One of the top biotech picks, Merck & Co., Inc. (NYSE:MRK) Animal Health, has announced that is has purchased a controlling interest in a leading Brazilian manufacturer of products for livestock and pets, Vallee S.A. The president of Merck Animal Health, Rick DeLuca, said that the acquisition would be to the benefit of customers.
“The combined strength of the two companies under the umbrella of MSD Animal Health will provide customers with a more comprehensive portfolio of products for livestock animals. We will continue to seek opportunities like these that complement our business and bring value to our customers,” said DeLuca.
Wide portfolio of products
As a market leader not just in Brazil but also the wider South American market, the Brazilian company’s portfolio of products totals more than 100. This includes vaccines, anti-infectives and parasiticides. The acquisition will give Merck Animal Health a headstart in a rapidly growing South American market. For instance, the value of beef exports from Latin America via-a-vis global beef exports rose from 18% in 1999 to 25% in 2012. In that period, Brazil has emerged as a key exporting country having grown its exports by 193%.
Another factor that makes South America a lucrative market for Merck Animal Health is the fact that the cattle population in Latin America per person is three times more than the number of cattle per person in the United States.
Companion products sector
Also, the companion products sector is expected to grow in Latin America at a faster rate than the rest of the world. This segment of the animal health products industry is expected to at a compounded annual growth rate of 5% in the next 10 years around the world but in South America it will grow at a faster rate of 6%.
The faster growth has been attributed to the fact that Latin Americans are growing more affluent and this will result in an increase in the number of pets adopted. Thus, this humanization of pets will lead to an increase in the amount of money being spent on companion products.
In Wednesday’s trading session, shares of Merck & Co Inc, one of the top biotech stocks, edged downwards by 0.64% to close the day at $63.50.