MSD Animal health operations adjusts in Brazil

Under new management in Brazil since the beginning of the year, the MSD of Animal health, veterinary pharmaceutical's American arm Merck, put for sale the areas where were two of his three factories, said the company's President in Brazil, Edival Santos.
After making acquisitions of weight at the end of the last decade, the company closed about a year ago all the unit's activities of Cotia (SP) and abandoned the production of vaccines against foot-and-mouth disease in Fortaleza (CE) on account of the new requirements of the Ministry of agriculture biosecurity.
According to Santos, the area where it worked the Cotia factory may be sold to another industry, not necessarily the veterinary segment. The machinery of the unit was transferred to Cruzeiro (SP). The Executive believes that the Fortress area has commercial vocation, for being close to the city centre.
In practice, the decision of MSD aims to reduce costs and eliminate an overlap existed between the units of Cotia and Cruise both in the State of São Paulo in Brazil. Since the closure of the operations of cearense drive reflects the company's vision that the market for vaccines against foot-and-mouth disease, responsible for 15% of the company's revenue in the country, will become less attractive in the coming years.
"The number of doses of vaccines against foot-and-mouth should fall in some States that make two vaccination campaigns," says Santos. Today, States such as Goiás, Bahia and Paraná imunizam the herd cattle and Buffalo over the age of two years only once per year. With the low incidence of the disease in the country, the trend is that other States also do not have to perform two more vaccination steps per year throughout the herd.
Another factor that weighs on the profitability of the Brazilian market of vaccines against foot-and-mouth disease is increased competition. In recent years, companies like Ourofino Animal health, biotechnology and Innovates Biovet joined in the production of vaccines-that already counted with the American and Brazilian Merial Vallée-intensify competition. "Who entered the market need to amortize investments made with large volumes", says President of MSD.
The strong competition in the market and the tendency of a stagnant minimum demand were the factors that paved the MSD's decision to abandon the production of vaccines. The American multinational was forced to halt in June 2012, the production of vaccines in the Fortress for determination of the Ministry of agriculture. To resume production, the MSD would have to make heavy investments in so-called "biocontida area"-responsible for the process of foot-and-mouth disease virus inactivation, which wasn't considered feasible by the direction of the MSD, depending on the value already reported.
Despite abandoning production, MSD has not left totally foot market. The multi will sell vaccines produced by Vallée from the second stage of vaccinations this year, which begins in November. "A portion of the second stage vaccines will already be purchased from Vallée," says Santos. The remainder still relates to stocks of vaccine produced in the Fortress.
Last year, the MSD sold 79.7 million doses of vaccine against foot-and-mouth in Brazil. For this year, which still has factory stocks from Ceará, the goal is to sell 77 million doses, says the Executive. But that number is expected to drop dramatically in the coming years, if only because sell vaccines produced by third-party means "slightly" reduce operating margins of the company, admits Santos.
The Executive estimated that until 2018, sales of vaccines against foot-and-mouth will pull back to about 50 million doses per year, reducing the contribution from the revenue product of MSD. "In fact, this participation is already falling." According to him, the thread is here to vouch for 30% of the revenue of the company.
Last year, the MSD recorded a revenue of r $ 500 million in Brazil. Worldwide, the company had a net revenue of $ 3.3 billion.