Pet Care Market Primer-Vf

Pet Care
Market Primer
Research Materials
NOVEMBER 2021
Executive Summary
Overview of pet care market attractiveness
Agenda Deep dive on key segments
Creating a Global Pet Care ecosystem
Copyright © 2021 by Boston Consulting Group. All rights reserved.

Appendix
2
Attractive global Companion Pet Care market
Global Pet care is a large (~$225Bn), fast growing (~4% p.a. '13-'20) and profitable market, backed by resilient humanization &
premiumization trends; Pet Healthcare (~$70Bn) most attractive space with higher margin and expected +8% p.a. growth over '21-'26
• $575Bn animal care market, including $225Bn for companion animals, rest is production animals
• ~4% '13-'20 p.a. growth (vs. +2% p.a. CPG) and expected ~6% '21-'26 growth supported by strong tailwinds
• Companion animals market composed of mix of segments within 3 categories: Daily needs, Healthcare, Emerging Healthcare
– Daily needs (food, products, non-medical services, retail & distribution): mature segments, highly competitive with sustained growth (+4% '21-'26)
backed by resilient trends of (1) volume effect driving pet ownership (single households, aging population, delayed childbirth) and (2)
premiumization
– Healthcare (pharma, veterinary clinics, medical equipment, central labs): experiencing strong growth (+8% '21-'26) driven by "humanization" of
pets supporting healthcare products and services growth, notably specialty medicine development
– Emerging Healthcare (IoT/ wearables & Pet Insurance): double digit growth in the US and Europe (+16% '21-'26) , driven by development of
technological innovation (cloud, ai, data, connectivity) and insurance penetration pushed by increasing healthcare spend per pet
• Highly profitable market: ~$45Bn profit pool, with differentiated profitability levels by segments, higher in Healthcare segments (+15-25% EBITDA) -
high stakeholder value creation potential strong cash flow and low capital intensity

• Strong resilience against downturns demonstrated during Covid (limited one-off impact on vet clinics and boost on pet food) and 2007-2009 crisis
Within Healthcare segment, US largest geo (45% of market size) despite hosting only 5-10% of pets – though with already high penetration
of healthcare services, US still expected to grow at +8% over '21-'26 driven by specialty medicine; Europe, being less mature showing long
term strong growth potential
• US with c. 45% of Pet Healthcare market, most sophisticated with average spend per pet at c.$180 ($250 on dogs v. c.$100 global average, $120 on cats
v. c.$50 global average), pushed by fast development of specialty clinics
• Europe with c.25% of Pet Healthcare market, less mature than the US with average spend per pet at c.$110 and limited specialty vet services yet with
+8% p.a. '21-'26 growth, driven by humanization trends and pet insurance penetration (65% penetration in Sweden, 30% UK)
• Emerging countries experiencing strong growth driven by increasing pets' coverage by CPGs and pet medicalization though pet ownership and average
spend still vastly below mature markets
3
Market potential map
Daily Healthcare Emerging Healthcare
Size ('20, $Bn) 147
needs 69 8
Growth ('21-'26, p.a.) 4% 8% 16%
Retailers & Non-medical Veterinary Medical

Distributors Pet Food Pet Products services Pet Pharma clinics equipment Central Labs IoT/Wearables Insurance
Market attractiveness
• Size ('20, $Bn) 392 72 19 17 14 751 5 3 2 6
• Growth ('21-'26, p.a.) 4% p.a. 4% p.a. 5% p.a. 5% p.a. 9% p.a. 7% p.a. 9% p.a. 11% p.a. 12% p.a. 17% p.a.
Large but on lower Large and growing Large and growing Large and growing, Large and growing Large and Emerging, strong Relatively small Emerging with New market being
end growth levels new premium with nascent new growing, 11% for growth driven by but fast-growing strong growth for shaped with large
vs. other segments categories services (e.g. funeral) specialty US specialty care healthcare use cases potential
Stakeholder value creation

Growth potential, Existing fast- High growth High growth High-growth High growth High growth High growth High growth, Most promising
Growth, profitability, capital but margin (~6%) growing niches, potential, with potential, with potential with potential, high potential, with potential, high negative cashflow segment in
intensity, working capital expected to with high margin 10-15% high margins on high margins (20- margin (15-25%) high margins on margin (10-15%) business, funded insurance sector,
deteriorate due to ~20% and low profitability likely some segments 30%) protected by with value emerging expected to by investors; with double digit

online competition capital intensity to stay so and low and limited market's creation potential specialty-related further increase however high growth and
capital intensity capital intensity concentration and thanks to segments (large players potential for attractive loss
innovation consolidation with +4pp EBITDA data-related ratio
since 2015) services
Potential for consolidation

Phys. dominated by Top 2 players – Fragmented with Highly Top 4 players High consolidation Fragmented with Duopoly in the US, Fragmented, Opportunity for
large player. Room for Mars & Nestlé numerous players fragmented with ~70% market with potential in the US potential for Europe more market not consolidation while
online (yet low (c.40% market) and private labels potential for strong barriers to consolidation in fragmented with mature yet with market is being
market share for small Accelerating surgery/
challenged by consolidation entry consolidation trend in smaller national potential for shaped
players) niche players orthopedics players consolidation
Europe ("time is now")
4
1. Including sales of drugs, food and lab services; 2. Distribution margin ; Source: BCG analysis Relatively High Relatively Low
Healthcare segments, accounting for c.30% of total Pet care market in 2020,
experiencing strong growth at c.8% p.a. expected by '26
Pet care market: Global revenue breakdown
by category (2013 to 2026, $Bn) CAGR
13-18 21-26 Key growth drivers
320
6.2% 16% • Humanization of pets
18 Emerging 12%
• Push from insurance players and increasing vet
Healthcare1 clinics spend
4.0%
239 111
• Humanization of pets with impact on pet
223 Healthcare 6% 8%
3.9% 8 (35%) medicalization
207 8 • Vets specialization, available new treatments
5 75
69 and increasing insurance penetration driving
171

68 (31%) further medicalization and need for new medical
3 (31%)
51 (33%) equipment
(30%)
191 Daily needs 3% 4% • Food premiumization in mature countries (US,

