Growth based on new range of generics

IT may seem a long way from school teacher to managing director of an animal health business, but that’s the path that Stephen Wildridge’s career has taken. The man who now heads one of the UK’s fastest growing veterinary companies, Animalcare, began his working life as a teacher of A-level physics, chemistry and games but, as he jokingly puts it, finding that he had become allergic to children, in 1979 he turned to the applied life sciences, joining first Albright and Wilson, then moving on to May and Baker, part of Rhone Poulenc. Mr Wildridge spent 16 years with that company, 10 of them overseas in a variety of roles in various parts of the world, including Brazil, France and Canada before being seconded to the World Bank for a year in Washington DC, helping the bank establish policy on pesticides and genetically-modified crops in developing countries. From there he joined Monsanto as director of business development for its global wheat team based in Brussels, looking firstly at GM wheat in Europe before being appointed general manager of Monsanto’s agriculture business in northern Europe and then director of business development for EMEA – Europe, Middle East and Africa. And then, he says, “after averaging more than 95 flights a year in the previous five years, it became clear I needed to see more of my family”. So on 1st April 2003 he joined Animalcare, then part of the Genus Group, as managing director. The firm is based in Dunnington, York, just 20 miles from where he was born in the small coal-mining village of Featherstone. JA. Who, or what, is Animalcare? SW. It’s a company that has been around since 1988. It was the specialist products division of the Vet Drug Company that was established by a group of Yorkshire vets in about 1956 and eventually bought by the Genus Group in a hostile takeover in 1997. It would be fair to say that the old VDC businesses struggled under Genus and by the time I joined in 2003 Genus wasn’t sure what it wanted to do with the businesses and its shareholders and investors were saying that conglomerates weren’t the way forward and wanted to look at more simple business structure. As part of the new management team we were tasked to find an independent future for the then Genus Animalcare Division of which Animalcare was a part. So Genus concentrated on animal genetics and we looked at developing the animal health division. From the start it was clear that Animalcare was a good business but by 2003 it had lost its way and there wasn’t a good idea on what it could do or what it should do. From the very start we established a strategy of growth for Animalcare based on the development of a new range of generic veterinary medicines. This was so successful that between 2005 and 2008, as Genus divested itself of its non-core business including all the other businesses of its animal health division, Animlacre as retained. However, as Genus Group sought to pay down debt following its acquisition of Sygen in January 2008 we were acquired or merged, if you will, with Ritchey plc, and the group was renamed as Animalcare Group plc and the combined businesses floated on the AIM stock market in London. Initally I continued as MD of Animalcare Ltd and became CEO of the group in April 2010; after further rationalisation, the Animalcare Group is now entirely a veterinary supplies business. Since 2003 Animalcare has been working towards being essentially a sales and marketing company which supplies professional goods and services to vets and other veterinary professionals. Our focus is on companion animals and our development in the future will be on companion animal medicines. We do make and sell large animal products and that sector is important to us but our focus is mainly on companion animals. We are a relatively small company but we have a relatively large office staff because of the database that we run for Identichip and other brands of pet identification microchips. We have almost 20 people dedicated to running this database. At present we are underwarehoused and over-officed; our base is over 30 years old and we’re looking for the right place to move to. Hopefully within the next six months we will move: staying in the York area but in a place better suited to what we want to do. JA. Just how big is the business? SW. We turn over about £12 million a year and we have approximately 54 employees, though not all of them are full-time. We have six local ladies who input the registration forms for the microchips into our database as homework. On the distribution side, we have 14 sales reps in the UK, a marketing team of four, customer services team of three and four warehouse people. JA. Do you have partnerships with other companies? SW. In 2003 we laid out our strategic plan for the business. We did a thorough analysis of our strengths and capabilities and the market opportunities that were present. In very simple terms we looked at whether we wanted to be in pet foods, diagnostics, nutrition, veterinary equipment and medicines and we decided that generic veterinary medicines was the way forward for us. The cost and time and expertise required means that developing a brand new veterinary medicine is a world-wide game. With the harmonisation that has gone on with regulatory systems in Europe, however, developing a generic medicine means you can actually develop and register your product for the UK market and with a little extra effort and cost it’s applicable in the whole of Europe. It becomes potentially a pan- European venture. In 2003 we set out to find partners who wanted to distribute our new generic medicines that we had developed for the UK in their home markets in Europe. Equally we looked for partners for example in Germany, France and Benelux, who were looking for distribution for their products in the UK and so we have a quid pro quo in working with those companies. Not only do we have distribution agreements with our European partners, we also have development agreements. We jointly develop products, then they take the products for their markets and we take them for ours. This not only reduces our costs and risk, it also means our capabilities to develop and introduce new veterinary medicines are much bigger than you might expect for a small UK company. In real terms we are able to be in the process of developing and registering three new generic products at any one time. Since it takes around three years from first concept to first sales, that means we should be able to launch perhaps two new products each year. As a result of our joint development and distribution programme with our European partners, we launched six new products last year and have the capability of launching as many again this year. That’s far and above what we could do on our own. It is unlikely that there is any other company in the UK which will have introduced as many new products in the UK either last year or this. JA. Do you contract out your manufacture? SW. Yes, the quip is, “We make nothing but money.” We manufacture nothing within Animalcare. We contract out formulation development, stability testing and development studies and manufacturing. With the exception of the product development management, sales and marketing, we act as a “virtual” ompany for many aspects of the business process. JA. If a vet in practice has a query or a concern about an Animalcare product, who provides technical assistance? SW. That is an area where we have always been and still are very much a regular business. As with most small companies, we have a number of people who are experienced and multi-talented across the board. Our director of sales, Kevin O’Brien, for example, has been in the business for over 20 years and has a vast practical knowledge and experience. Torben Orskov, who heads our technical department and regulatory department, is a veterinary surgeon who has many years of experience from being in practice and each of our two product managers has been in the business for over 20 years, so they have the knowledge and capabilities to give technical recommendations on our products within the legislative framework of the industry. JA. What is your view on the current state of the market? SW. Neither the companion animal segment nor the livestock segment is immune from the world around us. The livestock segment is driven more by economic factors affecting agriculture which are somewhat detached from the direct effects of the recession and credit crunch that we are now seeing affecting the companion animal segment. But this segment is quite resilient and will resist its effect more than some areas of the economy. We have seen some elective treatments that might have been done two or three years ago now not being done. Clients may not keep up as closely as they might wish with, for example, the vaccination regime for their pets. When the family pet dies, it may not be replaced quite as quickly as in recent years. But when the upturn comes I believe that the market will respond rapidly. I also believe Animalcare will continue to do well as we are introducing new products and not just trying to hold our own with our old products. I think we will grow quicker than the market overall as we have done for several years. Because of our new product pipeline, I think we will continue this trend for the next few years. JA. And the next stage? SW. Our next steps will be to take our development away from simple generics into what we call “enhanced generics” – older veterinary products where we have been able to apply new technology to improve their utility and sometimes clinical performance. The next phase will be to develop products based on our IP and that could be formulation or more likely molecules new to the veterinary market. So when you ask the question, “Why should the vet buy from us?”, we believe we will have even more reasons in the future. JA. And your family? SW. I have two grown-up children, a son and daughter. My son is in his final year of a history degree and is unsure of which direction his career will take while my daughter is a vet who qualified from Glasgow in 2008. She practised for a couple of years but is now back at university studying to become an MD on a path that I think is leading to research.