Benefits for both sides, and plenty of opportunity ahead
One year later, the question stands: Is MWI Animal Health better off today than it was prior to its acquisition by AmerisourceBergen in February 2015? Perhaps not surprisingly, the answer – according to the architects of the acquisition – is a resounding “Yes.”
“When we looked at the skill set and expertise that allowed MWI to be successful, and what we would need to double revenues again, we knew we could have developed them on our own, but it was smarter to do it as part of one of the largest service companies in the world – AmerisourceBergen,” said Jim Cleary, executive vice president of AmerisourceBergen and president of MWI, speaking with Vet-Advantage President & Publisher Chris Kelly during MWI’s recent national sales meeting in Orlando, Fla.
Take, for example, PrescribeWellness. It’s a pharmacy software solution that AmerisourceBergen offers retail pharmacies to promote communication between the pharmacy and patient, leading to greater medication adherence and even greater adherence to follow up physician office visits. MWI is testing the program among veterinary practice customers.
Information technology is another example.
“We had always done a very good job on that front,” Cleary said. “But when we looked at the level of investment needed for the future, we thought that being part of a large global company that had done this before made a lot of sense.”
MWI is integrating AmerisourceBergen’s warehouse management system in its facilities. “We had a good system, but AmerisourceBergen’s is really world class,” he said. The system will help MWI improve the quality and efficiency of its distribution centers, and give the company the ability to provide associates with incentives to award above-standard productivity. “It will help us reduce turnover and improve quality,” said Cleary. “That’s just one example of a systems-related (implementation) that we didn’t have to do on our own.”
AmerisourceBergen brings another dimension to MWI – the prospect of international growth. In fact, MWI acquired Vetswest Ltd. and recently closed on the acquisition of St. Francis Group, two veterinary support services providers in the United Kingdom. “We have had tremendous growth in the United States, and we need to grow internationally,” said Cleary. As with information technology, AmerisourceBergen has the legal, accounting and other skills to make such growth outside the United States achievable.
“The United States is the biggest animal health market in the world, and the best,” said Cleary. “But you’ve seen what we have done in the past year – two international deals in the United Kingdom – which reflects our interest in global markets.”
And more international acquisitions are forthcoming, though they will be carefully executed, said Steve Collis, president and CEO of AmerisourceBergen.
“We start by asking, ‘Is it the right market?’ Then, ‘What’s the right vehicle to use?’ ‘Would MWI be a good owner and partner for this company?’”
Demand-creation sales force
Since last year’s acquisition, MWI’s field and inside sales force have enjoyed incremental growth, said Cleary.
AmerisourceBergen’s acquisition of MWI in 2015 wasn’t so much about reducing redundancies in the work force, said Collis. “We are a good fiduciary steward for our shareholders, so you can expect some synergies. But more important are the answers to these questions: ‘Is the business doing well?’ ‘Are we growing?’ ‘Are we getting closer to our customers?’ ‘Are we doing a good job for manufacturers?’”
“One terrific thing about AmerisourceBergen is the fact that everyone understands the value and strength of our demand-creation sales force,” said Cleary. “We feel great about the position our company is in, to work with our manufacturers to launch products and improve the healthcare of pets and livestock.
“We are continuing to invest a lot of money in training our sales force,” Cleary continued. And AmerisourceBergen has brought a number of management training opportunities as well, for seasoned as well as rookie managers. “They offer training on everything from women in leadership, to conferences for millennials in leadership roles. It’s been very eye-opening for us. And for the first time in my career, I have an executive coach. It’s a great development opportunity.”
As part of AmerisourceBergen, MWI continues to invest in sales analytical tools, to get sales data into the hands of the field reps, said Cleary. “With these tools, they get a better understanding of what products are used by whom.”
And MWI is making what Cleary described as a big investment in a next-generation e-commerce platform. “It will offer many more capabilities in terms of specific information for specific customer groups,” he said. So, an equine practice will get more information on equine products. “It allows us to customize the shopping experience based on the products the customer has been ordering.”
Expanding e-commerce sales remains a goal for MWI. That’s because when customers order on the company’s e-commerce platform, error rates and returns go down, and order size typically goes up. “And it frees time for our inside sales reps, so they can focus on other things in addition to taking orders over the phone,” said Cleary.
Also, the acquisition has given MWI access to AmerisourceBergen’s large number of human generic pharmaceuticals, which are an important product category in veterinary clinics. “Being part of one of the largest purchasing and sourcing companies of pharmaceuticals in the world has been very good in terms of product access,” said Cleary.
Wall Street’s perspective
Finally, Wall Street seems enamored by the deal and the profit margins the animal health business delivers for AmerisourceBergen. On a call with analysts reviewing first quarter 2016 results, Collis said, “We have made excellent progress on the integration and a few investments to help [MWI] continue to meet their long-term objectives.
“The companion animal business was especially strong in the December quarter, as MWI benefitted from strong organic growth, new product introductions, [a] healthy pricing environment and some new business wins. We are very confident that MWI will continue to deliver excellent performance in fiscal 2016, and will make important differentiated contributions to the value we provide to pharmaceutical supply channels, as we continue to grow our presence in the complex animal health segment.”
Neither Cleary nor Collis fear competition from e-commerce companies such as Amazon.com Inc. “We have a lot of great competitors out there,” said Cleary. “But we provide tremendous service and value to our customers, and we will continue to do so.
“We are a complete supplier to the animal health profession. We have sales reps in the field and on the phone who provide value. They detail products, launch our value-added services, and I’m extremely confident we will remain relevant in the animal health market.”
Post National Sales Meeting Commentary
As part of a strategy to better align with their customers’ values, MWI decided to expand choices for products containing fipronil in 2016. This new approach offers veterinarians simplified, full-line access to multiple manufacturers’ products. MWI believes this approach is in the best interest of veterinarians, their patients, and the clients they serve.
Although MWI doesn’t have a small animal agreement with Merial this year, they continue to value their longstanding Merial relationship while continuing to act as a Merial distributor in equine and livestock markets.
Best of both worlds
Since its acquisition of MWI Animal Health, AmerisourceBergen has made a point of importing MWI leaders into its ranks. Some examples:
• Kevin Price, former vice president inventory management, MWI, is now vice president, global animal health sourcing and inventory management, AmerisourceBergen.
• Alden Sutherland, former vice president and chief information officer for MWI, is now vice president, chief information security officer for AmerisourceBergen.
• Mark Durcan, who previously served on the board of MWI Veterinary Supply, was elected to the AmerisourceBergen board of directors in September.