Britain’s pet care sector has caught the eye of private equity and, as a consequence, regulators.
Cat Protection Swale, an animal charity in southeast England, saw its vet bills nearly double to £60,000 in the last year. The rise was partly due to surging medicine prices and a lack of choice among local providers.
So what? Britain’s pet care sector has caught the eye of private equity and, as a consequence, regulators. A former cottage industry is now 60 per cent owned by large companies, up from 10 per cent in 2013, with three of the six largest vet groups backed or owned by private equity (PE). The CMA has launched an in-depth probe to find out how this rapid consolidation may have forced up prices for the UK’s 16 million pet owners.
Big Vet. The global pet industry is poised to swell from $320 billion today to almost $500 billion by 2030. Key growth areas include
- Medications such as monoclonal antibodies that can extend pet lifespans.
- “Human-grade” foods, which are proving “sticky” with owners reluctant to switch brands, and even possibly
- Weight loss drugs tailored for pets whose owners can’t resist that face beneath the dinner table (60 per cent of American cats and dogs are either overweight or obese according to a 2022 survey).
PE companies have sniffed an opportunity in steady earnings and a fragmented market. They poured $51 billion into the veterinary sector from 2017 to 2023, and another $9.3 billion in the first four months of this year.
Roll over. IVC, a chain backed by a Swedish PE firm and Nestlé, owns more than 1,000 vet practices in the UK, including three within the vicinity of Cats Protection Swale. Its parent company, IVC Evidensia, owns nearly a quarter of the market. IVC’s website encourages vets to “sell your clinic … so you can focus on being a veterinarian again”. Within PE, this strategy of bringing smaller firms together in order to cut better deals with suppliers is known as “rolling up”.
Collared customers? Corporatisation isn’t necessarily bad. “Veterinary practice is lightyears ahead of where it was 25 years ago. Owners of animals have never had so much choice,” says Dr Sue Patterson, president of the Royal College of Veterinary Surgeons.
But there can still be a lack of competition in a given location, according to the CMA. Its initial review found competition deficiencies in 40 per cent of areas surveyed. Another problem is that most people will pay just about anything for the health of their furry family, regardless of whether it’s fair. By the numbers:
- 11.6 per cent – annualised inflation in vet costs in January this year, compared with an overall CPI of 4 per cent.
- 1 in 10 – dog owners who say they’ve been pushed into debt in order to pay for treatment, according to a YouGov poll.
- 83 per cent – of 1,400 websites for general vet practices that provide no pricing information.
Purr-fessionals needed. “We still have a desperate workforce shortage and that is putting pressure on prices,” says Patterson. “The new salary threshold of £48,000 [per year] is going to have a real impact on overseas vets coming here that make up a significant portion of the workforce.” The number of EU vets in the UK has already more than halved since Brexit and for those remaining the work can be tough: female veterinarians are close to four times more likely than the general population to die by suicide.
Paws for thought. After a series of controversial decisions, notably in relation to Activision Blizzard, the CMA will be careful not to fuel perceptions of overreach. There’s a range of actions it might take in the pet market – from better transparency in branding to more draconian price caps. The real test will be to identify who, if anyone, is making excessive returns. Pets are an emotive issue and PE is the scapegoat du jour. The CMA should be careful not to bark up the wrong tree.
