Animal biologicals market has the potential to surge
Animal biologicals market has the potential to surge
The Indian animal health market is expected to grow from its present level
of $40 million to about $100 million in size in the next five years.
KV Balasubramaniam
Managing Director, Indian Immunologicals Limited (IIL), Hyderabad
The animal biologicals market is generally derived from the
need to control animal diseases and thereby enhance productivity of the
livestock sector. As compared to the human biologicals market, it is unique in
the sense that the number of animal species is large. The common species include
cattle, buffalo, sheep, goat, canine, swine and poultry. A large number of
animal diseases affect several of these species. These diseases are both
transboundary diseases i.e. diseases that can move across geographic regions
both by movement of animals and by trading in food, as also zoonotic diseases
i.e. diseases which effect animals as well as human beings viz., rabies,
brucellosis, tuberculosis and West Nile fever.
Low market
Given this picture, it would appear that animal biological
products would have a large market. However, as compared to the human
biologicals market of about $70 billion, of which human vaccine is about $8
billion, the animal biologicals market is only about $3.2 billion comprising
largely of vaccines. This is on account of the fact that the problem of
controlling animal diseases is largely the problem of the developing world,
since many developed countries have eradicated a number of animal diseases
namely foot and mouth disease (FMD), classical swine fever and rabies.
This apart, the dependence on livestock is more in developing
countries and is particularly important to poor people. Developing countries
value livestock products (milk, meat, eggs) that provide income to farmers.
Livestock are means of transport and traction and also important means of
savings to meet crop failures and unforeseen expenses. The low market for animal
vaccines is also affected by relative paucity of animal vaccines for prevention
of livestock diseases, since the expensive research oriented pharmaceutical
industry in western countries do not find this to be a very attractive market.
Public investments in research by developing countries are also meager, which
leaves much of the disease control needs unaddressed in developing countries.
Indian scenario
We have to look at the Indian market against this background.
It is therefore not surprising that India, as a developing country, has very low
salience of animal biologicals in the pharmaceutical market. At present, the
domestic animal health industry is only about $225 million (Rs 1,000 crore) as
against domestic pharmaceutical market of $5 billion (Rs 22,000 crore) i.e. 4.5
percent of the market.
However, the domestic market for animal biologicals is about
$40 million (Rs 180 crore) as compared to about $380 million (Rs 1600 crore) for
human biologicals. Thus animal biologicals have a higher intramarket salience of
18 percent as against only about 8 percent for human biologicals. The salience
for vaccines is even higher since most of the animal biologicals are only in
vaccines.
This is on account of the fact that the vaccine market for
human beings is still under developed since children in India are vaccinated
only against six diseases as compared to twelve in the west. Also we have a
relatively large livestock population, comprising mainly of cattle and poultry,
both of which are relatively better developed as compared to many other
developing countries. Poultry farming in India is very organized and
vaccinations are carried out against a number of poultry diseases. Likewise,
vaccination against several animal diseases in cattle and sheep are also common
but not similar in scale and magnitude.
Key market drivers
In so far as India is concerned, the key market drivers of
the animal biological market are:
In view of the low level of literacy and minimal extension
and out reach programs, the awareness level among farmers in India about animal
diseases is quite low. Farmers generally tend to vaccinate only when there is
outbreak of diseases and not in a regular, systematic way. This is also because
farming in India is widely dispersed among marginal farmers with low per unit
holding.
Until sometime in the past, the animal vaccine range that was
available was not significant and it also did not address several animal
diseases of concern. Although this situation has not significantly changed, a
number of new vaccines are now produced against animal diseases. It must be
understood that unlike therapeutic medicines, there are few substitutes to
vaccines in prophylaxis.
With low disposable incomes, affordability of products
whether human or animal, is the most important factor driving demand in our
country. This applies to animal vaccines as well. The added problem here is that
the life of animals is not often treated to be important and the cost benefit of
prophylaxis vs. treatment is not well understood. Thus, both affordability and
appreciation of benefits of vaccination vs. treatment are deterrent to pricing.
With not much of organized farming and with livestock keepers
widely spread out in a large country like ours, the availability of the
veterinary services close to the doorstep of farmers is an issue. Even where
available, quality of such service is also a problem. Farmers tend to look to
para-veterinarians and first aid workers for addressing the basic health needs
of their livestock.
