal health market is growing and start-ups should enter the market in confidence, knowing that there’s big pay day available to those with unique technology.
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