Our vision is based on a profound belief: as humans, we are part of the animal kingdom. Caring for animal health and welfare means protecting living beings in the broadest sense. And this is a true collective responsibility.
With the robust population growth of developing countries and the changes in purchasing power and nutritional habits around the world, animal protein consumption is on the rise. “Feeding the planet” is therefore becoming a major challenge. This is why we continue our advocacy efforts in aquaculture, which is the main source of animal protein in the world. Since the issue surrounding animal production quality is equally important, we are pursuing our commitment to searching for alternatives to antibiotics. Finally, maintaining cow health and welfare is at the heart of our Target 150 program, which we shared with professionals from the dairy farming industry at an international symposium.
Yes. We strive to broaden the scope of our health solutions, especially in the area of prevention. Nutrition is a vital component of this and has spurred on our physiological petfood range's geo-extension program and the launch of our new dietetic product range for dogs and cats. In June, Virbac also had its marketing authorization amended for the extension of the protection period on its Canigen CHPPi vaccine for up to three years. Another advance: providing canine veterinarians with Speed Reader, a blood dosing analyzer used for testing five biomarkers in dogs and cats, thus facilitating diagnosis. On the treatment front, we offer in the Brazilian market the very first registered veterinary drug that treats canine leishmaniosis, while taking an active part in government-driven public education initiatives.
Social networks are an unprecedented sounding board for our companion animal awareness campaigns, for example our communications on unwanted dog behaviors in France, alternatives to surgical castration in Australia or parasitism in Spain and Italy. Digital technology brings us closer to pet owners and enables us to cater to their consumption patterns.
On the European markets, our overall situation is favorable. Development was driven, in particular, by sales momentum in the United Kingdom, Italy, Poland and Belgium. The few challenges encountered with our vaccines and the relative loss of competitiveness in our external parasiticide ranges have been offset by double-digit growth of our flagship products, such as our contraceptive implant and new petfood range.
Virbac posted double-digit growth in China, as a result of sustained market development and a modified distribution model that optimized its presence in the country. In Brazil, our focus on the cattle market earned us double-digit growth for the second consecutive year and a four-fold increase in profitability in the food producing animal segment over the past two years. We took advantage of the many opportunities 2017 brought to Mexico and South Africa, where our growth rate remained high, as was the case in Chile.
The return of our products, whose market share recovery is slower than expected after an absence of more than 18 months, naturally led to restocking throughout the various levels of the distribution chain, generating a sales surplus of around $25 million in 2016. Consequence: a significant decrease in our revenue for the 2017 financial year. Today, although our inventories with distributors, apart from our parasiticide ranges, are for the most part back to normal, we still need time to return to historical market share levels.
We transferred the production of our Sentinel Spectrum parasiticide to the American plant in St. Louis, which should provide improved mitigation of certain fixed plant-related costs. The Biology plan, which has been in place in France since June 2017, aims to increase our level of vaccine industrial process proficiency, against a backdrop of ever-tightening regulatory requirements.
We expect moderate growth in our business. Outlook remains good in Europe and promising in the Asia-Pacific and Latin America areas, especially in developing countries. In the United States, the launch of the Iverhart Max soft chews, a palatable parasiticide tablet solution to canine heartworm disease, and the return of several products by the end of 2018 should generate a higher volume of business compared to 2017. On the financial front, our operational profitability rate should gain about half a point, at constant exchange rates. Vigilance related to our investments and our changing working capital requirements should allow the Group to enjoy continued debt relief at constant exchange rates.
We are confident. There are plenty of growth opportunities for Virbac, particularly in the food producing animal segment, since we maintain a presence in less than 50% of the global markets. As for the companion animals segment, growth prospects are expected, along with a desire to create strong brands and the implementation of new distribution models in some countries. In both of these segments, we are preparing for the future through geo-extension of our ranges, R&D investments and proposed licensing agreements. Our expansion continues, of course, in line with our sustainable development policy that puts our employees at the heart of our organization.
The satisfaction of veterinarians, farmers, and animal owners is our reason for being. We are convinced of this: there can be no happy customers without well-rounded and engaged employees. As such, I would like to thank, on behalf of the executive board, all of our teams around the world. We strive to provide them with the opportunity to grow in an environment where everyone can take initiatives and venture off the beaten path, so that Virbac remains an agile and innovative company where conviviality, team spirit and cooperation prevail, all in the service of animal health.
