2020, an extraordinary year? Without a doubt, given the rare natural disasters that affected several parts of the globe and, of course, the Covid-19 pandemic that shook the world. This is why we have been mobilized throughout the year to protect the health and safety of our employees and to ensure the best possible continuity of our commitments to animal health.
What does this mean? With an increase in pet adoptions around the world since the first lockdown, taking care of the animals that share our homes, especially those of people in isolation, was more important than ever. Our teams have, therefore, been at the forefront of ensuring dogs and cats continue to eat, by creating webshops in several European countries that facilitate access to our specialized petfood range, particularly suitable for domestic carnivores. In Mexico and China, with the physical integrity of the animals in mind, we have provided owners with an alternative to surgical castration via our implant for the reversible neutering of dogs, already available throughout Europe. Finally, in 2020, we opened a new route in the treatment of canine cancers thanks to a new injectable solution against mast cell tumors, the second most commonly diagnosed cancer in dogs.
And on the food producing animal side? The level of mortality and morbidity in farms is still very high, especially considering that these structures are a major source of protein intake to "feed" the populations of today and tomorrow. In 2020, we made our vaccine against porcine circovirus type 2 available in Vietnamese and Thai farms, helping to limit its impact in one of the largest production areas of the world. In Australia, we are moving forward with the management of parasiticide resistance in cattle with an effective innovation against multi-resistant parasites. Finally, with the acquisition of a range of vaccines for tilapia from Ictyogroup and the launch of an anesthetic in Norway, the number one country in the world's salmon production, we now offer our aquaculture solutions on all continents and for the most promising species (salmon, tilapia, shrimp) to respond to the global food challenges.
What about the protection of Virbac teams? In 2020, more than ever, we placed our people at the heart of our concerns. The strict health measures implemented very early in our various subsidiaries are proof of this. Despite a complicated healthcare context, several Great Place to Work initiatives have emerged around the world. In France, for example, we have deployed a manager's charter and integrated the employee's feedback to the manager in the annual appraisal. So many initiatives and good practices that continue to make Virbac, day after day, a great place to work. The times of crisis are also a strong indicator of our values and our strengths. Throughout the year, we saw an unwavering commitment from our teams, around the world, and I sincerely wanted to thank them all for this. This unique corporate culture is amongst what drives us every day and what also makes us want to go further to shape the future of animal health.
How? Within our new Group executive committee, we are working closely to adapt our strategy to a world in constant motion. This is the best way to optimize its robustness and thus sustain the company's future. As the health and economic crisis is in full swing, we have continued to invest during 2020 in the rollout of Workday, our new HR system, within the context of a program to improve the employee experience. We have also given new impetus to the transformation of our industrial operations to make them more competitive in the coming years with significant investments planned, including in the digital field, particularly as it relates to France and the United States.
What is the outlook? We will soon achieve our entry into the American food producing animal market and continue to roll out our petfood range in two major markets, the United States and China. In the medium term, our goal is to provide products with high added value for those who take care of animals around the world. This is why in 2020 we signed several agreements on innovative molecules or technologies protected by patents in biology, reproduction or in the field of antibiotic substitutes. Finally, in 2021, we launched a vast program, “Virbac 2030”, which aims to define the type of company that we wish to build in the next ten years, in connection with our sustainable development approach.
With which commitments? In view of the health context, our priority remains to preserve the health and well-being of our employees, while allowing them to explore new areas serving animal health, an essential activity for the balance of ecosystems and the protection of the living as a whole. We will also continue our efforts to preserve the environment by working, for example, on products that are even more environmentally friendly. And more generally, continue to make responsible choices for a sustainable future by giving all levels of the company the means to contribute to an increasingly sustainable approach to our activity.
What made this year so remarkable? First of all, because despite the Covid-19 crisis, 2020 continued the strong growth we have seen over the past two years. It also marks a real turning point for the Group and its financial position with the sale of our SENTINEL® brands parasiticides to MSD Animal Health.
How do you explain these results in the midst of a health crisis? Our industry has weathered this crisis very well, because taking care of animals remains an essential activity for the planet. Throughout the year, our Virbac teams have demonstrated exceptional resilience and adaptability. This engagement has enabled us to achieve one of the highest growth rates in recent years (+5.7% at constant exchange rates and scope).
What were the growth factors? Our sales growth was driven as much by companion animal activities as by food producing ones, in all of our geographical areas except for the United States. It is the result of the geographic expansion strategy of our products, particularly our specialized pet food range and our neutering implant. The launch of new products also contributed positively to our 2020 sales.
And in terms of financial indicators? Beyond our performance, we stepped up our cost-control efforts and our expenses were reduced due to Covid-19. These efforts increased our adjusted Ebit, which, in terms of sales ratio and constant rates, amounted to 14.4%, an improvement of 1.4 points compared to 2019. Even if the sale of the SENTINEL® brands corresponds to a negative impact of approximately 3 points on our Ebita-to-sales ratio, on a pro forma basis over a full year at the time of the sale, it will have allowed us to completely eliminate our debt in 2020. This allows us to look at other possible external growth operations to supplement our product portfolio and/or our presence in certain markets.
