By Joseph Harvey
Animal health may currently only represent 9% of Boehringer's annual sales but this is all set to change in dramatic fashion.
"There is a Greek word – Kairos – meaning the right moment in time," explains Dr Joachim Hasenmaier. "That's what we've done. We have seized the right moment in time."
Dr Hasenmaier is describing the timing of the Merial merger, which has dominated the animal health industry for more than a year and represents one of the industry's most significant transactions ever.
He stated: "Last year was the first time human pharma was second priority at Boehringer. Our business was stretched to the limit to make this integration happen."
Dr Hasenmaier explained to Animal Pharm the rationale behind the merger and Boehringer's decision to offload its consumer healthcare business to Merial's former parent Sanofi. He noted Boehringer had a decision to either be "a mid-fielder in two businesses or a leader in one". With Dr Hasenmaier's division offering more synergies to the company's human pharma segment, Boehringer plucked for animal health.
Boehringer believes animal health can go on to represent around 25% of its annual sales in the near future. This would put the division in a powerful position.
Elanco has grown notably in recent years and accounts for 16% of Eli Lilly's overall annual revenues, while Merck Animal Health represents 9% of its parent company and Bayer Animal Health is at approximately 3%. Merial was 8% of Sanofi's annual revenues before the asset swap.
This is quite a turnaround for Boehringer.
Dr Hasenmaier said the firm's acquisition of Fort Dodge assets in 2009 provided Boehringer with an important learning curve in the M&A field. He said this purchase "completely changed our US and Canadian business" and gave the animal health unit experience in game-changing deals.
However, it is not often an opportunity arises to combine with a company the size of Merial – an opportunity to upgrade the business that would not have always necessarily been deemed attractive to Boehringer.
"Five years ago, we might have shied away from such a big transaction," Dr Hasenmaier explained. "Five years ago, we were under €1 billion. I remember a time when Novartis Animal Health was double our size. In 2001, when I joined Boehringer, we were €300 million and now we're €1.5bn. We've not just grown in size but we've also grown our capabilities too.
"We have met all of our milestones and we are confident this will be considered a successful transaction. But we can't forget why we made this transaction. We want to bring more value to our customers and we need to win over 10,000 people who support this combined business. With any large transaction there will be change but all we can do is be transparent and fair."
Plans for innovation
"If we stop innovating, we are dead," declares Dr Hasenmaier, suggesting Boehringer has its sights set on organic growth as well as the acquisitional gains it has made via Merial.
At Boehringer's press conference, Dr Hasenmaier also highlighted probiotics and diagnostics as important areas of growth for the company.
He told Animal Pharm the company will also be looking towards veterinary biotechnologies. "Other companies are further ahead here but nobody captures the whole market," he noted.
Aside from stepping into new product areas, Boehringer also wants to build on its existing strengths. Dr Hasenmaier voiced his desire to further the company's expertise in the control and treatment of mastitis.
He said: "We have an outstanding history in treating mastitis but we wish we were able to understand the immunology behind mastitis. So, we are playing with non-antibiotic compounds for mastitis."
Thoughts on industry trends
Not only did Dr Hasenmaier grow up on a small dairy farm where his father individually named all of their cows but he also received a doctorate in veterinary medicine from Ludwig-Maximillian's University, as well as an MBA from the Kellogg School of Management.
He joined Boehringer in 2001 and served as the divisional head for the animal health business for a decade. He then spent a year as human pharma regional business manager for Northern Europe, Canada and Australia, before returning to the helm of the animal health segment as he joined the Boehringer board of managing directors.
"I've been in the animal health industry for more than 20 years," he said. "It's a great industry with favourable trends."
Talking about his veterinary roots, Dr Hasenmaier added: "One advantage is I know what I'm talking about. I've seen it and I've done it – I've been on the other side."
He suggested the animal health industry is just at the beginning of an all-time high of consumer influence. With calls for more natural and safe food production ever increasing on social media and online, the animal health industry is adapting to this new scrutiny.
"People never see what it takes to raise and slaughter animals," he told Animal Pharm at Boehringer's headquarters in Ingelheim. "When I was growing up, we raised the animals ourselves and we slaughtered them ourselves. We are now living in times when people are so detached. They may see videos online but these are not the reality of food production. People care more now and this will not go away.
"If our industry closes it eyes and puts its head in the sand without addressing consumer concerns, we may eventually see meat consumption go down." Reprinted with permission of Animal Pharm News