Zoetis: 'We need to keep Brazil as one of our most important international markets'
As the leader in Brazil's animal health segment, Zoetis is aiming to increase productivity for farmers in the country over the coming years. Animal Pharm correspondent Ana Andrade met with the company's management team to look at how Brazil will remain one of Zoetis' top markets.
"The animal health sector in Brazil has achieved an average annual growth of 8.5% since 2014, and we have been able to grow further without the need to acquire new companies," said Paco Ortiz – the company's senior vice president and general manager for its Brazilian and South American businesses in Argentina, Chile, Uruguay, Paraguay, Bolivia, Peru and Ecuador.
While Zoetis' revenues in Brazil fell 2% to $206.1 million over the first nine months of 2019, sales were up 8% on an operational basis (reflecting a negative impact from currency exchange rates). Brazil remains the company's largest market outside of the US, followed by China and Australia.
Mr Ortiz (pictured below) said Zoetis expects to grow above the animal health sector average, with Brazil taking a greater leadership position in the production and export of proteins.
The company aims to leverage its wide-ranging product portfolio – featuring genetics, robotics, data analysis, diagnostics, treatments and preventative technologies – to remain the market leader in Brazil.
Zoetis will soon launch Smartbow in Brazil's dairy cattle sector. The firm acquired Smartbow and its artificial intelligence-based precision livestock farming technology in 2018. Mr Ortiz said the company is also aiming to use the Smartbow technology for beef cattle in Brazil.
The firm intends to drive South American growth with: equine infectious disease diagnostics; a bovine tuberculosis vaccine; products focused on ectoparasites and ticks (the latter is mainly aimed at the southern region of Brazil); and respiratory vaccines across several species.
Benefits of ASF, genetics and pets
The Brazilian animal health market has benefited from the impact of African swine fever in Asia. It is believed the disease will prompt the country's pork and poultry sector to accelerate in 2020.
Renato Verdi – director of Zoetis' Brazilian swine and poultry unit – told Animal Pharm local pork producers are seeing significant investment, as well as higher adoption of products that increase productivity and herd health.
The company also hopes to benefit from Brazil's increasing adoption of genetic technology, such as the firm's Clarifide – a productivity prediction test sold for many breeds, including domestic breeds such as Nelore and Girolando.
In addition, Zoetis believes its good prospects are not restricted to farm animals. The company highlighted the importance of companion animals in Brazil's animal health market, which Mr Ortiz said "only lags behind the US in the number of pets".
Zoetis director of companion animals in Brazil, Simone Blay Leiderman, said local medicalization rates for pets is still low compared to developed markets. She noted Brazilian pet owners spend more on cosmetics or clothing for their companion animals than on disease prevention or treatment.
Over the past three years, the company has launched several significant products for pets in Brazil. In particular, Apoquel and Cytopoint have "revolutionized" the Brazilian pet dermatology space – the products account for 44% and 40% of the country's patient share in this area, respectively.
Mr Ortiz said two additional undisclosed products will soon be launched to strengthen the firm's dermatological and vaccine portfolio for pets.
Investments and macroeconomic challenges
To support growth in Brazil and throughout South America, Zoetis has invested in its Campinas manufacturing site in São Paulo state. The plant's production capacity has increased in recent years and should continue to grow in the future, according to Mr Ortiz.
Every business in Brazil and the wider Latin American market is faced with ongoing macroeconomic hurdles, as well as cyclical political challenges.
With this in mind, Mr Ortiz told Animal Pharm the main issue is dealing with the peculiarities of each country in order to boost operations in the region. In Argentina – one of the countries currently experiencing hyperinflation scenario – Zoetis has been employing this approach to help report strong growth.
This month, Mr Ortiz will take over as the leader of Zoetis' US cattle business. Luis Xavier Rojas, who is currently the vice president of the company's Dublin-based Center of Excellence, will become the new head of the Brazilian unit.
Mr Rojas has been with Zoetis since it spun out from Pfizer. He previously moved to Pfizer Animal Health from the firm's human pharma unit.
Mr Ortiz said: "We need to keep Brazil as an important market for Zoetis. The country has all the conditions for strong growth. If they asked me to return to Brazil I would be back, even with all the problems, there are countless opportunities."