Challenges For Profitable Growth in Livestock Industry
through
Animal Health & Welfare
Dr. P. R. Rao CEO, Novartis South Asia & Chairman, Animal Health Products Sub Committee, OPPI. Lonavala, INDIA 12th September 2009
The greatness of a nation and its moral progress can be judged by the way its animals are treated
..Mahatma Gandhi
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Four Ingredients of Profitable Livestock Operations
+ BREED FEED
Quality
HEALTH CARE
MANAGEMENT
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Our Purpose
We improve lives, We extend lives, We save lives
Feed the world
Maintain Health
Treat & Cure Disease
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Global Animal Health Market
The World Market
World Livestock Population 2008 In Mio. Heads
Pigs, 944
Cattle, 1,365
Buffaloes, 172
Goats, 790
Sheep, 1,059 Dogs, 240
Poultry, 18000
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As per FAO, 2005
World Animal Health Market- Estimated sales
Sales (billion USD)
20
Year 2008 2007 2006 2005
Companion Animals 42%
Sales
(USD Bn.)
18 16 14 12 10 8 6 4 2 0 2005 2006
Cattle Pigs
19 18 16 15
2007
26% 16% 11% 5%
2008
Farm Animals 58%
Poultry Sheep
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Product Groups 2008
Medicinal Feed Additives 12% Total Pharmaceuticals 65%
Parasiticides Vaccines 23% Others Anti-Infectives
29% 20% 16%
Total Market: 19 billion USD
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Species Wise Market 2008
Companion Animals 42% Others
Farm Animals 58%
Cattle Pigs Poultry Sheep
26% 16% 11% 5%
Total Market: 19 billion USD
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Market Trends : 2006 to 2009
Sales in million USD Source: Vetnosis
8,000
7,000
7.16%
6,000
5,000
1.75%
4,000
3,000
1.06% 0.86% 0.04%
2,000
1,000
0 1996 1997 Cattle 1998 1999 Sheep 2000 Pig 2001 2002 Poultry 2003 2004 2005 2006 2007* 2008* 2009*
*estimates
Companion Animal
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Top 10 Companies 2008 - World Market
Rank 2007 1 2 3 4 5 6 7 8 9 10 Rank 2008 1 2 3 4 5 6 7 8 9 10 Company I/SP * Pfizer N Merial Bayer N Novartis N Elanco Fort Dodge Boehringer Ingleheim Virbac N CEVA N Rank 1-10 Total World Market
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Sales million USD 2,973 2,825 2,643 1,408 1,107 1,093 1,088 683 621 541 14,982 19190
% Share of total market 15.5 14.7 13.8 7.3 5.8 5.7 5.7 3.6 3.2 2.8 78.1 100
Growth % over 2007 9.7 7.0 7.9 7.6 4.8 9.7 4.4 22.4 3.5 16.6
7.2
Global Animal Health Business : Challenges
Long term sustainability
Higher cost of bringing a new product to market Vs expected return Disincentive for innovation
Regulatory agencies to understand animal health industry
requirements rather than merely transposing from human sector, where the drivers are often very different.
3 key areas will result in a range of new products within the
next few years
Sequencing of whole genomes, New genomic tools, and RNA-based technologies
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Global Animal Health Business : Challenges
Effective partnerships between industry, academia,
international animal health organizations and regulators is essential to accelerate the progress to market of innovative products
The European Technology Platform for Global Animal
Health represents a useful model of how these stakeholders can be brought together effectively.
Limiting the development of antimicrobial resistance due to
the use of antimicrobials in animals is one of the greatest challenges
Entry into Emerging Growth Markets and reaching BoP.
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Animal Health Market - India
Biological Market 2008
Population in Million Heads
Cattle
285
Layers Broilers Breeders Sheep Pets Aqua
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164 1750 12 120 0.4 70,000 hectares
GLOCAL AH Market 2008
Therapeutics 65% Feed Addit. 12% Vaccines 23% Cattle 26% Poultry 11% Sheep 5% Pig 16% Pets 40%
World AH Market 19190 Mio. USD +7.2%PY
India: 369 Mio. USD 1.9% MS Feed Addit. 27%
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Cattle 52% Poultry 38% Pets 5% Others 5%
The Dynamics of growth
Market
Trade
AH INDUSTRY
Government & Livestock
NCE
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What Makes India Attractive
Dairy Segment
No.1 milk producer in the world (106 mio.
tons per year)
Poultry Segment
5th largest Egg Producer Growth rate of eggs & broilers are
16% and 20% respectively (CII & Mckinsey)
Meat products (Pork/Beef/Mutton) have a
growth rate of 10% (CII & Mckinsey)
Increasing urbanisation leading to
greater consumerism (Packed milk & meat products)
Productivity of hens equivalent to
USA (300 - 305 eggs/year /hen)
All Poultry & Livestock related industries
establishing base to encash from one of world largest growing economy
Indian eggs cheapest in the world (75
cents/kg)
Production of egg powder for export
greater than China
10th five year plan of Govt. of India
focuses on live stock industry and a National Cattle Development Board set up with huge funds
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Potentiality of marketing poultry feed
for the whole world
The Industry
The Animal Health Care is an integral part of Rural Development. The Indira Gandhi Centre for Advanced research on Livestock
(IGCARL) , a research centre in Andhra Pradesh to develop a world class centre for advanced research in livestock development at more than Rs.600 Crores is fast completing.
