Interlink Insight

Vol. 10 Issue-1 Jan - Mar 2012

Challenges of the Animal Health Industry

Dr. Kirti Wadekar

The last decade witnessed manifold increase in Animal Wealth in India, leading thereby to a boom in the Animal Healthcare sector. This article explores the scope of Animal Healthcare Industry and discusses Innovative promotional strategies which play a critical role in Growth of this business.

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Interlink Insight

Vol. 10 Issue-1 Jan - Mar 2012

he animal healthcare market has been a silent contributor to the balance sheets of some of the Indian pharmaceutical companies for many years now. But of late, this segment is undergoing a transformation into a more aggressive one. Although the AH industry in India was affected by recession in 2009, its estimated Rs 2,000 crore market size (according to experts, the unorganized sector, which is not captured in market data, could add another Rs 1,000 crore) is still one of the fastgrowing segments, and the industry is looking to raise its profile and change its image to that of the food factory to the world. Some of the major players in the Indian organized sector that have a stake in the AH market include Zydus AHL, Alembic, Vetnex, Virbac Animal Health India, Intas Pharmaceuticals, Intervet India, Concept Pharmaceuticals, and Wockhardt. Their global counterparts include Pfizer, Merial, Schering Plough, DSM Nutritional Products, BASF Animal Nutrition, Bayer AH, Elanco, Novartis, and Ceva Sante. Apart from these, many more multinational AH players are rapidly increasing their foot-print in India. These are usually global developers, manufacturers, and marketers of a range of AH and nutrition products used preventively and therapeutically to produce healthy animals and for animal nutrition. Industry scope The two commonly known segments of the AH industry companion animals and farm animals are of importance. The 1st segment is growing because pet owners are taking steps to ensure that companion animals enjoy a healthy lifestyle. Although this segment is growing faster than the farm animal segment, the later has almost 90% of the market share. This is because agriculture and its allied industries are gaining importance in our country. Farmers have also started realizing the benefits of keeping their animals disease free and healthy. Secondly, there has been a global rise in the demand for safe meat and dairy products from healthy livestock, particularly in the developing markets. India, being one of the countries with the largest cattle populations and one that breeds world-class buffaloes, goats, cows and even poultry; there exists a growing need to prevent losses resulting from diseased animals. As Indian pharma companies in this space offer a wide range of therapeutic and supplementary products that cater to the poultry, swine, cattle, and aquaculture markets, industry experts have categorized this animal health market into two different segments as follows: Species-based: Poultry, Livestock, Companion animals, Aqua

Product-based: Therapeutics, Feed & feed supplements, Growth promoters, Herbals, Diagnostics & Biosecurity According to 2009 data published in Business Line, the therapeutics market in India contributes about `820 crore, nutritional supplements about `470 crore, and bio-security, like vaccines, about `480 crore. In comparison with the companion animal segment, the farm animal segment faces a number of challenges like increasing costs of distribution, marketing and sampling, difficulties in promotion, inadequate product pipeline, diseases in animals, and competition from unorganized players leading to substandard drugs. In order to grow this business as a separate entity rather than allowing it to be simply an extension of the pharmaceutical business, the industry has to deal with these challenges strategically on a continuous basis in order to increase the overall market size. 1.Increasing productivity and reducing marketing and distribution costs: The cattle population in India is highly fragmented, making distribution a businessman's nightmare. As cattle owners, organized as well as unorganized, are spread over a very wide geographic area (sometimes there may be only one or two customers in a town), it is extremely difficult to reach these end users through a distribution network and marketer is unable to reach a substantial proportion of the market, which poses a critical business challenge. Managing a base of professional vets and paravets in the country is another issue. Apart from individual owners (end users), there are more than 10,000 vet practitioners and 90,000 non vet practitioners (paravets or pranibandhu) pan India. To serve this customer segment, it is necessary to build a strong network of C&Fs, distributors, and retailers, to increase spending on the development of a distribution network and channels, thereby raising the end price substantially. Reducing these marketing and distribution costs is a major challenge. The best way to deal with this issue is to organize group meetings including vets, paravets, and farmers at cattle feed-selling points or milk-collection centers at regular intervals. This will provide a company with access to a large number of owners, thereby increasing the market share. 2.Innovative approach to promotion: In order to reach the stakeholders in rural India and to help them understand the product integrities, a Marketer has to spend more and more on out of the box product promotion. E.g. the field staff of

