Chapter 7

Animal Health Product Industry

Outlook

ndias flourishing animal husbandry has given rise to a dynamic Animal

Health Product (AHP) industry. With a market size of approximately Rs.

13,500 million in 2004, it is growing at an estimated 8-10% per annum. The dominant sectors served by the Animal Health Product industry are cattle, poultry, aquaculture and small ruminants. Pets, equine and others are comparatively insignificant contributors. The robust growth pattern displayed by the poultry segment and the sheer size of the cattle population have contributed largely to the growth of the AHP segment. Today, over 250 companies market a wide range of feed additives, tonics, vitamin supplements, antibacterials, anthelmintics, biologicals, enzymes, herbals, antibiotics, probiotics and others. However, almost 70% of this market is controlled by 15 companies who have leveraged their marketing and distribution strengths to tap the market potential. They are bullish about the growth in consumption considering the growth trends in the poultry and dairy segments.
Figure 7.1

AHP Market Composition

Feed Additives Rs. 3408 mio. 25%

Vaccines Rs. 2000 mio. 15%

Source: OPPI

Therapeutics Rs. 8104 mio. 60%

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One of the key factors that impacted growth in 2004 was the bird flu scare. The import of poultry vaccines was banned during its aftermath leading to a steep drop in sales. The other major factor was the ban on the import of grandparent stock and specific pathogen free eggs into the country. The uncertainty over the implementation of the new VAT regime was yet another factor.

Market Scenario
The Animal Health Product market consists broadly of therapeutic products, feed additives and vaccines:

Figure 7.2

Therapeutic Product Market 2004 Total Market (Rs. 8,104 Million)

Milk Yield Boosters Others 1% 9% Infusions 4% Analgesic & Corticosteroids 2% Antipyretic Anthelmintic Antimastitis 1% 3% 12% Antihistaminics 1%

Analgesic & Antipyretic 262 Anthelmintic Antibacterial Anti Protozoal Tonics Antiparasitic Antihistaminics

964 2752 262 2038 302 118 86 182 338 80 720 8104

4% Antiparasitic 25% Tonics 3% Antiprotozoal 35% Antibacterial

Antimastitis Corticosteroids Infusions Milk Yield Boosters Others

Source: OPPI

Total

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Livestock Industry Report 2005 - CLFMA of India

Figure 7.3 Feed Additive Market (Rs. 3408 Million)

Others 6% Herbal Products 7% Amino Acids 40%

Vitamin Premix 18% Growth Promoters 8% Enzymes and Probiotics 7%

Vitamin Premix Growth Promoters Coccidiostats Toxin Binders Amino Acids Herbal Products Others Total

620 270 345 148 1340 250 200 3408

Enzymes and Probiotics 235

Coccidiostats 10% Toxin Binders 4%

Source: CLFMA 2004

Figure 7.4 Biological Product Market Total Market: Rs. 2000 Million

Pet Vaccines 13% Cattle (FMD) vaccines 24% Poultry Vaccines 63%

Poultry Vaccines Pet Vaccines Total

1280 250 2000

Cattle (FMD) vaccines 470

Source: OPPI 2004

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Growth Drivers
Demand Generation from Poultry
With professionalisation of the poultry industry, there is a growing demand for animal health products. The promotional effort of the leading players in the AHP business, has lead to an information explosion. The poultry business has experienced many a traumatic situation in the recent past. This in turn has given rise to great caution in matters dealing with animal health. With large flock sizes and farms located in close proximity, every farmer would like to minimise his risks and losses that could accrue from neglect of animal health.

Organised Dairy Segment

The dairy segment too is getting organised with the co-operatives playing a lead role. Spread of animal health information and field service efforts have resulted in greater farmer awareness about cattle health.

Figure 7.5
600 500 400 300 200 100 0

Market Size 2004 (Rs. 1010 Million)*

550

400

30 Cattle Poultry Pet

30 Others

Source: OPPI

* Excluding Feed Additives

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Livestock Industry Report 2005 - CLFMA of India

Increasing Productivity
Exposure to international standards has brought about an heightened awareness of productivity and best farm practices around the globe. Indian farmers are now conscious of the need to increase profits by cutting costs and improving productivity levels. Animal health products especially nutritional supplements have become important inputs to boost productivity.

Clean Production Standards

There is a growing awareness in the livestock industry of the need for clean and healthy production. Many concepts like HACCP clean milk , production and issues like antibiotic and pesticide residues have raised levels of awareness. This has given an impetus to the growth of the AHP industry in the country.

Growth Inhibitors
Distribution Costs
The highly fragmented cattle population in the country is a marketers distribution nightmare. Distributed over a very wide geographic area, the cattle population is extremely difficult to reach through a distribution network. Small farm-holdings tucked away in every nook and corner of the country, make it impossible for any marketer to reach a substantial proportion of the market. Besides, the cost of sales promotion and distribution raise the end price substantially.

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Lack of New Molecules

High costs of research and development have led to fewer new molecules being introduced into the market. Thus the AHP industry finds it difficult to keep pace with the changing needs and demands of the livestock business.

Unprincipled Manufacturers
Capitalising on the market created by pharmaceutical majors, local unorganised manufacturers entered this segment. There are still a large number of such unprincipled local players which makes marketing difficult for genuine manufacturers of quality products which necessarily come at a higher price.

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