Various subsidies extended by government including supply of high
yielding cows and buffaloes to weaker sections have created rural employment and economic development.
Bottom of Pyramid projects by few multinational Animal Health
Companies in dairy sector too gave fillip to rural upliftment.
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The Focus
The Tenth Five Year Plan of Government of India envisages enhanced and
sustainable productivity through improved animal health. The major thrust will be on :
genetic up gradation, conservation of livestock breeds, creation of disease- free zones, development of fodder, Sheep & Goat development, improve animal husbandry extension network, Quality assurance of dairy & poultry produce, promotion of backyard poultry, strengthening of veterinary education, encourage interface with scientific community and other stake holders like animal health companies, poultry associations etc.
More and more Agri- clinics and Farm Science Universities
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Veterinary Institutions
Veterinary Polyclinics/Hospitals: 8720 Veterinary Dispensaries: 17820 Veterinary Aid centers: 25433 Disease Diagnostic labs: 330 Veterinary Vaccine Production units: 27
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Indian A.H Farmaceutical Market: Growth
22000 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0
CAGR 2002- 2008 10%
Rs. Millions
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?
2008
1965
1980
1996
1999
2002
2003
2004
2005
2006
2007
2009
India- Market Overview
Market Size (Currency)
Canine 5% Poultry 38%
Others 5%
Cattle 52%
Cattle Poultry Canine Others
Category Cattle Poultry Canine Others Total
Market Size (in Mio INR) 9178 6707 795 970 17650
Market size (in Mio USD ) 191 140 19 19 369
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Animal Heath Products Market - Currency
Animal Health Products Market in Mio INR 27% 46%
Therapeutics Feed Additives
27%
Bio- security products
Category Therapeutics Feed Additives Bio- security products Total
Animal Health Products Market in Mio INR 8120 4755 4775 17650
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Top 10 AH Companies 2005
(Not Ranked)
Global
Intervet/ Schering Plough Pfizer Merial Bayer Novartis Elanco Fort Dodge Boehringer Ing. Virbac CEVA
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India
Ventri Vetcare Virbac-Glaxo Sarabhai Zydus Pfizer Intervet Vetnex (Ranbaxy) Wockhardt Novartis Intas
What Makes India Attractive
Livestock industry contributes 6% to GDP next to agriculture
Livestock Industry is the 2nd largest contributor to GDP
(6%) the future food factory of the world.
Per capita consumption levels
Milk : 250gm. Meat: 1.6 kg Eggs: 44 (Tgt. 400 gm) (Tgt. 2.5 kg) (Tgt. 60 eggs)
Ranks 5th in Sheep & 7th in Fish production in the world Has 53% of World buffalo heads.
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Key Industry Drivers
Transformation from disease control and treatment to
complete health cover and welfare
Focus on farm productivity, FCR and ROI Organised poultry production Advanced feed production, [pelleted] feed manufacturers
upgrading to global standards
Tailor made solutions Technical support
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Key Trends
Shift towards increasing milk production Increased focus on cross breeding and high yielding
animals
Marketing of live bird preferred Changing structure of farming more towards integration Awareness of biosecurity on the rise
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Concerns of AH Industry
Lack of Official Market Data Lack of Growth : Value Vs Volume Unethical Mktg. Practices Classification of Feed Supplements High WC: Cattle: 21 - 120 days, Poultry : >120 days No New Products Low Export Opportunity
Direct Selling by Sales Staff/ Handling Cash Parallel Manufacturing & Marketing by 3rd party Formulators Generics Regional Low Talent Pool
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Current Situation & Challenges
Expected GDP growth 7% Inflation under control Proliferation of Generics
Economic explosion
Price wars
Demanding customers
Customer knowledge > sales staff
Attracting & retaining talent
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India An Emerging Knowledge Superpower
Are We There ?
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Partnering Opportunities in India
Contract Manufacturing
Clinical Trials
Contract R&D
Bio-technology
Bioinformatics/ Biostatistics
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Growth Dynamics
Price Monitoring
Bottom of Pyramid
Intellectual Property Enforcement
Regulatory Reforms Fiscal Reforms
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Data Protection
In order to ensure enabling environment, the regulatory division dealing with the applications concerning new drugs and clinical trials would be required to develop suitable mechanisms to ensure confidentiality of the submissions.
Extract from the Report of the Expert Committee (Dr Mashelkar Committee) A Comprehensive Examination of Drug Regulatory Issues, including the Problem Spurious Drugs (November 2003)
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Key Competencies for Success
Strong Brands and Product Range Branding and Marketing Excellence Sales Excellence
Competent and Right sales force size in all potential markets to serve all types of customers
Product innovation / portfolio
Vaccines, Bio Security and new drug delivery forms
Efficiency in supply chain and organization Efficiency in procurement to compete generics and support
functions
Passion
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Outlook of the Industry
Future to 2013
Per capita availability of milk to go up from 220- 450 gm. Per capita consumption of eggs to go up from 41 - 100 Eleventh planning commission of Government of India
focuses more on farm productivity Retail Revolution Untapped potential at the very Bottom of pyramid Good Marketing Practices to become the business culture Development strategy by new entrants will exploit huge hidden potential. More international players to step in through M&A, Licensing, JVs etc.
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The Journey continues.
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