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U.S. ACQUISITIONS GIVE EUROPEAN VACCINE MAKER A SHOT IN THE ARM
Ruurd Stolp, president of Intervet International, visited the Midwest for the grand opening of Intervet's research and distribution facility.
Following World War II, a small vaccine maker was started in an obscure town near Holland's border with Germany. The company grew in international stature along with the development of industrialized livestock production, eventually becoming one of America's fastest-growing animal health companies.

"To allow industrial poultry production, you have to have vaccines," says Ruurd Stolp, president of Intervet International, based in Boxmeer, Germany. "Our vaccines got exported around the world with the poultry as the Dutch industry grew."

Stolp was among the international officials who visited the Midwest earlier this year to celebrate the grand opening of Intervet's new research and distribution facility west of Kansas City, Mo. The 350-acre campus, assumed in 2000 as part of the acquisition of Bayer's North American biologicals business, will be Intervet's primary research and manufacturing site for livestock vaccines, as well as the company's largest U.S. distribution center.

Parent company Akzo Nobel, a global leader in industrial coatings with a modest-sized human pharmaceutical business, is predominantly European-based but largely U.S.-owned by virtue of its many Wall Street investors.

"We want to be everywhere in the world, and we've pretty well done that," Stolp told 200 or so guests who attended the grand opening event. The company's affiliates operate in 55 countries and sell into at least 100, while employing 5,000 people worldwide. With the addition of the DeSoto, Kan., site, which added 170 jobs, the U.S. workforce now includes more than 800 people.

Intervet International, which inherited its name from a small French firm, already has a well-worn strategy toward expanding into new territory. "We understand how to live with and respect differences," Stolp says. "Could you develop a vaccine for the United States in Europe? You probably could, but you don't understand the market. You have to operate in that market."

To build its presence in the United States, Intervet has pursued a long series of acquisitions, initiated in 1979 with the purchase of Intercontinental Biologics, a poultry vaccine company based in Millsboro, Del., and now home to the U.S. corporate office. That was followed by acquisitions of Ambico swine vaccines in 1996 and Hoechst-Roussel feed additives and livestock pharmaceuticals in 1999.

The 350-acre campus of Intervet's new facility will be the primary research and manufacturing site for livestock vaccines.
These acquisitions have helped counter the advantages held by competing companies tied to large human pharmaceutical businesses with access to new compounds to aid developments in the animal health field, observes Ron Brakke, president of Brakke Consulting in Dallas.

The company's long-range plan is to reduce reliance on its traditional livestock and European markets by expanding its presence in products for companion animals and horses as well as in the North American market.

Livestock product sales currently account for about 77 percent of the company's global receipts but only equal about 64 percent of the total global market. Europe represents about 29 percent of the global market but accounts for 53 percent of Intervet's revenue. Conversely, Intervet derives 21 percent of its sales from the United States and Canada, while North America represents 37 percent of the world market.

Not only does the United States comprise the world's single-largest animal health products market, company officials say it's the seat of technological innovation.

That's important to a firm that invests 18 percent of sales in research and development at 14 sites employing 2,500 people worldwide.

Intervet used biotechnology to develop the world's first recombinant DNA vaccine for swine in 1984, well before the use of modern genetic manipulation procedures became more politically contentious. The company continues to focus on "complex production technologies and sophisticated biotechnology" to bring new products to market.

Among them: the only existing catfish vaccine on the market, AQUAVAC-ESC, as well as an "ELISA" test, capable of differentiating the antibodies in animals exposed to foot-and-mouth disease (FMD) from those that have been vaccinated for it.

The company's full portfolio includes antiparasitics, anti-infectives, endocrine products, diagnostics, feed additives and productivity enhancers, in addition to vaccines for pets, livestock, poultry and aquaculture.

Technology and service - exemplified by the company's slogan "Expect More" - are two attributes company officials stress. Vaccines are recognized as the historical cornerstone as well as the foundation for future success.

Brakke predicts the sales and development of vaccines for food production animals will be one of the industry's bright spots as industrialized livestock production continues to expand and consolidate, driven in part by consumer desires for safe, consistent and high-quality meat products.

"Vaccines provide an efficient and cost-effective way of managing herd health, greatly reducing the need for chemical-related treatments," he says. "The leading vaccine companies are spending significant research dollars in improving the quality and effectiveness of vaccines."

His consulting firm anticipates that biotech will continue to play a leading role in vaccine development, as it has in the past few years, as well as throughout other areas of agribusiness, despite the public visibility of some protest groups.

"The political negatives on biotechnology has to date mainly been focused on genetic manipulation of seeds for crops. There has been little concern shown related to improved vaccines and pharmaceuticals," Brakke explains. "There were some issues related to the BST produced and marketed by Monsanto for milk production. However, most of that seems to have moved on to the seed GMO issues. We see biotechnology playing a major role in the genetics of food producing animals in the next 10 to 20 years."

Animal health companies will continue to consolidate into fewer, larger companies with more market share, he predicts. "The keys to success for surviving companies will be new products and technology that will allow them to expand sales to create the critical mass necessary to compete in the marketplace," Brakke concludes.

Based on that prognosis, Intervet appears to be well positioned for growth in the veterinary health arena.

Candace Krebs is a freelance writer based in Enid, Okla.


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