Again, given the dispersed nature of the market, cost
effective distribution reach is often the issue with the suppliers. This results
in sketchy presence of products and often their inadequate availability in times
of need.
While the cattle market is largely dependant on institutional
purchases of vaccines and biologicals, the poultry market, though better on the
retail side, is still influenced by the power of large integrated producers of
poultry products. As is the case with institutional purchase, price prevails
over quality.
The progress of science and strides made in the biotechnology
sector notwithstanding, research on newer animal vaccines especially to address
diseases in the Indian sub-continent has been pathetic.
While the human vaccine market can boast of a number of
recombinant biotechnology products and combination vaccines, the animal
biologicals market still largely lives on conventional vaccines based on primary
cell culture or mammalian cell cultures. This contrasts with the development in
the west, where we now have recombinant vaccines, (eg. against ticks ) DNA
vaccine (eg. against west Nile fever) and live vector vaccines (eg. pox vector)
Development of animal vaccines and their manufacture is
regulated in a manner similar to that of human vaccines. Although not as
rigorous in pre-clinical studies and clinical trials requirements as with human
vaccines, still multiple agencies are involved in approval and licensing of
products.
There is also a near absence of post marketing surveillance
of the products introduced. This is further compounded by a weak disease
monitoring and surveillance program in the country.
The changing picture
A review of these market drivers would tend to put the animal
biologicals market un-attractive on account of its high institutional salience,
low price orientation, difficult regulatory environment and low level of disease
awareness. However, the next five years could well be the turning point in the
growth of this industry on account of the following factors:
-
Globalization of the Indian economy has thrown open a
large number of opportunities for the food and livestock sectors. Our
competitiveness can be improved only if we control a number of animal
diseases. As a first step in this direction, a zoning approach for disease
control has been undertaken by the government, resulting in a relatively
higher growth rate of the animal biologicals market at 15 percent per annum
as compared to 12 percent of the overall pharmaceutical market.
-
With recognition that the animal husbandry sector plays a
major role in the contribution of the agriculture sector to the economy, the
Eleventh Five Year plan has ambitious plans to significantly increase
outlays for control of animal diseases.
Diseases such as Foot and Mouth (FMD), Brucellosis and Pest
Des Petits Ruminants (PPR) which have high economic impact are expected to be
included in the national control programs. This itself will expand the markets
and enlarge its size from the present level of $40 million by an equal share in
the next few years.
-
Thrust on productivity enhancement and quality
improvement programs in the livestock sector, specifically the dairy
industry, will contribute to gradually increasing incomes in the hands of
farmers and result in better care for their livestock. Alongside this, is
the expected increase in their awareness about the better farm practices and
about the need to control diseases.
-
Increased presence of transnational companies in the
Indian animal health market, in particular due to the recognition of the
Indian market is growing in stature. This has been aided also by the changes
to the Patent Act and the respect for intellectual property rights in India.
We are witnessing MNC animal health players making a renewed presence in
India.
-
Strong growth of the canine segment, thanks to a growing
number of pet owners in the country. It is expected that the pet segment
will grow at 20 percent in the coming years.
-
Improved research, especially in recombinant
biotechnology which will lead to several new vaccines, among them are
improved Brucellosis vaccine and PPR vaccine, coccicidiosis vaccine and
combination vaccines. We will witness new product offerings, especially from
the industry leader Indian Immunologicals Ltd which is leading the research
efforts.
Market by 2010
As a result of these changes, we can expect the Indian animal
health market to grow from its present level of $40 million to about $100
million in size in the next five years till 2010. It could be argued that this
could possibly decline due to the recent developments affecting the poultry
sector i.e. the incidence of avian influenza in the western part of the country.
However, this could be a temporary setback for two years at best, since
consumption of poultry products in India which is preferred over beef or pork
due to socio religious reasons, is quite low. A heightened level of surveillance
would smother this adverse market.
In summary, it can be said that the animal biologicals market in India has
the potential to surge in the next few years, growing by nearly 20 percent per
annum, resulting in a market of about $100 million. On the qualitative side, a
higher level of disease awareness and externally oriented market will bring more
diseases under national control programs, thus benefiting millions of livestock
keepers in the country. Much, of course depends on the success of the
intervention programs of the government in controlling animal diseases, new
product introductions from modern biotechnology and the speed with which the
poultry industry rebounds from its recent setbacks.
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