147 155 Europe)
135
117 • Growth of non-medical services driven by
humanization of pets
• Increasing pet ownership in emerging countries
2013 2018 2020 2021 2026

1. Pet insurance and IoT / wearables for pets
Source: BCG Analysis 5
Total ~$45Bn profit pool; Healthcare segments with higher average margins of
~20%
Split of EBITDA Margin & Revenues per segment (2020, $Bn)

$45Bn
profit
pool
EBITDA
margin
Daily needs Healthcare
30% Avg Margin = ~20% Avg Margin = ~22%
25%
20-25%
15-20% 20-25%
20%
16%
10-15% 10-15%

10%
6%
0%
Distributors Pet Food Pet Product Pharma Vet Clinics Labs
& Retailers suppliers Suppliers Non-Medical Services edical Equipment
M
Revenues ($Bn)
Consolidation
potential
6
Pet care market profit pool expected to keep growing at ~7% p.a driven by
Healthcare segment, growing at ~10% p.a.
Acceleration due to revenue growth (+6% p.a.),
mix effect (most profitable segments growing faster CAGR
Profit pool breakdown of the global pet care market by e.g. clinics) and slight increase of profit margins for '13-'18 '21-'26
major segment ($Bn) some segments (e.g. clinics) due to consolidation &
specialization
+7% p.a. 65
+4% p.a. 27 ~40% 8% 10%

47
43 44 45
+4% p.a.
35 15 17
15 15
29

10
8
Healthcare: ~30%
38
28 29 29 30 ~60% 3% 5%
21 25
Daily needs: ~70%
2008 2013 2018 2019 2020 2021E 2026E
Overall market
139 171 223 318
size ($Bn)
Not relevant for emerging healthcare

Source: BCG analysis 7
Focus Healthcare: US market most attractive with higher pets per household,
spend per pet and high value specialty services – Europe and RoW less mature
Pets per household

USA: 5-10% of pets Market size
2.0 45% of healthcare spend
2020 2026
USA Specialty
RoW: Both number of pets
1.5 and spend per pet increasing
rapidly, driven by emergence
of middle classes and start of USA: Increasing pet population through
pet humanization "good for you" trend, and increasing
EU spend per pet driven by premiumization
$18Bn of products & services
1.0

RoW
EU: Convergence towards higher standard of care
0.5 as the US for key European countries (UK, France,
Germany); Specialty market limited to date
though could be developed in the mid-long term
supported by strong underlying demand and offer
push (including vets training) by vet clinics chain
0.0
0 100 200 300 400
1. Average spend per pet, taking into account dogs and cats mix by region (average spend for dogs on average 2X higher than average spend for cats)
Source: Euromonitor, BCG analysis Annual 8
spend/ pet ($)1

Executive Summary
Overview of Production vs Companion animal markets
Agenda Focus on Pet Care market
Deep dive on key segments

Appendix
9
Overview of production and companion animal markets
Global animal care market can be estimated at ~$575Bn in 2020, mainly divided into companion animals (~$225Bn, "CAs") and
production animals (cattle, swine, poultry, aquaculture, ~$350Bn, "PAs")
• Overall market has been steadily growing (both in # of animals and spend/animal) driven by socio-economic factors, increased
medication and technological innovation enabling new services
• These trends and dynamics have attracted investments from private-equity firms across segments
However, Production and Companion animal markets are different, with little overlap in terms of growth drivers, market dynamics,
success factors and players
• Wide gap in spend per animal: for example, in the US, ~$550/year for pets, ~$500-$1,000 for cattle, ~$60 for pigs and $2 for poultry
• Spend on CAs is ~40% Food, ~30% medical services, ~10% supplies, ~10% drugs whereas feed accounts for ~90% of spend on PAs
• Different clients (pet-owners vs. farm-owners), products (packaged pet food vs. feed stored in large mills), services, distribution
channels (vet clinics vs. visiting vets, specialized pet retailers vs. large distributors)

• As a result, players are mostly different, except in 2 segments: animal health pharmaceutical companies and laboratory equipment
• There are specific trends underlying each market
– For companion animals: socio-economic trends (millennials, urbanization, etc.) driving pet ownership, humanization driving
premiumization and increased medication
– For production animals: farming industrialization, rise of demand for protein in emerging market, etc..
• And success factors differ: Brand and access to vets are critical in Pets vs. product efficiency, access to farms, industrial operations in
production animals
Overall, Companion Animal seems a particularly attractive market, with healthy profit pools, attractive underlying trends
(humanization driving willingness to pay, premiumization) which suggest that growth and margins can be sustained in the long term
• On the contrary, seemingly higher pressure on margins in production animals, with fewer opportunities to differentiate and less
branding 10
Animal Care Market overview: Five primary species
Companion Production
Companion animal Cattle Swine Poultry Aquaculture
Primarily dogs, cats, Meat vs. dairy though vets Sows vs. piglets, though Primarily US, Eastern Few specialized markets
equine generally x-sector farms typically doing both Europe, and Asia (Norway, Chile, Asia)
Growth primarily driven Moderate growth Strong growth largely Continued growth expected

by increased pet spend expected, primarily driven by Asia (esp. China) through fish consumption
(also in Emerging Markets) through increased spend (fastest growing protein
per animal source)
Key figures
Yearly spend per
~$550 ~$500-1,000 ~$60 (2018) ~$2 (2018) n.a.
animal ($ – US data)
Population
~185M ~95M ~77M ~500M4 n.a.
(heads, US only)
Market size (US, B$) ~$95Bn5 ~$65Bn2 ~$19Bn3 ~$13Bn4 n.a.
Market size (Global, B$)~$225Bn1 ~$350Bn

1. Excluding equine (cats & dogs) 2. Beef cattle market 3. Hog & Pig farming 4. Chicken Population and Chicken Meat market 5. Incl. Canada Source: BCG, USDA, APPA, US Bureau of 11
Labor Statistics, IBIS World
Companion vs. production animal: Different spend mix across segments
eg. Food accounts for ~85% of spend on production animals vs. ~45% for companion animals
Companion animal Production Animal

