Sector Landscapes: Animal Health 2015

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ANIMAL HEALTH2015

About LifeScience AlleyLifeScience Alley is a global leader in enabling health technology and care organizations to innovate, succeed and influence the evolution of healthcare. By influencing policy, delivering actionable information and intelligence and connecting members with critical resources, we work to ensure that Minnesota's Medical Alley remains the world's strongest health technology community.

SECTOR LANDSCAPES: ANIMAL HEALTHCopyright © 2015 by LifeScience Alley. All rights reserved.

About Sector Landscapes PublicationsThe Sector Landscapes provide in depth analysis of emerging and established industry sectors in Minnesota. The reports highlight global industry insights, Minnesota core and supporting assets, unique positioning, company lists and industry trends. Identified sector areas include: neuromodulation, cardiac active implantables, tissue based products, research tools, animal health, diagnostics, vascular technologies,and digital health.

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PLEASE DIRECT CORRESPONDENCE TO:

Cheryl Matter, PhD, Vice President of Intelligence & Research, LifeScience [email protected] | 952.746.3817

Amanda C. Leightner, PhD, News Director, BioAM / Postdoctoral Fellow, University of Minnesota, Department of Diagnostic and Biologic SciencesResearch Lead

Amanda K. Weber, LifeScience Alley Design ConsultantVisualization + Design

LifeScience Alley's intelligence and research work is generously supported by our Foundational and Sustaining Members.

Foundational Members

Sustaining Members

Animal health is a $7.9 billion industry in the United States that experi-enced a 5.5% rate of annual growth over the past 5 years. The animal health industry in Minnesota developed to support the state’s robust agricultural production. Minnesota remains a national leader in turkey and swine manufacturing. The animal health sector plays a significant role in the state economy, employing ~53,030 workers in over 44 companies. Most companies are clustered in Worthington, Willmar and the Twin Cities. Substantial capabilities exist in the space of pharma-ceuticals, nutritional supplements, vaccines and diagnostics. Emerging fields include: probiotics, gut health and improved disease management and prevention. Minnesota’s animal health sector is bolstered by four major areas of strength: + An extensive animal health surveillance system. + Leading companies in swine and turkey health. + Strong genomic engineering capabilities. + A robust agricultural environment.

The industry is supported by a highly educated workforce budding out of the state’s top ranking educational programs. The industry should continue to expand, with several occupations in the space of animal health among the fastest growing in the state. Technology developed in animal health has applications in other established life science sectors in Minnesota. Consequently, the state’s ingrained animal health capabil-ities support Minnesota’s historic livestock production and the state’s life science industry as a whole. The animal health capabilities uniquely position Minnesota to produce safe, healthy and cost effective livestock for food consumption.

EXECUTIVE SUMMARY

[1] THE GLOBAL - LOCAL COMPARISON 1

OVERVIEW 2

GLOBAL MARKET 2

[2] MINNESOTA ANIMAL HEALTH LANDSCAPE 5

OVERVIEW 6

INDUSTRY DRIVERS 8

AREAS OF STRENGTH 10

WORKFORCE 13

[3] FUTURE FORECAST OF ANIMAL HEALTH INDUSTRY 17

GROWTH OUTLOOK 18

CONCLUSION 21

[4] MN ANIMAL HEALTH COMPANY DIRECTORY 23

[5] UMN ANIMAL SCIENCE EXTENSION PROGRAMS 29

LIST OF FIGURES

FIGURE 1. Percentage of Global Market Share 3

FIGURE 2. Minnesota Companies by Industry Segment 7

FIGURE 3. Turkey & Swine Production in Minnesota 8

FIGURE 4. Minnesota's Major Livestock Producers 9

FIGURE 5. Minnesota Vaccine Products 11

FIGURE 6. Top Ranking Educational Systems in Minnesota Animal Health Industry 13

FIGURE 7. Workforce Educational Attainment 14

FIGURE 8. Factors Driving Change in Minnesota's Animal Health Market 19

THE GLOBAL - LOCAL COMPARISON

1.