Éric Marée’s open letter
Chairman of the executive board 2000-2017
Over the past eighteen years, I have been honored to lead a company made up of people as passionate and engaged as Virbac’s employees. We have had ups and downs over these years, fortunately more ups than downs, but we can be proud of what we have accomplished. Together, we have turned Virbac into a global company capable of addressing the various needs of its customers in all markets. Revenue has tripled, the number of employees has increased two and a half fold, and market capitalization has practically increased tenfold despite the drop in the share price these past few years. Nevertheless, Virbac’s DNA, made of attention to people, respect for customers, entrepreneurial spirit and innovation, has remained intact.
Faced with fierce competition that has become stronger on a large scale since the early 2000s, we have vigorously defended our market share in Europe and other developed markets. We are well-positioned and growing steadily in emerging markets. We are also gradually getting back on the path of growth, albeit still too slowly, in the United States. We have made significant investments in upgrading our quality standards in order to ensure the viability of our business, and we have never compromised on our research and development efforts. Finally, we can count on the long-term commitment of our majority shareholders, which gives us the benefit of stability for shaping the future. It’s a rare benefit in our very uncertain and volatile environment.
I am pleased that Virbac appointed Sébastien Huron as chairman of the executive board. He has the energy, vision, competence and values needed to put Virbac back on the path of growth in the United States and to speed up its growth in the rest of the world, in addition to driving innovation, leading digital transformation and improving profitability, with the valuable assistance of the other members of the executive board.
Thank you to Virbac’s customers who put their trust in us around the world, thank you to Virbac’s shareholders who support us, thank you to the employees who are so passionately invested in Virbac.
Chairman of the executive board 2000-2017
In 2017, Virbac continued to strengthen its base in several market segments, as a result of sales growth of 3.6% at constant rates, except in the United States, an area where performance has declined. In the companion animal sector, our specialty products, often positioned to address unmet needs, saw continued strong growth. The geographic roll-out of our new physiological and dietetic petfood range ramped up, driven by very positive feedback from veterinarians and pet owners alike and strong sales growth in countries already covered. In aquaculture, after a difficult 2016 year, Virbac, among the top three worldwide, posted a strong increase in business in 2017, whether it be in the warm-water fish segment, primarily in Asia, or in the cool-water fish segment in Chile. Finally, double-digit growth is back for food producing animal vaccines in many countries.
On the financial front, as expected, both revenue and operating profit in 2017 were roughly in line with those recorded in 2016. This stability masked a clear boost in our R&D investments, a strong indicator of our willingness to pursue investment. Assisted by a favorable exchange rate climate, the Group sought further debt relief. This is a priority for Virbac. It will provide us with renewed financial flexibility when considering external growth transactions, in addition to R&D efforts, as we prepare for the next decades.
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Innovation is a key business driver for designing the medicines of tomorrow and enhancing the effectiveness of today’s products. Virbac has technological expertise in formulation, biological and regulatory processes, leading to the development of medicines and vaccines with strong added value. In 2017, the Group continued its research and development efforts and obtained the marketing authorization for a new chew in the United States, as part of its parasiticide range for dogs to prevent dirofilariasis. Beyond technological advances, we regularly analyze societal and regulatory trends, as well as the unmet or emerging needs of veterinarians, farmers and animal owners, to which we pay particular attention in order to offer solutions suited to meet their future expectations.
Lastly, we take a global approach, as much in the relatively consistent field of companion animals as in that of ruminants, to which we devote regional product portfolios suitable to the farming methods and pathologies of each area. Innovation is sustained by synergies and openness: Virbac innovation teams work closely with each other, in addition to forming external partnerships with universities and research laboratories. In particular, several license agreements were established in 2017 with vaccination technological platforms.
Cat specificities are taken into even better account
Cats are an increasingly popular companion animal. However, they are less medicalized than dogs, as they are more sensitive to stress during veterinarian visits. Virbac is developing a specific approach for them throughout product development, based on observations of their behavior and needs.
