Two markets collide: Animal health and nutrition are becoming one and the same

14:28 PM | November 19, 2020 | Emmy Koeleman

The role of animal nutrition, and in particular the use of feed additives, in animal health is stronger than ever. IHS Markit Animal Health correspondent Emmy Koeleman takes a closer look at the major companies that may now be considered leading players in an ever-expanding animal care sector.

The research around feed additives and their contribution to animal health has been intensifying tremendously over recent years. Farmers, nutritionists and veterinarians are increasingly looking at certain feed additives to target particular problems on farms, such as laminitis or mastitis in ruminants, post-weaning diarrhea in pigs or digestive problems in poultry.

A large proportion of the feed additives that enter the market strongly focus on preventing diseases by: increasing immunity and reducing oxidative stress in tissues; reducing the bad bacteria load in the gut; and/or restoring the bacteria balance in the digestive system.

Therefore, feed additives often contain a mix of different molecules – for example, a prebiotic and probiotic or a plant extract and an organic acid in one product – to have a health-promoting and economic effect (improved digestibility, feed intake and growth).

The global feed additive sector is growing at a fast pace for all species and across all regions. The poultry segment continues to see the biggest growth, due to its size and the fact poultry meat is consumed everywhere around the world. The region with the fastest growth in feed additive use is Asia Pacific, while North America is the largest producer of feed additives.

Below are the leading businesses that own animal feed additive divisions or subsidiaries.

Increased knowledge of the health-promoting effects of feed additives, combined with consumer focus on animal wellbeing and the need to further reduce the total use of antibiotics for farm animals around the world, has significantly boosted the growth and sales of feed additive companies over the last several years. As well as organic growth, many firms have been boosted by acquisitions.

While takeovers are a common phenomenon in the core animal health industry, this trend is also emphasized in the animal nutrition sector. Large ‘traditional’ animal nutrition companies are buying more specialized, smaller feed additive companies.

A recent example of this is the acquisition of Austria’s Erber Group by Dutch firm Royal DSM. The transaction includes Erber's specialty animal nutrition and health businesses (Biomin and Romer Labs) that specialize primarily in mycotoxin risk management, gut health performance management and food/feed safety diagnostic solutions.

A major acquiror of feed additive businesses over the last 10 years is US-based Cargill. In 2011, the company – with more than €95.6bn in annual revenues and 166,000 employees – completed the purchase of Netherlands-based Provimi. With this major transaction, Cargill complemented its own expertise in compound feed, supply chain and risk management with Provimi's wide range of nutritional expertise, technology and portfolio of premixes, additives and ingredients.

An interesting range of takeovers have been executed by China's Bluestar Group, which is the largest subsidiary of ChemChina (a Fortune 500 company). In 2006, the company acquired French business Adisseo. More recently, in 2018, it completed the purchase of Belgian feed additives producer Nutriad, followed by a September 2020 deal for Dutch feed additive company FRAmelco Group.

In 2014, InVivo Group – the French leader in animal nutrition with annual sales of €5.2bn – acquired Pancosma. Switzerland-headquartered manufacturer Pancosma was founded in 1947 and has since been developing, manufacturing and distributing feed additives worldwide. It is active in a range of seven different product lines such as flavoring and sweetening palatants, bioactives, organic trace minerals, vegetable-based charcoals and acidifier blends.

In 2014, Dutch animal feed firm Nutreco acquired two animal nutrition companies in Brazil. This expansion was in line with its strategy to expand into targeted growth geographies. Fatec Indústria de Nutrição e Saúde Animal is a Brazilian supplier and producer of premixes and animal health products for broilers, layers, swine and dairy cows. BRNova Sistemas Nutricionais is a Brazilian supplier of premixes and feed specialties, mainly for poultry and swine.

In 2015, Nutreco entered into an agreement to acquire The Heritage Group – the owners of Micronutrients, which was a global leader in hydroxy-based trace minerals. The acquisition enabled Trouw Nutrition, Nutreco's animal nutrition business, to further strengthen its Selko Feed Additives portfolio. In 2019, Nutreco also acquired South African premix company Animal Nutrition and Health from Kaonne Investments for an undisclosed price.

In 2017, Cargill sealed a strategic equity investment in Austrian phytogenic feed additive company Delacon. The partnership gave Delacon access to Cargill's global sales network, with certain markets where it was not previously present. For Cargill, the investment expanded its presence and capability in the additives space, with a focus on select markets outside the US. In the same year, Cargill bought Iowa-based Diamond V – a company specialized in yeast-based feed additives.

Heads turned in 2019, when Archer Daniels Midland (ADM) – one of the world's largest agricultural processors and food ingredient providers – finalized its €1.54bn acquisition of French animal nutrition firm Neovia (formerly part of InVivo Group). With the acquisition of Neovia, ADM added a large range of feed additive products to its offerings. This also means Pancosma has been part of ADM since then.

Most recently, in September 2020, DuPont Animal Nutrition (part of DowDupont) entered into a partnership with Proteon Pharmaceuticals to bring emerging bacteriophage technology to poultry producers in selected countries. This deal strengthened DuPont's gut health solutions for poultry and helps to further mitigate antimicrobial resistance.