Specialist
Executive at Royal College of Veterinary Surgeons (RCVS)
Agenda
- IVC Evidensia’s performance update in the UK veterinary care market, including consolidation rate
- IVC’s service mix and competitive positioning across key players including CVS (LON: CVSG), VetPartners and Medivet in context of broader macroeconomic pressures
- Consolidation outlook for IVC and key growth areas
- Service expansion capabilities and sustainability outlook
Questions
1.
Specialists in previous Forum Interviews have noted that, despite animal health companies noting a structural slowdown in the overall animal health market, the veterinary care market is somewhat recession-proof. Do you agree, and how sustainable do you see this being?
2.
We’ve touched on the demand and sustainability behind small animal ownership and pet spend. Quite recently, Medivet and a number of other UK veterinary chains have been subject to CMA [Competition and Markets Authority] inquiries. Could you walk through some of those inquiries? What do you think some of the implications might be?
3.
You mentioned a number of independent practices that are reopening despite the consolidation across the UK market, which you noted as 50-60%. Is that correct?
4.
How do you expect the number of new independent practices opening in the UK to trend over the next 2-5 years? Do you expect this number to increase?
5.
Based on the 50-60% of the UK veterinary market being consolidated, do you see any room left for consolidation in the UK? How well-positioned do you see companies such as IVC Evidensia to acquire the remaining practices that may be on the market?
6.
If we have reached a ceiling for consolidation in the UK veterinary market, does that mean the opportunities now lie in other markets, such as western or eastern Europe? What is your outlook here?
7.
Given that Europe is the focus for some veterinary chains, including IVC, how should we think about some of IVC’s international operations? Could you provide details on how successfully the company has been managed or in terms of the quality?
8.
How would you say some of IVC’s international operations compare to its UK operating model?
9.
I would like to look at the labour dynamics and broader macroeconomic pressures we’re seeing in the veterinary care market. Could you provide an update of labour dynamics and shortages? Can you delineate how that might differ across vets and nurses?
10.
Although you mentioned a reduction in the vacancy rate for nurses, there is still a shortage. Could you quantify this shortage? As you noted, it is much more predominant for the vets in the UK.
11.
You discussed the labour dynamics and staff shortage in relation to the post-Brexit landscape. There has been a significant drop, but you said that it has stepped up again in the last year. How do you expect this number to evolve going forward? Specialists in previous Forum Interviews have noted that, because of Brexit, a lot of vets essentially left the UK.
12.
Based on everything that we have discussed around labour dynamics across vets and nurses, to what extent do you see staff availability dynamics and challenges impacting IVC’s ability to meet demand? How might that compare vs peers or close competitors such as CVS or Medivet?
13.
To your point on the middle-experienced clinicians’ salaries plateauing after 8-10 years, presumably that plays into some of the issues or dynamics around IVC’s ability to retain talent. Would you agree?
14.
Thinking about the ability to attract and retain talent, especially in the current macroeconomic environment, Medivet has a partnership model that gives vets the opportunity to become equity partners in their clinics or hospitals. Previous specialists have noted that this essentially allows the company to have an effective retention strategy overall. How should we think about this in the context of IVC? Is that a significant advantage?
15.
Given the broader input cost inflation pressures that we’re seeing, how successfully do you see IVC passing some of the costs on to its customers? Where do you think is the ceiling? Have we reached it yet?
16.
Thinking about IVC and its ability to meet demand but also be one of the largest chains, could you walk through the company’s ability to demand greater discounts or perhaps rebates from suppliers? How might that compare vs competitors such as CVS? Does that change in any way compared to smaller players? Thinking about IVC’s market positioning, does it have more bargaining power, given its larger volumes?
17.
Thinking about some of the bargaining power that large chains such as IVC may have, I want to discuss the evolving distribution channels. We’ve heard a lot about pet owners moving away from traditional bricks-and-mortar channels and progressively shifting towards online. Where would you position the company in this respect? Do you see this as a potential growth driver for it?
18.
Is the move from traditional bricks-and-mortar channels to online only for OTC [over-the-counter], or are we also seeing prescription?
19.
Do you see OTC businesses representing a threat to veterinary prescriptions? I’m thinking in the context of reduced pet owner purchasing power, so perhaps they’re looking increasingly for OTC solutions as an alternative.
20.
I’d like to look at the service expansion capabilities, as it seems that IVC has moved into equine and farm businesses. How well-positioned do you see the company here? Could you outline the type of service offering and competition it may be facing in the space? Do you see it as sustainable for IVC?
21.
How does the profitability in equine and farm compare vs small-animal clinics?
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