Australia: fighting ovine parasitism
In Australia, sheep farmers have two major concerns: the spread of parasites in farms and the development of resistance to these parasites. Since September 2017, Virbac has offered a new oral parasiticide solution based on three molecules with different mechanisms of action (levamisole, albendazole and moxidectin) providing synergies. This original combination was developed by Virbac Australia teams. Meanwhile, Virbac continues to pursue prevention awareness initiatives and support farmers and veterinarians in establishing parasiticide programs.
Brucellosis: Virbac takes aim at zoonoses
Brucellosis mainly affects small ruminants in developing countries, inducing abortions in ewes and goats in particular. It also threatens humans via contact with the animal or its products, with milk being a possible vehicle for contamination. Virbac conducts research into developing a safer, more effective new-generation vaccine to combat this disease. In 2017, initial results of this research earned Virbac official recognition by the Global alliance for livestock veterinary medicines organization (Galvmed).
United States: a formulation innovation against dirofilariasis
Dirofilariasis is a heart disease affecting dogs, with potentially serious long-term effects. It poses a widespread threat across the United States. At the end of 2017, Virbac received Food and drug administration (FDA) marketing authorization for an ivermectin-based parasiticide product for dogs. Its formulation included a formulation innovation: a very palatable bacon-flavored chew. This heartworm solution should be available to veterinarians and pet owners in the United States during the course of 2018.
The push for regulatory compliance over the past several years has paid off. The highest quality standards are now in place and certified in our factories. Now competitiveness is the challenge for our industrial sites. Both internally and through our external partners, optimization of production costs is the priority.
Within this perspective, the Manufacturing science and technology (MSAT) organization was established in 2017 with a Corporate scope and two distinct entities for pharmaceutical and biological activity. It involves establishing operational control of production processes in these two areas, to make them more robust and reproducible and thus more competitive. The MSAT team thus took action over the course of the year at our main sites. In Carros, significant work was undertaken on the production of injectables, as well as pipettes and vaccines. At the Australian Peptech site, an increase in capacity safeguarded manufacturing of one of our flagship products. Lastly, in Chile, a team was mobilized to increase the productivity of workshops dedicated to vaccines for salmon.
Alliance management: controlled outsourced production
Make or buy? The question is now being settled as part of any product innovation project in a more coordinated manner between Production, R&D and Sourcing. More than one-third of products sold by Virbac are produced by third parties. To strengthen control of the production outsourcing process, a new alliance management methodology was introduced in September 2017. Identification and selection of suppliers, negotiation, industrial transfer, relationship development or management: these stages are now standardized according to a shared framework, leading to greater compliance, competitiveness and partners that are better chosen and better monitored.
Virbac quality academy: for a shared quality culture
Against a background of increasing societal and regulatory pressure, developing trust in Virbac products by veterinarians, farmers and animal owners is a major challenge of which all employees should be aware. First building blocks of the Virbac quality academy: two online training modules launched in September 2017 on quality challenges and the Virbac strategy in this area. With 90% of employees certified in France by late 2017, the plan will be extended globally in 2018. New modules will also follow, particularly on quality risk management, and raising awareness of data integrity as regards Good manufacturing practices.
Biology plan: optimizing vaccine production
Launched in June 2017 on the Carros site, the Biology plan aims to strengthen safeguards in the manufacturing of vaccines for companion animals. This plan is in response to production interruptions and stock shortages recorded between 2015 and 2017 and to the strengthening of quality assurance constraints. In total, twelve initiatives were selected and are currently being rolled out, with cross-functional assistance (R&D, Production, Quality, MSAT). Objectives: to improve production processes and raise the level of compliance for validation records.
Human beings evolve in an interdependent ecosystem. At Virbac, our work serves this reality through our contribution to animal health. A commitment that is long-term and extends to the whole planet.
Our concern for animal well-being coincides with a major societal change in many countries. More and more, dog and cat owners regard their companion animals as true members of the family. Conscious of this change, we have been concentrating our efforts for several years on delivering diagnosis, prevention and treatment ranges, solutions that prolong and improve the life of companion animals, thus maintaining the quality of the relationship between animal and owner.
The exponential growth in the world population over the past few years is a major challenge. On average, the world population increases by 1 billion individuals every 12 years, all of whom must be fed. At the same time, the rapid growth of the middle class and changes in nutritional habits foster consumption of meat and milk. The Virbac approach, which includes reasonable use of veterinary medicines and the development of preventive medicine, is key in helping farmers to improve both the quality and the quantity of animal production.
