Big pharma rediscovers the poultry industry

05-12-2006 | |

The recent announcement that Pfizer Animal Health will purchase Embrex Inc. for over $150 million is an encouraging sign that multi-national pharmaceutical companies are re-evaluating the importance of the poultry industry.  By Simon Shane

While there is some speculation in the US as to the motivation for the purchase of Embrex , the leading supplier of in ovo injection equipment, it is evident that strategists at Pfizer Animal Health intend to broaden their product-market scope.  This approach contrasts with events during the past decade involving divestiture and sale of animal health assets by multinational pharmaceutical concerns.
The ’80s and 90’s – low profits cause withdrawl from market
During the late 1990s, Pfizer sold a range of animal feed additives to Phillip Brothers (now Phibro Animal Health ), effectively withdrawing from the intensive livestock market and only retaining pharmaceutical products for companion animal species. During the 1980s, pharmaceutical companies forecast synergy among pharmaceutical products, biologicals and genetics. 
Despite predictions of enhanced revenue, three multi-nationals sold their assets in primary breeding including Pfizer (H & N), Merck (Hubbard), and Upjohn (Cobb).  The progressive withdrawal from intensive animal agriculture was in part due to low profit margins associated with the highly competitive structure of livestock production.  This is characterized by the disparity in the US price for a multivalent human pediatric vaccine at €20 per dose compared to a combination ND-IB vaccine at less than €1 per 1,000 doses.  Pharmaceutical companies are justifiably concerned over corporate image.
Governmental and consumer opposition to feeding antibiotics to livestock was in all probability a factor in Pfizer exiting the market for anticoccidials and growth promoters.’Low profit margins and the withdrawal of large pharmaceutical companies from the poultry market have obviously impacted the allocation of resources to research and development, ultimately to the disadvantage of producers.
Multinational mergers bring hope
This trend may be reversed if multinational pharmaceutical companies re-evaluate the intensive livestock market as potential consumers of innovative biologicals and chemotherapeutics. It is hoped that the acquisition of Embrex by Pfizer will initiate a trend resulting in an infusion of new technology which can serve as a stimulus to enhance productivity and profitability in the face of new challenges including avian influenza, food-borne infections, and metabolic dysfunction.

By: Simon Shane