Vetoquinol SA

A.1.1. Vetoquinol recognises the “fight against antibiotic resistance” as a material topic of high importance to its stakeholders and the business. Vetoquinol also states that regulatory restrictions on the use of antibiotics pose a financial risk to the business; it notes that in Europe regulation is “leading to a reduction in the proportion of sales generated by anti-infectives". Furthermore in 2022, the company specifies that its European segment experienced a 3.6% decline, mainly due to declining sales of antibiotics for livestock. These statements indicate that Vetoquinol considers increased regulatory restrictions, to be a material risk to the business. However, it does not recognise antibiotic resistance (AMR) as a material risk, despite increased AMR having the potential to reduce the efficacy of the antibiotics it sells, further impacting sales. Through disclosures, there is no evidence that Vetoquinol acknowledges the role its business may play in the spread of AMR to the environment, animals or humans, nor the risk this may have for its own business. A.1.2. There is no publicly available evidence the company actively wants to reduce its exposure to antibiotics. Furthermore, Vetoquinol has chosen to focus on a range of products entitled the “Essentials”, which it states have strong growth potential. Four out of the six Essentials products included in its livestock business contain medically important antibiotics (MIA). This suggests that Vetoquinol is relying on increased sales of antibiotics for continued growth. A.1.3. Despite acknowledging a decline in sales from anti-infectives, the company does not provide quantitative disclosure for its antibiotics portfolio, preventing investors from ascertaining the company’s exposure and whether this is changing year-over-year. A.1. Recommendation: To score ‘Low’ Vetoquinol must either: (i) recognise AMR as a material risk to the business, or; (ii) report a more granular breakdown of revenue from antibiotics.

A.2.1. Vetoquinol states that it advocates for the “rational use” of antibiotics. However, there is no evidence that this has translated into the company adopting a strategy for the responsible sale and marketing of antibiotics. The company has not publicly defined what it considers to be the “rational use” of antibiotics, or how it would support farmers in implementing and ensuring this on farms. Additionally, the company states it promotes the “proper use of antibiotics (reasoned prescription)”, however, it does not provide further details on how this translates to a responsible marketing policy; contributing to the company scoring ‘NRD’. A.2.2. The company also scored ‘NRD’ as it does not have a public-facing commitment to remove indications for growth promotion and prophylaxis from the labels of MIAs. However, during FAIRR’s research, there was no evidence of the company explicitly promoting its antibiotics for these uses, instead, labels state to use them for the treatment of a disease/infection. Furthermore, on some labels, such as Amoxinsol an amoxicillin-based product, Vetoquinol provides guidance for vets and farmers to conduct susceptibility testing before treating infections with antibiotics. A.2.3. It is unclear from public disclosure who is responsible for oversight of responsible sale and marketing of antibiotics. A.2.4. The company’s Sales and Marketing division is the largest of its business, contributing to 43% of the salesforce. This indicates that Vetoquinol dedicates a large proportion of its resources to marketing its products. However, it does not release any information relating to its sales incentives at the business level, or specific to antibiotics. A.2. Recommendation: To improve its score to ‘Low’ Vetoquinol should make a time-bound commitment to remove indications for growth promotion from all antibiotics globally.

B.1.1. Vetoquinol has a Health, Safety and Environment (HSE) Policy, the details of which are provided in the company’s 2021 Universal Registration Document. The policy is implemented in all Vetoquinol entities and establishments across all geographies. The Policy has 12 fundamental principles, one of which states that environmental indicators are established for industrial entities, and it monitors waste, effluent discharge, and water. It is unclear whether the company has set specific minimum residue limits for its antibiotic manufacturing effluent. For its own operations, the company incinerates pharmaceutical waste that cannot be recycled, and at its Italian and Brazilian sites, all wastewater generated is collected and destroyed by a waste specialist. It may be assumed that antibiotic waste is covered by this policy, however, this is not explicitly stated and therefore the company is limited to scoring ‘Low’. B.1.2. The company states that where it lacks technical ability, it uses contract manufacturing to produce pharmaceutical products and ingredients. Vetoquinol states it does not produce any active chemical ingredients in-house; it is unclear whether Vetoquinol produces antibiotics in-house or solely through a third party. The company states its contract manufacturing operations are expected to comply with the same HSE standards as its own sites. B.1.3. Vetoquinol provides disclosure on how it ensures its HSE policy is implemented at its own sites and states that all its sites have been audited within the last three years, with action plans prepared for every audited entity. It is unclear whether these audits are conducted in-house or by a third-party organisation. For its contract manufacturers, its industrial and quality department conduct audits to ensure they apply the same standards of compliance as the company’s own sites. However, no details are provided about how often the audits are completed and what happens in incidences of non-compliance. B.1.4. Vetoquinol provides details of its own manufacturing locations; France, Poland, Italy, Brazil and Canada, but it does not provide any disclosure of who its manufacturers and suppliers are or where they are located. B.1. Recommendation: To improve its score to ‘Partial’ Vetoquinol would need to either disclose where the company’s largest third-party manufacturers and suppliers of antibiotics are located or provide details on the standards it has in place to ensure wastewater discharged into the environment contains safe levels of antibiotic residues, with best practice being to set PNECs.

