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Article: Animal care sector’s thirst for innovation continues to see increasing impetus
16 July 2020
The animal care space will continue working to drive growth in
the coming decade by leveraging transformational technologies and
trends. This is according to the author of a new IHS Markit
Animal Health report on industry growth drivers, Joseph
Burkett.
The quest for innovation in the industry has been accelerating
tremendously over the past several years. The leading companies in
animal care have been developing strategies to offset the
maturation of their product portfolios, while working to diversify
the way they offer complete health solutions to veterinarians,
livestock producers, aquaculture professionals and pet owners.
While scale is, and will still be, important for development,
several forces have led to an increased emphasis on new approaches
to accessing innovative products and technologies via partnerships,
collaborations, acquisitions or other means.
There are also several potentially transformational technologies
and trends that hold promise for driving the growth of the animal
care industry over the next decade.
External opportunities
Most importantly, as company growth strategies have shifted to
include a significant emphasis on external opportunities to
supplement internal development, the increase in demand for
external innovation has been dramatic.
The availability of new technologies in animal care and a
proliferation of partnership opportunities in recent years have
rapidly expanded the sources of innovation for the industry's
leading competitors. At present, virtually all the top players are
proactively inviting collaborations with related industries and
with start-ups to potentially create synergies with their current,
core research programs.
The need for innovation in the animal care space is growing, and
there are several areas that are accelerating the move towards
leveraging external opportunities. For decades, consolidation has
been a huge avenue for climbing the industry rankings in terms of
sheer size, and consolidation will continue to be a large factor in
that quest.
Today, however, industry elements like the emergence of an
exciting start-up company ecosystem, strategic moves into adjacent
and synergistic market areas, and increasing investments in an
evolving biotechnology sector are adding significantly to the ways
companies are working to maximize the value they bring to
customers.
As the leading animal health companies have broadened their
sources of innovation, their focus has been primarily aimed at four
avenues of building growth as they seek to expand their portfolios
and animal health solutions.
These four avenues include: internal research and development
programs; life cycle management; formulation development; and
external collaborations in the form of partnerships or deals.
External collaboration is a great lever to de-risk innovation
and make the balance sheet lighter. However, management might need
new tools when it comes to managing an external portfolio.
Multiple approaches
Accessing future sources of innovation and growth is likely to
require multiple strategies. While the animal care industry still
has several smaller firms that represent potential acquisition
targets, the number of these companies that are big enough to bring
immediate sales and profits to industry leaders is not vast.
Hence, there is increased interest in: translating innovation
from the human health field into animal care; acquiring technology
through start-ups; developing partnerships, collaborations and
licenses that provide synergy with existing portfolios;
capitalizing on the Internet of Things (IoT) and related digital
opportunities; and looking at adjacent areas to the traditional
animal care space, including nutrition, diagnostics and medical
devices.
Digital and data
The digital revolution has embedded internet connectivity into
the daily lives of almost everyone in the modern world.
IoT is the network of physical devices, vehicles, home
appliances and other items embedded with electronics, software,
sensors, actuators and connectivity. This network enables things to
connect, collect and exchange data.
Standard devices like laptops and smartphones, when embedded
with technology capabilities commonly used today, allow farmers,
livestock producers, veterinarians and pet owners the ability to
remotely monitor and control a fascinating array of production, pet
health or lifestyle enhancing factors.
Crop and livestock production are examples where digitalization
and the IoT has already improved productivity and efficiency, with
more technologies soon to burst onto the scene. In crop farming,
drones are being used in soil and field analysis, planting, crop
spraying/monitoring, irrigation and crop health assessment to
improve productivity. Self-driving tractors, seed planting rate
controllers, fertilizer and pesticide controllers and other such
technology are also now commonplace.
Successful examples of benefits from digitalization are also
aplenty in both livestock and pet health - telehealth, trackers,
wearables that monitor vital health signs, implantable devices,
artificial intelligence and 'Big Data' are becoming more prevalent.
These technologies have the potential to provide the animal health
and veterinary industries with opportunities to improve
outcomes.
According to Grand View Research, the animal health and crop
protection elements that make up the 'agri-tech' space were valued
at around $5.8 billion in 2016 and are expected to grow more than
200% by 2025. Grand View noted milk production, breeding, feed
management and animal movement/comfort are key areas.
Grand View also said the global market for companion animal
wearables was estimated to be worth $1.4bn in 2018, including
technologies that use GPS trackers, RFID sensors, motion sensors,
cameras, antennas and transmitters. These devices allow the
monitoring of animal movement, as well as the measurement of
biomechanical and physiological systems. Grand View said the
identification and tracking application segment is expected to
dominate growth of the digital space in pet care over the next
several years.
The new animal care industry that is currently emerging is a
result of the broader view companies are taking in their R&D
programs and in the ways they are defining and addressing their
customer bases in the various market segments where they compete.
The potential benefits of investing in the animal care market today
have never been stronger and the related potential breakthroughs in
animal medicine have never been more exciting.