What is the outlook for 2021? As in previous years, we aim to grow at a faster rate than the market. Through our commitments to animal health, our growth is expected to continue in all regions, with the possible exception of Chile, where aquaculture activity has been more severely affected by the health crisis.
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At Virbac, we have always geared our R&D teams' efforts toward applied research and development, with one single objective: to encourage practical innovation in the service of veterinary medicine.
In 2020, despite the health crisis, our teams remained proactive in pursuing their mission. Through several years of cross-functional collaboration and an increasingly shared responsibility for projects between our various R&D sites and our partners around the world, we have pursued the vast majority of them remotely. Networking is all the more important since the smooth running of these projects is closely linked to the convergence of teams worldwide around common development programs, brought about with collective intelligence. At the same time, the implementation of very strict protection measures in the field have allowed us to maintain our level of activity in laboratories.
In terms of business development, we have achieved the signing of ten licensing-in technological partnerships relating to molecules, either in innovative technologies in biology or reproduction, or in the wide-reaching area of antibiotic substitutes. Building on the momentum generated several years ago, these agreements illustrate our desire to expand our presence in the field of applied research. To explore, discover and share increasingly differentiated health solutions for caregivers around the world.
Australia: delving further into the management of parasiticide resistance
In Australia, 90% of farms are affected by the resistance of internal parasites to wormers with a single active ingredient. Mobilized to provide a solution to this problem in a country with more than 26 million cattle, in September 2020 we shared the first parasiticide combination of moxidectin and levamisole in this country. The result of research work carried out by our Australian teams in close collaboration with local universities, this ingenious solution has already been very favorably received by local farmers thanks to its effectiveness against strains of multi-resistant Australian worms.
Eco-friendly packaging: Virbac steps up the pace
Always listening to society and its developments, our Carros R&D teams developed new innovative packaging for one of our injectable solutions for cattle, pigs and sheep in 2020. Resulting from several years of research, this new patented system consists of a glass vial protected by a detachable silicone shell, which can be reused on other vials. Providing an airtight glass seal while preventing the risk of breakage, this clever solution facilitates the administration of treatments in food producing animals. It demonstrates our daily commitment to developing more efficient and eco-friendly packaging for animal health.
France and the United States: another step forward in feline oral hygiene
70% of cats are affected by periodontal diseases starting from the age of two. Mindful of the continued relationship between the owner and the animal, we shared a dental innovation with French and American caregivers in 2020. With their shape, taste and texture specifically designed to prompt cats to chew them, our new chews clean their teeth and freshen their breath while strengthening their gums. Developed through the collaboration of our French and American teams, this innovation provides an effective solution for the well-being and good health of cats.
Making our health solutions increasingly accessible to caregivers around the world thanks to a reliable and efficient industrial tool: this is what we believe is the essence of working for animal health.
In 2020, our teams played a key role in meeting the challenges that emerged as a result of the Covid-19 crisis. We restructured our work processes in order to ensure our employees’ presence at all of our industrial sites was in strict compliance with all the safeguards required, in place. Despite a slightly reduced production capacity, mobilizing each and every one in a true display of solidarity enabled us to continue to share our animal health solutions around the world.
The same positive dynamic continued to drive the rollout of our Imago industrial competitiveness program at our various industrial sites in France. As for the Odyssey program, which accelerates the transformation of our industrial activities technologically and organizationally, it has continued to forge its way forward in France and the United States through remote workshops.
In 2021, we will continue efforts to improve our industrial performance. All this to contribute ever more rigorously and effectively to the health and well-being of both food producing and companion animals.
The Odyssey program takes on a new dimension
2020 marked a decisive step in the project to modernize our information systems. In November, the significant preparatory work carried out by our teams led to the selection of publishers and integrators of our new ERP system (Enterprise resource planning) and the three expert solutions covering purchasing, manufacturing and quality control processes. In 2021, we started to implement the new processes in the field, with the set-up of a core model for France and the United States, whereby the four software programs will be integrated by 2022. Placing employees at the heart of transformation, the Odyssey program will eventually mobilize nearly 2,000 employees.
France: new advances in the rollout of Imago
In 2020, we kept the momentum of the Imago program going with the rollout of several projects. With regard to the sterility of our production environments, the implementation of specific routines coupled with the training of our teams has helped strengthen the control of our aseptic activities. In terms of investment, we have displayed foresight by integrating a robot into our equipment for the automatic loading of vials from our dermatology range, allowing the employees concerned to devote themselves to tasks with greater added value. Finally, our teams took an active part in the progress strategy: during the year, they issued about 30 suggestions for improvement, more than 2/3 of which resulted in concrete action in the field.
Towards an optimized management of our industrial performance
In 2020, we introduced a new approach to managing our industrial performance. Supported by a working group made up of operational employees, our management control teams have implemented more legible performance indicators to better guide decision-making in the field and improve the control of our industrial costs. Thanks to the harmonization of dashboards and solid buy-in on the part of the teams, this new management method will help keep our production system at a high level of efficiency and compliance with the highest international quality standards.
