In continuation with the previous blog here’s the second part signifying the factors that are to be taken into consideration for understanding the growth of the Animal Healthcare Sector.
Link to previous related article:
The changing economic and climatic scenarios is globally fostering many hazards to livestock, poultry, aqua & companion animals which needs to be addressed more effectively and efficiently by veterinary professionals and animal health product manufacturers/distributors. This larger picture helps all members with a better understanding of Animal Health and encourages a scientific approach that facilitates the supply of innovative, cost effective and quality products & services.
Animal Healthcare – Industry Dynamics
A ) Beneficial Pricing Environment
Unlike the pricing landscape of human prescription medicines, where pricing pressure and price control have been the regulators and governments major weapon to control burgeoning healthcare costs, the animal health market has seen little direct government involvement. Unlike the human pharmaceutical industry where eventual buyers are insurance companies or the government in the animal health industry, buyers are pet owners and animal farm owners. This gives the government very little incentive to get involved in fixing prices.
B ) Increasing R&D Productivity
Unlike human health, the animal health industry is characterised by higher R&D productivity and shorter development time, as well as lower costs and risks. Animal health products generally show faster R&D timelines in all stages ranging from research to the regulatory review process. Hence, in aggregate total development timelines are typically 3 to 5 years faster than in human drug development.
C ) Competitive Intensity
Competition is lower in the animal health industry. There is extremely limited overlap in the product portfolio of Top-10 companies. Market is dominated by the Big US and a few European players.
D ) Global Scenario
The global population is growing at 0.75% p.a., which is expected to increase from 7.7 billion today to over 9.7 billion by 2050. This increased population cannot be fed by agriculture alone. Livestock farming automatically becomes a secondary yet important source of living. Second, population growth leads to increased demand for land, hence animal farms necessarily have to have enhanced productivity.
Growth drivers for Animal Healthcare Industry
A ) Trend in Animal Husbandry around the World
Animal husbandry significantly contributes to the GDP of emerging nations around the world. Animals have been domesticated since 13,000 years. Even today, cattle such as cows, buffaloes, goats, sheep that provide milk and meat are the primary source of income in rural areas. Animal husbandry has become technology driven with rising demand on quality of animal products. Like all major industries, it has seen corporatisation resulting in attachment of control on animal infection outbreaks. This in turn has resulted in the growth of the animal healthcare market.
B) Increase in Pet Adoption and Growing Technology
In the past few decades, there has been a significant expansion in pet adoption, especially amongst the elderly population. The increase in disposable income and increasing acceptability of animals as social companions has led to increase in pet ownership. Amongst some lonely elderly people, certain animal categories like dogs and parrots are seen as an alternative to human children, given their ability to respond to human emotions and signals. The growing number of pets will also boost the overall demand from the animal healthcare industry.
C ) Protein Consumption
It is estimated that by 2030, to feed the global population, animal protein production will have to increase by 30% from its current volume. Without effective disease prevention and health management strategies, this could impact the meat and dairy industries in a big way. Post consideration of the increased interest in plant-based or lab-based meats and other protein alternatives, animal-based proteins will remain critical in meeting the demand of the world’s growing population.
D ) Human Population Growth
The global population is growing at 0.75% p.a., which is expected to increase from 7.7 billion today to over 9.7 billion by 2050. This increased population cannot be fed by agriculture alone hence livestock farming is also simultaneously required. Second, population growth leads to increased natural resource constraints driving a need for enhanced productivity.
E ) Improved Living Standards
There is increased focus on food quality and safety as standards of living improve, leading to higher demand for quality non-vegetarian food.
Types of Animal Healthcare
There are many more varieties of healthcare that have developed for animal health but here I would like to highlight the two most important segment of animal healthcare:
The farm animal healthcare accounts for 62% shares in the entire veterinary healthcare market. Continued efforts are being made by the government with initiatives that help modernise agriculture through technology and continued scale consolidation. With that, stricter food safety/ quality improvements and environmental regulations have formed which are useful as well as easily adopted in many developing countries.
