What have been the key drivers of success throughout the year?
It has been another good and ultimately successful year for Dechra despite a number of challenges, those namely being the reorganisation and investment that we have had to put in to Manufacturing to improve efficiencies, but also we have invested a huge amount of time and effort into what proved to be a successful go live on an Oracle ERP integrated system for the majority of European countries which happened in May.
Commercially, it has been a similar pattern to previous years where we have outperformed the majority of markets in which we trade within the EU. We have also put greater investment into our International business, but the biggest success has been the USA where we have massively outperformed the market and we have seen yet again excellent growth. Overlaying that is the full year effect from Apex, but also a four month contribution from the most recent acquisition that we have made which is AST Farma and Le Vet.
Can you tell us more about the strategy behind the AST Farma and Le Vet acquisition and the progress on integration to date?
The strategy is very clear. AST Farma and Le Vet has been our number one target within Europe for some time. It brings additional products to the Group, it strengthens our position in the Netherlands and also extends our European pipeline. Although it is predominantly generic or generic plus, most of the range is complementary to our existing range. In the AST Farma part of the business it strengthens our Dutch offering but also gives us a direct to vet capability from a logistics perspective where we do not have to be dependent upon the distribution network that is currently in place. The big benefit to the Group though is the Le Vet side of the business. Le Vet, we were already one of their major distributors, but they also sold their products through several other companies and we are now able to terminate those agreements to bring more products in-house.
From an integration perspective, the Dutch aspect of the business is now fully integrated; the sales teams are co-ordinated, the commercial aspects are now all operating out of the AST Farma facility for the Dutch market, but as I have already said the big benefit falls on the Le Vet side and with Le Vet we have now terminated most of their agreements with our competitors and we are now starting to bring the products in-house which gives us the full value chain and the full margin for these products and I think within two years we will have completed the majority of the exercise and will have taken the full value out of this acquisition.
Following the AST Farma and Le Vet acquisition you have been described by one arm of the animal health press as the "generics specialists": is that now your strategy?
I can understand how people may come to that conclusion with a little bit of knowledge, however, our real emphasis is on providing novel products to veterinarians. We have bought two businesses that are predominantly generic or generic plus within AST Farma and Le Vet and within Putney recently, but we have also invested a huge amount of time and effort in new partnerships and researching new ideas to make sure we have got a drug development pipeline that includes a lot of unique and novel products that will enhance our key therapeutic sectors.
Acquisitions are clearly a major factor of your growth; what is next on your agenda?
As always, we have a target and list, and we are engaging with a number of companies. It is very difficult to get them to the table and it is very difficult to get them over the line. Having said that, we have proved successful and we have delivered good growth through acquisition over recent years. So we remain hopeful that in the near term we can bring one or two more complementary businesses into the Dechra Group.
How does the increasing amount of consolidation of veterinary practices by groups such as Banfield and CVS affect Dechra?
This has been a facet of our market, particularly in the USA and the UK for a number of years now and we see the incorporated groups as major customers to Dechra and the trend is only going to continue. We have started to restructure a number of our sales organisations to put greater focus on key account management and to put more emphasis on these practice consolidators. They do put a challenge on margins, but at the same time they deliver volume. I think there is a lot of change in the marketplace overall, not just consolidation of practices, but also the change of the role of the distributors but I think that one of Dechra's advantages is our flexibility and our capabilities to deal with change very quickly.
What does the future hold for Dechra and also you personally?
First of all looking at Dechra, the market for veterinary products continues to grow, people continue to spend more on their pets, the demand for high quality protein increases year on year across the globe, so Dechra as one of the few mid-sized companies I think is best placed in terms of its flexibility and its strategy to continue to outperform markets.
From a personal perspective I have been CEO now for 17 years. I still have drive; I still have ambition, I believe we are still creating a huge number of opportunities for Dechra, so as long as I have got the Board's, the employees' and the shareholders' support, I see no reason for change in the immediate future.
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