Oliver, what happens when a market consolidates?

Generally speaking, consolidation means that the number of players within a market declines – this happens typically through mergers or acquisitions, changing the landscape for stakeholders such as investors. As our customers are getting bigger, their bargaining power increases as they are offering greater sales opportunities – and thereby growth via scale – for suppliers like pharmaceutical or feed companies. Depending on the intensity of consolidation a wholly new market structure is created.

What does this mean for the current animal health market?

For quite some time we have observed a kind of race among corporate clinic chains – so the pet segment – to acquire as many small privately owned practices as possible. Just recently, IVC Evidensia (a European veterinary care provider) announced the acquisition of Vetstrategy in Canada, resulting in a new and powerful conglomerate with approximately 1,900 clinics in 13 countries. In the US, which is the biggest pet market globally, MARS has championed this trend, now owning approximately 2,500 clinics in more than 20 countries. And we see the same development in other markets like China.

What about livestock?

The livestock business is already at a more mature stage of consolidation, however there are still regular news regarding large takeovers. Cargill, for example, announced to acquire Sanderson Farms in the US for 4.53bn US$ in August. In emerging markets and the US the level of consolidation of poultry and swine customers is very high – approximately 60 percent of all swine and poultry operations in Asia, Latin America, Middle East, and Africa is sitting in five countries, for example. This puts into perspective just how large some of our customers have become. Of course, you still have small family-owned farms, but the majority of animal-based protein that people consume today comes from large producers.

What could be the effects of a consolidated market on the health of animals? After all, the industry whose purpose it is to improve their health is rapidly changing.

My view is that – almost unrelated to the industry – companies with a strong purpose will thrive and brands with a strong purpose will remain. Market consolidation isn’t automatically beneficial to the overall health of animals but it can be if leading companies define the right agenda!

The large German supermarket chain ALDI, for example, has just obligated all of its suppliers to radically improve animal welfare standards by 2030 as a prerequisite to get shelf space at their stores, most probably forcing other supermarkets to follow suit. Like in most situations, a few pioneers can bring about great change, and this may lead to better conditions for livestock animals. Furthermore, large food companies have very valuable brands and reputations to preserve. They invest heavily in quality, traceability, and animal welfare standards to meet consumer expectations. 

For pets, veterinary clinics could lead to more standardized levels of care which may also be a positive development. Imagine making a cross-country move and not having to change your veterinary provider, meaning that your pet’s health documentation is already there and you know just what to expect! 

What about us in the pharmaceutical industry?

The same principles hold true here as well. At Boehringer Ingelheim, we have a strong focus on preventive care and the use of vaccines, which can help reduce the use of antibiotics. By shifting to other means of keeping animals healthy, antibiotics can remain effective as last-resort solutions to relieve suffering. And this is just one example among many. 

The pharmaceutical animal health companies create the tools that veterinarians, farmers, and pet owners can use to enable their animals to live full and healthy lives. So yes, there is a lot we can contribute, all of us.