Governments globally have taken several steps for the development of farm health care animals. These include zero environmental impact of agricultural residues, over the course of the last five years by the Chinese government. Other Governments have enacted notably stringent environmental protection laws.
The global farm animal healthcare market size was US$ 20.5 billion in CY2019. It is expected to grow at a CAGR of 8.2% between 2019-2025 with North America being the largest market and Asia Pacific being the fastest growing market.
Companion Animal Healthcare
Based on animal type, the market is fragmented into companion animals and livestock animals. Companion animals cover dogs, cats, horses, and others. The companion animals segment is poised to witness around 4% CAGR during the forecast timeframe. The segmental progress is majorly due to the growing number of pets and fast-changing technology implications.
The global companion animal market size in 2019 was worth US$ 12.54 billion and expected to reach US$ 19.18 billion by 2024 with a growth rate at a CAGR of 6.26%. The increase in the number of pets and importance of emphasis on animal healthcare and vaccination has led to an increase in the demand of animal healthcare products. Since pet owners realise that their animal companions are part of their own family, the level of care provided to these animals has significantly improved, thereby driving the growth of this market.
Rise in the income levels of individuals leveraging recent trends is leading to the increase in the number of pet (companion animal) adoption which ultimately leads to increase in the demand of companion animal healthcare. Additionally, advances in animal health medicines and vaccines, increased types of medical treatment are fostering the market growth of the companion animal healthcare market.
The companion animal healthcare market is extremely competitive with major players accounting for about 3/4th of the market. Given its highly competitive nature, several companies are focusing more on research and development to produce better pharmaceuticals and vaccine products for the existing and newly diagnosed diseases.
Segregation through Animal Types
Poultry had a short term hit due to the move from the large trend of 50:50 dine in, dine out to 90:10 dine in scenario. This has resulted in near-term supply chain realignment from box packaging to add-supermarket consumption. In a recession, consumers generally trade down a little bit on protein, resulting in slightly lesser meat consumption. However, the same still is expected to grow 1-2% as per past historical trends. It is expected that the same will be normalised in the coming months.
China has a huge demand for pork, which is imported from the USA, Brazil and other geographies. China will need to significantly ramp up protein imports during the next several years from the rest of the world given the ASF disease that decimated Chinese hog production in 2019 and materially reduced protein availability within the country. Pork demand has remained stable thus far.
It is expected that the cattle population will be maintained for the dairy industry. Beef demand has shifted from restaurants to home dine in due to the former’s closure. As a result, a marginal decline has been noted so far and it is expected that the same trend will gradually become normal in the second half of 2020 with the recent reopening of restaurants in developed countries.
Further, cattle breeding and rearing is expected to remain constant since livestock owners know that it takes around 2 years to fully breed a cattle.
In India, Animal Husbandry is making a significant contribution to the national economy and socio-economic development of the country. With 10.71% of world’s livestock population, India stands first in buffalo population, second in cattle and goat population, third in sheep, fifth in chicken and sixth in camel population world over with bovine population of 299.9 million, 135.17 million goats, 65.06 million sheep, 10.29 million pig, 0.4 million camels and 729.2 million poultry as per latest census.
There are very few companies that deal only in the animal healthcare sector in india. To name the few it includes:
1) Alembic Pharmaceuticals Ltd.
2) Alivira Animal Health.
3) Alltech Biotechnology Pvt Ltd.
4) Bayers Animal Healthcare.
5) BASF India Ltd.
India stands number one in the world for total milk production with an estimated milk production of 140 million tonnes with an average yearly growth of over 4% and per capita milk availability of around 307 grams per day. Poultry industry which provides cheap sources of animal protein has taken a quantum leap in the last few decades evolving from a near backyard practice to a venture of industrial promotion.
Global Market Insights