2019 annual
report

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Interview with Sébastien Huron
Chairman of the executive board of the Virbac group

We are continuing our relentless efforts
to advance animal health.

On course for new territories

In what ways are Virbac’s activities essential?
Animal health is at the heart of protecting life. Taking care of animal’s health not only helps farmers meet a growing demand for animal protein, it also safeguards the well-being of animals and the special relationship that binds them to their owner.

What did Virbac teams accomplish in 2019?
In the companion animal sector we have mobilized, throughout 2019, to share new health solutions with owners and veterinarians. For example, fighting parasitism with a collar that gives dogs in Southern European countries protection against the sandflies responsible for leishmaniosis, a fatal zoonotic disease. Our efforts also focused on dental hygiene with the provision in several countries of drinkable or chewable products directly targeting the oral and digestive causes of bad breath.

Any other contributions?
Yes. Increasingly, we see that accurate diagnosis is essential in adjusting treatment to the animal’s needs and that immediate results are key to managing certain diseases. That’s why in 2019 we continued the European deployment of our blood marker dosage analyzer with an series of tests for five biomarkers in dogs and cats. We are also entering a new era in the treatment of mastocytomas in dogs, the most common form of skin cancer, after obtaining favorable opinion in Europe for an innovative injectable solution. Lastly, animal welfare continues to be one of our major concerns.

How do you tackle this issue?
In China, for example, after obtaining a marketing authorization, dog owners will soon have our deslorelin-based implant to reduce their animal's undesirable behaviors and control their fertility in a reversible manner and without altering body integrity. A real leap forward in this country, where 70% of owners who have not sterilized their animal believe that surgical castration is not a method that respects their dog’s nature. In addition, aware that nutrition is a pillar of wellness and prevention, we are committed to making our petfood range, which respects the carnivorous diet of dogs and cats, available in new countries, such as Colombia, this year.

And for food producing animals?
Along with the responsible use of antibiotics, the role of trace elements in cattle health is fundamental. In addition to bringing our mineral-based injectable supplement to France, Ireland and the United Kingdom, we strive to raise farmers’ and veterinarians’ awareness of the importance of micronutrition in disease prevention. Another essential component of prevention: vaccination. In 2019, we were proud to continue the Korean deployment of our type 2d vaccine against porcine circovirus, a predominant genotype in Asian farms. At the same time, we are continuing our relentless efforts to advance animal health.

How so?
Primarily, by increasing our ability to innovate on five continents. Therefore, we opened new facilities in Uruguay in late 2019, dedicated to developing vaccines for ruminants. In Taiwan, we laid the first stone of a new R&D biology center that will be operational within two years. We are also strengthening our aquaculture activities, with the start of construction of a specialized unit in Vietnam. On the production side, we launched a transformation and performance pilot program to develop the productivity, safety and quality aspects of Virbac’s industrial activities. It’s the beginning of a great adventure to build the Virbac plant of tomorrow.

Any other investments?
Yes. Since June 2019, all company employees have had a new, higher performing Google Suite-centered digital workplace to optimize collaboration and performance. Along with our employees’ commitment, our internal operating modes are clearly part of the company’s success levers. Therefore, we are focused on improving quality of life at work. In France, for example, following the Great Place to Work survey, cross-functional working groups identified corrective actions that will help make the Virbac of tomorrow an even better place to work.

What is the outlook?
In our first Statement of extra-financial performance in 2019, we formalized our four sustainable development commitments, demonstrating our common will to a long-term approach. To ensure the company’s sustainability, we also established governance to mitigate risks, including a strong commitment to transparency, business ethics and respect for human rights. Lastly, we are going to go even further with regard to corporate culture in order to further define our societal contribution. A capital approach to give meaning to our daily activities and thus continue shaping the future of animal health.

