Animalcare overcomes stiff competition in microchips

Pet drugs supplier Animalcare reported a five per cent fall '‹at its animal microchipping business'‹ due to stiff competition in the market ahead of microchips becoming compulsory in April.
By The Newsroom
Published 20th Jan 2016, 17:31 BST
Updated 20th Jan 2016, 17:34 BST

From April 6, all dogs must be microchipped and registered by the time they are eight weeks old.

York-based Animalcare said the downturn in microchips was offset by an increase in its medicines division and it is confident ​about​ prospects for the full year.

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Revenue across the group rose 2.7 per cent to £7.1m in the six months to December 31 and the company said it had made good progress.

Licensed veterinary medicines revenue rose 4.2 per cent to £4.6m. This was despite the impact of a £200,000 first half benefit in 2014 from sales of pet drug Buprecare as a result of competitor supply issues.

Animalcare’s CEO Iain Menneer said the companion animal microchipping market has become significantly more competitive ahead of compulsory microchipping in England, Wales and Scotland in April.

Sales in the microchip division fell 5.2 per cent to £1.2m. Whilst microchip revenues were adversely affected, Animalcare said other products and services in this division performed well, with sales rising 7.2 per cent.

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Revenue from the animal welfare products division rose 5.0 per cent to £1.34m.

The focus for this year will be investment, both in people and the product development pipeline.

“In the first six months we have invested over 300 per cent more in our product development pipeline,” said Mr Menneer.

The group said three in-house product development projects are expected to receive regulatory approval over the next six months, with commercialisation expected soon after.

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Analyst Mike Mitchell at Panmure Gordon said: “Animalcare has released an interim trading update for the six months to the end of December, with performance tracking well and revenues up 2.7 per cent to £7.11m

“We view this as a solid performance and note the board’s confidence about the prospects and outcome for the full year.

“The broad thrust of today’s statement sees the company delivering on its stated strategy, responding to the competitive landscape in microchipping, while driving product development to underpin future launches and revenue streams. We maintain our forecasts and will review in more detail at interims which are expected on February 10.”

Animalcare said it expects to make further progress in its product development pipeline and expenditure is expected to be between £1.0m and £1.5m for the current financial year and beyond.

The group said this will leave it well positioned to drive growth from 2017 onwards.

Related topics:YorkScotland