For decades, animal health existed as a mere side business for big pharma companies, largely ignored by Wall Street and perceived as a subordinate division and market in comparison to human medicines and vaccines.
In the last five years, however, animal health has burst onto the scene as an engine of growth and a critical profit driver in the pharmaceutical industry. The increasing global consumption of protein-rich foods such as meat and dairy, the growing trend of pet adoption around the world and the emergence of foodborne/zoonotic diseases (animal diseases transmissible to humans) are key drivers in the recent growth of the global animal healthcare market. The perceived boundary between raising healthy animals and healthy people has blurred significantly. This tectonic shift in the animal health space, which consists of two sectors—pet care and livestock production—has resulted in an explosion of dealmaking, attracted an influx of capital and created an increasingly dynamic and lucrative marketplace for all entities in the life science industry.
Dubbed in 2013 as “the $22 billion industry that nobody on Wall Street is talking about,” the animal health industry has proven to be 2015’s new “it” industry that companies at every point in the value chain are actively seeking a stake in. Estimated by Vetnosis to represent a global market of over USD 24 billion and projected to grow at a steady rate of 5 to 6% every year before exceeding USD 33 billion by 2020, animal health is a space rife with business opportunities.
Divestiture vs. acquisition
Increased dealmaking and evolution within the animal health space has revealed one key, unanswered question for the industry’s future: Are animal health divisions better off as standalone companies focused exclusively on animal health, rather than as subcategories of traditional, human-health-focused pharma organizations as they historically have been? In spite of the proven symbiotic nature of animal and human health, differing nuances in the commercial, financial and regulatory considerations for the animal health business ultimately require a different analysis than the human health market.
No doubt the biggest player in the industry, Zoetis, is one entity that operates as such an independent organization, following its wildly successful 2013 spinoff from Pfizer. Other major players may be considering similar divestitures, while more are pursuing the opposite strategy: holding onto their existing animal health divisions and building upon these with acquisitions (for example, when Eli Lilly and Company completed the acquisition in January 2015 of Novartis Animal Health to further position Lilly’s Elanco as a global leader in the animal health industry).
Either way, animal health is an accelerating industry in the pharmaceutical arena, posting no shortage of need for partners and stirring up a buzz among willing, deep-pocketed buyers.
Position yourself now to capture the growth opportunity of Animal Health
Learn how to capture the growth opportunities presented by this nascent industry by attending the dedicated workshop “Opportunities at the intersection of animal and human health” at BIO-Europe® 2015 this November 2–4 in Munich. BIO-Europe is Europe’s largest partnering event of the year and will be attended by thousands of dealmakers from all parts of the biotechnology and pharmaceutical value chain.