Vetoquinol - Universal Registration Document - 2021

1 16 Vetoquinol Universal Registration Document 2020 Financial report PRESENTATION OF THE GROUP Animal health world market 1.5 Animal health world market 1.5.1 Animal health world market In 2020, the animal world health market is expected to grow by around 4% at constant exchange rates (source: Vetoquinol estimates). In terms of species, the animal health market is divided into two segments: the food-producing segment (cattle, sheep, pigs, poultry, etc.) and the pet segment (dogs, cats, horses, etc.). These two segments are separated as they are based on different economic rationales: the food-producing segment is a high-volume market driven by profitability and subject to significant variations during a health crisis (e.g: bluetongue, bird flu, swine flu, etc.) while the pet segment represents a market with higher added value and growth, while still being linked to the increase in the purchasing power of owners (pets’ “parents”). The relative importance of these two segments varies considerably from country to country, depending on their economies. The year 2020 was marked by the COVID-19 pandemic. This crisis has had a mixed impact on a very resilient global market, with the only notable downturn occurring in Q2 2020. Market growth was driven in particular by the pet segment (>8%). The livestock segment was also still growing (<4%) and very dynamic in Asia and Latin America, despite a strong devaluation of the Brazilian real in 2020. 1.5.2 The animal health market by region Europe Europe is historically Vetoquinol’s No. 1 market, thanks to the presence of its subsidiaries in all major countries. The main growth driver in Europe for food-producing animals is the vaccine segment, which offsets a conti- nued decline in the antibiotics market. For the pet segment, growth is driven by parasitology and spe- cialty dermatology and cardiology pharmaceuticals. In 2020, Vetoquinol acquired the Drontal ® and Profender ® range, thus allowing Vetoquinol to enter the parasitology segment in line with its strategy. Americas The Americas market is subdivided into two distinct regions: North America, a mature but constantly growing market, and Latin America, a developing market. North America North America, and more specifically the United States, is the No. 1 market worldwide with a market share of more than 30%. In the pet segment, the US market alone accounts for about half of the world market in this segment. Canada is the 10 th biggest animal health market in the world. Animal protein production is up, as is the pet market, which is also being driven by parasiticides for pets and the introduction of new products. Latin America Latin America is the region with the strongest market growth. It is a developing region dominated by beef, pork and poultry production. The pet market is growing as peoples’ standard of living improves. It is a rapidly developing country among the world’s leading animal health markets. In line with the strategic plan, Vetoquinol completed the acquisition of Clarion laboratory in 2019 and is organizing its operations to make it a sustainable driver of growth. Brazil has one of the largest global cattle populations, representing about 10 times that of France. Brazil has the ambition and the political desire to become the top global producer and exporter of animal protein. It is not only one of the world’s leading producers of cattle, pigs and poultry, but also offers high growth potential in the pet market. Also present in Mexico for over 20 years, Vetoquinol mainly operates in the dairy cow segment and, more recently, in the pet segment. Asia Pacific (and rest of world) The market in Asia was impacted in 2019 by the swine fever crisis, which limited market growth that year and created a favorable base effect for growth valuation in 2020. The Asian animal health market also experienced very strong intrinsic growth in 2020, despite the COVID- 19 pandemic and swine fever still impacting herds. Vetoquinol is present on these markets, either directly through its subsidiaries, with the creation of a new entity in New Zealand in 2019, or through a network of distribu- tors in most countries in the region. Vetoquinol operates directly in South Korea, India, China and Australia. These regions represent strong growth potential for all of the Group’s species and strategic areas. China is a particularly important market for Vetoquinol in terms of growth potential, both in the food-producing animal segment and the pet segment; it is currently the world’s second largest market and is positioning itself to overtake the USA and become the world’s No. 1 market during the coming years. Vetoquinol is actively seeking to expand its footprint in this key territory, firstly in the