M&A activity

The sector has recorded slightly fewer deals globally over the past 12 months – 39 deals compared to 46 transactions in the preceding 12 months. Total aggregated deal value was €10.3bn in the past year, compared to €2.4bn in the 12 months before1 although this figure was skewed by a number of mega deals including the Mars/VCA and LG Chem/LG Life Sciences transactions.

The US has been the most active market with 42% of total deals. However, there was significant growth in Indian and Chinese markets which saw five deals compared to just three in the preceding 12 months.

In the veterinary care sector, high levels of European M&A activity have been driven by consolidation as private equity firms pursue buy-and-build strategies.

In the animal pharma sector, companies are increasingly entering new geographic markets through acquisition.

Rise of big players

The UK is a good example of how the veterinary services market is now dominated by several sizeable corporate players. These include Pets at Home, Independent Vets, CVS and the Linnaeus Group.

While the market was previously characterised by a large number of small family-owned practices, decreased regulation and higher training costs have led to many of the smaller players selling up to more sizeable groups.

These larger companies offer centralised back office support such as payroll, HR functions, training and bulk buying benefits, which can lead to huge cost savings and better profit margins.

Many of these groups are now consolidating, trying to buy up small animal clinics and referral centres to drive in-house referral opportunities, and to add scale to their businesses. They are also moving into more specialist areas such as the equine and farm vetting ends of the market. For instance, last year Pets at Home acquired a 90% stake in Eye-Vet, a specialist veterinary ophthalmology centre, while Independent Vetcare acquired Robson and Prescott, a provider of veterinary hydrotherapy.

Some companies are also diversifying into other areas including pet crematoriums, online pharmacies and shops, laboratories, out-of-hours surgeries and vet locum agencies.

In Ireland – where the agrifood sector is worth €26bn – several major players have emerged such as Chanelle, a producer of generic animal pharmaceuticals and Ireland’s largest indigenous pharmaceuticals manufacturer.

The company has more than 1,700 animal health licenses registered in the EU and 500 animal health licenses registered across the rest of the world. It also holds the largest number of registered veterinary licences of any company in Europe.

Cross-border moves

These big players are increasingly looking beyond their own shores.

Nordic Capital-backed AniCura of Sweden, for example, now has up to 200 animal health clinics across Europe. And Irish player Bimeda, a manufacturer and distributor of animal health products and veterinary pharmaceuticals, now operates in more than 70 countries. It has made a number of recent acquisitions to enter new markets and expand its product base, including acquiring the marketing rights to Ceva Animal Health’s portfolio of equine products in the US.

Dechra of the UK has also been highly acquisitive. Last year it acquired Apex Laboratories Pty, an Australian provider of generic and proprietary veterinary pharmaceuticals and pet care products.

It also bought Putney, a US-based developer and distributor of generic drugs for pets, and Brazilian veterinary pharmaceuticals provider Laboratorios Brovel.

Other notable cross-border deals include Valeant’s acquisitions of Humax Pharmaceutical S.A, Farmatech S.A. and Cambridge S.A.S.; Merial’s acquisition of a manufacturing facility in Barceloneta, Puerta Rico from Merck & Co; and Alivira’s acquisition of Interchange Veterinaria Industria e Comercio SA, the Brazilian producer of veterinary pharmaceutical preparations.

