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$22 Billion Health Sector That Nobody On Wall Street Is Talking About

Companies / Healthcare Sector Jun 05, 2013 - 12:09 PM GMT

By: Money_Morning


Garrett Baldwin writes: Suffering from a debilitating condition known as respiratory syncytial virus, the patient lay on the ground wheezing with every tormented breath.

It's a horrible yet common viral condition that brings a high fever, a hacking cough, and progressive difficulty in breathing. Once infected, the prognosis is as dire as it gets.

What's worse, it can strike at any age. In fact, nearly 62.5 million in America alone are susceptible to this devastating respiratory condition.

Not long after, the doctor delivered the bad news: There was nothing more he could do.
The steer would have to be put down.

Situations like this are so common that Bovine respiratory syncytial virus leads to the death of 32 million cattle each year.

It is the single largest source of economic loss to the cattle and dairy industry, costing producers more than $3 billion per year.

It's a small part of $22 billion industry that many investors are completely ignoring. It's called Animal Health and Nutrition.

And it promises to be one of the biggest growth industries in the next three decades.
The Animal Nutrition Industry is Heating Up

It's a bold claim but the worldwide food trends back it up.

In fact, last week's proposed purchase of Smithfield Foods, the world's largest pork producer, by Shanghai International highlights the booming market for meat products in emerging markets around the world. As 250 million people join China's middle class alone, demand for pork, beef, and poultry is expected to increase dramatically.

Of course, everyone believes that buying an ETF related to pork or beef is be the best way to cash in on this trend. But they are wrong.

The truth is the technology and health products that facilitate the growth of the supply of these commodities will be far more important than the underlying assets and far more lucrative.

According to research consulting firm Vetnosis Limited, the animal health and nutrition market will grow at an annual rate of 6% per year through 2016, And that's likely a lowball figure.

Animal disease costs the sector billions each year, and viral strains have adapted and mutated in livestock environments.

As with any virus-related technology, companies need to stay ahead of problems before they start. Their greatest concerns center on potential new diseases and outbreaks. Recent outbreaks in avian bird flu, bovine tuberculosis, and Mad Cow disease have had catastrophic repercussions for animal agriculture, the food supply, public health, and reputations for certain exporting nations.

With the rise of demand in pork and beef in the last decade (and the steep expected increase in the future), animal health and nutrition will be central to the long-term goals of feeding global markets.
Stopping Outbreaks Before they Happen

That's why animal health products represent a very lucrative market-especially for pharmaceutical companies with their own animal health divisions.

Even as these Big Pharma companies struggle with patent expirations and concerns about government intervention in the healthcare markets, animal health and nutrition has evolved into a market with a steady source of growth and strong, reliable margins.

Primary drug companies like Pfizer (NYSE: PFE), Sanofi-Aventis, Merck (NYSE: MRK) all have animal health units and each is exploring the opportunity for standalone companies within the sector. Pfizer most recently spun off its animal health unit in a $4.2 billion IPO.

In addition, more traditional agribusiness firms like Archer Daniels Midland (NYSE: ADM) and DuPont (NYSE: DD) are poised to expand their animal health units as global demand for their services continue to swell.

Merck Animal Health is one of the key players in the industry. In 2011, the Merck division generated $3.3 billion in sales and grew into a reliable player in research and development in the sector. As animal health and nutrition heats up, this unit could become an attractive target for acquisition by a major player, could spin off in its own IPO, or remain a very lucrative part of its parent company's portfolio.

The future of animal health and nutrition remains one of the brightest and most innovative sectors in today's markets. And this week, in our weekly broadcast, the Money Map Dispatch, we'll be discussing the one company that is set to explode as the global leader in animal health and nutrition and double their revenues in the next five years.

We'll also be naming the company that has created the world's first preventive medication to help stop bovine respiratory syncytial virus in cattle. This groundbreaking medication has the capacity to reduce one of the greatest challenges in the agribusiness markets today saving millions of cattle in the process.

Source :

Money Morning/The Money Map Report

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