Global pet-owner spending (%) Global producer spending (%)
Vaccines and medicines ~10% Vaccines and medicines 5%
Vet services
~25%
Diagnostics Surgery … Vet services 1%
Non-medical services
~10%
(Boarding, Grooming, etc.) Other health care,

x3 e.g., Nutrition1, Genetics/ 7%
breeding, Diagnostics
Pet supplies ~10%
Purchased feed 87%

Food ~45%
100%
Total 100% (~$225Bn) Total
(~$350Bn)
1. Nutritional feed additives

Source: BCG 12
Companion vs. production animal: Limited overlap of players due to differences
in business models
Segments Companion animal Key features Production Animal Key features
High profitability driven by Little differentiation,
exclusivity patent and/or competition on cost
Pharma suppliers
premiumization including from generics
international players
Packaged food, with a Feedstock

Food suppliers growing premium segment
Cat litters, toys, other • na na

Products suppliers
products and accessories
Distributors & retailers Mostly B2C Mostly B2B

Medical service providers Vets mostly in clinics • TBD Vets mostly on farm site
Diagnostics na na
Grooming, Boarding / • na na
Non-med service
Hotels, Crematoriums /
providers
Funerals
Platform to exchange tips, Tagging & monitoring to

Digital wearables to optimize pet's increase productivity
wellness, etc.
Source: BCG, companies websites 13

Companion vs. production animal: The 2 markets are subject to specific trends,
hence different key success factors
Key trends in Companion Animals markets Key trend in Production Animals markets
• Socio-economic trends pushing pet ownership and • Rise of demand for proteins in emerging markets,
pets humanization driving premiumization across while in developed economies, more and more
segments (food, medical and non-medical people considering vegetarian nutrition
services) and increasing spend • Increasing medication rates and push for prevention
• New high-potential segments with increase (e.g. vaccines)

penetration (e.g. insurance, specialty clinics, non- • Farming industrialization, targeting decreased
medical services etc.) production costs (increase in size of farms, increase
• Increasing coverage in emerging markets of pets in medication rates)
by CPGs and pharma manufacturers • Increased consumer awareness around animal
• Limited consolidation maturity across segments welfare e.g. decrease of antibiotics and hormones
with strong scale & ecosystem synergies use, need for traceability
• Strong resilience to COVID crisis for most • Advanced farming leveraging data-driven solutions
segments; most impacted already bouncing back (e.g. early detection of oestrus or farrowing,
(e.g. clinics & labs) treatment alerts) and advanced services
14
Executive Summary
Overview of Production vs Companion animal markets
Agenda Focus on Pet Care market

Appendix
15
Pet Care market Size & Growth
Pet care is a ~225B$ market comprised of Daily needs, Healthcare and

Emerging Healthcare segments
Size
Segment Short Description Key Players (2020, $Bn)
• Sale of pet products and services in physical
Distributors &
stores or online, specialist or not ~$40Bn1
retailers
• B2B Distribution/wholesale (e.g., for vets)
Daily needs
• Manufacturing & supply of pet food

Food suppliers • Includes value, standard, premium, nature, ~$70Bn
scientific, dietary supplements
• Manufacturing & supply of products such as cat
Products suppliers ~$20Bn
litters, toys, etc.
Non-med service • Incl. services such as breeding, grooming,
~$15Bn
providers boarding/day care, crematoriums

• Drug markers, often producing for both
Healthcare
Pharma suppliers ~$15Bn

pets and livestock
• Manufacturing & supply of machinery, Highly fragmented market – Ex.
Medical Devices &
consumables and software used by vet of players in specific segments ~$5Bn
Equipment
practices
Medical service • Mainly vet clinics (generalist and specialist)
~$50Bn
providers • Also incl. diagnostic labs & drug compounders
Emerging
IoT & wearables • Sale of wearables / connected devices <$2Bn
Healthcare
Insurance • Pet Insurers ~$5Bn
Note: Henry Schein (distributor) not existing since 2018 (brand only) 1. Distribution margin only to avoid double counting ~$225Bn
Source: BCG, websites 16
Pet care space can be subdivided in clusters providing products, services and
distribution
Daily needs Healthcare Emerging Healthcare
Size ('20, $Bn) 147 69 8
Growth ('21-'26, p.a.) 4% 8% 16%
Distribution Products Services Products Services Products Service

I II III IV V VI VII VIII IX X
Non-medical
Distributors Pet Food Pet products Pet pharma Med Devices IoT /
service Vet Clinics Central Labs Insurance
& Retailers suppliers suppliers suppliers & Equipment wearable
providers
~$29B ~$31B ~$4B ~$8B ~$2Bn ~$2B ~$42B ~$3B <$2B ~$6B
Distributors Standard Cat litters Pet grooming Anti-infectives Diagnostics Generalist Laboratories / IoT/ wearable Pet
pet food1 clinics Diagnostics insurers

~$57B ~$27B ~$15B ~$8B ~$4Bn ~$2B ~$6B ~$1B
Traditional Premium pet Other Boarding / Parasiticides Machinery Specialty clinics Drug
retailers food accessories Hotels / compounders
Day care
~$50B ~$11B <$1B ~$4Bn ~$1B
Specialty Treats and Crematoriums / Vaccines Software

retailers mixers Funerals
~$30B ~$3B ~$2B ~$3Bn ~$0.5B
Online channel Dietary Breeding Others Other Devices

supplements (Consumables, Ortho,
hard equip.)
Note: market sizes are estimated MSP values, Distributors & retailers are RSP 1. Incl. Standard 17
and Mid-Priced segment Source: BCG Analysis
~xB$ Market size
Healthcare segments, accounting for c.30% of total Pet care market in 2021,
experiencing strong growth at c.8% p.a. expected by '26
by category (2013 to 2026, $Bn) CAGR
320
6.2% 16% • Humanization of pets
18 Emerging 12%
• Push from insurance players and increasing vet
Healthcare1 clinics spend
4.0%
239 111
• Humanization of pets with impact on pet
223 Healthcare 6% 8%
3.9% 8 (35%) medicalization
207 8 • Vets specialization, available new treatments
5 75
69 and increasing insurance penetration driving
171