2 Sector Landscapes: Animal Health | LifeScience Alley

Minnesota has historically thrived as a robust agricultural state and remains a leading producer of both turkey and swine in the nation. Strong livestock production, close proximity of breeding facilities to livestock producers, low corn prices and abundant feed production uniquely position Minnesota in the global Animal Health Market. Livestock production is supported by an extensive diagnostic and veter-inary surveillance system and a strong vaccine development sector to enhance healthy food manufacture. Technology developed in the state’s Animal Health Industry supports other life science sectors. Pig disease models are utilized in Minnesota’s established medical device industry. Vaccine and food supplementation technology promote both animal and human health. In this manner, animal health is intertwined with other life science sectors, creating a supportive infrastructure to promote biotech-nological development in Minnesota.

The Animal Health Industry is a $7.9 billion market in the United States that experienced robust growth (~5.5% annually) over the past 5 years.1 This life science sector promotes livestock and companion animal health through research and development, diagnostics, preventative medicine and breeding support systems.

Animal health is a highly competitive industry dominated by large pharma-ceutical companies. Income from the animal health divisions accounts for 2-6% of total revenue. Smaller biotech companies also play a prominent role in the industry. Some of these businesses create molecularly cloned livestock, or animals containing DNA from other organisms or strains of the same species. These animals may mitigate disease, enhance food production and create nutrient-enriched food products.

OVERVIEW

GLOBAL MARKET

1 SOURCE: IBISWorld Industry Report 0D4023

3Section 1 | The Global - Local Comparison

FIGURE 1. PERCENTAGE OF GLOBAL MARKET SHARE

149 OTHER COMPANIES

MERCK (8.8%)

ZOETIS (6.6%)BAYER (6.1%)

MERIAL (6.3%)

MINNESOTA ANIMALHEALTH LANDSCAPE

2.


The Animal Health Industry in Minnesota plays a major role in the economy, employing approximately 53,030 workers, including farmers and ranchers.1 At least 44 animal health companies exist in the state (see attached Company Directory).

Major segments of the industry include pharmaceuticals, nutritional supplements, vaccines and diagnostics (see Figure 2).

The state's Animal Health Industry is dominated by large pharmaceu-ticals, with most companies occupying less than 1% of the national market share, similar to the national animal health market.

Significant players in Minnesota include: + Prairie Holdings Group + Life-Science Innovations (including subsidiaries Willmar Poultry

Farms, Epitopix and Nova-tech Engineering LLC) + Bimeda + Merck Animal Health + Merial, the Animal Health Division of Sanofi (including subsidiary

Newport Laboratories) + MJ Biologics

OVERVIEW

1 SOURCE: Minnesota Department of Employment & Economic Development

7Section 2 | Minnesota Animal Health Landscape

2 4 6 8 10

2 4 6 8 10

FIGURE 2. MINNESOTA COMPANIES BY INDUSTRY SEGMENT

RESEARCH

MEDICALDEVICE

PHARMA

NUTRITIONALSUPPLEMENTS

DIAGNOSTICS

VACCINES

VETERINARY SERVICES

LIVESTOCKPRODUCTION

LIVESTOCK SUPPORT

EDUCATION


Strong livestock production is an economic driver that fuels and guides technological development in Minnesota’s animal health industry. The state remains a leading producer of turkey and swine in the nation.

INDUSTRY DRIVERS

+ Produced 44 million head of turkey in 2013.1

+ Leading turkey producing state.

+ Industry netted $769 million in 2013.1

+ Grossed $2.8 billion dollars in sales in 2012.2

+ 3rd largest swine producer in the United States.

FIGURE 3. TURKEY & SWINE PRODUCTION IN MINNESOTA

1 SOURCE: United States Department of Agriculture and National Agriculture Statistics Service, 20132 SOURCE: United States Department of Agriculture and National Agriculture Statistics Service, 2012

Census of Agriculture


+ 4th generation business with 60 years of experience in poultry genetics

+ Annually produces 45 million commercial eggs

+ On average delivers 600,000 poults per week to customers

+ Largest turkey hatchery in the nation

È

THE MAJOR GOAL IS TO UTILIZE TECHNOLOGY TO ENHANCE LIVESTOCK

PROFITABILITY AND LOWER FOOD PRODUCTION COSTS TO THE CONSUMER.

