Virbac Group

A.1.1. Virbac does not recognise antimicrobial resistance (AMR) or the sale of antibiotics for non-therapeutic use in food-producing animals (FPA) as a material financial risk for the business in the company’s 2022 Annual Report. Since 2018, Virbac has been developing its Corporate Social Responsibility (CSR) strategy and has outlined a series of commitments to be met by 2025/2030. The company disclosed that in 2022, it worked on its CSR roadmap, and in 2023, it would continue to implement the results of its reflection. Previously, AMR was not identified as a material issue for the company or its relevant stakeholders. It is unclear if this has changed following the work the company completed on its CSR roadmap in 2022. A.1.2. Virbac has not yet disclosed a formal strategy to reduce its exposure to antibiotics despite the company recognising a decline in its farm animal segment due to a reduction in antibiotic sales in the swine and poultry market. Note that the company is continuing to launch antibiotic products for companion animals. In 2022, Virbac’s major launches included Twinox, an antibiotic for dogs and cats indicated for the treatment of infections caused by bacteria sensitive to the combination amoxicillin/clavulanic acid, and Doxytab, an antibiotic for dogs and cats indicated for the treatment of diseases caused by bacteria sensitive to doxycycline. The company does note that regarding the development of alternatives to antibiotics, it is focused on the production of vaccines to reduce the use of antibiotics in animal production and has initiated several partnership programs to advance the development of innovative products to reduce/replace antibiotic use. A.1.3. Virbac provides a partial breakdown of its revenue from antibiotics. The company reports that its revenue from antibiotics for pigs and poultry amounts to €32 ($34.7) million and revenue from bovine antibiotics amounts to €86 ($93.2) million in 2022. The company highlights that its pigs/poultry antibiotic sales have declined by 9.9% and that it's the bovine antibiotic segment has grown 3.2% from 2021. Note that its total revenue from antibiotics from farm animals has decreased from an estimated 11% to approximately 9.7% from 2022 to 2021. These percentages, however, are likely to be higher as Virbac does not disclose the revenue from antibiotics for aquaculture.

There has been no update to Virbac’s disclosure on the company’s sales and marketing approach since 2021. However, the marketing team increased by 95 people from 2021 to 2022. A.2.1. Virbac does not have a responsible sales and marketing strategy that explicitly addresses how antibiotics should be marketed and sold. There is a lack of clarity over how Virbac encourages the responsible sale and marketing of antibiotics to ensure that shared-class antibiotics are not being promoted for unnecessary purposes: growth promotion and prophylaxis. The company’s overall approach to sales, marketing and labelling is to ensure compliance with local regulations and ensure promotions of products are science-based. This is supported by a commitment to limit the number of product non-compliances on the market, specifically for promotions, labelling, regulation, and voluntary codes. Virbac reports against this commitment, and for 2022, there were 0% promotional non-conformities, 1.01% non-compliance with labelling, and 1% non-compliance with regulations and voluntary codes. Non-compliance with labelling has increased by 0.23% from 2021, and non-compliance with regulations and voluntary codes has increased by 33%. In addition, Virbac has product pharmacovigilance checks in line with regulatory requirements to ensure the efficacy of products. The company does not disclose any further details regarding the checks. Given the concern over the future efficacy of antibiotics, it would be useful to understand how Virbac is tracking and assessing AMR development that could impact the future use of products in its antibiotic portfolio. A.2.2. The company has not publicly considered voluntarily removing indications for growth promotion and prophylaxis from the labels of antibiotics, where not required by law. A.2.3. The company's general manager oversees global sales and marketing operations. There is no disclosure regarding how the company ensures compliance with regulations relating to antibiotics specifically. A.2.4. It is unclear if sales incentives are tied to the volumes of antibiotics sold. The company does not provide disclosure on sales incentives.