68 (31%) further medicalization and need for new medical
3 (31%)
51 (33%) equipment
(30%)
191 Daily needs 3% 4% • Food premiumization in mature countries (US,

147 155 Europe)
135
117 • Growth of non-medical services driven by
humanization of pets
• Increasing pet ownership in emerging countries
2013 2018 2020 2021 2026

1. Pet insurance and IoT / wearables for pets
Pet Care market Profit pool
Total ~$45Bn profit pool; Healthcare segments with higher average margins of
~20%
Split of EBITDA Margin & Revenues per segment (2020, $Bn)

$45Bn
profit
pool
EBITDA
margin
Daily needs Healthcare
30% Avg Margin = ~20% Avg Margin = ~22%
25%
20-25%
15-20% 20-25%
20%
16%
10-15% 10-15%

10%
6%
0%
Distributors Pet Food Pet Product Pharma Vet Clinics Labs
& Retailers suppliers Suppliers Non-Medical Services edical Equipment
M
Revenues ($Bn)
Consolidation
potential
Source: expert interviews, company reports, BCG analysis 19

Pet care market profit pool expected to keep growing at ~7% p.a driven by
Healthcare segment, growing at ~10% p.a.
Acceleration due to revenue growth (+6% p.a.),
mix effect (most profitable segments growing faster CAGR
Profit pool breakdown of the global pet care market by e.g. clinics) and slight increase of profit margins for '13-'18 '21-'26
major segment ($Bn) some segments (e.g. clinics) due to consolidation &
specialization
+7% p.a. 65
+4% p.a. 27 ~40% 8% 10%

47
43 44 45
+4% p.a.
35 15 17
15 15
29

10
8
Healthcare: ~30%
38
28 29 29 30 ~60% 3% 5%
21 25
Daily needs: ~70%
2008 2013 2018 2019 2020 2021E 2026E
Overall market
139 171 223 318
size ($Bn)

Focus Pet daily needs segments: Sustained growth of all segments driven by
increasing pet ownership and premiumization
CAGR
for Daily Needs segment (2013 to 2026, $Bn) 13-18 21-26 Key growth drivers
Total 3% 4%
4.2% (CPG CAGR) (1%) (2%)
5.7% 191
4.5%
2.8%
51
Distributors & 3% 4%
155
147 Retailers
135
41 • Product & Food premiumization (esp. in EU /
117 39
33 US)

29 Food Suppliers 2% 4% • Several socio-economical trends driving pet
92 ownership (esp. in emerging markets)
75
64 71
58
Products Suppliers 3% 4%
25
17 19 20
14
• Humanization of pets driving growth of non-
20 17 19 24 Non-Med Services 4% 5%
medical services, especially in the US
2013 2018 2020 2021 2026
1. Service formerly provided by family and friends, becoming a paid service

Focus Pet Healthcare segments: Strong growth driven by pets humanization and
emergence of specialty vet clinics in the US
Pet care market: Global revenue CAGR
breakdown for Healthcare segment
(2013 to 2026, $Bn) 13-18 21-26 Key growth drivers
Total 6% 8%
8.1%
111
8.8% • Humanization, longer pet life expectancy and push on
1.1% Pet Pharma 6% 9%
23 preventive medicine (e.g. vaccines)
5.8%
12 Speciality Clinics 12% 12%

75 • Humanization with impact on pet medicalization
68 69
15 • Increasing specialty segment and new treatments in

13 14 Generalist Clinics 5% 7% the US (+11% p.a.)
51 7
5 6
10 62
3
• Vets specialization & insurance penetration driving
Med Equipment 7% 9% increasing complexity with inspiration from human
45
44 42 medicine
34
9 • Increasing tests complexity driven by new treatments

5 5 6 Central Labs 11% 11%
1 2 3 3 5 and specialty clinics development
2013 2018 2020 2021 2026

Focus Pet Healthcare segments: US accounting for 45% of Pet Healthcare

market
CAGR
Pet Healthcare market split by
Geography (in $Bn) Total 6% 8%
+8%
111
• Humanization of pets
+9% 32 RoW • Increase in pet ownership and spend in
+1% 8% 8%
(29%) (Gen only) general pet healthcare
+6%
75
68 69 • Humanization of pets
22 29 Europe • Increase in pet ownership and spend in
20 (29%) (26%) (Gen only) 6% 8%

19
(29%) general pet healthcare
51 (29%)
• Development of pet insurance
13 20
(26%) 18 18
(27%)
(27%) (27%)
14 38
US Gen 4% 7%
(27%) (34%)
26 25 27 • Humanization of pets
22 (36%)
(38%) (36%) • Increased spend in general and
(42%)
6 7
12
US Spec. specialty pet healthcare
3 5
(10%) 12% 12%
(5%) (7%) (9%) (9%)
2013 2018 2020 2021 2026
Source: Euromonitor, BCG Analysis 23

Market profitability positive dynamics driven by Healthcare, other segments

with slightly lower margin growth
Pet care market: Global profit CAGR EBITDA margin
pool breakdown by segment 13-18 21-26 2020 Dynamics
(2013 to 2026, $Bn)
6.9% Total +4% +7 Key profitability dynamics
Distributors 3% 3% 6% • Increase of direct-to consumer & online
66 & Retailers channels putting pressure on traditional
4.8% physical players
1.8%
12 • Online players should start becoming
4.2% (18%) profitable
Food suppliers 2% 4% 20% • Overall stable margins, premiumization not
47 necessarily leading to higher profitability
43 45 18
10 Product suppliers 3% 4% 13% • Stable margins, limited effect of
10 (28%)
10 (22%) premiumization on products
35 (22%)
(22%)
Non-medical 4% 13% 13% • Slight increase of margins thanks to market

