Mars Petcare Quietly Laying Strategic Groundwork to Be a Major Player in Veterinary Diagnostic Market – Could it Impact Market Leaders Idexx and Zoetis?
Mars Petcare has been quietly consolidating companies and increasingly positioning itself to become a major player in the veterinary diagnostics, services, and products markets. Mars had been highly active acquiring a network of animal hospitals and laboratory service providers but now appears poised to become a more comprehensive service provider in the space through its recent acquisitions, most notably with its $1.3 billion dollar acquisition of veterinary product maker Heska.
Notable Mars Petcare Acquisitions
– Banfield Pet Hospitals (2007) – runs over 1,000 pet hospitals in the U.S. with 3,600 veterinarians
– Blue Pearl Veterinary Partners (2015) – runs over 100 specialty and emergency vet hospitals
– Pet Partners (2016) – runs 60 animal hospitals along with specialty and emergency hospitals
– VCA Antech (2017) – runs over 1,000 vet hospitals in the U.S. and Canada, operates one of the largest vet reference labs in the U.S. and Canada, sells vet radiology equipment
– Heska (2023) – clinical chemistry, hematology, blood gas, rapid diagnostics, digital imaging, and other veterinary medicine products
– SYNLAB Vet (2023) – European veterinary reference lab
The market leaders in the veterinary diagnostics market have historically been Idexx and Zoetis who acquired Abaxis in 2018. In addition to offering veterinary products, these businesses have vertically integrated offering reference laboratory services as well to their customers. Idexx’s companion animal group product and service sales are currently at a run rate of $3.5 billion including $1.3 billion of global veterinary laboratory services. This business has grown relatively consistently at a high-single digit to low double-digit pace for years. Zoetis’s companion animal run rate sales are approximately $6 billion globally on an annualized basis, however Zoetis’s sales comprise companion animal pharmaceutical sales as well.
Following the completion of the Heska and SYNLAB Vet acquisitions, Mars Petcare will now have a complete set of integrated product and service offerings in the U.S. and Europe. At the time of the acquisition, Heska’s veterinary diagnostic portfolio is substantially smaller than both Idexx and Zoetis (approximately $250 million in companion animal sales), however, Mars Petcare is poised additional marketing muscle. Additionally, while as a private company Mars is notoriously cagey around its strategy, we would be surprised to not see the Company invest its product offerings given its already sky-high level of investment in the space. Beyond the ability to offer a complete set of product and service offerings to veterinarians, Mars’s acquisitions should also benefit from expanded distribution and reach.
Beyond these advantages, Mars has one advantage Idexx and Zoetis do not have. The have the ability to now sell-through to their existing suite of U.S. and Canadian animal hospitals. Combined Mars Petcare now has over 2,500 animal hospitals among its suite of acquired service providers which represents approximately 10% of the roughly 25,000 animal hospitals in the United States. Mars’s hospitals tend to be larger in size as well including numerous specialty hospitals and consequently incorporate a larger portion of the overall market. The ability to transition controlled hospitals to portfolio products and services could impact Idexx and Zoetis’s growth rates in coming quarters. We will be closely monitoring how this potential emerging major competitor impacts the market leaders in coming quarters.