Animal Pharmaceuticals Engagement
Sales and Marketing Practices
Strategy, risk and reporting on antibiotics
A.1.1. Virbac does not recognise antimicrobial resistance (AMR) or the sale of antibiotics for use in food-producing animals (FAP) as a material financial risk for the business in its 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. As part of its ongoing work to identify the key CSR issues for the company and develop its strategy, it conducted a materiality assessment in 2021 facilitated by a third-party expert. AMR was not identified as a material issue for the company or its relevant stakeholders. (A.1.3.) This is despite revenue from antibiotics for pigs, poultry and cattle making up at least 11% of total revenue and antibiotics for companion animals making up to 10% of total revenue in 2021. Additionally, following the introduction of regulation 2019/6 in the European Union (EU) in January 2022 restricting the use of antibiotics in food-producing animals, Virbac has noted a decline in sales of antibiotics in its pigs, poultry and cattle segments. A.1.2. Virbac does not have a strategy to reduce its exposure to antibiotics and has not disclosed plans to do so in the near future. In fact, revenue from antibiotics is increasing. Sales of bovine antibiotics grew 23.1% from 2020-2021 to $88 million (€83 million). The company is also looking to expand its offering of antibiotics across its operating markets. Since the start of 2021 Virbac has achieved product approvals for two antibiotics in the US. In July 2022, Virbac launched Tenotryl, an injectable antibiotic for use in livestock, which contains a highest priority-critically important antibiotic (HP-CIA), enrofloxacin. In December 2021, Virbac launched Tulissin, another injectable antibiotic containing tulathromycin, another HP-CIA. Whilst injectable antibiotics are easier to use responsibly due to their targeted nature, HP-CIAs are more likely to be regulated than other antibiotics putting this revenue at risk. Virbac has already experienced the adverse impact of regulation on revenue in the European Union (EU). In July 2021, Virbac disposed of its Magny-en-Vexin industrial site to Friulchem, one of the company’s Contract Manufacturing Organisations (CMOs). It states in its 2021 Annual Report that this follows decreased demand for antibiotics "as a direct consequence of the regulations implemented to limit the use of antibiotics in industrial farming." On the company’s website there is a high-level statement on the need to reduce the usage of antibiotics: "At a time when reasoned protocols for antibiotic use in veterinary medicine are being developed, Virbac is doing its part to deal with the global issue of antibiotic resistance.” The company discloses that it is pushing for the implementation of preventative protocols such as vaccination, micronutrition and for individual treatment using antibiotics. It’s positive to see this statement, however, it is not a clear commitment of action to address AMR. Virbac has outlined clear quantitative time-bound commitments to improve sustainability across the key CSR risks that have already been identified. Virbac should do the same for AMR and set a time-bound commitment to reduce its revenue exposure to antibiotics for food-producing animals. A.1. Recommendation: Given the company’s increasing exposure to antibiotics, for Virbac to achieve ‘Low’ on this KPI it would have to disclose revenue from antibiotics for the entire food-producing segment, including aquaculture.
Applying a consistent sales and marketing approach in line with best practice operating market
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 2021, there were no promotional conformities, 0.78% non-compliance with labelling and 0.67% non-compliance with regulations and voluntary codes. In addition, Virbac has product pharmacovigilance checks in line with regulatory requirements to ensure the efficacy of products. The company does not disclose further details. 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 antibiotics portfolio. When it comes to antibiotics specifically, the company has stated that it encourages individual treatment using injectables but does not provide evidence of how this is done or whether this is company-wide standard practice for sales teams. 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. Global sales and marketing operations are overseen by the company’s general manager. There is no disclosure over how the company ensures compliance with regulation relating to antibiotics specifically. A.2.4. It is unclear if sales incentives are tied to volumes of antibiotics sold. The company does not provide disclosure on sales incentives. A.2. Recommendation: Virbac could improve its score to ‘Partial’ or even ‘Good’ by setting a time-bound commitment to remove indications for growth promotion from all antibiotics globally and disclosing more detail on its approach to sales and marketing of antibiotics.
Manufacturing and Production
Demonstrating effective management of antibiotic residues in manufacturing and production
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 includes 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. Virbac has 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. If it did disclose this information, then the company could be scored partial. B.1.2. As of 2021, all of Virbac’s own manufacturing sites, which are located across ten countries, are certified with current good manufacturing practices (cGMP), the World Health Organisation’s (WHO) international manufacturing standards for pharmaceutical products. All hazardous waste is traceable to the point of disposal. This demonstrates the company has strong manufacturing standards in place, however, as cGMP does not explicitly cover responsible disposal of antibiotic residues, this does not provide oversight over 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, 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 contract. B.1.4. The company provides a clear breakdown of its operations and supply chain via purchasing and revenue: 63.3% of revenue is from own manufacturing sites, and the company has 670 suppliers of raw materials and packaging costing $106 million (€100 million) in procurement spend, the company has 96 subcontractors costing $89 million (€84 million) in procurement spend. B.1. Recommendation: Virbac clearly discloses on its approach to ensuring environmental risk is managed in its own operations and supply chain which is very positive. Unfortunately, as the company’s approach to managing antibiotic residues is not disclosed, the company cannot score higher than 'Low'. To reach ‘Partial’ or ‘Good’, Virbac needs to disclose detail on how antibiotic residues are managed in its own operations, by its CMOs and third-party suppliers.