Learn more about corporate governance
59%
Companion
animals
938 M
41%
Food
producing
animals
SALES
2019

Sales split by geographical area

Répartition CA mondialSales split by geographical area EuropeLatin AmericaNorth AmericaAsiaPacificAfrica-Middle East

Finance: good 2019 performance

Habib Ramdani
Habib Ramdani,
Group chief financial officer

What was the outcome for Virbac in 2019?
Our revenue grew 6.6% at constant rates and scope, above the estimated market growth rate of between 3 and 4%. All regions contributed to this growth except for the Pacific region, where the Australian drought greatly affected our sales. Eleven countries, including Brazil, China, and the United States, saw double-digit growth. At the same time, our profitability1 greatly improved, reaching 13% of our sales at real rates.

And on the species front?
In companion animals, we had growth of 9.6% at constant rates and scope. This activity was driven in large part by the increase in sales of our petfood range, which surpassed €50 million in 2019. Our dental range profited from the launch of our innovative chews in Europe and North America. Lastly, in spite of a few supply issues, our canine contraceptive implant posted double-digit growth.

And for food producing animals?
The pig and poultry sector was impacted by new regulations on the prescribing of antibiotics in Italy and Spain. In addition, the African swine fever epidemic slowed the provision of our new vaccine against porcine circovirus in Asia. However, our food producing animal activity grew overall by 2.4% at constant rates and scope.

What are the growth factors in this segment?
The performance of vaccines and food supplements for cattle in Europe and Latin America, on one hand, and parasiticides and injectable aquaculture vaccines in Chile on the other.

What is the outlook for 2020?
In view of the anticipated impact of Covid-19, we have decided to suspend our guidance given in March. Right now, it is still too soon to evaluate the impact of Covid-19 with a sufficient degree of certainty. We will give the outlook for 2020 as soon as we have a clearer picture of the future.

1Current operating profit, before depreciation of assets arising from acquisitions

Key figures

(in € million)

at constant exchange rates and scope (in % of revenue)

(in € million)

(in € million)

(in € million)

(in € million)

(in € million)

(in € million)

For responsible innovation in step with societal changes

Jean-Pascal Marc
Jean-Pascal Marc,
Corporate Product Innovation director

We turn to the latest technological advances every day, seeking new and practical solutions that meet the expectations of veterinarians, farmers and animal owners. This is what innovating for animal health means to us. An approach that is also in step with society and its changes to provide new answers to the needs of today and those of the future.

These expectations include a growing demand for quality animal production that limits the use of treatments and favors farming conditions that respect animal well-being and the environment. That is why we are mobilizing in favor of preventive medicine in the areas of nutrition and even biology, which on its own represented 33% of our R&D investments in 2019. Meanwhile, companion animals, often seen as full-fledged members of the family, are living longer and longer. With the help of veterinarians, we have made solutions available to pet owners that are designed to be a part of their daily lives in order to preserve the bond they have with their pets.

To meet these challenges, our R&D teams work hand-in-hand worldwide while developing external partnerships with biotechnology companies, universities and research laboratories, with whom new agreements were signed in 2019. Through alliances with other companies, we are also pursuing an active business development policy to continue exploring, discovering and sharing increasingly useful animal health solutions.

China: an ethical solution serving the well-being of dogs

In October, we obtained marketing authorization for our implant that induces temporary infertility in male dogs. Placed subcutaneously, this deslorelin-based implant sterilizes the dog and reduces undesirable behaviors in a reversible manner and without altering body integrity. In this country, owners are increasingly sensitive to the question of animal well-being: 70% of those who have not sought sterilization feel that surgical castration is not a method that respects their dog’s nature. Thanks to this information, we are now providing an ethical solution for 34 million medicalized male dogs.

Taiwan: Virbac takes another step towards sustainable farming

November 26, 2019 was a great day for our Virbac Taiwan teams. During a solemn, colorful ceremony in the presence of about fifty representatives from local institutions and industries, we celebrated the laying of the cornerstone of a new R&D center, slated to open its doors in 2021. With the construction of this first laboratory dedicated to biological products in Asia, we are taking our support for the region’s aquaculture and swine activities even further. Our approach remains focused on prevention, in order to contribute, as close as possible to the field, to the development of increasingly sustainable farming.