Ç+ Leading supplier of genetically

robust swine to hog industry

+ Uses selective breeding to enrich hogs with economically desirable traits to the producer

+ Closed herd breeding system

FIGURE 4. MINNESOTA'S MAJOR LIVESTOCK PRODUCERS


+ University of Minnesota's Veterinary Diagnostic Laboratory (VDL) See description on page 12.+ Large veterinary practices exclusively serving the livestock industry

including the Swine Vet Center

An Extensive Animal Surveillance System

+ Clustered in Willmar and Worthington, Minnesota+ Collaborative business community: MinnWest Technology Campus

(Willmar) supports agribusiness and bioscience with 398 employees and 28 businesses

+ Strength in poultry and swine vaccine development

Leading Companies In Swine And Turkey Health

+ University of Minnesota's Center for Genomic Engineering: technology developed includes transposable elements, zinc finger nucleases (ZFNs) and transcription activator-like nucleases (TALENs) for gene therapy and precision genomic editing; technology commercially translated by emerging biotech, Recombinetics

Strong Genome Editing Capabilities

+ Comparitively low costs of animal housing+ Close proximity of livestock breeders to producers+ Abundant grain production (ranked in top 4 corn producing states in

2011)1

Robust Agricultural Environment

AREAS OF STRENGTH

1 SOURCE: Agricultural Marketing Resource Center, 2011


DESCRIPTION PRODUCTS

Newport Laboratories

Major MN veterinary vaccine producer

Acquired by Merial (April 2014)

Swine, bovine and poultry vaccines

Epitōpix

Subsidary of Willmar Poultry Company

Poultry, cattle and swine vaccine producer

Proprietary SRP technology

Spun off human vaccine company, Syntiron, which uses same SRP technology

MJ Biologics

Swine vaccine producer

Developed MJPRRS vaccine for prevention of PRRS

FIGURE 5. MINNESOTA VACCINE PRODUCERS


The Veterinary Diagnostic Laboratory (VDL) is part of the University of Minnesota (UMN) College of Veterinary Medicine and provides quality veterinary diagnostic services for all animal species. The workforce of the lab includes seven board certified patholo-gists and 84 laboratory and administrative staff. The main laboratory is located on the Saint Paul UMN campus. Another facility exists in Willmar, which monitors disease in the robust poultry industry centered at this location. The mission of the VDL includes: monitoring of emerging diseases and rapid development of novel diagnostic tools to combat the identified pathogens. The laboratory is Minnesota’s only full service center for animal health diagnostics and serves as the official lab of the Minnesota Board of Animal Health. As part of the overarching goal in disease monitoring, the VDL is a partic-ipant in several national animal health and disease surveillance networks including the National Animal Health Laboratory Network. The lab also plays a vital role in protection of public health through control and observation of zoonotic diseases, which pose a threat to food safety and human health. A wide range of customers are serviced by the center including veterinarians, veterinary clinics, pet owners, government agencies (USDA, Homeland Security, DNR, etc.) and the livestock industry. In 2014, the VDL serviced 61,000 cases and performed 1.45 million procedures. The majority of clients were from the US, but cases were also seen from Latin America, Mexico, Canada, Europe, Africa and Asia.

The VDL functions as a cornerstone for many of the veterinary practices that service Minnesota’s livestock industry, especially in the area of swine health. Large animal veterinarians rely upon the diagnostics developed by the VDL to prevent and identify animal diseases. The lab also helps veterinarians identify endemic disease pressures within herds and determine if programs in place are effective at mitigating disease.

The VDL is positioned to rapidly detect and respond to infectious animal disease with the development of novel diagnostic testing and technology. The VDL is positioned to rapidly detect and respond to infectious animal disease with the development of novel diagnostic testing and technology. The nation’s first porcine epidemic diarrhea (PED) rapid detection test was developed by the VDL in July 2013. An ELISA test for the disease was created in January 2014. PED is one of the top threats to porcine health. It is a devastating swine viral disease which causes diarrhea and vomiting. The viral infection can cause dramatic mortality and loss in young pigs, a significant drain to swine producers. The PED test allows for timely and cost efficient viral detection, preventing disease spread and protecting the state’s lucrative swine industry.

The VDL is an essential component for maintaining the health and well-being of Min-nesota’s varied animal populations.