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Interlink Insight

Vol. 10 Issue-1 Jan - Mar 2012

a Bangalore-based AH company has been given DVD players with an LCD screen for structured and undiluted communication down the line. This allows medical representatives to communicate the most technical messages in a similar way to end customers across the country. For effective utilization of this tool, different versions of detailing need to be created in order to maintain customer interest. Some other innovative ways to promotion could be a. Promotion in regional languages b.Farming and production-related movies with social messages emphasizing on the importance of animal health c.Promotion through KOLs, leading p r a c t i t i o n e r s p e c i f i c a l l y, D a i r y Consultants/Dairy Co-operative practitioners 3.High sampling cost: The cost involved in sampling is very high in the AH industry. It is important to develop a sampling strategy that can be used to analyze if samples are used for selected doctors or for all, whether every doctor who receives a sample writes a prescription or not, how the sample cost can be reduced, and whether a sample package should be small. 4.Competent field force: As compared to the pharma industry, AH companies find it difficult to acquire skilled and knowledgeable sales and marketing personnel. These are needed to educate farmers and impart techno-marketing information to vets and paravets for the up-keep of AH. These internal stakeholders in turn have an impact on the top line. Apart from quality and performance, training them on some of the PRE CALL, DURING CALL, and POST CALL techniques should be considered as a priority. Some of the DURING CALL techniques that need to be addressed while training sales representatives are: Functional skills: converting features into benefits, objection handling, probing, selling skills, customer profiling and tracking Technical skills: veterinary science, product knowledge, product communication 5.Competition from unorganized players Fragmented cattle population leading to large number of unorganized players affects marketing of organized players. Small local/regional players indulging in unethical marketing practices can negatively affect the market. Also, improper manufacturing units affect product quality and output. 6.Lack of new molecules: The small AH market, dominated by a dozen international and national players, leaves little margin for R&D and new molecules. Thus, high R&D costs and less funding options have led to fewer new

molecules being introduced into the market. Improving R&D with a focus on innovative nutraceuticals like growth promoters, milk enhancers, canine food supplements etc., can help company develop a strong product pipeline. 7.Threat from substandard drugs Companies and authorized persons should not encourage substandard drugs/supplements as it gets transformed to human consumption. The use of low quality drugs containing an incorrect amount of active ingredient due to poor manufacturing controls or losses due to aging can lead to fatalities. Also, it could result in the emergence of drug-resistant forms of infectious agents, which has disastrous consequences for medical treatment programmes. Apart from health-related issues, spurious/substandard products and local influential dealers appear to be a hurdle to brand building for good quality products. One way of tackling this could be to involve these dealers in company promotion. 8.Disease eradication: Industry should focus on eradication of diseases which can spread through animals to prevent infection and death of human beings. Animals dedicated for food consumption should be kept disease free. The performance indicators are determined through the health status of the animals, for which germfree water, for instance, is a basic requirement. Companies, can use a disinfecting solution for water treatment, thereby improving animal health, decreasing mortality, achieving better FCR, and increasing daily weight gain. Conclusion During the last decade, animal wealth in India has increased manifold. The veterinary infrastructure has also grown to the extent of 50,000 hospitals/dispensaries/first-aid centers and polyclinics, and over 300 disease diagnostic laboratories all over India. But along with the health of companion and farm animals, the health of the business also needs to be taken care of. For any business to grow, government backing is important. The eleventh Five Year Plan of India (2007 2012) has regarded AH industry as one of the major thrust areas. The government focus will be on effective management including control and eradication of important animal diseases and establishment of "Animal Disease Information Service" for farmers. For other business issues, the industry will have to take a step forward to manage and expand business.

Dr. Kirti Wadekar, Ph. D. in Management, is an expert in nutraceuticals. She has handled Project Management of various consulting, competency development and market research assignments at IMC Pvt. Ltd.

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