Research and Development
Defining alternatives to antibiotics
C.1.1. Virbac does not provide a definition for alternatives to antibiotics but refer to them as products that “may replace antibiotics or help to reduce their use” in its 2021 Annual Report. C.1.2. The company does not provide a breakdown of products considered to be alternatives to antibiotics. C.1.3. Virbac clearly has exposure to some alternatives to antibiotics that the company promotes, including Bovigen T vaccine against ringworm in cattle launched in 2021; a range of Tilapia vaccines developed in partnership with Ictygroup to prevent Streptococcus agalactiae the main driver of stock loss; and a mobile application used on farm to determine whether antibiotics are necessary to treat a respiratory disease. However, the company does not disclose revenue from its alternatives to antibiotics. C.1. Recommendation: To improve its score Virbac needs to disclose the percentage of its portfolio or revenue for food-producing animals that is made up by alternatives to antibiotics and disclose detail of how it assesses the efficacy of its alternatives at reducing antibiotic use.
Increasing availability and use of 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”. The focus is on the development of vaccines. In February 2023, Virbac announced that it has developed the first rotavirus vaccine for pigs available in France and Germany. Rotaviruses are endemic on many pig farms and often require antibiotic treatment. In March, this was followed by the announcement of a new tool, Smart DCT, that supports farmers and veterinarians to detect mastitis even at subclinical levels and better target antibiotic treatments within herds. In 2021, Virbac added a new vaccine filling line at the production facility in Carros, France to increase capacity of production. It also signed a partnership with Japanese company Jectas Innovators, a vaccine company. This is one of ‘several’ partnership programmes the company has with public research institutes and private companies to develop innovative products such as immunostimulants and micronutrition that “may replace antibiotics or help reduce their use”. There is a clear focus on finding solutions for disease in aquaculture. In 2021, Virbac opened the Virbac Aquaculture Technology Centre to develop solutions to reduce mortality, reduce antibiotic use and promote alternatives – including the development of vaccines. In November 2022, the company opened an additional R&D centre in Taiwan focused on the development of vaccines and immune-stimulants to fight disease in food-producing animals. Virbac does not disclose the proportion of R&D spend that goes towards alternatives to antibiotics but does disclose that 7.4% of revenue goes towards R&D and that its goal is to maintain a ratio of above 7%. C.2.2. Company shows no evidence that it has made recent acquisitions with exposure to alternatives to antibiotics 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. C.2. Recommendation: To improve its score Virbac should: (i) disclose the percentage of R&D spend dedicated to alternatives to antibiotics and (ii) provide greater insight on marketing spend on alternatives to antibiotics and antibiotics.
Stakeholder Engagement and Lobbying
D.1.1. Virbac has no formal initiatives for antibiotic stewardship and shares minimal detail of its efforts to tackle AMR. It does, however, mention AMR, vaccination and efforts to reduce antibiotic use in a number of press releases. For example, a press release discussing the benefits of micronutrition and trace mineral supplementation in reducing antibiotic use, and a press release stating the company will be speaking on the benefits of vaccination in swine against porcine circovirus 2 (PCV2) at the International Society of Swine Veterinary Medicine. In addition, Virbac discloses that in 2021 it has run two webinars on the recent EU regulation prohibiting the routine use of antibiotics for prophylaxis. Given the lack of clear disclosure on its stewardship efforts and a lack of evidence that these are formal programmes, Virbac has been scored as ‘NRD’. D.1.2. There is no discussion in company disclosures on efforts to improve AMR surveillance. D.1. Recommendation: To improve its score, Virbac should disclose detail of any AMR surveillance programmes it is involved in and provide greater insight into the impacts of its stewardship initiatives to demonstrate positive change.
Lobbying and political expenditure
D.2.1. Virbac discloses 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). D.2. Recommendation: To improve its score, we recommend that Virbac demonstrate alignment between lobbying activities and the company’s stated position on AMR stewardship. One way to do this would be to clearly indicate what industry organisations the company is a member of.
Level of company engagement with the coalition
E.1. Positively, Virbac took part in an informal call with FAIRR on 16 February 2023 to learn more about the engagement. For this reason, the company has been scored as Partial. Virbac 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.
22 May 2023
Virbac Group Assessment
Animal Pharmaceuticals - Investor Engagement Questions
Antibiotics in Pigs & Poultry Factsheet
Antibiotics in Aquaculture Factsheet
Antibiotics in Beef & Dairy Industry Factsheet
Investor Briefing Pack
Key Findings Report
Engagement Progress Report Webinar Video
Sample Engagement Letter
Animal Pharmaceuticals Engagement