(AOF) – The animal health group Virbac is more optimistic about its 2023 objectives due to the significant rebound in sales observed in the third quarter and which continues in the fourth quarter. He also explains it by a higher margin on production costs than expected and by the confirmation of the delay in certain expenses, in particular R&D. 2023 revenue growth at constant exchange rates and scope is now expected to be around 4% compared to 2% to 4% previously.
The ratio of “current operating income before depreciation of assets resulting from acquisitions” to “turnover” should consolidate around 15% at constant exchange rates, compared with a previously range of 13.5% to 14.5%. %.
Finally, at constant exchange rates, its net cash position at the end of December 2023 should improve by almost 50 million euros compared to the same position at the end of December 2022, excluding acquisitions and the impact of the share buyback plan. actions.
In 2024, Virbac at this stage anticipates growth in turnover at constant rates and scope of between 4% and 6% and a ratio of “current operating income before depreciation of assets resulting from acquisitions” (adjusted Ebit) to “number business” around 15% at constant exchange rates.
Finally, the group reaffirmed its objective of achieving an adjusted Ebit ratio of 20% by 2030.
AOF – LEARN MORE
Key points
– Sixth in the world in animal health with 7% of the market;
– Turnover of €1.22 million, with 4 specialized sectors – pets, pigs, poultry & ruminants, aquaculture;
– Rise of international: 42% of revenues for Europe, ahead of emerging countries (33%), notably Chile, China and India then North America (13%);
– Business model based on 4 pillars: welfare of companion animals and veterinary services, positioning of the vaccine portfolio, success of R&D projects and external growth;
– Capital controlled by the founding Dick family (49.8% of the shares and 66.1% of the voting rights), Marie-Hélène Dick Madelpuech chairing the board of directors of 7 members and Sébastien Huron providing general management;
– Almost debt-free balance sheet with €857 million in equity.
Challenges
– Strategic plan 2030:
– commercial priorities for Virbac Busters, geographic expansion of key products, entry into new markets (petfood and farm animals in the USA, antiparasitics and petfood in China, etc.),
– 20% operating margin by 2025-2030 and R&D on turnover at 7%;
– Strategy for accelerating international development and improving competitiveness through the digitalization of systems and industrial production;
– Innovation strategy rich in + 9,000 patents and opening of a 9
th
R&D center, in Vietnam:
– based on 3 pillars – alternatives to antibiotics and traditional medicines, use of environmentally friendly technologies, and open innovation based on partnerships – universities, public research laboratories, biotechnology companies and start-ups;
– Environmental Strategy 2025:
– 4 major objectives: 50% reduction in the use of therapeutic trials on animals, 5% in energy consumption, 10% in carbon emissions, 5% in DCD (chemical oxygen demand) and 5% in volume of waste,
– reduction of packaging and use of water,
– “green” financing line;
– After strengthening positions in India, the group’s 3rd subsidiary, expected expansion in the United States and China (production and companion animals) and heavy industrial investments, particularly in Carros in France in vaccines and biotechnology platforms;
– Benefits of the acceleration of R&D to 8.5% of revenues and the increase in investments to €100 million, including €20 to €25 million in land in France.
Challenges
– Chile’s persistent underperformance, particularly in antiparasitic and antibiotic ranges, and limitations in the production capacity of vaccines for dogs and cats;
– Waiting for the exact measurement of the consequences of the cyberattack of June 2023;
– Regulatory delays in the construction of the Nîmes factory dedicated to pets;
– After stable half-year turnover, 2023 outlook lowered: increase in turnover of 0 to 4%, operating margin of 12 to 13%.
Learn more about the Pharmacy sector
Oncology, priority of pharmaceutical giants
Sanofi’s stock market disappointment recorded at the end of October 2023 underlines the new direction for the group, which has now set oncology as its number 1 priority. Efforts in this segment, where therapies are advancing the fastest, notably involve investments in R&D which weigh on profitability. Sanofi therefore announced a drop in its earnings per share in 2024 and the abandonment of its objective of an operating margin of 32% in 2025. Merck has just unveiled a new alliance. It will pay up to $22 billion to the Japanese group Daiichi Sankyo as part of a partnership on experimental cancer treatments. While some experts estimate that the United States represents nearly half of global oncology spending (drugs and treatments), or $196 billion in 2022, Chinese spending in this area has more than doubled in five years, going from 5 to 11.8 billion dollars.