C.1.1. Vetoquinol does not define what it considers to be alternatives to antibiotics. It does, however, state that it is “developing rapid diagnostic tools to allow rational use of the remaining [antibiotic] stock available for veterinary medicine”. The company is also investing in R&D to develop new vaccines to treat bacterial infections. In 2020 the company launched Klebsiella Vetovax, Canada’s first mastitis vaccine for infections caused by Klebsiella pneumoniae. Furthermore, Vetoquinol is developing novel antibiotic products that minimise the risk of developing AMR, these include single injection short-acting antibiotics (SISAAB) such as Forcyl. C.1.2. The company provides no disclosure on the percentage of its product portfolio that is classified as an alternative to antibiotics. C.1.3. Vetoquinol provides no disclosure of its revenue from alternatives. This prevents investors from being able to monitor changes in exposure year-over-year. Moreover, no information on revenue from vaccines or diagnostics is available to provide an idea of what their revenue from alternatives to antibiotics may be. The company does, however, allude to increasing its exposure to vaccines through increased sales in its livestock business segment in Europe. C.1. Recommendation: To improve its score to ‘Partial’ Vetoquinol should disclose the percentage of its portfolio or revenue for food-producing animals that is made up of alternatives to antibiotics. To achieve ‘Good’ it should also disclose details of how it assesses the efficacy of its alternatives at reducing antibiotic use.

C.2.1. In 2021, Vetoquinol reinvested ~6% of its revenue into its R&D. The company provides limited disclosure on what its R&D priorities are but states that it has initiated research programmes to develop alternatives to antibiotics. Furthermore, as a member of the industry association HealthforAnimals, Vetoquinol featured in its report Roadmap to reducing the need for antibiotics. Here it stated that in Vetoquinol’s 2017/22 strategic plan, the company planned to invest up to 20% of its R&D spend on tools that reduce the need for antibiotics. If this remains the case, this would place the company well ahead of its peers in this area. However, the company has not provided an update on the outcomes of its strategic plan, or the percentage of R&D spent on developing alternatives over this time period. C.2.2. Vetoquinol has made some acquisitions of companies developing alternatives to antibiotics. In 2014 Vetoquinol acquired the animal health division of Bioniche Life Science Inc. for $55 million. The biopharmaceutical company produced innovative products, including vaccines. More recently, in 2018 Vetoquinol acquired a majority interest in FarmVet Systems Ltd, a diagnostics company providing insights at the animal, farm and practice level enabling the improved performance of cattle. C.2.3. The company provides no disclosure on the marketing spend for alternatives to antibiotics, nor for antibiotics. C.2. Recommendation: To improve its score Vetoquinol should: (i) disclose the percentage of R&D spend dedicated to alternatives to antibiotics; (ii) provide greater insight on marketing spend on alternatives to antibiotics and antibiotics.

D.1.1. Vetoquinol was involved in a three-year collaborative research project – Yellow Pearl – with the French National Institute for Agricultural Research and public research teams from French veterinary schools. The project focused on antibiotic use and the effects it has on public health, addressing the key question “is it possible to establish treatment protocols that limit the adverse effects of antibiotic therapies while retaining their effectiveness?” The findings from this research will be used to improve scientific knowledge about the use of marbofloxacin (a fluoroquinolone antibiotic, designated by the WHO as a CIA) in the treatment of bovine respiratory infections. Aside from this initiative, Vetoquinol is not disclosing involvement in any other antibiotic stewardship programmes. To improve its score to ‘Partial’, Vetoquinol should provide greater disclosure on the stewardship initiatives its part of. Vetoquinol also publishes updates on the sensitivity of bacterial strains to its antibiotics and organises training sessions dedicated to new regulations on antibiotics for vets and farmers. Vetoquinol is a member of the industry organisation HealthforAnimals and it is also an associate member of the Pharmaceutical Supply Chain Initiative (PSCI). However, the company is not a member of the AMR Industry Alliance which outline the predicted no-effect concentrations (PNECs) for antibiotics or any other organisations that tackle the issue of AMR. D.1.2. The company has carried out epidemic monitoring at the European level for over 20 years. However, it has not expanded this to cover a wider geographical region, nor is there evidence of it releasing the data gathered through its monitoring programme. D.1. Recommendation: To improve its score to ‘Good’ Vetoquinol should provide greater insight into the impacts of its stewardship initiatives to demonstrate positive change and disclose further details of its epidemic monitoring.

D.2.1. No information was found on Vetoquinol’s lobbying efforts. The company’s position on antibiotics and AMR is unclear. D.2. Recommendation: To improve its score Vetoquinol should disclose its approach to lobbying on issues related to AMR and antibiotics.

E.1. Vetoquinol did not respond to the investor coalition’s formal letter sent in July 2022 and declined to attend an engagement call with investors. The company also declined to provide feedback on its preliminary company assessment sent in December 2022, or on its final assessment sent in May 2023.