Devotion to pets helps drug firm defy downturn

The York-based company, which makes medicines for cats, dogs and other pets, saw sales of its UK vet medicines rise by eight per cent in the year to June 30, beating a 0.5 per cent decline in the overall market.

Animalcare’s chief executive Stephen Wildridge said people are still devoted to their pets, but the economic downturn means some are not replacing animals when they die.

“The companion animal market is a nice, safe segment of the industry. People will give up other things before their pets, but when pets die, some are waiting before they get another one,” he said.

While Animalcare is enjoying robust sales of essential spending on pet drugs, it has seen a drop off in discretionary spending as people put off buying microchips and pet healthcare products.

The company reported a 21 per cent rise in ongoing underlying pre-tax profits to £3m in the year to June 30 on the back of a five per cent increase in sales to £11.8m.

In July the group warned that this year’s annual sales could be £450,000 less than expected after a Swedish pharmaceutical group unexpectedly closed a production unit.

Animalcare used Swedish company Recipharm to manufacture its 1ml ampoule version of Buprecare, a morphine based pain relief for dogs.

The group said the closure will have a negative impact on 2011/12 results, although measures will be taken to limit the financial impact of the closure. A new supplier will come on stream next spring.

Mr Wildridge said Animalcare is working on ways to mitigate the loss of the production unit, but said the details are commercially sensitive.

Analyst Chris Glasper, at house broker Brewin Dolphin, said: “The temporary supply issues with Buprecare, which led to an eight per cent downgrade to our 2012 and 2013 forecasts in July, are on track to be rectified in the new year.

“With a number of new products expected to launch over the next 12 to 24 months, the medium term investment case for Animalcare looks very strong.”

The group has launched two new pet products, dog and cat sedative and reviver Sedastart and Sedastop.

Two new cattle products have also been launched, an antibiotic called Tilmidil and an anti-inflammatory drug called Emdocam.

Referring to the cattle drugs, Mr Wildridge said the “jury is still out” on the livestock market as it is very different to the companion animal market.

While the livestock market is run on economic models, the pet care market is far more emotive.

“We are looking to see how well we can perform in the large animal market,” said Mr Wildridge.

“It’s not a real risk to the business as we are distributing products developed by our partners. These are not products we have taken to market.”

People in the UK have proved themselves to be remarkably loyal to pets despite the downturn. Many see their dogs and cats as members of the family and will spend whatever is necessary to keep them in good health.

Brewin Dolphin said it understands that Anivac, the vaccine for Viral Haemorrhagic Disease (VHD) in pet rabbits, is trading very well and has already reached its initial target market share. VHD is a very serious disease and one of the biggest killers of rabbits in the UK and Europe.

Looking to the future, Mr Wildridge said the market will remain tough.

“It all depends on the economic climate as a whole,” he said. “Because of the new products we’ve introduced, we will grow considerably more than the market.”

The group is also benefiting from a database update which gives it access to five million pets.

“We think we will see a pick-up next year as we launch new products and use the database better,” said Mr Wildridge.

Animalcare plans launches

Animalcare’s main focus is medicines for dogs, cats, rabbits and other companion animals following the sale of its livestock businesses last autumn.

The agricultural division, which consisted of livestock tagging business Ritchey in Masham and Fearing International in Northampton, was sold to New Zealand firm Tru-Test.

Animalcare said the buyer had given assurances that no jobs will be lost following the deal.

Tru-Test is keen to expand the agricultural business which employs around 60 people at Ritchey.

Animalcare is planning a number of new product launches this year to help it ride out the economic downturn.