North America: 2-in-1 chews for healthy dogs

Last October in the United States, we shared with dog owners two innovations that include our FR3SH technology and the scientifically recognized ingredients L-theanine (Veggiedent Zen) and eggshell membrane (Veggiedent Flex). In addition to fostering good dental hygiene, these chews help to maintain behavioral well-being and good joint health. Two frequent subjects that can harm the animal’s quality of life and relationship with its owner. Thanks to these 2-in-1 solutions, we provide a daily answer that favors the overall well-being of our four-legged companions.

Another step towards industrial transformation

Marc Bistuer
Marc Bistuer,
head of Industrial Operations
& Corporate Quality Assurance

We are committed each and every day to the quality of our products and the competitiveness of our production facilities. With one goal in mind: making our health solutions even more accessible to veterinarians, farmers and animal owners around the world.

With this in mind, in 2019 our teams have taken this commitment even further. How? By optimizing our quality processes around the world, particularly with regard to improving our biological processes. As for competitiveness, we launched a pilot of our Imago program in France, dedicated to transforming our manufacturing activities. Through this approach, buoyed by employees who are both the actors and the engine of our transformation, we are going to advance in three key areas: performance, quality and safety.

In 2020, we will continue in this direction, in particular, to expand the Imago program to other manufacturing sites around the world while accelerating the replacement of our information systems. All this to contribute ever more rigorously and effectively to the health and well-being of both food producing and companion animals.

France: encouraging results for Imago

Since its launch in France, the Imago program has made significant achievements. Thanks to our teams’ targeted action, particularly with regard to controlling material losses or optimizing quality control, we have achieved our performance objectives. In terms of safety, our annual accident frequency rate has dropped below five for all of our teams in France for the first time ever! As for quality, we have focused on the specificities of our different non-pharmaceutical product ranges. These advances will be strengthened by an even greater adoption of the Imago approach within our teams in 2020.

United States: FDA certification renewed in Bridgeton

In November, FDA inspectors visited our Bridgeton (Missouri) production site. During this inspection, our local teams demonstrated great expertise and were fully mobilized to supply any required documents and explanations. At the end of this visit, the FDA representatives confirmed the site’s GMP status. Thus, we affirm the quality control of our processes, essential to sharing our health solutions with American veterinarians, farmers and animal owners.

Information system: on course for modernization!

We worked steadfastly in 2019 on a project to modernize the information systems that support our activities, including manufacturing. This will come to fruition with the establishment of a new ERP and three expert solutions for procurement, production processes and quality control. Throughout the year, our teams were actively involved in important structuring work on project governance, functional specificities and software vendor tender calls. Exciting challenges are in store for the next years with the standardization of our processes and increased performance being key!

Closer to veterinarians,
farmers and animal owners worldwide

Nathalie Pollet
Nathalie Pollet,
Global Marketing &
Business Optimization director

For over fifty years, Virbac has been forging a personal relationship with veterinarians, farmers and animal owners in every country, based on active listening and a deep understanding of their needs. This strong connection allows us to develop ingenious, effective solutions to help them confront major animal health issues, whether it be supporting sustainable farming, ensuring the animal’s quality of life, or its relationship to humans.

This year, once again, these issues were central to our activities. Mobilized to provide solutions that ensure food production quality and safety while safeguarding animal well-being, we worked to expand the availability of our vaccine against porcine circovirus in Asia. Farmers benefited from a new prevention option to better control infectious phenomena in swine production while limiting the use of antibiotics.

Meanwhile, to respond to changing consumer habits, over the course of the year we launched online stores in several countries. These shopping platforms will allow us to remain true to our historic mission: to provide increasingly effective solutions committed to animal health.

Better respect for the nutritional needs of cats and dogs

The first step in caring for our canine and feline friends is providing them with a diet that suits their carnivorous nature. In 2019, our Veterinary HPM petfood range, already on the market in Europe, Japan, and most of Latin America, was made available to veterinarians in Colombia. And for battling obesity, which affects 25 to 40% of dogs worldwide, we established a partnership with a canine activity expert, PitPat, in Europe. The concept? Supporting owners as they help their companions lose weight in a simple and fun way; using a connected device that measures the animal’s daily activity!

