Zoetis Seeks Acquisitions to Strengthen its Offering and Add Value
This article originally appeared in Expansión on June 1, 2016. An English translation of the article is below.
By Ana Medina, Expansión, Madrid
"The strength of our business model is based on three interconnected capabilities: the salesforce, R&D, and manufacture of high quality products. These advantages have helped raise revenue three consecutive years above the market and have positioned Zoetis for sustainable growth and will generate value over the next years," says Juan Ramon Alaix (Barcelona, 1951). In February, the animal health group world leader served three years as leader of the public company, after separation from the pharmaceutical company Pfizer. A few months earlier, in July 2012, Alaix was named chief executive of the business that makes drugs and vaccines for animals. "In the last three years, the animal health industry has grown from a small piece in the health sector, with little interest among investors, to become an important and distinctive part," Alaix said, adding that since Zoetis is an independent company, "we have demonstrated our leadership with stable financial results stable, a team of colleagues centered on the customer and innovation."
Zoetis had a net profit 339 million dollars 2015, which invoiced 4,800 million, an 8% increase over the previous year and up 14% from the 4,200 million reported in 2012, the last year as a business unit of Pfizer. Fifty-six percent of turnover comes outside the US. present in 120 countries, pointing to US, Brazil, China , Japan , Mexico, United Kingdom and Spain as the main engines growth.
Alaix has 35 years of experience in managerial positions, 20 of them in the area of Health. He was CEO of Rhone-Poulenc Rorer in Spain and Belgium and President Pharmacia Spain when, in 2003, Pfizer took control. Then, he moved to the US to lead the area of central and southern Europe and,since 2006 Pfizer Animal Health. "Becoming CEO of a listed company in the US, with a market capitalization more than 24,000 million, it exceeded my expectations from when I initially moved there," he says.
Last year, he announced an efficiency program integral to simplifying its operations and improving the cost structure. Focusing on opportunities key to its growth, it expects revenues this year between 4650 and 4780 million of dollars [not updated for May earnings]. The goal long term, according to its CEO, is continue to lead the industry, "not only in income, but also in innovation and customers recognizing our team and products for more value. We also want to be more efficient to ensure our competitiveness in the long term. The goal is to continue growing faster than the market and achieve a adjusted EBIT margin of 34% in 2017.” A goal that will contribute R&D. "The innovation is very important to Zoetis. It is one of the three advantages that make us competitive. Last year, we received about 200 product approvals," he says.
A strategy that goes also to "acquire companies and products that improve our portfolio and increase shareholder value.” Last year, Zoetis closed acquisition of Abbott animal health assets and Pharmaq. "The purchase of Abbott has strengthened the portfolio for pets. It has expanded the diagnostics business and has given us a leading position in veterinary surgery suite. With Pharmaq, we have strengthened a segment in the rapidly growing aquaculture business, which represents about 400 million market.”
Increasing population and spending on care for pets, especially USA, Western Europe and China, play, according to Alaix, a pro-growth outlook for the industry and contributes to consolidation (Sanofi and Boehringer negotiate an exchange of assets that become the second largest in the sector). "The industry remains very competitive and we continue to seek ways to strengthen the product portfolio and create value for shareholders, including acquisitions".
Alaix is part of the club Spaniards who have come to lead a foreign company. "Being in the right place in the right moment always helps, but USA, and in any country, one has to be willing to take risks and to welcome changes as opportunities for personal and professional development. Another ingredient for success is to create a high performance team, enabling each of its members to develop all potential. Most importantly obtaining consistent results is as important as achieving them with integrity," he says.
About Juan Ramon Alaix
PLACE OF BIRTH: Barcelona, in 1951.
STUDIES: BA in Economics from the University of Madrid.
HIS CAREER: Worked in Rhône-Poulenc Rorer and was president of Pharmacia when, in 2003, Pfizer acquired the group. Since 2006, he has been president of Pfizer Animal Health (Zoetis from 2012).
THE COMPANY: It is the largest group of animal health. It has 9,000 employees. It had a net profit of 339 million USD and billed 4,800 million USD in 2015.
HIS SENTENCE: "Being quick and agile is very important, but I often say to my team that sometimes we have to consult the pillow, take our time and think. It's a good way to get advice and less expensive that external consultants.”
Spain, a key market for the group due to its growth and innovation
Spain is among the ten major markets of Zoetis. The Spanish subsidiary had a turnover of 77 million euro in 2015, 13% more, which represents 2 per cent of the multinational revenue. "It is a country with a highly consolidated livestock sector, the largest producer of pigs in the EU and the third in the world", says the first executive of Zoetis. With head offices in Madrid and commercial presence in the major communities, Zoetis has a medicines and vaccines production plant in Olot (Girona). "It exports to more than 60 countries and also hosts the R+D centre. Our employees in Olot will continue to play a vital role in the success and growth of the company", says Alaix. He also emphasises that Spain's general manager, Félix Hernáez, also monitors operations of the group in the south of Europe as vice president. "All these aspects make Spain a key market". On the economic situation of Spain, Alaix highlights its many advantages, "including a staff with a lot of talent. The leaders of the Spanish companies have a good training and are qualified to apply the learning to business in a very effective manner. I am sure that the future economic and political environment will continue to support our investment there".