Why Vallee S.A. Acquisition Could Boost Merck’s Animal Health Business’ Growth In South America?
Merck has acquired 93% stake in Brazilian animal health product company, Vallee S.A,. for an approximate payment of $400 million. Vallee S.A. has a portfolio of over 100 products which include parasiticides, anti-infectives and vaccines. The company is a market leader in South America for animal health care products. We believe future growth of South American cattle and companion product industry could provide boost to Merck’s Animal Health business in the region.
How Big Is Merck’s Animal Health Business?
- Merck’s Animal Health business accounts for approximately 10% of the valuation of the company and includes Companion Animals, Horses, Cattle, Aquaculture and Poultry
- The business’ revenue has hovered around $3.5 billion for the past 5 years
Why South American Acquisition Presents A Meaningful Growth Opportunity?
1) South American Cattle Industry Is Big And Growing *
- Global beef exports from South America as a percentage of worldwide beef exports increased from 18% to 25% from 1999 to 2012. Brazil is one of the key exporting countries exhibiting 193% increase in exports over the same time period.
- The number of cattle per person in South America is more than thrice of that in the U.S.
2) Companion Products Industry In South America To Grow Faster Than World **
- While the global Companion Products industry is expected to grow at a CAGR of 5% from 2015-2025, Latin America is expected to experience an annual growth rate of 6% during the same period.
- This will be driven by growing affluence in Latin America, increases in pet adoption and the humanization of pets.
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Data Sources:
* What U.S. should know about South American beef production, Progressive Cattle, February 24,2014
**Animal Healthcare Market: Global Industry Analysis and Opportunity Assessment 2015 – 2020, Future Market Insights, May 2015
Have more questions about Merck? See the links below.
- What’s Merck’s Revenue And Earnings Breakdown In Terms Of Therapeutic Areas?
- What Led To Nearly 15% Decline In Merck’s Revenues & EBITDA In The Last 5 Years?
- How Has Merck’s Revenue Composition Changed In The Last 5 Years?
Notes:
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