Levi Animal Health

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Levi Animal Health
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Levi Animal Health

• Who we are and how
• we are structured

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Who We Are

• Founders Three animal health and pharmaceutical
  professionals with a combined 75 years of
  experience in Manufacturing, Marketing ,
  Dispensing
• Marketing  shareholder and distribution partner
  Vedco Animal Health.
• Sales 145 million plus yearly
• Locations Nationwide 30
• Professionals Sales personnel 360
• Service every veterinary clinic twice a month
• Sales manager, Michael McGuire works with most of
  the remaining veterinary distributors nationwide
  to augment our sales efforts.
• Market coverage Minimum 85 of the entire
  Unites States veterinary industry on any given
  product.
• Distribution and Marketing located in Missouri,
  in the animal health capital of the country.
• Warehouse In Missouri so our products can be
  shipped to nearly any veterinary outlet within
  2-3 days. With most outlets using Just In Time
  inventory control it is very important to be able
  to service your customer base in the fastest
  possible manner.

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Overview of the Animal Health Marketing Industry

• Today 5 major distribution networks or co-op
  type organizations. represent a captive
  network for sales of the majority of animal
  health products, owned by their member
  independent distributors.
• Past History Many years ago the market was made
  up of exclusively independent distributors that
  tried to compete with one another and also fought
  for product lines from the major manufacturers.
• Co-op Philosophy Co-ops were forged to take
  advantage of group purchasing, central
  warehousing and much stronger clout in dealing
  with the majors by the 300 or so independent
  distributors with current numbering in 10
  different entities.
• Non Co-op distributors In addition to the
  co-ops, there are also several large national
  distribution companies that are of sufficient
  size to operate independently and compete with
  the co-ops. Depending on the product to be sold
  any one or two of these independent organizations
  can be a great source of additional sales to be
  garnered. LEVI has the structure to work with
  such companies to augment sales coverage where it
  is to our advantage to do such.
• Example of this would be in the sales of
  Ceftiofur.
• Since this is a veterinary prescription product
  our sales team and member companies are
  veterinary ethical companies. In reality,
  Ceftiofur is sold into the animal health area
  more than to the veterinarians alone. We would
  add to our sales mix with other companies that
  are the leaders of the animal health industry.
• This would triple the sales coverage to over 85
  of the entire market.

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Realities of Marketing Animal Health Products

• Attempting to sell animal health products in the
  American market can be a challenging situation.
  The market being made up of such a large
  percentage of distribution groups that going
  alone is a recipe for disappointment. The
  mentality is that of, "You are either with me or
  against me."
• Major company Phoenix Scientific owned by Ivax
  and as of July 26, 2005 by Teva.

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CEFTIOFUR Possible Players and Scenario
Market Share Scenario

• Ceftiofur Partners Sales
• Partners
  Sales
• 1. Pheonix/Orchid Member
  Distributors
• 2. Virbac/Dobfar No Network
• 3. Med-Pharmex/Aurobindo No Network
• 4. Hanford Uncertain/
  Wildcard
• 5. Lupin TBD

Marketing penetration Success It is our
opinion that the marketing organization to be
successful with this product must have some sort
of tie in to the distribution or vested
interest.
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Market Analysis of Ceftiofur

• PfizerSales of 50 mil yearly of Ceftiofur dry
  powder injection dropping to just over 40 mil
  due to ready to use formulation.
• Levis PositionLAH is confident that we can
  obtain a 25-35 market share of the generic
  Ceftiofur the first year with increasing market
  share in each year thereafter.
• Facts Due to the fact that we do have a captive
  market for a large amount of Ceftiofur we can
  maintain our sales percentages with confidence
  and also achieve these numbers in a rapid period
  of time. The model we are following is our
  success with the recent Carprofen launch. This is
  a Pfizer product with sales of nearly 100
  million yearly. We are the first to market a
  generic and within a mere two months have gained
  a 25 market share.
• Levis Strengths To market this product we have
  brought in some additional distribution to fill
  in some areas where we felt could be improved.
  This is why we are truly unique. We can tailor
  our distribution to meet the challenges of
  marketing any product.
• Example We introduced Enalapril in the last
  month and were able to gain a 42 market share
  immediately.
• Ceftiofurs Future To put these percentages into
  dollars, we would project yearly sales of
  Ceftiofur of 12 Million or more in the first
  year with a 5 increase per year up to 5 years.
• Pfizers Position will not allow its market
  share dwindle substantially without a fight and
  will probably promote their ready to use product
  or introduce a longer lasting or repository
  product to offset their losses.

