Veterinary Healthcare Services

Global Market Outlook on Veterinary Healthcare Services

Market Revenue (2020E): $40.1 Billion
CAGR Growth Rate: 8 percent between 2020 and 2025

• The evolution of new diseases offers untapped opportunities for the animal healthcare market. To find enhanced solutions for the prevailing and new diseases, the companies in the animal health market are increasing their research and development activities

• Customers of this market are predominantly distributed in the west

• Major growth is expected to arise from APAC, LATAM, MEA, and some East European countries. APAC, which is one of the highest producers of animal meat in the world, is expected to consume the highest amount of feed additive, followed by North America

• North America and Western Europe is a potential market for companion animal products whether it be pharmaceuticals or vaccines

• Japanese companies haven't performed as well in the last few years, they seem to have quite flat growth, while the Chinese companies are seeing a big double-digit rise in their annual revenues

Regional Analysis

Buyers can leverage low country labor advantage by engaging with suppliers that have presence across the globe, as this would also ensure method transfer from advanced country lab to low cost country lab smoothly

• Pharma companies prefer engaging with contract labs closer to their manufacturing facilities, as they can avoid delay in transportation
• Contract testing service providers (e.g., Catalent) are expanding their facilities in emerging markets, such as China and India

Global Market Share by Application Area

Market Scenario

• The global demand for both commercial and companion animals is increasing and many AH solutions are relevant to both markets. E.g., the growing middle classes in China are increasingly after a protein-rich diet that includes meat, eggs, and milk
• But to meet demand, this often entails problematic farming practices, such as cramming animals into smaller spaces, which inevitably leads to the spreading of contagious diseases
• To increase their margins, farmers are heavily reliant on feed additives and administering vaccines
• That's why finding innovative solutions to AH have become vital for combatting the drawbacks of modern industrial farming
• Pet adoption rates are increasing, as people are increasingly opting for animal companionship. This may lead to the growth of the pet animal market over the coming years
• Indian market growth is propelled by animal husbandry. About 10 percent of global livestock population belongs to India and India is among the largest producer of cattle, chicken, and fish

Outsourcing Adoption and Drivers

• The scale of outsourcing is increasing in AH R&D, as innovation outpaces internal research capabilities
• A large portion of the functions are outsourced to functional CROs, who specialize in various phases, such as field studies and discovery R&D
• Off-shoring to emerging markets, unlike human health R&D, is restricted, owing to that fact that field studies ought to be done in the target commercial markets and the poor track record of discovery/innovation in developing markets
• Hence, the US and EU would be the leading destinations for contracted work and are likely to account for over 50 percent of the AH CRO market

Growth Drivers and Constraints

Drivers

• Consumers' demand for natural products and food processor's demand for transparent labeling would drive the demand of Animal Healthcare categories
• Development in micro-encapsulation techniques and packaging innovation would give thrust to carotenoid market
• The growing number of foodborne and zoonotic diseases is also fueling the animal healthcare market
• Extensive implementation of animal vaccination programs and mandatory animal vaccination in some countries will propel the market growth
• Growing pet adoption and spend on their healthcare by people, due to favorable government initiatives and increasing disposable incomes in emerging economies

Constraints

• Regulations against the excess use of antibiotics in production animals, and legislations and protest of animal activists and institutions against animal research
• Declining veterinarian population is also posing a challenge to the animal healthcare industry

Market Trends

The animal healthcare market remains highly competitive and fragmented albeit leading companies continuing to consolidate their market position through high-profile and strategic acquisitions. Innovation: A competitive landscape between the top companies has led to the introduction of new products and vaccines with a view to strengthen their position in the market. Companies yearly invest around 10–12 percent of their sales on innovations in animal health. However, the low research and development returns might shift their focus into mergers and acquisitions, leading to market consolidation. E.g., Virbac launched Speed Reader, a range of biomarker tests for the used for the detection of parasitic and infectious diseases in companion animals and cattle in January 2018.

• The Animal Healthcare (AH) market is currently fragmented with the top 10 AH companies accounting for less than ~75 percent of the global sales. Industry consolidation over the last decade has resulted in high market share concentration
• However, the market is volatile because of the large number of mergers and acquisitions taking place in the market. The on-going M&A trend in the AH market will create a strong sellers market
• Approximately 3.2 million shelter animals are adopted each year in the U.S.
• Globally, the adoption of animals has increased, thereby fueling the growth of AH market
• Zoonotic diseases in humans are mostly transferred through livestock. Thus, there is a widespread implementation of animal vaccination programs. Some countries are also adopting mandatory animal vaccination, which might propel business growth
• The increase in zoonotic diseases and compulsory animal immunization by regulatory authorities might fuel growth of the companion animal market
• Harmonization with other countries is the sole focus in the U.S. regulatory systems with regards to the animal healthcare sector
• Vision 2025 by IFAH focuses on maximizing innovation, removing unnecessary administrative burden. As countries, like Finland, do not have many authorized vet medicines, this Vision will improve available drugs in the market.