Phytogenics - New opportunity for AH players

12 merger & acquisitions and 1 strategic investment to acquire* even a minority stake in the first 7 months of 2017.

No, we are not talking about mainstream and relatively more reported about “animal healthcare companies’ but the upcoming animal feed supplements’ segment. Over the same time period, mainstream AH companies though totaled an equal 13 mid-sized acquisitions, tide seems to be turning in favor of feed supplements as going forward, pace of such deals would only gather steam.

Animal feed supplements sector which reportedly is expected to be around US 21 Billion $ by 2021 (growing at 4.3% annually)** is slowly but surely getting the well deserved attention. With growing animal protein demand, increasing food safety concerns and attention to early nutrition, food animal producers are exploring additional avenues to safeguard their production. Newer feed supplements have stepped in to promise improved flock performance and some more.

Animal feed supplements with a promise to protect animals by boosting immunity and promote production with largely “natural / phytogenic products” are a current hot topic. Driven largely by the industry wide trend from AGPs to “AGP Free” to an ambitious but still expected “No Antibiotic Ever”, feed supplements sector has witnessed rapid proliferation of newer companies and concepts alike.

This sector by far dominates the floor space in industry exhibitions, mind space in animal health journals and the social media space alike. This only partly explains Cargill recently picking up a minority stake in Delacon – an upcoming phytogenic feed supplements producer.

Consolidation in this sector is well underplay and may only gain strength in future. Should they desire, nay I say – must they desire - this holds an attractive opportunity for big league, mainstream Animal Health Companies to explore this sector. The proverbial “history repeats itself” may only mean that some of the leading AH companies could get back into this segment (esp. AGP replacements), having already exited in late 90’s and early 2000.

Animal Feed Supplements segment holds promise for leading AH companies on account of the following strategic reasons:

Multitude of species among food animals

Phytogenics led feed supplements have a lot to gain from the fact that food animals segment offers multiple opportunities across various species such as – poultry, swine, aquaculture and beef farming. Barring minor differences, majority of phytogenic feed supplements have same / similar common formulae for usage across all such animal species thus reducing significantly the time, costs and efforts required to target multiple animal species at same time. Speed to market - being an important competitive advantage – is truly well afforded by this segment

Acceptability across geographies

Long perceived as products for lesser regulated markets such as Asia and Latin Americas, phytogenic feed supplements are being adopted in greater proportions in developed markets such as Europe and North America as attractive alternatives to AGPs. This explains a large number of companies being set up / operating in Europe and North America and expect this trend to strengthen further, leading to steady growth in the segment

Regulatory approvals

Fact be told first – animal feed supplements including phytogenics remain largely a lesser or loosely regulated segment – however, regulatory authorities across key countries are strengthening approval processes. This could only be reassuring for leading AH companies as they explore portfolio and business expansion opportunities.

Gut health & early nutrition

In food animals – current focus is on early nutrition to support optimal gut health management. The future war on pathogenic bacteria could only be won not only by killing pathogenic bacteria but by an interaction of quality nutrition and gut health to ensure proliferation of good bacteria in gut. Unfortunately, neither drugs nor vaccines could offer a solution in this area – while phytogenics have proven to be an important and effective tool. As the food animal segment moves forward, this new armory will be of increasing value

A cursory look at the portfolios of leading AH companies in emerging markets would indicate that many are already marketing a number of nutritionals and/or phytogenics either through in-licensing or through local, creative developments.

Its only a matter of time we see some of Top 10 AH players getting into this segment in a strategic way. Smart players may do well to initiate the move towards “total animal health” covering nutrition and therapeutics. That may be the future of our industry!


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