|Merial CEO Carsten Hellmann|
When rumors emerged in late September that Sanofi ($SNY) might be considering spinning off its high-flying animal health division, Merial, the unit's CEO, Carsten Hellmann, didn't let the media attention distract him from his mission. "In the last couple of quarters, Merial has been doing very well. We're growing fast, and that's what I'm focusing on right now," Hellmann said when he sat down Tuesday in New York City with FierceAnimalHealth. He declined to comment on the spinoff rumors.
Hellmann has good reason to be pleased with Merial's positioning as one of Sanofi's 5 strategic business units. In the second quarter, Merial's sales jumped 14% year over year on a constant-exchange-rate basis to €691 million ($776.8 million). Animal-health sales in the first half were also up 14%, to €1.3 billion ($1.5 billion). Sales of Merial's companion-animal products have been especially strong, thanks largely to NexGard, it's chewable flea-and-tick fighter for dogs, which was launched in the U.S. in early 2014 and has been rolling out in several overseas markets since then.
Hellmann says the key to NexGard's successful launch was a carefully thought-out marketing program. The category has long been dominated by topical products like Merial's own Frontline, and the company knew it wouldn't be easy to build confidence in an oral alternative. Hellmann's team did extensive market testing before designing the marketing program. "We needed to understand what matters in this category," Hellmann said. "I think our team did an excellent job figuring out how to tell consumers about the advantages of the product, testing out what did and did not work, and integrating [communication with] veterinarians."
Fleas and ticks aren't the only pests Merial wants to control with an oral medication. The company is one of the major players in the ongoing global effort to eradicate rabies, a disease that affects about 100 dogs and more than 300 cats per year in the U.S., according to the Centers for Disease Control, and that is still transmitted to people at high rates in Africa and Asia. Wild animals such as raccoons are major carriers of rabies, so Merial came up with an innovative solution: An oral vaccine, contained in edible treats, which can be dropped in rural areas.
Working with local governments, Merial recently helped distribute 1.7 million "bait packets" containing the rabies vaccine in Alabama, Tennessee, North Carolina and Georgia. After they were dropped from helicopters or spread by vehicle, teams were sent out to make sure the animals were consuming the vaccine. So far, the project seems to be a success.
Hellmann said that distributing the product, called Raboral, overseas will be complicated, but that the company is engaged in an ongoing dialogue with international groups such as HealthforAnimals and the Gates Foundation to devise a plan. "It's very complicated, and animals cross borders. So it's about having big programs in place," he says.
Merial is also investing in R&D aimed at improving disease control in the agricultural industry. The company recently launched Avinew Neo, for example, a poultry vaccine contained in an effervescent tablet. The vaccine, which is used to prevent Newcastle disease virus, can be dissolved in drinking water and administered to birds orally or even by aerosol spray, eliminating the need for clumsy and uncomfortable injections. The company has also set up a probiotics research group, Hellmann says, which is investigating the use of beneficial bacteria for improving disease prevention and productivity in food animals.
It's all part of an ambitious mission that Hellmann has laid out for Merial. "We only want to operate where we can become the global number one or number two," he said.
That's why, late last year, Merial bought two equine products from Bayer HealthCare: Legend/Hyonate (hyaluronate sodium) to treat joint diseases and Marquis (ponazuril) to treat a central nervous system disorder. The products were added to Merial's equine portfolio, which includes drugs, vaccines and online tools. "I think we can build a business where we have the right service and the right type of products for horse owners," Hellmann said. "We could either be three or four in the market, or acquire the Bayer products and be a strong number two," he said. "Now we can build on that."