Potential Markets

A Global Industry

Annual meat production is now around 250 million tons per annum with consumers in the industrial nations consuming more than 80 kilograms per person, per year and in developing countries 28 kilograms per person, per year. 
 
Collectively the global animal health industry for 2005 was estimated at over US$120 billion, of which the United States market represents 48%, and for which expenditure on food-producing animals was 52%.  Feed additives in veterinary medicines, the intended target market for R-salbutamol products, represents 30% of the spending.
 
Globally, 75% of the expenditure on food-producing animals is spent on feed and in the US alone, expenditure on livestock and poultry growth agents and performance enhancers is US$561 million.

R-salbutamol Potential Market Size

The primary markets for R-salbutamol beta agonist feed additives are cattle, swine, poultry and sheep in regulated markets.  Of the global slaughter figures, developed markets (excluding the EU) account for 45% of poultry, 18% of  pork, 22% of  lamb and mutton and 50% of the cattle markets. Developing markets (including China and SE Asia) also offer significant opportunities. Although these areas are mainly for domestic supply not exports, collectively they account for 60% of the global pork and 40% of the poultry markets.
 
Business modelling based on the anticipated selling price for finished product and assumed progressive market penetration, places the total regulated market potential at US$1.5 billion with an additional US$2.5 billion for less-regulated markets.
 
The indication for R-salbutamol products will be to enhance growth, improve feed efficiency, and/or improve carcass quality by increasing the lean meat content and decreasing fat content. According to published evidence, R-salbutamol may also be efficacious in certain species of
farmed fish and for other poultry types such as turkeys or
ducks.

Market Dynamics

Since World War II, the human population has doubled while the livestock population to feed this population has quadrupled. In order to meet the projected growth in meat consumption 30% more animals would be required without the use of growth promotants in livestock animal diets. 
 
In an industry where demands are high, there is an associated market need for safe and effective supplements to assist in growth promotion of livestock animals to meet the demand.

Global Numbers of Slaughtered Animals

Global				US
52 bill				9.4 bill
300 mill				33 mill
1.3 bill				104 mill
914 mill				3 mill1
1 Australia and New Zealand = 55 million head Data Adapted from Food & Agricultural Organization of the United Nations, 2004 (http://faostat.fao.org)

A Market in Transition

Consumer Demands

Throughout the chain of supply and demand in the meat production industry, beta agonists (especially "pure" beta agonists such as R-salbutamol) products are expected to have considerable impact. Beta agonists may offer replacement for antibiotics commonly used in growth promotion.
 
End consumers are a driving force in the changing demand for meat products. Key public factors that continue to exert a significant effect on the market and production environment include:

• A demand for proven and safe feed additives
• A demand for higher quality meat with less fat
• Humane processes with minimal environmental impact

The demands of end consumers govern the quality demands of the different processing stages in the supply chain (e.g. the meat packers) and the management practices of the primary producers. Better quality meat, produced using accepted methods and feed products results in higher prices at the packing plant. An animal that is given a beta agonist growth enhancer can gain weight more rapidly and produce leaner product. By reaching market weight sooner, there are potential reductions in the cost of production.

Diminishing Use of Antibiotics

The current spend on medicated animal feeds in the US alone is in the order of US$560 million annually, the majority of which is spent on anti-infective and antibiotic agents and much of which in turn is directed toward growth promotion. 
 
Of the total US production of antibiotics, more than 50% has been estimated to be fed to chickens, pigs and cows for non-therapeutic purposes like growth promotion. In Canada, 33% of all antibiotics are fed to animals and in Australia estimates are as high as 40%. Non-therapeutic livestock use in chickens, pigs, and cows now accounts for 7 times more antibiotics than human medicine.
 
Concerns have arisen over the prophylactic use of antibiotics leading to the total or partial ban of antibiotics. In the USA, the use of antibiotics is under intense scrutiny by the FDA and the EU has already banned the use of all antibiotics as growth agents. Major food groups and food retailing interests are also assessing their respective situations. McDonald's for example, has recently advised all its suppliers that it would be phasing out all meat purchases where any antibiotic products have been used as growth agents.  Other major suppliers are also adopting a "no antibiotics" policy.

Demands for Manufacture That is More Efficient

In the past the agricultural agenda has been based on productivity improvements.  Today it is a combination of not only productivity gains but also equity issues, food safety and environmental sustainability. Demands of livestock producers centre on improving production efficiencies. Animal feed is the largest cost in livestock production. Any improvement in the feed conversion ratio (ratio of animal's weight gain to feed intake) translates into improved profitability, as well as contributing to land and water conservation, decreased waste output and a lower consumption of cereal grains and fertilizers as secondary but important benefits.

The use of animal growth agents is an established and integral part of livestock production and due to the mounting regulatory pressures and media attention to the removal and/or banning of many antibiotics used for growth promotion, the industry is aggressively pursuing alternative solutions. R-salbutamol offers superior feed conversion ratios (21% in pigs and 5.5 % in chickens) based on R-salbutamol animal studies. R-salbutamol has also shown improvements of 12 - 15% in lean meat in studies conducted with pigs, broiler chickens and lambs and a reduction of almost 30% fat in broiler chickens.