Pharma and Life Sciences
How can Indian animal health players win in global markets
27 Aug 2020
The global animal health market represents an opportunity of US$ 48B1. The Indian animal health market at size US$ 1.6B makes up a 3% share in the global market and boasts of the world's largest buffalo population, 4th largest population of horses in Asia and 2nd largest poultry market in the world. With 4.5% contribution to the overall Indian GDP, livestock including cows, buffaloes and horses are indispensable to farm activities in India. Not surprisingly, livestock makes up the largest chunk of the animal healthcare market with a 50% share followed by poultry at 40%, companion animals at 5% and other animals at 5% as well.

Domestic animal healthcare market comprises several large global players such as Zoetis, Virbac, Merck (MSD), Bayer and Elanco among various others. Various home-grown players like Sequent Scientific (Alivira), Zydus, Hester Biosciences, and Indovax have also been growing rapidly.

Emerging opportunities

On analyzing key global players’ growth and market tailwinds, we spot the following opportunity areas for Indian players who are fast increasing their share in the global pie.

Injectables

While OSD (Oral Solid Dosages) are the most popular dosage form for human subjects, animal equivalents are powders and pre-mixes. The powders and pre-mixes to be used as feed additives made up 45% of all formulation dosage forms globally (by volume) in 2019. This, however, is poised to change as injectables dosage form is fast catching up. Injectables market size is expected to grow at CAGR 12% in 2019-24E and is expected to surpass powders and premixes. This is attributable to the corresponding growth in biopharma (vaccines, serums, toxins, blood plasma, and other biologics) – most of the products in which are administered using injectables. As per pipeline data released by Indian animal health players – Sequent, Indovax, and Hester, injectables make up 50-60% of all pipeline drug formats.

Non-antibiotics

Several peer-reviewed studies have linked pathogenic Anti-Microbial Resistance (AMR) in humans to heavy usage of antibiotics in food animals. According to OECD estimates, on average 1 kg each of beef, chicken, and pork use 45mg, 148mg, and 172mg of antimicrobials, respectively. This led food regulators across the world to constrain antibiotic use. In India, as per the Food Safety and Standards (Contaminants, Toxins and Residues) Amendment Regulation 2017 the tolerance limit for 21 specified antibiotics and 77 other veterinary drugs should not be more than 0.01 mg/kg for all edible animal tissues and their fat derivatives, and milk.

While antibiotics were, and continue to still be, extensively used for therapy, to prevent disease outbreak (metaphylaxis), to protect the susceptible population (prophylaxis) and for promoting growth – the tightening regulatory control has propelled innovators to shift future focus. Antibiotics still make up 50% of revenues for major players but the new drug development is focussed on areas like anthelmintic and pain-management. This is parallel to the increasing stringency of antibiotic regulation enforcement by ICMR’s Antimicrobial Resistance Surveillance and Research Network (AMRSN).

Product portfolio tailored to dominant local population

There is an increasing tendency to innovate for products catering to the regionally dominant animal population. Foreign players like MSD, Zoetis, and Virbac have introduced novel products for India’s large livestock population. Many players are increasing penetration in the Indian cattle business with mastitis, infertility, and probiotics therapies. Poultry business in India is being catalyzed through nutritional products like enzymes, toxin binders, and acidifiers.

A similar trend is witnessed for Indian players looking to grow their global footprint. Sequent, one such player is focussing on cattle and sheep segments in Turkey to capture dominant revenue streams.

Preventive healthcare

Animal owners (whether commercial or companion) globally, are increasingly warming up to the idea of preventive healthcare as disease burden is becoming heavier due to increasing costs and loss of revenue. The US$ 150M market for preventive medications against common animal diseases in India like Foot and Mouth Disease (FMD), Mastitis, Anthrax, Black Quarter, Haemorrhagic Septicaemia and Brucellosis in the form of injectables and dietary supplements are expected to grow at CAGR > 15% in 2019-24E. The high growth is also attributed to increasing awareness against zoonotic diseases post COVID-19 outbreak.

Phyto and herbal solutions

Plant-based solutions are becoming increasingly popular in the domestic market due to both demand and supply factors:

  • Inherently high appeal for rural masses and increasing rural penetration of animal health products
  • Increasing adoption of herbal and alternative medicine (collectively called AYUSH*) in urban population
  • India’s abundant reserves of resources like eucalyptus and other therapeutic herbs 

On the back of this, several pure-play natural products companies have grown to secure stable revenue streams:

  • Saharanpur, UP based Indian Herbs is a US$ 25M company serving the domestic market
  • Natural Remedies (NR) is growing at CAGR 20% between 2015-19 with US$ 31M in revenues. Exports account 25% of NR’s revenues and the team has contributed many monographs on Indian medicinal plants to various international pharmacopeia
  • Ayurvet worth US$ 20M is also expanding its only natural portfolio in India and abroad with a strong portfolio of innovative products
  • Largest domestic player, Sequent while not a pure-play herbal player produces natural biosurfactants for poultry and cattle under Lipized brand.
  • Himalaya Drugs with US$ 10M from animal health, also offers herbal nutritional products for dairy animals, poultry and companion animals.

Another popular trend is the launch of multispecies products i.e. products that can deliver select pharmacological effects in animals of more than one species. Sequent has recorded 40% of its revenues from multispecies products year-on-year.

We continue to witness practices like divestment of auxiliary businesses to focus on the niche animal health segment and launch in regulated and affluent markets of the EU and the US. These help players increase margins and boost bottom-line respectively.

Overall, we expect the Indian animal market size to grow at CAGR 10% for the period of 2019-24E against the same period global CAGR of 6%. The trends above suggest that the Indian market is cleverly adapting to local requirements and global trends. These coupled with inherent Indian advantages of low operational costs, technical expertise, and abundance of raw materials are sure to assist India to become a force to reckon with on the global animal healthcare map.

All numbers in the article are for 2019, *AYUSH stands for Ayurveda, Yoga, Unani, Siddha, and Homeopathy

Authored by:

Ashish Agarwal, Practice Leader, Pharma and Life sciences

Madhur Singhal, Practice Leader, Pharma and Life sciences

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