B.1.1. Governance of environmental risks resulting from manufacturing processes is conducted by the Environment, Health and Safety (EHS) department which is attached to the Group Executive Committee. In relation to pharmaceuticals in the environment (PiE), Virbac recognises that wastewater needs to be treated in compliance with relevant standards that include regulations, good manufacturing practices (GMP) and good laboratory practices (GLP). In addition, 100% of products that are subject to pharmaceutical registration (including antibiotics) are subject to testing to ensure their safety, quality, efficacy and stability for humans, animals and the environment. Note that Virbac has not provided any relevant updates to its disclosure from last year’s assessment. Virbac has still not adopted the predicted no-effect concentrations (PNECs) for antibiotics established by the AMR Industry Alliance (AMRIA), but the company does use Best Available Techniques (BAT)-compliant processes for recycling wastewater. BAT was introduced by the Organisation for Economic Cooperation and Development (OECD) to help prevent and control industrial pollution by setting environmental limits at production sites. It is unclear if Virbac has used BAT to establish its own company-defined environmental limits for antibiotics, or if it has plans to do so in the future. B.1.2. All of Virbac’s own manufacturing sites, which are located across ten countries, continue to be certified with current good manufacturing practices (cGMP) and the World Health Organisation’s (WHO) international manufacturing standards for pharmaceutical products. All hazardous waste is traceable to the point of disposal. This demonstrates that the company has strong manufacturing standards in place. However, as cGMP does not explicitly cover responsible disposal of antibiotic residues, it is still unclear how the risk of AMR is being managed across the company’s own manufacturing sites. Similarly, suppliers of both active pharmaceutical ingredients (APIs) and finished products are subject to a supplier assessment questionnaire which includes environmental criteria, but it is not clear whether AMR and the disposal of waste and wastewater containing antibiotics are specifically addressed. B.1.3. On auditing, 100% of API suppliers are qualified and analysed during certification, and all suppliers are subject to regular monitoring. The company’s main suppliers are monitored annually using an audit plan, and follow-up indicators related to CSR themes are tracked. In 2021 and 2022, assessments with new suppliers identified no risks. Virbac states that where non-compliance is identified, the company would require the company to comply or risk termination of the contract. B.1.4. The company provides a clear breakdown of its operations and supply chain via purchasing and revenue: 59.7% of revenue is from its own manufacturing sites. This has reduced from 63.3% in 2021. Additionally, the company now has 889 suppliers of raw materials, up from 670 in 2021, with packaging now costing $106 million (€135 million) in procurement spend. The company has 111 subcontractors costing $89 million (€95 million) in procurement spend.

C.1.1. Virbac refers to alternatives to antibiotics as products that ‘may replace antibiotics or help to reduce their use’ in its 2021 and 2022 Annual Report and has again identified the development of alternatives to antibiotics as a key objective for the company. The company's focus is on vaccines. C.1.2. The company does not provide a breakdown of products considered to be alternatives to antibiotics, though it is clear it has some exposure. On its website, Virbac reports that it is ‘working tirelessly to develop alternatives to antibiotics to reduce the risk of AMR’. In its 2022 Annual Report, it reports that it has made recent investments in centres for the research, development, and production of vaccines and has engaged in partnership programs to advance the development of products, including immunostimulants, micronutrients, and biocides. C.1.3. The company provides a breakdown for its ‘other ruminants products’ and ‘other pig/poultry products’, which exclude parasiticides and antibiotics. The company does not disclose how it defines ‘other’ and, therefore, is not considered to disclose revenue from its alternatives to antibiotics.

C.2.1. Alternatives to antibiotics are included as part of the company’s CSR commitment for the ‘Development of Innovative Products and Services’ and the company outlines in its 2023 Press Pack that when innovating responsibly, one of its two priority areas is the reduction of antibiotic use through the development of prevention methods. The focus is on the development of vaccines. Virbac does not disclose the proportion of R&D spend that goes towards alternatives to antibiotics, but the company did report in its 2023 Press Pack, that it has allocated 26% of its R&D expenditure to vaccines and biology. Additionally, in the company’s 2022 Annual Report, Virbac disclosed a commitment to allocate 8.3% of its revenue (before R&D tax credit) into research, development, and learning. This is up from 7.4% in 2021. C.2.2. In April 2024, the company announced that it was to acquire Sasaeah, an animal health subsidiary of ORIX Corporation, which generates annual revenues of about €75 ($81.3) million, 50% of which is generated by vaccines. In December 2023, Virbac also acquired a majority stake in Globion, a leading Indian poultry vaccines specialist. C.2.3. Virbac does not disclose details of its marketing spend, and therefore no information on marketing spend for alternatives or antibiotics is available.

D.1.1. Virbac has not provided any updates on its disclosure regarding formal initiatives for antibiotic stewardship and shares minimal detail of its efforts to tackle AMR via stewardship efforts. The company does mention that regarding the development of alternatives to antibiotics, it is focused on the production of vaccines to reduce the use of antibiotics in animal production and has initiated several partnership programs to advance the development of innovative products to reduce/replace antibiotic use but lacks clear disclosure on its stewardship efforts. D.1.2. There is no discussion in company disclosures on efforts to improve AMR surveillance.

D.2.1. Virbac does not provide any updated information on its lobbying and political expenditure but continues to disclose that it monitors global regulatory changes via inter-professional organisations, at national, regional and international levels. These groups include the following: SIMV (French association for animal health industry), NOAH (UK animal health organisation), BfT (German national animal health body); Animal Health Europe (lobbying organisation), Animal Health Institute (lobbying organisation); and HealthforAnimals (the global industry association for animal health).

E.1. Virbac acknowledged the engagement and provided feedback on its company assessment. Virbac did not provide a written response to the questions in the engagement letter sent in July 2023 and declined to attend a FAIRR-facilitated engagement call with investors.