At Virbac, we know how essential the personalrelationship connecting us with veterinarians, farmers and animal owners around the world is, to better understand and meet their expectations.
In a year marked by a global health crisis, the desire to maintain this link was, more than ever, at the center of our attention. Even though it has not been possible to make physical visits to our customers, all our teams have proceeded with multiple product launches and remote training sessions, via webinars that sometimes bring together several hundred participants.
This tremendous mobilization allowed us to further our contribution to the major challenges of animal health. To improve the quality of life of our animals, we have made available a new innovative treatment for canine skin tumors and continue the rollout of our implant for reversible neutering in dogs in several countries. Finally, we have increased the availability of our specialized petfood, hygiene and nutraceutical supplement ranges - thanks to the growth of our online sales platforms which make our health solutions increasingly accessible to those who take care of animals.
Committing to animal health also means supporting sustainable farming. Several acquisitions in the aquaculture sector allowed us today to share our health solutions on the three of the most consumed species in the world (shrimp, salmon, tilapias) and on all continents, thus favoring the development of an animal protein of the future to feed the planet.
Europe and United States: a new path for the treatment of canine skin tumors
In April, at the first Virbac Oncology Summit, we shared an innovative treatment against mast cell tumors, the most common form of skin cancer in dogs. An unprecedented injectable solution, it is administered directly into the tumor, leading to its complete eradication in 75% of cases. Granted the innovation award at the main French veterinary congress for companion animals in December, it offers a new, efficient and easy-to-use non surgical option. Throughout the year, our teams have shown a strong commitment to sharing this solution with all European veterinarians and soon with American practitioners.
Aquaculture: one more step towards sustainable aquaculture
In 2020, we stepped up our commitment to the aquaculture sector by entering into a significant partnership with Ictyogroup. It allows us to provide a range of innovative vaccines for tilapia in Africa, Asia and Latin America. In parallel, we entered into an agreement with the biotechnology company Pebble Labs for the co-development of new solutions dedicated to the prevention of aquaculture diseases, including White spot syndrome, responsible for significant losses in shrimp farms around the world. These two major partnerships confirm our desire to sustainably meet increasing global food needs.
Reproductive management: our ethical solution extended to new countries
In 2020, our teams proposed to Chinese, Uruguayan and Mexican veterinarians the first implant to induce temporary infertility in male dogs. Inserted subcutaneously, this deslorelin-based implant enables neutering of dogs and helps control some of their behaviors, albeit reversibly. After Europe, these launches are a new step in offering an ethical alternative to surgical castration to practitioners and animal owners around the world. In 2022, we will be providing fresh impetus to the rollout of this solution, thanks to its availability in Brazil, Colombia and Chile.
More than ever, 2020 has illustrated one of our most essential values: the attention we pay to each of our employees for over 50 years.
From the beginning of the pandemic, the health and safety of our employees have been our top priority. Around the world, we have been hard at work implementing everything possible to protect our teams while ensuring the continuity of our commitments to animal health.
Within this context, the commitment of each person was a driving force. The crisis revealed the incredible solidarity between our teams around the globe. At our headquarters in Carros, many employees volunteered to aid compliance with the barrier measures in the field; others reorganized their activities, for example, to deliver computer equipment to the home or distribute packed meals to the production teams. In parallel, we have been able to demonstrate agility and remain effective remotely by adopting the new ways of working together induced by the development of teleworking, while maintaining a close connection between our employees.
The collective drive we demonstrated underscored all the strength of our corporate culture. The continued deployment of our internal HR programs helps strengthen it and allows our teams to continue to experience a unique human adventure.
Group: towards more open evaluation processes
In November, we rolled out our new HR information system in all our subsidiaries. A leader in this sector, the latest generation of Workday’s integrated platform will allow us to progressively deploy optimized processes, promoting the commitment of those who, every day, shape the future of animal health. At the same time at this key stage, we have developed the annual appraisal interview thanks to a working group bringing together employees from different positions and countries. Incorporating the observations from our last internal inquiry, this change simplifies the evaluation process while strengthening the role of the exchange, thanks to the possibility for the employee to share his/her feedback with his/her manager.
Group: strengthening the employee-manager relationship
Despite the difficulties related to the health crisis, we continued to progress in the deployment of initiatives related to the Great Place to Work approach. In France, one of the most important achievements was the sharing of a manager charter in June. Developed by a working group consisting of employees and managers, it specifies the expected behaviors and best practices in this area around ten key themes. Its deployment will help strengthen the relationship of trust that unites employees and managers, enabling us to take an additional step towards an increasingly participatory corporate culture.
France: meeting needs of the victims of storm Alex
In October, all of the Carros teams mobilized to help the victims of the storm Alex, which occured in the hinterlands of Nice and Menton. An upsurge of solidarity was created to support our 24 colleagues affected by flooding, some of whom were able to benefit from temporary housing, vehicle loans, or even the donation of days of leave between employees made possible by a new company agreement. In collaboration with the French Medical Drug Agency and the Order of Veterinarians, the teams from our French entities also committed to veterinarians and animal owners in the Vesubie and Roya valleys, delivering a supply of medicines and vaccines, as well as nearly two tons of food for dogs and cats.