Boehringer Ingelheim (BI) Canada says it will be business as usual as its head office works through completing its massive January merger with Merial, the animal health arm of Sanofi. In exchange Sanofi will receive BI’s consumer health care business.
As a result, BI will move from sixth to second overall player in animal health worldwide; first in MetAsia (Africa, Middle East, Asia, Australia, Oceania) and second in Europe and North America. It will be a leading provider of parasiticides and biologics (including vaccines) with a presence in 99 countries, products in 150 countries, 24 research and development sites, 24 manufacturing sites and more than 10,000 employees.
“This makes a lot of sense,” says Dr. Troy Bourque of Okotoks, Alta., president of the Canadian Veterinary Medical Association. “Without a parent company that is also a human health care company, a company can focus on animal health and that is always positive for veterinarians.”
In Canada, BI and Merial will maintain their separate brands and sales and customer service staffs until the integration is completed.
Product brand names won’t change during this transition period while the marketing and legal authorizations for product lines are being switched over. As it stands no service interruptions are anticipated.
This latest consolidation leaves us with 31 companies in the Canadian animal pharmaceutical sector, out of 103 in total since the 1960s, according to the Canadian Animal Health Institute (CAHI), the sector’s trade association. Its current membership includes developers, manufacturers and distributors of animal health pharmaceuticals, biologics, feed additives and animal pesticides operating in Canada.
For example, 22 companies have been folded into the Zoetis brand, 12 under the Merck Animal Health banner, 11 for Elanco, seven for Vetoquinol and five absorbed by Bayer
“The changes are always interesting,” says Bourque. However, he doesn’t sense much concern within the veterinary community about consolidation within the animal health sector.
“We don’t tend to see much change afterward,” he explains. Generally, there’s no dramatic increases in the cost of products. If anything, we’ve seen costs go down in some cases.”
Customer service may get a boost with more representatives out and about the countryside. Typically, company reps cover huge areas and when mergers happen, field support teams are often retained.
Sometimes mergers result in an overlap of products and some of them disappear. That might be offset by pooled research and development efforts toward bringing new or innovative products to the marketplace, or it could open the way for smaller innovative companies to develop products and become competitive.
CAHI president Jean Szkotnicki monitors this trend. Of the 21 companies with full CAHI memberships — those that market licensed medications with animal health claims — 11 are new firms that specialize in generic products. The institute’s associate membership includes smaller companies still in the research-and-development stage with their first product and those that market natural-type products that require only a notification number from Health Canada to be approved for sale.
Most of these firms have risen out of the upheaval created by the merging of giant firms. Some pick up technology orphaned to satisfy competition rulings, or pick up product lines too small for the merged company to manage. Other chemical engineering companies have started with one product of their own design and expanded from there. Then there are the small domestic companies marketing generic lines, or discovery companies working on novel approaches to old technology.
“The cost of taking new products from research, through the testing required for licensing, to commercialization has skyrocketed in recent years so that more often than not, the merged company will rationalize its research and development dollars by cherry-picking products that are most likely to be successful and the others fall by the wayside,” adds Szkotnicki.
A 2015 survey of the U.S. domestic market for HealthforAnimals, the global animal medicine association, found it took 8.5 years and an average $30.5 million to bring a new pharmaceutical product for livestock to market. One product cost $62 million. There wasn’t much new-product development in Canada in the 2011 survey.
But 14 companies developed pharmaceutical products with a new active ingredient in Canada during 2015 at costs ranging from $1.5 million to $85 million.
The Canadian cost to bring a new biological product to market ranged from $5 million to $25 million, $0.75 million to $5 million for medicinal in-feed products, and $5 million for a new pesticide product.
The cost of establishing new species uses for existing pharmaceutical products ranged from $2 million to $50 million and biological products averaged $6.5 million.
The main reasons international companies give for not commercializing existing products in Canada is pressure from competitors , imports of non-approved competing products, own-use imports and active pharmaceutical ingredients, the small size of the Canadian market, and regulations for maintaining or extending licenses.
The average time it took to get a livestock product through Health Canada’s Veterinary Drugs Directorate in 2015 was 2.1 years.
A major cost hurdle for Canadian companies is the fact they spend about 40 per cent of their research and development budget on mandatory defense, compared to two to six per cent in the U.S., China, Brazil and Australia.