8 3 services consolidation
15 5
(24%) 13 14
(32%) Pharma 6% 9% 25% • Stable margins, protected by concentration
(30%) (32%) 6 and innovation
12
2 2 3 Vet clinics 8% 10% 23% • Expected to increase thanks to consolidation
(33%) 2
4 3 and use of new devices
2 4 18
3 3
3 (28%) Medical devices 7% 11% 10%-15% • Increasing complexity
2 11 11 12
7 (25%) Labs 11% 14% 21% • Increasing thanks to market concentration
(25%) (24%)
1 trends
(21%)
1 1 1 1 1 1
IoT/ wearables 10% 23% 10% • Increasing margins with products gaining
2013 2018 2020 2021 2026 maturity
Insurance 11% 26% 3% • Increasing with optimized risk control
24
Source: BCG Analysis
Pet Care market Growth drivers
Sustained growth of pet care market is driven by several mega trends
Socio-economic changes driving Humanization of pets driving Technology reinventing shopping

increase in pet ownership premiumization and better animal care and creating new opportunities
• Longer life expectation and • Pets are increasingly seen as members of the • E-commerce reshapes pet retail and
delayed childbirth are pushing family, as such creates new business models like
the need for pet companionship – owners are trading up to higher quality subscriptions and personalized nutrition
to fight loneliness food and premium services for the
wellbeing of their pet (grooming, • Connected and wearable devices offer
• Increasing disposable income daycare…) insights on pets for owners and vets, as
allows for spending on pet – owners increasingly treat their pets well as data that can be leveraged by

(preventive, surgery, therapeutic diets, many players (insurance, food
• Importance of social media etc.) suppliers, pharma with R&D…)
display incentivizes ownership of • Opportunities for medical services, incl. new
pets segments like insurance • New sectors are also emerging in
medical services with telemedicine
• Urbanization pushes for pet
ownership, as seen as having 99% 76%
relaxing benefits would spend
view pets as
any amount
a family
necessary to
member or
keep their
companion
pet healthy
25
Pet Care market Growth drivers Backup
Socio-Economic
Changes
Socio-Economic factors: Clear shift in ownership towards higher income

households across geographies
USA Germany China

PP change PP change PP change
20 20 20 11
9 7 5 5
4 2
-1 -3 -2 -4 -5 -8 -4 -1 -23 -19 -26
0 0 0
-20 -20 -20
-40 -40 -40

0-40K 41-60K 61-80K 81-100K 101-150K 150K+ 0-40K 41-60K 61-80K 81-100K 101-150K 150K+ 0-40K 41-60K 61-80K 81-100K 101-150K 150K+

Brazil Australia
PP change PP change
20
20 20
4 7
-2 -6 -2 -11 -2 -3 -2 2 -6
0 0
-20 -20
-40 -40
0-40K 41-60K 61-80K 81-100K 101-150K 150K+ 0-40K 41-60K 61-80K 81-100K 101-150K 150K+
Source: Euromonitor 26
Pet Care market Growth drivers
Humanization of pets
Premiumization: Pet food has one of the highest pricing spread across consumer
goods categories
Price multiple between low-cost product and high-end product on a French retail website
(comparison of price/kg or price/L)
52.9x
0.9€/kg 14.2x 13.9x
(Private label beef & veg.
dog croquettes – 10kg) 11.7x
Vs.
8.3x

12.8€/kg
(Gluten-free organic beef
& chicken dog croquettes
– 700g) 4.0x 4.0x
2.0x
Body cream Pet food Coffee Shampoo Whisky Pasta Baby food Dishwasher
from 8 tabs
months
Source: Carrefour.fr – as of September 24, 2019 27
Pet Care market Spend per pet
Increasing spend per pet in all geographies and shift towards Healthcare to the
detriment of Food, accounting for c.40% of spend by 2026 in EU and the US
Annual spend per pet 2013-2026 forecast ($ per animal per year)
CAGR CAGR CAGR

13-26 13-26 13-26
RoW
$688
$429
$551
$492 $381 1%
(55%) $336
$315 $228
(53%)
0%
$353

$322 (64%) $91
$209
(66%) $216 (62%) $71 $69
(69%)
$63 1%
$264 4% $165 5% $52 $49 (69%)
(38%) (38%) (73%) (71%)
$181 $110
$164
(33%) $89 3%
(33%) $25 $3
(33%) (28%) ($18) ($1) $19 $2
$17 $43 $9 $18 $36 11% (28%)
13%
$5
(6%) 18% (8%) (26%) (1%) (27%) (2%) (3%)
(1%) (3%) (3%) (5%)
2013 2020 2026
2013 2020 2026 2013 2020 2026
Daily needs Healthcare Emerging Healthcare

Source: Euromonitor, BCG Analysis 28
Pet Care market Resilience
Overall positive impact of COVID on PetCare market, esp. on Food & Products
sales and Ownership; Healthcare services already recovering from lockdown
Pet Food & Products markets Lockdowns & social distancing Vet Clinics already strongly
experienced strong growth increasing ownership trend recovering from 2020 struggle
Global pet food market vs Real GDP 2018- Global vet services market (in $bn)
2021 (%) • COVID crisis has accelerated +7.0%
increasing ownership trend (esp.
% cat adoption) with people looking +8.4% 115
+5.5% -6.5%
to fight loneliness & additional
10%
activities 82
6.4 76 81
75
• In the US, pet ownership rose to
5%

70% of US households according to
the Appa (vs 67%)
0% • In the UK, the PFMA COVID survey
-3.5 has shown that 19% of 24-35 yo
(2.1M people) have welcomed a
-5% pet during lockdown 2018 2019 2020 2021 2026
2018 2019 2020 2021
• 2020 impact on vet services due to

World Real GDP Pet Food Market Growth reduction of activities (postponed visits)
• Expected recovery in 2021
Source: Euromonitor; APPA; PFMA (Pet Food Manufacturers’ Association); BCG Analysis 29
Pet Care market Competitive landscape
Four major players accounting for ~20% of total PetCare market, leaving space
for a new player to create Platforms in the remaining 70%
70% remaining opportunity for

20% of market held by 10% consolidation in clinics, diagnostic labs,
4 major players other large players medical devices & pharma
Nestle BI Animal Elanco IVC