Recent trade transactions

Announced date Target name Country Target description Acquirer name Country Deal size (€m)
Jun 17 Village Vet Limited UK Provides veterinary services Linnaeus Group Limited UK n.a
May 17 Cevasa SA Argentina Veterinary pharmaceutical products manufacturer Farmabase Saúde Animal Ltda Brazil n.a
Apr 17 Casvet Portugal Operates veterinary hospitals and clinics OneVet Group SA Portugal n.a
Mar 17 Pieneläinklinikka Tuhatjalka Oy Finland Operates a veterinary clinic Omaeläinklinikka Oy Finland n.a
Feb 17 Kliniek voor Gezelschapsdieren Eersel B.V. Netherlands Operates a veterinary clinic AniCura AB Sweden n.a
Feb 17 Donnachie & Townley Limited UK Provides veterinary services for farm and companion animals Linnaeus Group Limited UK n.a
Feb 17 VRCC Limited UK Provides veterinary services for companion animals Linnaeus Group Limited UK n.a
Jan 17 VCA, Inc. US Animal healthcare company Mars, Inc. US 8674.0
Oct 16 Jaguar Animal Health, Inc. US Develops and commercialises gastrointestinal products for companion and production animals Napo Pharmaceuticals, Inc. UK n.a
Sep 16 Apex Laboratories Australia Manufactures and markets generic and proprietary veterinary pharmaceuticals and petcare products Dechra Pharmaceuticals plc UK 37.0
Sep 16 LG Life Sciences South Korea Researches and commercialises animal health products and specialty chemicals LG Chem Ltd. South Korea 1156.0
Jul 16 Vallée S.A. Brazil Manufacturer and distributor of vaccines, therapeutics and supplements for veterinary use Merck Sharp & Dohme Saude Animal Ltda. Brazil 358.9
Mar 16 Putney, Inc. US Develops and sells generic prescription medicines for pets Dechra Pharmaceuticals plc UK 180.0
Mar 16 Polchem Hygiene Laboratories Pvt. Limited India Biosecurity and biotechnology company Ceva Sante Animale S.A. France n.a
Mar 16 Rubinum S.A. (50%) Spain Animal nutrition company Lallemand, Inc. Canada n.a
Feb 16 CAPNA, Inc. US Owns and operates veterinary hospitals VCA, Inc. US 317.0
Jan 16 MVP Laboratories, Inc. US Manufactures vaccines for livestock animals Phibro Animal Health Corporation US 43.0
Jan 16 Zoetis, Inc. Select brands and manufacturing operations in Haridwar US Manufacturing operations in Haridwar of global animal health company Zydus Animal Health Limited India 27.0

Private equity

The animal health sector is attractive to private equity for a number of reasons. In animal pharma the R&D model is more predictable and less risky than the human pharmaceuticals market, while animal pharma companies also have a lower-risk revenue stream as growth is steady and predictable due to expected long product life.

The fragmented veterinary care market has been a particular focus for buyers implementing a buy-and-build strategy, with the sector’s attractiveness underpinned by long-term positive market trends.

The trend has been particularly evident in the UK and Nordic markets, driven by the deregulation of the sector. Previous regulatory barriers to creating larger vet care groups have been lowered in both regions, paving the way for economies of scale.

Although veterinarians have historically owned their own clinics, the prospect of relinquishing some of the administrative and financial burden that comes with operating an independent practice has been welcomed by many, as has the investment in expensive education, equipment and IT that can be made by new investors.

1 Capital IQ

Recent private equity transactions:

Announced date Target name Country Target description Acquirer name Country Deal size (€m)
Jun 17 Altano Gruppe GmbH Germany Operator of equine clinics Ufenau Capital Partners AG Germany n.a
Dec 16 Independent Vetcare Limited UK Owns and operates veterinary practices in the UK EQT Partners AB Sweden n.a
Dec 15 ALK-Abelló A/S, European veterinary business Denmark Develops, manufactures, and markets immunotherapy products for veterinary use Fidelio Capital Sweden n.a
Jul 15 North Downs Specialist Referrals Limited UK Provides multi-disciplinary referral services for dogs and cats Linnaeus Group Limited UK n.a
Feb 15 Audevard SAS France Provides medical and dietary supplement solutions for equine health Ekkio Capital France n.a
Jan 15 PetVet Care Centers, Inc. US Provides services for veterinary clinics and practices Teachers' Private Capital Canada 368.9
Sep 14 Willows Veterinary Services Limited UK Owns and operates veterinary practices Sovereign Capital Partners LLP UK n.a
Jul 14 Independent Vetcare Limited UK Owns and operates veterinary practices Summit Partners LLP US n.a