Today's Veterinary Practice provides comprehensive information to keep every small animal practitioner up to date on companion animal medicine and surgery as well as practice building and management.
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TodAy's VeTerinAry PrAcTice | July/August 2015 | tvpjournal.com PrAcTice BUiLdinG 66 impact the private veterinary practice. With new investment also comes new, increased scrutiny from the marketplace, and successes and failures are magnifed. For Aratana, the successful outcome of a pivotal feld study for an osteoarthritis product in 2014 induced an 11% increase in share price. However, Kindred Biosciences experienced the opposite effect when the feld trial of its frst compound did not achieve its primary endpoint, dropping the company's share price almost 30%. Zoetis is also currently under pressure as activist investor William Ackman's Pershing square capital Management, LP has taken a roughly $2 billion stake (estimated 10%). Many analysts believe Ackman could be effective in pushing the animal health company to sell itself to a larger human pharmaceutical company. The growth of successful, independent animal health companies introduces new innovations that beneft patients and practices, both in therapeutic offerings and patient and client services. But market failures, or even the potential for failure, may force some companies to make decisions based on survival needs rather than their original missions of improving animal health. The end result for the consuming practitioner could be less innovation and fewer options for patient care. 2. ContinueD ConsoliDAtion The animal health industry is not immune to mergers, acquisitions, and consolidation, and many large transactions have occurred during the past year. While practice owners often see the market from the perspective of small business owners—in which growth is slow and driven organically by the development of new customers—suppliers to our businesses create value through much larger deals and transactions. The rapid changes can often be confusing. in december 2014, Zoetis acquired Abbott Animal Health, increasing the scope of its companion animal anesthesia and surgical suite portfolio. in January 2015, several more large transactions followed: • eli Lilly completed acquisition of novartis' animal health business, making it the second largest animal health company in the industry. • Virbac also benefitted from this transaction, acquiring the divested sentinel product line and adding a strong flea and tick product to its own portfolio. • Later that month, human health distribution leader AmerisourceBergen corp agreed to buy MWi Veterinary supply, inc; the transaction was completed in March 2015. • Henry schein, inc announced the acquisition of s cil Animal care company, an international maker of laboratory and imaging equipment. What Does it mean for the Practice? As the number of animal health suppliers decreases and their relative size increases, the effect on the veterinary practice as a consumer can be both benefcial and detrimental. on the upside, according to company and analyst reports, integration into AmerisourceBergen will provide MWi further product sourcing possibilities to meet the evolving needs of its customer base. scil's product line provides Henry schein customers additional options to meet their capital equipment needs. The evolution of these companies creates more opportunities for the practice as a consumer. But there can also be a downside. consolidation may also bring changes in the sales force, disruption of long-established relationships, and often a learning curve associated with the integration of two companies. For the customer, this may mean communication gaps, delivery delays, and frustration with suppliers. 3. lAborAtory WArs While laboratory service providers have competed aggressively for years, recent events are likely to make this competitive segment even more so. in July 2014, ideXX notifed distributors that it was moving to a direct sales and distribution model, which was offcially launched in January 2015. As expected, distributors responded quickly, with many establishing new distribution relationships with Abaxis and/or Heska for in- house laboratory equipment. This dynamic evolved again in March 2015, when VcA Antech agreed to acquire Abaxis' reference laboratory. This new partnership created a much more natural alignment between Abaxis and VcA Antech in providing services to the marketplace. The resulting market now looks very different from last year. on one side of the equation, ideXX now offers a fully integrated service model to their customers, directly providing equipment, consumables, and reference laboratory services. on