A carousel of companies: Inside the industry consolidation of 1990-2000
With the animal health sector currently experiencing a temporary lull in major M&A deals, the recent company rankings have remained fairly stable. However, to understand today's industry landscape, a history of consolidation has to be reviewed. Editor Joseph Harvey dug up Animal Pharm's time capsule to inspect over 25 years of comings and goings.
If you are new to the animal health industry, the names on the list of leading companies from 1990 may seem completely alien and unfamiliar.
However, those who have been in the industry longer will know these names all form the DNA of the sector's top firms today. Consolidation has been inescapable in animal health over the last two decades, rendering the list below – Animal Pharm's oldest industry rankings – an index of defunct, acquired, merged and renamed businesses.
For more about the history of M&A in the animal health industry, read Animal Pharm's table of important deals from 1995 to 2015, as well as recent industry rankings analysis.
A new top 50 report will be published by Animal Pharm this year, featuring more in-depth analysis of the industry's companies.
Of the 20 firms at the top in 1990, only Bayer Animal Health and Boehringer Ingelheim Animal Health remain under the same guises today. It is no surprise Dr George Gunn told Animal Pharm earlier this year: "Every company I've worked for doesn't exist anymore."
In 1990, the animal health market was worth only $9.9 billion globally. This is reflected in the size of the annual revenues at the time – there was not one firm with yearly sales in excess of $1bn, while only around $700 million separated the whole of top 20.
All the companies in the 1990 rankings, aside from BASF, were part of larger human pharmaceutical groups – something that can only be attributed to six companies in the most recent standings from fiscal 2016.
Many of these companies have been acquired, with their assets and brands now spread over several different portfolios among today's leaders.
It should also be noted the Animal Pharm rankings used to include several companies that only operate in the animal nutrition market. This is not the case anymore and firms featured in the top 20 have to record a portion of their revenues from pharmaceuticals, vaccines or diagnostics.
Ten years later, only nine names from the 1990 table remained at the top of the rankings. However, there were three companies in the billionaire's club.
The 2000 list has more in common with recent standings than the rankings from 1990 – nine companies featured below also appear at the top of 2016's leader board.
So, can the same turnover of companies be expected by the time the 2025 rankings are published? Possibly not. There are currently eight animal health firms with annual sales over $1bn, with other mid-sized firms growing rapidly.
Naturally, the animal health industry has hit an equilibrium whereby the biggest businesses are now of a size that makes the over-sized deals hard to execute.
It is hard to see any more deals being concocted amongst top 10 players, with leading firms dedicating M&A monies to bolt-on purchases. This means M&A is likely to come amongst players further down the standings – a trend highlighted by the recent coming together of Ecuphar and Animalcare to create a more competitive European player on the cusp of the top 30.
Animal Pharm predicts the leading names in the industry may be sticking around a little longer than their predecessors.