VETERINARY DIAGNOSTIC LABORATORY


A highly educated workforce drives the development and progress of the state’s animal health companies. Over 45% of employees in both science and educational services hold a bachelor’s degree or higher (see Figure 7).1

Several occupations supporting animal health are among the fastest growing in the state including: biomedical engineering; veterinary technology; veterinary sciences; veterinary and laboratory animal caretaking; and non-farm animal caretaking.2

Within most sectors of the Animal Health Industry in Minnesota, workers with any level of education are able to be recruited into the region. A large population of workers in this field are “home-grown”, budding out of the state’s educational institutions or entering into established family businesses in Minnesota. One employer remarked there is a lot of “bright talent in the state” and a strong biomedical and agricultural workforce. However, there is currently a deficiency of workers interested in the swine industry, particularly food animal diagnosticians and rural veterinarians. This may be due to a trend toward increased urbanization in the state. Fortunately there is much opportunity and employment available in this field and programs offered through the USDA, such as the Veterinary Medical Loans Repayment Plan, to entice workers to rural areas with labor shortages.

WORKFORCE

FIGURE 6. TOP RANKING EDUCATIONAL SYSTEMS IN MN ANIMAL HEALTH INDUSTRY

455 DEGREES

UNIVERSITY OF MINNESOTA COLLEGE

OF VETERINARY MEDICINE

UNIVERSITY OF MINNESOTA

DEPARTMENT OF ANIMAL SCIENCE

Awarded in farm management and animal health related

fields in 2011-2012

Ranks among top 20 veterinary schools

Several extension programs to share research with local animal

producers and to educate the public (see Appendix)

1 SOURCE: Quarterly Workforce Indicators Program, Minnesota DEED website2 SOURCE: Minnesota DEED Website, 2013


EDUCATIONALSERVICES

SCIENCE & TECHNICALSERVICES

AGRICULTURE &FORESTRY

50%

40%

30%

20%

10%

FIGURE 7. WORKFORCE EDUCATIONAL ATTAINMENT

Bachelor's Degree or Higher

College / Associate's Degree

High School / Equivalent

< High School


Recombinetics is an emerging biotech company headquartered in St. Paul with a range of cutting edge genetic capabilities. The intellectual property of the company includes several gene editing machineries, including the 2012 and 2013 Breakthrough Technology runners up according to Science Magazine (TALENs and CRISPR/Cas9 systems). The company utilizes gene editing to develop swine models of biomedical disease and for agricultural livestock production.

As disease models, these gene-edited pigs more precisely mimic human disease. The novel models can then be sold into Minnesota’s established medical device industry, which has much expertise in utilizing large biomedical animal models to support product development. In the area of livestock production, gene editing can leverage natural variation in livestock populations to combine beneficial traits and develop a more robust animal. In this manner Recombinetics successfully used gene editing for precision crossbreeding of hornlessness from a common beef breed- Angus into a prized dairy cattle breed- Holstein. De-horning is a painful process to the animals that elevates stress levels but remains necessary to protect both the farm operator and the cattle themselves. This achievement hints at a broader application for precision crossbreeding and gene editing in livestock production. This landmark work demonstrated an alternative to conventional selective breeding methods where desired traits, or genes, are enhanced in livestock by directed animal crossings. Gene editing permits introduction of preferred traits into dairy cows in a more accurate and rapid manner than with selective breeding. In a world with a rapidly rising population, increased demand for food and decreased space for livestock production, precision crossbreeding may serve as part of the solution to develop more efficient feed animals.

FUTURE FORECAST OF ANIMAL HEALTH INDUSTRY

3.


Although livestock production and the intertwined Animal Health Industry constitute a significant portion of the state economy, both sectors must continuously adapt to the changing global environment to grow and expand. Several factors driving change in the industry include: changing consumer demand; uninformed consumers; farm consol-idation; sales; and regulatory environment (see Figure 8).

Conventional livestock breeding has come under scrutiny by consumers. Trends toward vegan or vegetarian diets have altered the demand for meat products. Increased urbanization of the state’s population has removed consumers from the source of their food leading many to believe that traditionally raised livestock is unsafe or treated inhumanely. Consumers often gravitate toward meat products marketed as organic or steroid and antibiotic free. However, the FDA tightly restricts antibiotic treatment of livestock. Animals administered these products must undergo a specific withdrawal period before being taken to slaughter for human consumption. In addition, no steroid hormones are currently approved by the FDA for use in poultry or pork production.