Mars Purina Covetrus Zoetis Health Bayer M erck Idexx Evidensia NVA CF Rest

Total PetCare
7% 6% 2% 3% 2% 1% 2% 1% 72% C.$225Bn
Market
1%1%1%
Generalist platforms (food, Pharma Vet clinics

clinics, diagnostics, …)
Diagnostics

Pet Care market Competitive landscape
Dynamic M&A activity on Pet Care market, with 490+ deals since 2015
representing over $25Bn in investments, mostly in Pet Food
Top 3 deals diversified between clinics, pet

Dynamic M&A activity overview 2015- Sept. 2021 food and pharma
$9.1Bn Clinics
490+ # of deals closed involving PetCare 2017
companies Food
$8.3Bn
2018
$6.9Bn
2020
Pharma

~25 Sum of total transactions value
Bn For ~50% of deals for which amount was disclosed
2 1 3
Share of deals involving Pet Food
~35% targets, most represented category
Source: Capital IQ, Carleton McKenna, BCG Analysis 31

Executive Summary
Daily Needs
Pet Food
Non-Medical Services
Healthcare
Agenda Pet Pharma

Vet Clinics
Medical Devices & Equipment

Diagnostics Labs
Emerging Healthcare
Pet Insurance
IoT & Wearables
Appendix
32
Executive Summary
Daily Needs
Pet Food
Healthcare
Agenda Pet Pharma

Vet Clinics

Diagnostics Labs
Emerging Healthcare
Pet Insurance
IoT & Wearables
Appendix
33
Executive Summary – Pet Food
Large ~$72Bn market still growing at ~4% p.a., globally concentrated and competitive; yet many emerging
premium segments with potential attractive M&A opportunities
• ~$72Bn market in 2020 with US & EU as largest markets with $48Bn; Largest segment of global pet care market (~30%)
• ~4% p.a. '13-'20 growth (vs. CPG market at 2% p.a.) sustained by solid drivers on volume (pet demography, longer pet life
expectancy, pet food penetration) and price (premiumization). Similar pace expected over '21-'26
• 14B€ profit pool (15-20% EBITDA margin), premium food categories being the most profitable
• Ongoing sophistication of Pet food products range, with emergence of new premium categories: fresh & organic pet food, specific
diets foods (gluten or protein-free, age-specific, etc.), functional foods (skin & coat, digestion, immune system, teeth & tartar
prevention, …)
• Top 2 players (Mars & Nestlé) accounting for ~40% of the market, yet challenged by successful innovative new entrants (e.g. Blue
Buffalo) positioned on premium segments
• Many potential M&A opportunities as demonstrated by recent PE and large pet care companies' acquisitions

34
Pet Food Market Overview
Pet food market of ~$72Bn with expected CAGR of ~4% p.a. by 2026, showing
strong resilience during COVID and better performance than CPG indexes
Global pet food market 2014-2026 ($Bn) Global pet food market 2014-2026 vs Global Real GDP & Packaged
Constant 2021 Prices Food Spend (%)
World Real GDP
$Bn % Pet Food Market Growth
120 10% Packaged Food Spend per Household Growth
4.1%
100 91.8 6.7
4.0% 4.9%
84.4
75.0 78.0 5%
80 71.5
64.4 67.0
60.7
56.5

60
40 0%
20 -3.5
0 -5%
2014 2016 2018 2019 2020 2021 2022 2024 2026 2016 2018 2019 2020 2022F 2024F 2026F
32%
of global PetCare
Market
Note: Pet Food = Dog & Cat Food + Other Pet Food (Bird, fish and small mammal / reptile food) Source: Euromonitor; Oxford Economics; BCG Analysis 35
Pet Food Market Overview Key Drivers
As for Global PetCare market, pet humanization phenomenon as main driver for
Pet Food growth, driving ownership & food premiumization
Growing number of pet owners due to higher Dog & Cat population (M of heads)
Increased Pet Ownership, willingness for companionship, increasing income 598
esp. in emerging markets for spending and rising empathy lead to more 2016 2021
adoptions 475
Pet longer life expectancy Owners now treat pets as family members, driving
Volume
due to higher pet health demand for premium food, healthcare services &
Drivers 153 176
concerns products 110 121
Emergence of millennial pet owners already USA Western RoW

E-Commerce development
preconditioned to online shopping. Trend highly Europe
eases purchase process &
reinforced by COVID crisis, with ~25% of sales

increase food accessibility CAGR 1.8% 2.7% 4.7%
from e-commerce in 2021 (vs 7% in 2026)
Pet Food
Market Share of price segments in pet food
2 trends driving food premiumization: market (%)
• Increased demand for organic & natural pet
2016 2021
food with higher quality & safety standards 39%
Strong food premiumization 36%
Price than regular food
as pet owners are looking for 28% 27%
Driver • Pet personalization (mostly in developing
human-like food quality 19%
markets) with tailor-made nutrition to better 16%
control ingredients and address pet-specific
conditions (dry skin, obesity, aging, etc.)
Standard Mid-Priced Premium
1. Not equal to 100, remaining represents private label
Source: Euromonitor; Global Pet Food Market report; BCG Analysis 36
Pet Food Market Overview Geographical Split
US & Europe established markets to keep growth dynamic, emerging markets as

potential growth reserve in the coming years
Global pet food market split by geographies 2018-2026 ($M) CAGR Key Comments
$M 13-18 21-26 • North America to keep leading
+4.1%
position with increasing positive
100
attitude towards pets and presence
91.8
+4.2% +4.9% of largest food manufacturers (Mars,
84.4 Nestlé, JM Sucker) promoting
78.0 18.5 RoW 4.1% 5.5% growth. Slower ownership growth
80 75.0
71.5 16.6 due to already high rate (67% of
14.9 households in 2021)
64.4 14.1
60.7 13.4 18.4 Asia Pacific 11.1% 10.7% • Already high ownership rates in
60 11.9 15.1
Western Europe (~25% of
12.3