Target 150: committed to dairy farming professionals
Growing world demand for animal protein necessitates increased dairy production quality and output. This conviction led Virbac to create a dedicated program: Target 150. It aims to supply global answers to the question of the 150 critical days in the dairy production cycle, by including nutrition, reproduction, animal health and quality of life. With this in mind, the second Virbac dairy symposium, held in September in Colombia, strengthened the skills of about one hundred experts and veterinarians from around the world and allowed the sharing of future technologies.
Canine leishmaniosis: the battle intensifies
Leishmaniosis is transmitted to both humans and animals through the bite of a sandfly infected by protozoa of the genus Leishmania. With almost 20 years’ expertise, Virbac has developed a range of diagnosis, prevention, and treatment solutions for this disease. Its participation in the sixth WordLeish world conference in Toledo in May 2017 was an opportunity to share its latest scientific news during a workshop that brought together about 40 worldwide experts. Including, among others, the delivery of the first registered veterinary treatment to Brazilian canine practitioners, that will be supported by an extensive public awareness campaign.
Closer to animal owners through digital
In 2017, Virbac increased digital initiatives and optimized support offered to owners of companion animals. Four awareness campaigns used social media networks to share information on carnivorous nutrition in Finland, unwanted dog behaviors in France, alternatives to surgical castration in Australia and parasitism in Spain. Acclaimed by dog and cat owners mindful of their animal’s nutritional health, the Veterinary HPM range is now more accessible through dedicated webshops in Japan, Italy and Germany, which, in collaboration with veterinarians, offer a more flexible home delivery method.
Meeting the expectations of veterinarians, farmers, and animal owners requires engagement by all of our employees. Virbac is taking necessary steps to reflect this commitment, resulting in a unique human experience. Internal mobility between positions and countries, individual training plans and more, the ability to undertake and innovate offered to all employees, are all reasons to join and stay with Virbac.
Welcoming new talents, developing our employees and retaining them for the long-term: three priorities of our HR approach, implemented via several actions in 2017. To strengthen our attractiveness as an employer, we are making our job offerings more visible on social networks. With regards to individual development, we are increasing the number of blended training courses. The latest: the program dedicated to new managers, now in the pilot phase in three countries. With e-Perf, an online platform devoted to follow-up of managerial processes and our HR community, focused on the sharing of best practices, we are committed to building strong partnerships between managers and employees.
e-Perf: standardizing HR processes at the Corporate level
It’s a first: there has never been an HR tool at Virbac that covered so many countries! With e-Perf, a web application devoted to employee performance follow-up, it’s now a reality. Deployed in 31 countries, this platform represents the first step in the digitalization of HR processes. Following job description and annual appraisal in 2017, other features will follow in 2018, in particular the setting of objectives and mid-year discussion.
Managers: training that is even more qualitative
Standardizing managerial practices worldwide. That is the objective of the “Managing at Virbac” training program, which supports all new managers for six months, starting with their appointment. With the Virbac Learn management system, in 2017, France, Australia and the United States are testing this new program that alternates in-person sessions with online training from a PC or a smartphone. This digitalization provides more interactivity and attractiveness. Therefore, the program includes a gaming system, which allows employees to compare themselves to their colleagues through quizzes.
Unifying teams through international exchanges
Focus on cross-functionality and international collaboration in 2017. With its new short-term assignment policy, Virbac allows employees who wish to do so to experiment with short-term internal mobility. If the role is appropriate and linked with business issues, the applicant may be seconded with another Group subsidiary for a temporary assignment lasting from 3 to 12 months. A way to discover new working methods, to explore a different culture and rub shoulders with teams that you normally work with remotely. Thus, this program fosters a “one team” logic that is especially beneficial for projects that have a major impact for the Group.
Turning the page
The contract between Jean-Pierre Dick and Virbac expired at the end of 2017. Considering the need for change and current legal constraints, Virbac is prompted to end this partnership, which brilliantly promoted the veterinarian profession on seas around the globe. In a space of 17 years, Jean-Pierre, doctor of veterinary medicine and the son of Virbac’s founder, has established one of the best records in French sailing. With five major victories on the Imoca circuit to his credit, the skipper ends his ocean journey with a victory in the 2017 Transat Jacques Vabre. Thus, he lands his 4th title on the Route du Café, teaming up with Yann Elies, to whom he turns over the helm of his boat.