Emerging fields in the Animal Health Market are geared toward enhanced production of animals for food. There areas are driven by industry demand to optimize production performance and consumer demand to obtain food at the lowest possible cost. Developing sectors of the animal health industry in Minnesota include: expansion of probi-otics and increased understanding of gut health; and improved disease management and prevention.

Consequently, the Animal Health Industry in Minnesota has a positive growth outlook. Consumer preferences may be changing but demand for protein remains high and will continue to increase.

GROWTH OUTLOOK

19Section 3 | Future Forecast of Animal Health Industry

MIN

NES

OTA

'S A

NIM

AL

HEA

LTH

MA

RKET

REGULATORY ENVIRONMENT &INVESTMENTS

SALES

CONSUMER DEMAND

FARM CONSOLIDATION

UNINFORMED CONSUMERS

FIGURE 8. FACTORS DRIVING CHANGE IN MINNESOTA'S ANIMAL HEALTH MARKET


Grazix Animal Health is an emerging company operating in the gut health sector. This entity became an independent subsidiary of LifeLeaf, Inc. in May 2014 and is located in the Worthington cluster. Grazix Animal Health utilizes natural digestive technology developed for use in humans by Life-Leaf to combat scours in livestock. This product, called Grazix, harnesses the innate immune system in plants to inhibit toxins, slow down microbial growth and heal damaged tissues to reduce digestive stress and increase livestock productivity.

21Section 3 | Future Forecast of Animal Health Industry

The Animal Health Industry in Minnesota is predicted to continue to grow and thrive, building off a traditional agricultural base existing in the state. A highly educated workforce plus a growing job market provide ample resources for this expansion. Technology developed in this market have applications in other arenas of the state’s life science fields including: food production, diagnostics, biologic/biopharma, research tools and cardiac implants. Thus, the Animal Health Industry has broad implica-tions in biotechnology advancement. Minnesota is uniquely positioned to support vibrant livestock and food production with the supporting Animal Health Market. An expansive, industry-geared veterinary presence in the state helps to ensure the production of safe, healthy, humanely treated food. The VDL plays a large role in supporting these practices and also monitors emerging disease in the livestock market in the state. The identification of novel disease feeds directly into the significant veterinary vaccine and diagnostics market in the state, allowing for rapid production of new methods to mitigate infection. The developing gut health sector additionally increases livestock productivity. Lastly, genomic capabilities in the state have the ability to broadly impact animal health and agriculture through engineering of more robust, efficient livestock. Altogether, these forces aid in the support and maintenance of healthy and safe food at an efficient cost, making the role of Minnesota’s Animal Health Industry invaluable for feeding the expanding population.

CONCLUSION

23Section # | Text

MINNESOTA ANIMAL HEALTH COMPANY DIRECTORY

4.


PHARMACEUTICALS

Company City, State Founded Summary

Aurora Pharmaceutical LLC Northfield, MN Manufactures companion animal and livestock products.

Bayer AG Stillwater, MN Pharmaceutical with animal health division for companion and livestock animal health.

Bimeda, Inc. Le Sueur, MN Produces livestock health products.

Hobart Laboratories, Inc. Bemidji, MN Specialized producer of veterinary products.

Merck Animal Health Worthington, MN Produces companion animal and livestock products.

Novartis Animal Health St. Paul, MN Produces companion animal and livestock products.

NutriPro Biosystems Worthington, MN Specialized producer of swine related products.

Phibro Animal Health St. Paul, MN Large company that manufactures livestock products.

Prairie Livestock Supply, Inc. Worthington, MN Livestock supply center.

Steuart Laboratories Mabel, MN Manufactures ointments and creams for animal skin conditions.

25Section 4 | Minnesota Animal Health Company Directory

NUTRITIONAL SUPPLEMENTS


Aurora Pharmaceutical LLC Northfield, MN Manufactures companion animal and livestock products.

American AGCO Trading Company, LLC Cottage Grove, MN Livestock feed supplier.

Bayer AG Stillwater, MN Livestock supply center.

Bimeda, Inc. Le Sueur, MN Produces livestock health products.