11.0 11.1
10.0 households in France, 20% in the
6.7
8.3 Western UK). Market growth driven mainly by
19.3 -0.1% 1.6%
18.1 18.7 Europe increasing demand for treats &
40 17.6 17.8
16.8 16.8 premium human-quality food (both
67% of
segments with ~3% CAGR 20-26 vs
market in
0.1% for Standard & Mid)
2021
20 North • Rising disposable income, living
32.0 32.7 34.0 35.5 2.4% 2.2%
26.2 27.4 30.4 America standards improvement, rapid
urbanization and e-commerce
development as main growth factors
0
in emerging economies
2016 2018 2020 2021 2022F 2024F 2026F
Source: Euromonitor; APPA; Global Pet Food Market report; BCG Analysis 37
1.3%
1.1%
181
136 154 164
118 130
6.7%
45
19 25
Discrepancies in terms
of spend per pet 2013 2020 2026 2013 2020 2026 2013 2020 2026
across geographies,
Zoom Higher spend per dog in the US due to a combined
overall balanced next slide volume & price effect: (i) 1.5x higher food volume
between dogs & cats (ii) 15% higher price

except for the US
1.3%
340 1.5%
320
289 209
172 188
2.6%
30 33 42
2013 2020 2026 2013 2020 2026 2013 2020 2026
Note: spend per pet based on retail sales 38

Source: Euromonitor; BCG Analysis
Back-up | Higher volume and price for dog food in the US vs Europe
Although slightly declining, volume of food per dog Dog food in the US ~13% more expensive than in EU
still 1.5x higher in US than in Europe due to overexpressed premiumization
Food volume per pet per year (kg/pet) Food price per Ton ($/T)
Kg/pet $/T
100 5,000
Dog USA Cat EU

1.5x on average Cat USA
Dog EU 4,000 Dog USA
50
Cat EU +13% on average
Dog EU
Cat USA
3,000
0
2015 2020 2025 2015 2020 2025
Source: Euromonitor; BCG Analysis 39

Pet Food Market Overview Zoom US
$28Bn US market accounts for ~40% of global Pet Food and should keep growing
at historic rate of ~2% p.a. by 2026, in line with other economic factors
Global pet food market 2014-2026 vs Global Real GDP & Packaged
USA pet food market 2016-2026 ($Bn) Food Spend (%)
US Real GDP
$Bn % Pet Food US Market Growth
40 2.1% 15% Packaged Food Spend per US Household Growth
3.7% +5%
32.7
30.2 31.3
29.5
28.0 10%
25.3 26.2
24.1 6.8
22.6

20 5%
0%
-3.4
0 -5%
2014 2016 2018 2019 2020 2021E 2022F 2024F 2026F 2016 2018 2019 2020 2022F 2024F 2026F
~40% of global Pet

Food Market
Note: Pet Food = Dog & Cat Food + Other Pet Food (Bird, fish and small mammal / reptile food) Source: Euromonitor; Oxford Economics; BCG Analysis 40
Pet Food Market Overview Market trends
Clear consumption shift towards e-commerce and Premium food, resp.

accounting for ~20% and ~40% of the market, overexpressed trends in the US
Tripled market share of e-commerce in 5 years, Continuous trade up, Premium food accounting for 40%
reaching up to 20% of market in 2021 of the market, ~50% excl. Other Pet Food & Treats
Global pet food market split by Pet food market split by segments 2016-
CAGR
distribution channels 2016-2021 (%) 2021 ($Bn)
75 Total 4% 4%
100
100% 100% 32% CAGR for e- 18%
Other Pet Food &
7% commerce 61
Treat & Mixers
6% 20% 60

5%
18% 16% Standard 2.8% -0,2%

23% of market, 19%
42% CAGR 40 27% Mid-Priced 4.9% 2.1%
50
87% 28%
75%
20
E-Commerce
39% Premium 7.5% 6.5%
Non-retail channels 36%
Store-Based Retailing 44%
0 0
2016 2021 2016 2021
Source: Euromonitor; BCG Analysis 41

Pet Food Competitive Landscape
Consolidated market, highly dominated by Mars & Nestlé accounting for 40%+,
yet slowly losing market share to emerging players
Global pet food market split by players 2016-2021 (%) Market Share
gain 2015-2020
100.0 100.0 100.0 100.0 100.0 100.0
23.1 22.7 22.4 22.1 21.8 21.4 -1.7 pts
20.3 19.8 19.8 19.8 -1.6 pts

21.4 20.8
+0.2 pts
4.7 4.6 4.5 4.6 4.9
4.7 3.5 4.1 4.0 4.0 +0.1 pts

3.9 3.6 2.4 2.5 2.6 2.9
2.1 2.3
10.6 10.3 10.3 10.0 9.8 Acquired by
+0.8 pts
10.9 GenMills in 2018
Private Labels -1.1pts
33.9 35.3 36.5 36.7 37.2 37.2

Other players +3.3 pts
2015 2016 2017 2018 2019 2020
1. Excluding Other Pet Food and Treats & Mixers Source: Euromonitor; BCG Analysis 42
Pet Food Competitive Landscape Zoom USA
Top 5 players covering ~70% of the market, Blue Buffalo as fastest growing
player in terms of market share leveraging premium positioning
USA pet food market split by players 2016-2021 (%) Market Share
gain 2016-2020
100.0 100.0 100.0 100.0 100.0 100.0
29.3 29.0 28.1 27.3 27.2 27.3 -2.0 pts
19.2 19.3 19.1 18.8 -0.3 pts

19.1 19.2
+0.0 pts

10.0 9.2 9.0 10.7 10.3 10.0
Acquired by
5.9 6.3 6.6 6.9 7.5 +2.0 pts
5.5 GenMills in 2018
7.1 6.9 6.6 6.5 6.8 7.4 +0.3 pts

10.1 9.8 9.9 10.0 9.9 9.3 Private Labels -0.8 pts
18.9 20.0 20.9 19.6 19.8 19.7 Other players +0.8 pts
2015 2016 2017 2018 2019 2020
1. Excluding Other Pet Food and Treats & Mixers Source: Euromonitor; BCG Analysis 43
Pet Food Key success factors
1
Product experience
Strong core products with recognized quality & recipes, enabling to
develop further adjacent products (not necessarily requiring innovation)
Human-like quality ingredients and / or niche recipe justifying premium

and creating unique tasting experiences for pets
Functional benefits: e.g., allergy relief, dental care, appetite stimulation,

calming, digestive health etc.
2 key success factors Sustainable impact both in terms of ingredients (organic, traceability) and
to win in the Pet Food packaging (biodegradable, etc.)
market

