Introductions
Dechra Pharmaceuticals PLC (“Dechra”) comprises six businesses operating under two Divisions, Pharmaceuticals and Services. Both divisions are focused on the veterinary market with a key area of specialisation being on companion animal products.
The Group focuses on solid organic growth within its Pharmaceutical and Service Divisions; however, the key strategy to deliver medium to long-term growth is the development of our own branded veterinary pharmaceutical portfolio and the licensing of these key products into international markets. Our product development is focused entirely on prescription only veterinary medicines for dogs, cats and horses, with our main areas of specialisation being dermatology, endocrinology, equine medicine, ophthalmology and critical care.
Most of our projects utilise existing pharmaceutical entities that are typically used within the human market, therefore the majority of product creation is development and not research based.
During the last five years we have licensed four specialist products of which Vetoryl® Capsules and Felimazole® Tablets currently represent our biggest opportunities for international growth.
Vetoryl is a novel product for the treatment of Cushing's syndrome (hyperadrenocorticism) in dogs. It is marketed within the EU in 21 territories and it is sold in the USA under an FDA waiver scheme and through special import schemes into other countries such as Canada and Australia.
Felimazole® was the first veterinary licensed product for the treatment of feline hyperthyroidism. It received marketing approval for the UK and was launched into most major EU territories at the end of 2005.
Pharmaceutical Division
Our Pharmaceutical Division comprises Dechra Veterinary Products (“DVP EU”), Dechra Veterinary Products USA (“DVP USA”) and Dales Pharmaceuticals (“Dales”).
DVP EU
Dechra Veterinary Products EU (DVP-EU), located in Shrewsbury, England and in Uldum, Denmark, employs 212 people.
DVP-EU markets and sells pharmaceutical products, veterinary-exclusive pet diets, pet care products and instruments and consumables within 10 European countries and manages the relationship with our worldwide marketing partners.
The VetXX and Arnolds Veterinary Products brands and products are now fully incorporated in to the DVP-EU companion animal portfolio.
The company is focussed on providing therapeutic solutions for the care of companion animals. The key areas of expertise span dermatology, endocrinology, equine medicine, ophthalmology and critical care. The leading branded pharmaceuticals for companion animals include Vetoryl® Capsules, for the treatment of canine hyperadrenocorticism (Cushing's syndrome); Felimazole® Tablets, for treating feline hyperthyroidism and Equipalazone® the market-leading non-steroidal anti-inflammatory for equine musculoskeletal disorders. The recent additions of the SPECIFIC® dog and cat diet range, the ophthalmic product Fucithalmic® Vet and the dermatology brands Canaural®, Fuciderm® Gel and Malaseb® Shampoo further strengthen Dechra's product portfolio. There is a strong emphasis on product development with an ongoing programme of investment that will further enhance our product offering to veterinarians across Europe.
DVP US
This business, established in 2005 and located in Kansas City, USA, currently has seven employees. Both Vetoryl® and Felimazole® are at an advanced stage of the licensing process, with full submissions being targeted to be completed by the end of 2007. The Directors consider that the US market represents the biggest single opportunity for our own international expansion. We believe that to gain full value from our products that the best route to market will be to create a Dechra brand within the USA. In order to achieve this, we currently market one minor product with the intention of establishing the Dechra brand, developing distributor relationships, creating a customer database and establishing accounting and logistics systems prior to the approval of our own key products. It is our intention to distribute our products through the existing network of veterinry suppliers within the USA, who also provide first line sales support. Our American function will be structured predominantly around marketing and technical support, with a team of up to 12 people being employed to coincide with the launch of our first major product.
Dales
Dales, located in Skipton, England, employing 129 people is a fully Medicines and Healthcare Regulatory Agency (“MHRA”) approved pharmaceutical manufacturer with multi-competence in both scale and dose form. Dales manufactures the vast majority of our own branded licensed pharmaceutical products, which are marketed through DVP, but also derive approximately 50% of revenues from third party toll manufacture, predominantly for human pharmaceutical companies. This is Dechra’s only significant source of revenue not derived from the veterinary market.
Services Division
Our Services Division comprises of National Veterinary Services (“NVS®”), NationWide Laboratories (“NWL”) and Cambridge Specialist Laboratory Services (“CSLS”).
NVS
NVS®, located in Stoke-on-Trent, England, employing 453 people, is the UK market leader, as measured in terms of market share, in the supply and distribution of veterinary products to veterinary practices and other approved outlets.
NVS stock a range of over 12,000 products including pharmaceuticals, pet products, consumables and accessories. NVS has also developed a range of IT solutions for veterinary practices which are branded “Vetcom®”. Vetcom’s principle objective is to collect orders electronically. Approximately 80% of NVS’s orders arrive automatically with no human input required. NVS distributes to 1,500 customers daily utilising its own fleet of vans and Heavy Goods Vehicles (“HGVs”). The 
centralised stock located in Stoke-on-Trent is picked and packed throughout the afternoon and evening and then distributed overnight to trunking depots by the HGVs on large trailers. Van drivers are then employed locally at these depots who distribute the goods to the customers. NVS operates on a Sunday until Thursday shift which allows customers to place orders up until 7.30 p.m. Monday to Thursday and any time over the weekend up to 11.00 a.m. on Sunday for a next working day delivery.
NVS services companion animal practices, livestock practices and agricultural merchants, with sales being approximately 60% in favour of companion animal related products.
Laboratories
NWL is located in Poulton-le-Fylde, England and employs 44 people. It is a first referral veterinary laboratory, providing histology, pathology, haematology, chemistry and microbiology services to veterinary practices. Whilst a certain amount of simple chemistry is performed at veterinary practices, nearly all veterinary practices will outsource more advanced analytical tests, often requiring expert interpretation of results. We consider NWL to offer the highest level of service within this sector. We were the first veterinary laboratory to gain UKAS (United Kingdom Accreditation Service) approval. NWL also offers other services such as Allervet, a pet and equine allergy testing programme and Petscreen, a chemotherapy sensitivity test for small animal tumours.
CSLS, located in Sawston, England employs 6 people. It operates as a first and second referral laboratory, with its key area of expertise being endocrinology. The second referral work, i.e. providing services for NWL and some of NWL’s competitors, is mainly derived from specialisation in radio-immuno assays. The business also provides precise assays which support the dosage regimes and patient monitoring of our key products, Vetoryl® Capsules and Felimazole® Tablets.