Vetoquinol SA

A.1.1. Vetoquinol repeats its disclosure from 2021 and recognises the ‘fight against antibiotic resistance’ as a material topic of high importance to its stakeholders and the business. Vetoquinol also states that regulatory restrictions on the use of antibiotics pose a financial risk to the business; it notes that European regulation is ‘leading to a reduction in the proportion of sales generated by anti-infectives.’ The company specified that its European segment experienced a 3.6% decline, mainly due to declining sales of antibiotics for livestock in its 2022 Annual Results. These statements indicate that Vetoquinol considers increased regulatory restrictions to be a material risk to the business. However, Vetqouinol does not recognise AMR as a material risk to its business. A.1.2. Although Vetoquinol reports that it is fully committed to a policy of fighting the spread of antibiotic resistance, the company has not yet disclosed a strategy to reduce its exposure to antibiotics used for non-therapeutic purposes. Vetoquinol continues to focus on a range of products entitled the ‘Essentials’, which it states have strong growth potential. In 2023, Essential Products represented 59% of its revenue in comparison to 41% of its revenue in 2014. Four out of five Essentials products included in its livestock business contain MIAs. A.1.3. Despite Vetoquinol acknowledging a decline in antibiotics market sales from anti-infectives in its 2022 and 2021 Universal Registration Document, the company does not provide quantitative disclosure for its antibiotic’s portfolio, preventing investors from ascertaining the company’s exposure and whether this is changing year-over-year.

A.2.1. Vetoquinol states that it advocates for the ‘rational use’ of antibiotics and that the company is ‘fully committed to a policy of fighting the spread of antibiotic resistance.’ However, there is no evidence that this has resulted in the company adopting a strategy for the responsible sale and marketing of antibiotics. The company has still not publicly defined what it considers to be the ‘rational use’ of antibiotics, or how it would support farmers in implementing and ensuring this on farms. Additionally, the company states it promotes the ‘proper use of antibiotics (reasoned prescription)’, however, it does not provide further details on how this translates to a responsible marketing policy. A.2.2. Positively, Vetoquinol disclosed in its 2022 Universal Registration Document that it does not market antibiotics used for growth promotion and forbids the practice. The company does not have any public-facing commitment to remove indications for prophylaxis from labels of MIAs. A.2.3. It is unclear from public disclosure who is responsible for oversight of the responsible sale and marketing of antibiotics. A.2.4. In 2021, the company’s Sales and Marketing division was the largest of its business, contributing to 43% of the salesforce. It grew by 3.4% in 2022 despite the overall workforce contracting by 0.9%. This continues to indicate that Vetoquinol dedicates a notable proportion of its resources to marketing its products. However, the company does not release any information relating to its sales incentives at the business level, or specific to antibiotics.

B.1.1. Vetoquinol has a Health, Safety and Environment (HSE) Policy, detailed in the company’s 2022 Universal Registration Document. The policy is implemented in all Vetoquinol entities and establishments, across all geographies. The Policy has 12 fundamental principles, one of which states that environmental indicators are established for industrial entities, and it monitors waste, effluent discharge, and water. Vetoquinol has not updated its disclosure since its 2021 Universal Registration Document to clarify whether the company has set specific minimum residue limits for its antibiotic manufacturing effluent. For its own operations, in Vetoquinol’s 2021 Universal Registration Declaration, the company reports that for its Italian and Brazilian sites, all wastewater generated is collected and destroyed by a waste specialist. In the company’s 2022 Universal Registration Declaration, Vetoquinol reports that only the Brazilian site collects and destroys wastewater generated. It may be assumed that antibiotic waste is covered by this policy, however, this is not explicitly stated. B.1.2. The company states that where it lacks technical ability, it uses contract manufacturing to produce pharmaceutical products and ingredients. Vetoquinol states that it does not produce any active chemical ingredients in-house; it is unclear whether Vetoquinol produces antibiotics in-house or solely through a third party. The company states that its contract manufacturing operations are expected to comply with the same HSE standards as its own sites. Note that the company has not provided any additional relevant disclosure in its 2021 Universal Registration Document. B.1.3. Vetoquinol provides disclosure on how it ensures its HSE policy is implemented at its own sites. In 2022, 15 HSE audits were conducted throughout the group and all group entities have been audited within the last three years, with action plans prepared for every audited entity. The Group HSE manager is responsible for the preparation and implementation of the group’s HSE policy and is responsible for carrying out regular audits. There is no evidence of third-party audits to ensure compliance. Note that the number of HSE coordinators and officers who manage HSE activities and report to the Group HSE manager has increased from 20 to 25 in 2022. For its contract manufacturers, its industrial and quality department conducts audits to ensure they apply the same standards of compliance as the company’s own sites. However, Vetoquinol’s disclosure remains the same from its 2021 to its 2022 Universal Registration Declaration and no details are provided about how often the audits are completed and what happens in instances of non-compliance. B.1.4. Vetoquinol provides details of its own manufacturing locations, France, Poland, Italy, Brazil, and Canada, and that it has over 2,300 suppliers and partners. However, it does not disclose who its manufacturers and suppliers are or where they are located.

