What Is The Effect Of Vertical Integration On The Veterinary Industry
The Effect of Consolidation on the Veterinary Industry
Considering the veterinary industry as a whole is undergoing major consolidations at an unprecedented rate -- with vet companies and medical suppliers becoming more concentrated with fewer firms that are larger in size -- it comes as no surprise that both the large animal and small animal sectors will soon be seriously impacted by corporate mergers, particularly as they relate to the cost of running individually owned practices and veterinary expenses. With four firms controlling the bulk of the industry: Zoetis, Merial, Merck and Eli Lilly, and with numerous corporate mergers still in sight, industry experts and analysts believe that the corporate consolidation trend will continue, if …show more content…
The purpose of vertical integration is to expand a business operation with different steps on the same production path. Although it may be considered a strategic business move for some corporations, vertical integration tends to raise costs of supplies and products. For the vet industry in particular, pharmaceutical medicines and vet supplies are becoming more expensive, not only for individual practice owners, but also for pet owners and agricultural producers to attain. To compensate for an increase in supply cost, vet clinics must charge more for their services. As a result, many pet owners cannot afford veterinary care, and several livestock operations must risk going into debt to pay off veterinary expenses. This not only jeopardizes pet and production animal welfare, but also food safety for those who consume meat, egg and dairy products. In a 2014 blog post, Wayne Pacelle, the president of the Humane Society writes, “… close to 80 percent of pets owned by caretakers who live at or below the poverty line have never seen a veterinarian”. Alternatively, an article from the Veterinary Centers for Epidemiology and Animal Health states that, “food safety begins at the farm level and is the ability of livestock producers to easily access veterinary services”. It is important to recognize that these mergers are putting overall animal and consumer health at
Considering the veterinary industry as a whole is undergoing major consolidations at an unprecedented rate -- with vet companies and medical suppliers becoming more concentrated with fewer firms that are larger in size -- it comes as no surprise that both the large animal and small animal sectors will soon be seriously impacted by corporate mergers, particularly as they relate to the cost of running individually owned practices and veterinary expenses. With four firms controlling the bulk of the industry: Zoetis, Merial, Merck and Eli Lilly, and with numerous corporate mergers still in sight, industry experts and analysts believe that the corporate consolidation trend will continue, if …show more content…
The purpose of vertical integration is to expand a business operation with different steps on the same production path. Although it may be considered a strategic business move for some corporations, vertical integration tends to raise costs of supplies and products. For the vet industry in particular, pharmaceutical medicines and vet supplies are becoming more expensive, not only for individual practice owners, but also for pet owners and agricultural producers to attain. To compensate for an increase in supply cost, vet clinics must charge more for their services. As a result, many pet owners cannot afford veterinary care, and several livestock operations must risk going into debt to pay off veterinary expenses. This not only jeopardizes pet and production animal welfare, but also food safety for those who consume meat, egg and dairy products. In a 2014 blog post, Wayne Pacelle, the president of the Humane Society writes, “… close to 80 percent of pets owned by caretakers who live at or below the poverty line have never seen a veterinarian”. Alternatively, an article from the Veterinary Centers for Epidemiology and Animal Health states that, “food safety begins at the farm level and is the ability of livestock producers to easily access veterinary services”. It is important to recognize that these mergers are putting overall animal and consumer health at