Making a splash in poultry health
If rate of expansion was the sole criteria for business success, then Pfizer Animal Health’s Global Poultry division would be picking up prizes on an almost annual basis.
For the company has gone from being a relative “minnow” in the poultry pond to a veritable “whopper” in the space of just five years.
Back in 2006, Pfizer’s poultry sales were limited to medicinal feed additives, primarily in the US market, with annual sales of about $30m.
But then, in 2007, the company acquired Embrex, the force behind in-ovo vaccination technology and, thanks to fast developing sales of the Inovoject system of delivering vaccines directly into eggs, turnover tripled to $90m.
Two years later, the business tripled again, following the acquisition of US animal health giant Fort Dodge, bringing with it a wide range of poultry health products and taking turnover to $270m.
But Pfizer’s expansion did not stop there and, earlier this year it confirmed the acquisition of Alpharma, bringing with it a new range of feed additives, probiotics and anticoccidials.
“We have gone from being a relatively small business to a global leader in just five years,” says Pfizer poultry director for Europe, North Africa and the Middle East (EuAfME), Herve le Galludec. “When I was employed at Fort Dodge, I had just 11 colleagues. Today the EuAfME poultry team comes to 85 and global revenue for the year is expected to reach $440m.”
Pfizer’s Global Poultry division now has over 200 poultry products, sold in 90 different countries, with 15 different manufacturing plants around the world.
But the task of reshaping the business has not been without its challenges.
“The poultry team comes from a number of different legacies,” says Mr le Galludec. “They all have their own expertise, but may not know much about the other parts of the business. So we have had to do a lot of cross-fertilisation and set up workshops to share experiences.”
Research effort
The enlarged business places a major emphasis on research and development.
Overall, Pfizer Animal Health spends a massive $300m on R&D and employs over 700 research scientists around the world. This is 50% more than the next biggest spender, MSD (Intervet Schering-Plough).
Poultry is a major part of this effort, as the company seeks to make new combinations of vaccines, to limit the number of treatments a chicken receives in its life.
It is also driven by the need to reduce the sector’s dependence on antibiotics in response to political and retailer pressure. “I do not think we will ever replace all antibiotics – it is the way we use antibiotics that must change,” says Mr le Galludec.
The poultry sector has already done a lot in this respect, he adds, ensuring that vets and producers test first to establish which bacteria are causing a problem before deciding which antibiotic to use, and then seeing the treatment through to the end of the course.
But Pfizer is also prioritising new products that can replace antibiotics in certain situations, such as live E coli vaccines, which are already on the market in the USA and South America, and are due to launch in Europe.
Infectious bronchitis
Pfizer’s research effort has recently paid dividends in developing a new vaccine to tackle the latest form of infectious bronchitis to challenge EU poultry flocks, the IB QX strain.
“Viruses are changing all the time. But it seems that, every 10 or 15 years, we get a variant where the gene shift is so great that a new vaccine is needed. This is what has happened with IB QX.”
Mr le Galludec explains that Pfizer tested the existing vaccines against QX in 2005, but never got more than 70% protection. It therefore charged its R&D department with the task of developing a new vaccine, using frozen organs of culled birds, rather than swabs.
“We have very good IB expertise in house, and were able to produce the QX vaccine within five years. We have achieved 92% protection and registered the vaccine in France in 2010. We expect to submit mutual recognition in other member states by the end of the year.
The other big disease threat to poultry is campylobacter. “Common sense says that we should develop a vaccine for that too, but that is easier said than done. There are several different types of campylobacter and a new vaccine will take a long time.
“It is therefore better to find other routes to control it for the next five to seven years, while we start to build up our understanding of the biology of campylobacter.”
Inovoject
Mr le Galludec says the company is also looking to create more vaccines that can be used in-ovo – delivered directly through the shell of the developing egg.
Worldwide there are currently 575 Inovoject devices in operation, injecting 25% of all hatching eggs produced, and building sales is a major priority.
The vast majority of these devices are in the USA and Canada, used to counter Marek’s disease, Gumboro and coccidiosis, but in the UK and Europe there are just a handful.
“The situations between the USA and Europe are very different,” explains Mr le Galludec. “In Europe we clean the poultry houses after every broiler crop, but in the USA they do not, so it is routine to vaccinate every chick for Marek’s disease.
“In Europe, Marek’s vaccine is mostly used for layers and breeders, not so much for broilers, and since the male chicks are disposed of, in-ovo does not deliver the same return on investment.”
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| Mr le Galludec is optimistic that growing interest in the Inovoject device in Europe will help drive vaccine sales. |
But things could be changing as, three years ago, new Gumboro vaccines were developed that can be given in-ovo and work is now well advanced with vaccines for Newcastle disease. “Some of the big hatcheries are showing more interest.”
Consumer perception
Mr le Galludec admits that there could be consumer perception issues, with in-ovo vaccination creating a “Big Brother farming” impression. But he believes there is a need to be proactive, explaining to consumers what the poultry sector does and why it does it.
“In-ovo vaccination enables us to better protect against disease,” he says. “A chicken dying of Marek’s is a long and painful process. When consumers know this, they understand. But if they discover things by accident, they think we are trying to hide something.”
He also denies there are any issues with stress for the developing chick with in-ovo. “We are 97% certain that the needle going into the egg goes where it is intended. And the sanitation system we use, with one needle to deliver the vaccine and another one to punch the shell and apply a chlorine solution between each injection, ensures there is no cross-infection.
“It is certainly less stressful than injecting the chick after it is born. There is no drop in hatchability from eggs that have been treated with our Inovoject device.”
Future growth
The company is clearly anticipating further expansion – especially as its Inovoject devices gain wider acceptance in Europe – although such growth is more likely to be organic rather than by acquisition in the short term.
This is partly because Pfizer Animal Health, and Global Poultry within it, is currently on the market itself.
“Our parent company, Pfizer Inc, is always looking for the best options to maximise shareholder and customer benefits and announced in July that Animal Health may be of more value outside rather than inside.”
Pfizer Inc was still weighing up the options, though the choice seemed to be to sell off Pfizer Animal Health to another animal health business, or the “spin off” option, with Pfizer retaining a minority share holding.
Mr le Galludec views either outcome as a positive, confident that Pfizer Animal Health will be able to maintain it’s market leading position.
“There is a lot of excitement,” he says. “Even outside Pfizer Inc, we would still be a top company, with the resources to make even more of a splash.”
Herve le Galludec
Mr le Galludec qualified as a vet in Nantes, in his native Brittany, in 1986, working in the field for three years before setting up his own practice in 1990.
For the next 11 years he worked building up the business which was primarily focused on dairying. As the dairy sector contracted, he branched into equine and poultry, before selling his share in the business in 2001 to join US animal health company Fort Dodge.
He was initially employed in technical support for the company’s poultry operation in France, working his way up to become business manager and then technical manager for the whole of Europe.
To strengthen his business credentials, Mr le Galludec completed an MBA in Paris in 2008, which made him well placed to become European director of poultry for Pfizer Animal Health following the company’s takeover of Fort Dodge in 2009.