Cross Vetpharm Holdings

1
Cross Vetpharm Holdings
The Canadian Experience Growth through
Acquisition Donal Tierney, CEO. October 12th.
2005
2
The Company

• Global Manufacturer Marketer of Animal Health
  Products
• Revenues of US90 million

• 5 manufacturing facilities in Ireland, USA,
  Canada and UK
• 367 employees

• Bimeda branded products marketed worldwide
• Private Label for Distributors, Agents Peer
  Companies

3
Our Products

• Teatseal mastitis prevention for dairy cattle
• Exodus wormer for horses
• Sustain antibiotic for cattle
• Goldfleece parasiticide for sheep
• Neomycin antibiotic for poultry swine

4
Animal Health Industry by Region
5
Animal Health Industry by Species
6
Bimeda Phases of Growth
Domestic - 1970s
Domestic UK 1970s 1980s
International - 1980s 1990s
Global Operations 1997-2005
1997-2003 4 Key acquisitions in USA and Canada
1997 Divested Clonmel Healthcare
1980s Organic growth and geographic expansion
1977 Acquired Clonmel Healthcare
1975 Acquired Constant
1972 Acquired Bimeda Ireland
1968 Founded
7
Key Bimeda Growth Challenges

• The Changing Business .

1997
2005
8
Phases of Growth in Canada

• 1992 - Distribution
• Arms length approach with 3 distributors,
  delivering 1m revenue per annum.
• 1998 Acquisition of MTC
• Acquired manufacturing, distribution, customer
  base, product licences, human capital and product
  development capability
• Decision to acquire MTC part of North American
  strategy as well as diversifying manufacturing
  away from Ireland
• 2003 MTC Centre of Excellence
• Received FDA approval
• Specialisation in sterile injectibles pastes

9
MTC Operation

• Wholly owned subsidiary
• Functions manufacturing, product development,
  sales and marketing, procurement.
• Manufacture of sterile and non-sterile
  injectibles and pastes
• 85 employees, 8 nationalities
• Accounted for 15 of Group revenue in 2004
  (15million)
• Located in Southern Ontario Golden Triangle
• Good transport infrastructure, institutes of
  education, distribution advantages, market
  proximity.

10
Why MTC ? Why Canada ?

• Timing - opportunity to acquire a successful
  existing business
• Proven pharmaceuticals competence
• Basis to establish FDA approved site
• Access to product licences
• Qualified, English speaking workforce
• Access to large internal Canadian market
• Gateway to North and South American markets
• Government support
• Part of NAFTA

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Doing Business in Canada

• Canada is NOT the US
• Extensive landmass and low population density
• Relatively high degree of unionisation and
  government regulation
• Pharmaceuticals industry concentrated around
  Montreal Toronto
• Affluent and high standard of living and quality
  of life
• Southwest Ontario the location of choice
  accessibility, infrastructure, education
  services.

12
Managing Acquisitions

• Rapid growth necessitated acquisitions
• Capitalise on global opportunity
• Due diligence
• Synergy creation of value
• Integration
• Ongoing management

13
Managing The Team

• Growth through acquisition drove many management
  changes
• Structure
• Move from centralised to regional
• People
• Mix of Irish and local expertise
• Ethos of living the market
• Training
• Cross functional training and awareness
• More structured reporting
• Remuneration and incentives
• Responsibility and accountability

14
What We Learned

• Canada is NOT the USA
• Strategic Planning
• 3 distinct phases of growth in Canada between
  1992 and 2005
• Managing acquisitions is difficult and expensive
• Due diligence in advance
• Sense of urgency during integration phase
• Finance Considerations
• Increased requirement for budgeting and control
• Tax planning

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What We Learned

• Sales and Marketing
• Excellent and efficient gateway to NAFTA markets
• Good distribution, but choose location carefully
• Operations
• Labour intensive industry will be expensive
• Relatively high regulation
• Human Resources
• Qualified and well educated workforce
• Good quality of life for ex-pats

16
Thank You