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Market Analysis of CeftiofurConclusion
Suggestions

• Depending on the first generic that hits the
  market or the last the key to success will be the
  distribution network.
• Using the percentages of 25 for LAH and 25 for
  Phoenix/Orchid that will leave the balance of 50
  for Pfizer and the other competitors. The market
  will expand due to both price drops and
  availability increases. In just number of units
  alone it has been shown that the number can
  double and because the price will now make this
  product more competitive against many other
  products used to treat the same indication.
• So it will mean a larger dollar and unit volume
  at the expense of creating smaller margins.
  Therefore, the company that will excel will be a
  company that can get the product into the
  marketplace as cheaply and efficiently as can be
  done. We have shown that our distribution network
  is able to market and service the industry more
  efficiently than any other organization. This is
  be very important when there are more than just
  one generic on the market. One must be prepared
  to not only take advantage of a first or second
  to market but consider the long term potential
  for the product once the competition is fully in
  place.

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Role of Multinationals in the Market

• The other distributional channels  in the animal
  health market is the multinational pharmaceutical
  companies. These companies market mostly their
  own branded products. They maintain large sales
  forces and spend heavily on marketing and
  promotion. This is necessary to market the
  branded products that are sold at relatively
  high gross margins. The high margin products
  need expensive promotional programs to maintain
  their market share against other competitors.
  Secondly, the high gross margins justify
  these large expenditures.
• The major pharmaceutical companies also can
  either exclusively market their products through
  their own distribution network and not have to
  share their revenue with any outside companies or
  networks. The disadvantage of this is the cost to
  service their customers. They can control the
  entire process themselves but shipping points
  must be maintained to assure the products are
  delivered as quickly as possible. Large sales
  forces are necessary and the cost of which is
  quite expensive.
• Sometimes with new products the company will set
  up a few exclusive distributors to market and
  promote their product for a limited time or until
  they are able to establish the new drug in the
  market place. At that time they remove the few
  exclusive distributors and take the product
  direct to the consumer. In any event, all these
  companies share one

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Ceftiofur Analysis

• Indication
• Product used for food producing animals, where
  in price concessions work best to get the clients
  to switch to the generic. The market will be
  dominated by the generic as proven in most if not
  all instances
• Pricing
• Introductory pricing for Ceftiofur should work
  with a 20 discount assuming we are first to
  market.
• Market Cap
• The total market is 140 million a year.

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Ceftiofur Analysis

• Dosage Forms There are three different dosage
  forms for the Ceftiofur.
• 1. Dry powder
• The generic Dry Powder will pull sales from the
  ready to use more so than the long lasting
  product but still will effect it.
• 2. Ready to use
• The ready to use product is severely hurt by the
  fact that it cannot syringed during the winter.
  It is too thick and viscous to get out of the
  syringe and almost impossible to use. This
  product is used in the summer months but does
  have side effects of causing abscesses on a small
  percentage of animals that are injected with it.
  Due to the difficulties with this product it will
  lose more market share than the long lasting.
• 3. Long lasting
• The long lasting is given in the ear and gives
  blood levels for three days. No one thought it
  would be successful if used according to label
  claims. They use it off label and not in the ear.
  If given by iv, will kill instantly.

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Ceftiofur Forecast

• Segment Market Shares
• The product segments are roughly dividing up the
  total sales in thirds each.
• Market Forecast
• The market will expand by at least the
  percentage difference to the pioneer product at
  the very least thereby assuring the total product
  numbers should stay the same, however, unlike
  other products, generic Ceftiofur has a much
  better potential to expand substantially due to
  availability of cheaper version to the
  innovators and possibility of replacing other
  therapeutics because of superior regiment
  incorporated with better treatment cost.

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Role of Multinationals in the Market Ctd.

• Common thread They are selling exclusive and
  protected products with limited or no competition
  at all.
• In the case of Ceftiofur, the major
  pharmaceutical company would probably use a
  blended method of selling into the marketplace.
  They would sell both directly to the consumer as
  well as setting up distributors to market the
  product to the consumer. It is questionable if
  these companies could actually exist and be
  profitable selling a generic in this fashion..
  They have literally no captive audience for a
  product they are not the manufacturer of. They
  have a brand identity but it is quickly
  understood that they are merely a marketer of
  someone else's product. Secondly, it is very
  doubtful that they could market effectively a
  product that has several other identical products
  selling for a lower price.
• We truly believe if they are dealing with the
  product that is the first generic approval it is
  possible for them to market successfully but at a
  cost much higher than LAH.
• Once the other generics are approved they will
  lose any and all advantage and if the innovator
  Pfizer will lose over 50 of their market just
  what would a major pharmaceutical company expect
  to gain? They would have a product that is
  unsalable because their cost of doing business
  will preclude them from fully establishing
  the full  potential for Ceftiofur.