Australian vets set to buy NZ animal remedies

A large Australian-owned animal remedies company, Provet, says eight new companies, such as rural supplies retailers, are lining up to sell prescription animal remedies (PARs).

The agricultural compounds and veterinary medicines arm of the Food Safety Authority recently changed rules which have meant PARs have been both prescribed and sold by veterinarians, and Provet sold to the veterinarians.

"Provet considers that this increased competition will become a serious threat to its long-term viability, unless it can build scale quickly," the company said today.

Falling profit margins in the sector meant continued viability in the wholesale veterinary market could only be assured by increased economies of scale, Provet said. It wanted to buy market share by taking over a New Zealand manufacturer and wholesaler of veterinary products.

Provet NZ Pty Ltd -- effectively controlled by Australian veterinarians -- has applied to the Commerce Commission to acquire the business and assets of National Veterinarian Supplies Ltd (NVS), owned by the Reid family, of Auckland. The merged company and its products would only be known as Provet.

The commission said in a statement that such a buy-up would result in aggregation in the wholesale supply of animal remedies, animal health products, pet nutrition products, veterinary practice disposable items, and animal related merchandise, and would also result in a degree of vertical integration for Provet.

Provet is an Australian-owned company that wholesales animal remedies to registered veterinary practices, mainly in the north of the North Island. Its products include prescription remedies, over the counter animal health products, pet nutrition products, veterinary practice disposable items, and animal related merchandise.

NVS was established in 1959 as Northern Veterinary Supplies, but changed its name in 2000 to wholesale similar products to veterinarians nationwide. But it also manufactures six animal health products, including Pentobarb, a drug used for euthanasing animals, and sells its manufactured products to other wholesalers as well as directly to veterinarians.

The commission said today it would decide whether the proposed acquisition had the effect of substantially lessening competition in a New Zealand market.

Provet said it was not yet clear what proportion of the PAR market that non-veterinarian "approved traders" might secure, and urged the commission to consider the market for both PAR and over-the-counter (OTC) products as the whole product line, regardless of whether it was sold through vets or rural supplies companies.

"There are virtually no barriers to customers switching supply channels," the company said in an application signed by director Nigel Nichols. Anaesthetics would continue to be sold directly to vets, but the new non-vet suppliers could move to filling prescriptions for both antibacterial and analgesic medicines.

Significant market penetration by a new entrant would take up to two years, but the competitive pressure would be felt immediately. Likely new entrants included Australian veterinary suppliers, rural supply companies, pet shops, wholesalers or manufacturers of human medicines, and wholesalers selling other product to vets, such as petfood.

Masterpet had already leveraged itself from the petfood sector in Australia into animal health products there, and Provet was aware of an Australian veterinary supplier looking at expanding into New Zealand.

It said there was only one other significant wholesaler operating in the sector, SVS Veterinary Supplies Ltd, and that it was likely that another manufacturer would start directly supplying animal remedies.

It said most petfoods, $167 million of the total market of $220 million were non-premium lines widely sold through supermarkets, but $52 million worth of eight premium imported lines was mainly marketed through veterinarians and pet shops.

- NZPA