Chinese companion animal market booms despite pandemic
11:24 AM | January 28, 2021 | Mainbayer Badarch and Dr Maitsetseg Badarch
The Chinese pet market saw sales reach CNY202 billion ($31 billion) in 2020, with the segment expected to grow 15% annually during the next five years. This sector includes pet food, veterinary medicines, toys, and all products related to companion animals. China's pet health market is still in its infancy. However, it is now valued at more than CNY5.5 billion. The country now has around 91 million domestic cats and dogs.
Parasiticides accounted for the largest market share of veterinary products at 28% in 2018 (the latest full year of official Chinese industry data), followed by vaccines (25%). Medicinal feed additives accounted for 20%, anti-infectives (15%), and diagnostic and others (12%). The demand for antiparasitics is rising due to an increase in flea and tick-infested Lyme disease in pets.
The Chinese companion animal heath market is fragmented with the presence of multiple local and international players. More than 40% of the market is attributed to the top five players, according to Frost & Sullivan. These leaders are Boehringer Ingelheim, Zoetis, Bayer Animal Health/Elanco, MSD Animal Health, and Virbac. In terms of upstream drug raw material suppliers for the pet sector, 30% are international businesses and 70% are domestic players.
Rising Chinese government schemes such as its 'One Health Initiative’ are helping to promote veterinary care products and further boost the market's growth prospects. However, the high cost of animal testing is a significant barrier to the market progress. Several restrictions and regulations on animal testing in China have made it expensive for some healthcare companies to set up new drug manufacturing facilities.
Around 74 million households in China now own a pet, 46% have dogs and 31% cats. While 45% of the country’s pet owners are in their 30s, the key growth areas are the post-80s and post-90s generations.
Social media is fueling China's ever-increasing interest in companion animals. Some pet-related short videos on social media have been viewed by in excess of 700 million Chinese people in a single day alone. China's four major cities—Beijing, Shanghai, Xi'an, and Chengdu—have combined companion animal market of CNY48.6 billion alone. However, demand for companion animals is now spreading to the nation's lower-tier cities.
According to a recent industry white paper, the coming five years will also see the establishment of additional China-based pet-focused companies with annual revenues of over CNY20 billion.
Nearly 115,000 pet-related enterprises were launched in China during the first half of 2020—up 50% year-on-year. Almost 70% of the pet food products in China are imported, while online purchases exceeded CNY30bn in 2019. Sales of pet health supplements grew 50% in consecutive years from 2017 to 2019.
Many Chinese consumers have turned to cross-border e-commerce platforms to find premium and high-quality pet product imports that are not widely available offline in China. As an increasing number of Chinese pet owners try to offer the best to their companion animals, this market represents a significant growth track for international brands.
Demand for professional pet care and medical equipment is increasing. Currently, there are 15,000 pet hospitals in China and more than 10% are chains from established brands. The market is expanding to include not just clinics but also facilities and services such as imaging, insurance and a full vaccination service. Each year, around 16,000 Chinese professional graduates start working in pet hospitals.