Vendée Globe: around the world in 80 days
On January 25, 2017, Jean-Pierre Dick completed his 3rd Vendée Globe, crossing the finish line in Sables d’Olonne in 4th place after 80 days, 1 hour and 45 minutes of racing. In doing so, Jean-Pierre, along with Armel Le Cléac’h, became the only skipper to have completed three Vendée Globe races. This extraordinary adventure was experienced at the controls of the StMichel-Virbac, a “flying boat” capable of reaching spectacular speeds thanks to its foils. Very well-prepared physically, Jean-Pierre Dick knew how to best decipher the routing data when choosing trajectories and fine-tuning his settings. He became one of the five fastest solo skippers in the world.
StMichel-Virbac makes port in Nice
StMichel-Virbac had a heavy 2017 sporting calendar. But between the finish of the Vendée Globe, after 51,591 km around the world, the complete monohull check-up that followed and its return to training, the boat spent three weeks in port in Nice. The dockside program was shared between the boat’s various partners, and for Virbac, it was an opportunity to organize private sailing excursions and monohull tours. Of course, Virbac staff were not left out. They were able to visit the boat at the Riboty dock and enter a prize competition for a chance to win sailing trips. A touching conclusion to 17 years of shared passion.
The principles on which Virbac bases its governance are those that provide the balance required for the Group’s performance and successful development.
Separation of powers and collegiality
Since 1992, there has been a clear separation between Virbac’s strategic and operational management functions exercised by the executive board, and supervision of this management function devolved to the supervisory board. This structure meets the desire to establish a balance of power between the executive and supervisory functions. It involves a regular and effective dialogue between the executive board and the supervisory board, as well as mutual trust.
Collegiality is a key organisational principle in Virbac’s governance. Its two governing bodies, the supervisory board and the executive board, operate on the basis that their respective members seek common positions and take collective decisions, working as real team.
Committed and experienced management
Virbac’s governance is based on enhanced governing bodies, composed of members with a strong and long-term level of commitment. Their professional experience covers many of the aspects involved in the day-to-day management of a major international group. All but one of the supervisory board’s members are senior executives with extensive operational management experience. Virbac’s management, whether members of its supervisory board or members of its executive board, is committed to providing sustained support for the Group’s long-term strategy. Moreover, the involvement of supervisory board members and the non-voting advisor is not limited to their participation in formal board debates. Their involvement also includes regular informal discussions and periodic ad hoc meetings if circumstances so require.
Continual improvements to governance
Virbac follows the recommendations of the current Afep-Medef corporate governance Code. The Group continues to improve its governance practices. In some cases, it surpasses the objectives set by the Afep-Medef Code, particularly with regard to representation between women and men, the board being composed of three women and three men.
The executive board is responsible for the strategic and operational management of the Virbac group. Its four members work closely together and they take collective decisions. This way of working encourages joint reflection and the search for a consensus.
The members of the executive board regularly discuss the company’s long-term vision and operational requirements outside the formal meetings of the executive board. This flexible organisation allows a high level of responsiveness when taking strategic decisions.
The executive board reports on its work to the supervisory board and submits all of the Group’s strategic operations to the supervisory board for its formal approval.
It is supported in its work by a regular dialogue with the members of the strategic committee. In addition to the members of the executive board, the strategic committee also includes the Group’s nine functional directors and five area directors.
It ensures the permanent control of the management of the executive board, and the regular review of the accounts and of all major projects and investments.
Two special committees aid the supervisory board in its tasks: the audit committee and the compensation committee. The supervisory board is assisted by a non-voting advisor, Xavier Yon.
The audit committee is responsible for:
It is comprised of Philippe Capron, chairman, Olivier Bohuon and Pierre Madelpuech.
The compensation committee is responsible for:
It is comprised of Marie-Hélène Dick, chairwoman, Olivier Bohuon and Grita Loebsack.
Xavier Yon, permanent representative of the company Xavier Yon Consulting Unipessoal Lda.
Deloitte & Associés, represented by Vincent Gros.
Novances-David & Associés, represented by Jean-Pierre Giraud.