Grazix Animal Health Worthington, MN Specialized producer of livestock gut health products.

Omega Nutrition Fairmont, MN Manufactures companion animal food supplements.

Phibro Animal Health St. Paul, MN Large company that manufactures livestock products.

Prairie Livestock Supply, Inc. Worthington, MN Livestock supply center.

Qualitech Environmental Inc. Chaska, MN Small company with nutritional products for livestock and companion animals.

SarTec Corporation Anoka, MN Produces yucca-based feed products for livestock and companion animals.


DIAGNOSTICS


Abbott Labs Eden Prairie, MN Large pharmaceutical company with companion animal division.

Gut Bugs, Inc. Fergus Falls, MN Research company focused on swine intestinal disease.

IDEXX Laboratories Bloomington, MN Large company that produces products for companion animal and livestock health.

Merck Animal Health Worthington, MN Produces companion animal and livestock products.

Newport Laboratories, Inc. Worthington, MN Specialized producer of livestock products.

Protatek International, Inc. St. Paul, MN Specialized producer of swine, equine and bovine products.

UMN Veterinary Diagnostic Laboratory St. Paul, MN Diagnosis of animal diseases, identifies

emerging diseases, diagnostic methods.

Veterinary Medical Center Worthington, MN Veterinary center for large and small animals.


LIVESTOCK PRODUCTION


Babcock Genetics, Inc. Rochester, MN Worldwide supplier of swine genetics.

HD Genetics, LLC Northfield, MN Supplier of sire genetics.

Legred Swine Genetics Bricelyn, MN Suplier of swine genetics.

Pig Improvement Company Kasota, MN Supplier of swine genetics.

Recombinetics St. Paul, MN Accelerates livestock genetics through biotechnoogy in biomedicine & agriculture.

Willmar Poultry Company, Inc. Willmar, MN Turkey breeding company. Poultry genetics,

biotechnology, agriculture and engineering.

Fairmont Veterinary Clinic, LLP Fairmont, MN Veterinary practice serving the swine and

beef industry.

NovaTech Engineering, LLC Willmar, MN Specialized producer of poultry breeding equipment.

ProCattle Horizons Worthington, MN Provides information for cattle management and services.

ProPig Worthington, MN Provides services for pork production and management.


MEDICAL DEVICES

RESEARCH

EDUCATION

PARENT COMPANY


Abbott Labs Eden Prairie, MN Large pharmaceutical company with companion animal divison.

Renco Corporation Minneapolis, MN Manufactures ultrasound detection devices.

Ultimed Incorporated St. Paul, MN Specialized producer of pet diabetes products.


UMN Mid-Central Research and Outreach Center Willmar, MN Supports the MinnWest Technology

Campus.


UMN Mid-Central Research and Outreach Center Willmar, MN Supports the MinnWest Technology

Campus.

UMN Veterinary Diagnostic Laboratory St. Paul, MN Diagnosis of animal diseases, identifies

emerging diseases, diagnostic methods.


LifeScience Innovations Willmar, MN Oversees 10 affiliate life science companies including Willmar Poultry Farms & Epitopix.

Prairie Holdings Group Worthington, MN Oversees 8 affiliate life science companies including ProPig & Vet. Medical Center


UNIVERSITY OF MINNESOTA ANIMAL SCIENCE EXTENSION PROGRAMS

5.

30 Sector Landscapes: Neuromodulation | LifeScience Alley

Program Description Contact Information

Beef Cattle

Source of research-based information in the areas of reproduction, nutrition, pasture management and beef quality for meat producers.

www.facebook.com/UMBeefTeam

Dairy Cattle Provices tools for dairy cattle production for producers and industry. [email protected]

Poultry U Provides information on a broad level for the poultry industry. 612.624.2722

Meat ScienceModern meat packaging facility that also performs research and education and provides meat for purchase.

Tristan [email protected]

Horse Extension Source of research-based education for horse owners.

www.extension.umn.edu/agriculture/horse

Swine ExtensionFunctions to provide pork producers and consumers with information to improve the health of pigs.

[email protected]

Small FarmsProvides information on crop and livestock production, natural resonance conservation and business management to small farmers.

[email protected]

Sector Landscapes: Animal Health 2015

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