C.1.1. Vetoquinol does not define what it considers to be alternatives to antibiotics. It does, however, state that it is ‘developing rapid diagnostic tools to allow rational use of the remaining [antibiotic] stock available for veterinary medicine’ and has initiated and pursued research programs to identify alternatives to antibiotics. In 2020, the company launched Klebsiella Vetovax, Canada’s first mastitis vaccine for infections caused by Klebsiella pneumoniae. Vetoquinol is developing novel antibiotic products that minimise the risk of developing AMR; these include single injection short-acting antibiotics (SISAAB) such as Forcyl. The company has not provided any new disclosure since the assessment was carried out in 2022/2023 to highlight that it has launched new alternatives to antibiotics. C.1.2. The company provides no disclosures on the percentage of its product portfolio that is classified as alternatives to antibiotics. C.1.3. Vetoquinol has not yet updated its reporting to provide disclosure of revenue from alternatives. This prevents investors from being able to monitor changes in exposure year-over-year. Moreover, no information on revenue from vaccines or diagnostics is available to provide an idea of what their revenue from alternatives to antibiotics may be. The company does, however, again allude to increasing its exposure to vaccines through increased sales in its livestock business segment in Europe in its 2022 Universal Registration Document.

C.2.1. In 2022, Vetoquinol allocated 6% of its revenue to R&D, compared to 5.9% in 2021. The company continues to operate 5 R&D centres but has reduced its workforce from 214 employees to 211 employees in 2022. The company still does not disclose its R&D priorities but states that it has initiated research programmes to develop alternatives to antibiotics. C.2.2. Vetoquinol has made no new acquisitions of companies developing alternatives to antibiotics. C.2.3. The company provides no disclosure on the marketing spend for alternatives to antibiotics, nor for antibiotics.

D.1.1. Vetoquinol was involved in a three-year collaborative research project – Yellow Pearl – with the French National Institute for Agricultural Research and public research teams from French veterinary schools. The project focused on antibiotic use and the effects it has on public health, addressing the key question ‘Is it possible to establish treatment protocols that limit the adverse effects of antibiotic therapies while retaining their effectiveness?’ Additionally, on its website, the company lists a range of services it offers to help fight infection, which includes providing antibiotics discs to test the sensitivity of bacterial strains, regularly publishing updates on the sensitivity of bacterial strains to antibiotics, organising training sessions dedicated to antibiotics, promoting the proper use of antibiotics, and offering audits to manage microbial pressure in clinics and on farms. D.1.2. The company has carried out epidemic monitoring at the European level for over 20 years. However, the company has not provided any updated disclosure since its 2021 Universal Registration Document that provides evidence that it has expanded this to cover a wider geographical region or to release the data gathered through its monitoring programme.

D.2.1. In 2022 and 2023, no information was found on Vetoquinol’s lobbying efforts and political expenditure. The company’s position on antibiotics and AMR is unclear. Vetoquinol does disclose that it is a member of the industry organisation HealthforAnimals and Animal Health Europe. It is also an associate member of the Pharmaceutical Supply Chain Initiative (PSCI). However, the company is not a member of the AMR Industry Alliance, which outlines the predicted no-effect concentrations (PNECs) for antibiotics or any other organisations that tackle the issue of AMR.

E.1. Vetoquinol did not provide a written response to the questions in the engagement letter sent in July 2023 and declined to attend a FAIRR-facilitated engagement call with investors. However, the company provided feedback for its assessments.