Strengthening porcine circovirus prevention in Asia

In September, we made our new type 2d vaccine against porcine circovirus available in Korea and received marketing authorization for it in the Philippines, Vietnam and Thailand. Thanks to this decisive step, we are providing the region’s farmers with a preventive solution for sows and their piglets. To more effectively combat this infectious phenomenon responsible for major animal production losses, our approach is global: the vaccine is accompanied by diagnostic tools, a monitoring service at the farm and a control of vaccination procedure.

Promoting injectable micronutrition in Europe

In the third quarter, our teams made new strides in promoting animal well-being and sustainable farming by sharing our injectable micronutrition solution with English, Irish and French cattle farmers. Providing trace elements strengthens the animal’s ability to reduce oxidative stress during critical periods (growth, reproduction, transport). Injectable micronutrition contributes to good bovine health, supporting their immunity, fertility and growth. An ethical, long-term and effective solution for farmers!

Digital expansion for more closeness

Thanks to the commitment of our teams in the field, the year was marked by the opening of our first flagship store on the Chinese Tmall platform. This space allows us to make our range of daily hygiene and well-being solutions available to Chinese companion animal owners. Conscious of the need to adapt to pet owners’ changing consumption patterns, we also developed online stores devoted to our Veterinary HPM petfood range in several countries around the world (Japan, Germany, Italy, Switzerland, etc.) in partnership with veterinary clinics.

Engagement, the force that drives our corporate culture

Francesca Cortella
Francesca Cortella,
head of Corporate Human Resources

At Virbac, women and men are at the heart of our company project; as we know that their commitment is our most important competitive advantage. That is why we cherish a corporate culture in which we pay special attention to our employees. This resulted in two major accomplishments this year.

As part of the Great Place to Work approach, the first action plans were established in France and at subsidiaries. We would like to thank our teams for their strong involvement. Meanwhile, in 2019, we prepared for the launch of a vast transformation program for the Group's 5,000 employees; based on a new HR information system as well as simplified and optimized processes. The aim is to adopt a latest-generation platform for better management of the personal data of employees or that related to their career at Virbac. This program is perfectly in line with our corporate culture, respectful of local practices, where the quality of the relationship is unique and where employees will be fully involved in the future.

Experiencing a unique human adventure at Virbac is not just an ambition. These initiatives bring us one step closer, ensuring that the commitment, boldness and creativity of our teams continue to serve as the pillars upon which the Group’s success is built. To make our company a place that is, a little bit more each day, a great place to work together.

Great Place to Work: we all play a part in the quality of life at work

The Great Place to Work approach entered a new phase in 2019, with the establishment of specific action plans in all of our subsidiaries. Thanks to the reflection work carried out by several volunteers at cross-functional workshops, in France, in the United States and in Australia, several key themes were selected. Among them, for the Carros sites for example: cross-department and manager-employee relations, proximity between employees and management, and even workplace celebrations. They will culminate in 2020 with the sharing of concrete initiatives for an even better quality of life at work.

Mexico: a wonderful moment of sharing

On October 4, 2019, we celebrated the 30-year anniversary of one of Virbac’s historic subsidiaries with a moving and heartfelt ceremony. In front of 400 guests, comprised of all the site’s employees and its many partners, the chairman of the executive board and the subsidiary’s general manager paid vibrant tribute to this major Latin American entity. This is a team recognized for a state of mind that combines performance with the joy of working together, boasting no fewer than 20 innovations in the service of animal health from our regional R&D center! The following day, an open house day allowed employees’ families to spend additional time together and visit one of the Group’s newest production units.

Newcomers: a stronger welcome on all five continents

Entrepreneurship, innovation, attention to people... at Virbac, our Group’s founding values are key. To better share them with those just joining our teams, we launched a dedicated program on our Virbac Learn training platform in June. Available in English, French and Spanish, the various online modules provide each newcomer with a common core of knowledge on three topics: the Group and its organization, its business functions and how to protect the company’s assets. As a supplement to local initiatives, this program strengthens the unique culture that already unites us!

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