2
Physical & Online Availability
Strong physical retail presence and best-in-store placement to maximize
impulse in traditional players (Walmart, etc.)
Omni-channel expertise to reach consumers through alternative channels

(e.g., vet prescriptions, e-commerce)
Ability to increase referencing in leading marketplaces (Amazon, Chewy)

or to expand into online direct–to-consumer sales to bypass intermediaries
44
Pet Food Key Success Factors Product Experience
Among emerging or niche segments in Pet Food, new feeding formats &
functional food on the most dynamic growth trajectory
Dry Food Wet & Canned Food Treats New feeding formats
Freeze
• Natural food on the market for a few years, growing in line with the whole pet food market, slightly slowing down Dried & New format vs
Natural & • Frozen
Organic still a small part of the market yet growing relatively fast (c. high-single digit), mostly from new players, heated food to
Organic
complex segment for large player requiring to review & adapt production process preserve nutriments
Fresh & & recreate a
Prepared "natural" way to eat
• Feeding with functional benefits (joint treat, weight loss, ageing-dogs, etc.) or specific ingredients formulas
Functional Food (Limited Ingredient Diet, protein-free, gluten free, etc.)
& Specific Diets • Particularly appreciated from pet owners as it answers both the need to feed and to cure (+ treat for functional Supplements
treats)

Expensive food, vet prescription Dental
Veterinary only, benefitting from longer pet
Diets Treats
life expectancy Oils, Mostly
• Historical & larger treat Creams complements to
segment also benefitting from & Balms
High Specific high-protein diets for real food (favor
new trends (vegan, powder,
Performance sports / active pets enhancement,
new formulas e.g. CBD) Soups & etc.), relatively
Liquids small segment yet
• Relatively small segment to date, new recipes emerging based on insects, vegan / vegetarian food, new proteins
Alternative on the high-end
• Growth mostly on new proteins (e.g. insects) recipes rather than no-protein formulas, pets being historically carnivores with Sprays
Recipes price range
limited appetence for meat-free food
Green &
• Still unclear if concrete move from manufacturers or emerging trend on customer willingness to "see" green packages yet not ready to pay for it
Reusable • Likely to be more and more developed on large food packages where price impact should be lower
Packaging
Mid-single digit growth, in line with market High-single / low-double digit growth High-double digit growth 45
Source: Open Research; ; Expert Interviews; BCG Analysis
Numerous mid & small-sized players positioned on these new products trends
& niche segments
Small & mid-sized brands only – Non exhaustive
Freeze
Dried &
Natural & Frozen
Organic
Fresh &
Prepared
Functional Food
& Specific Diets Supplements

Dental Oils,
Veterinary
Treats Creams
Diets
& Balms
High Soups &

Performance Liquids
Alternative
Sprays
Recipes
Green &
Reusable
Packaging
46
Back-Up | "Product" view on new segments for small & mid-size players
Small & mid-sized products only – Non exhaustive
Freeze
Dried &
Natural & Frozen
Organic
Fresh &
Prepared
Functional Food

Dental Oils,
Veterinary
Treats Creams
Diets
& Balms
High Soups &

Performance Liquids
Alternative
Sprays
Recipes
Green &
Reusable
Packaging
47
Top players also expanding through in-house developments or M&A

consolidation moves, yet with limited presence in some segments
Mars & Nestlé Brands – Non exhaustive
Freeze
Dried &
Natural & Frozen
Organic
Fresh &
Prepared
Functional Food

Veterinary Dental Oils, Creams & Balms
Diets Treats
Soups & Liquids
High
Performance
Alternative
Recipes Sprays
Green &
Reusable
Packaging
Mars Brands Nestlé Brands Acquired Brands (vs historical brands) 48

Back-Up | "Product" view on new segments for Mars & Nestlé

Mars & Nestlé Products – Non exhaustive
Freeze
Dried &
Natural & Frozen
Organic
Fresh &
Prepared
Functional Food

Dental Oils,
Veterinary
Treats Creams
Diets
& Balms
High Soups & Sprays

Performance Liquids
Alternative
Recipes
Green &
Reusable
Packaging
Mars Brands Nestlé Brands Acquired Brands (vs historical brands) 49

These small players are attractive M&A targets for major players and PE
Illustration of selected deals – non exhaustive
Nestlé steps into digital & complements Pet Food emerging players also attract
Purina's portfolio with new Premium brands Investors & Private Equity funds attention
2018 • Direct-to-consumer & tailor-made dog food
• Acquired majority stake to enter both 2021 Deal value Natural & Organic
personalized pet food & online markets at not disclosed
Deal value the same time
not disclosed
Natural & Organic Functional Online only
2020 Deal value
Other Pet Food1
not disclosed
2017
Deal value
not disclosed Natural & Organic

• 2 deals to develop Premium natural pet food
Functional Vet Diets Deal value
segment and complement existing Purina's 2020 Functional
not disclosed
Supplements brand portfolio High Performance
• Lily's Kitchen ~$105M sales, Terra Canis ~€20M
2020 sales (2017)
• Both companies continue to run as
Deal value Natural & Organic
autonomous company
not disclosed 2020 $50M
Functional
Functional Dental
Natural & Organic

Natural & Organic
Since the acquisition of P&G Pet Food segment (IAMS, Eukanuba, Natura) in 2014, 2017 ~$780M
Mars has focused investments on Pet Health (clinics, labs, etc.) Fresh & Prepared
50
1. Equine, rabbits, ducks, small birds, etc.
Source: Capital IQ; Open research
Pet Food Key Success Factors Online Availability
Shifts in consumption habits

… and fostering emergence of pure
highlighting the need for robust
players & marketplaces
online presence …
Development of internet and increased accessibility • Raised $39M in 2019, largest Serie B
2014
across geographies boosting e-commerce as found for Pet Startup
distribution channel
• Leader in plant-based dog food
PetFood 2017 • Secured $23M funding for 2021
Growing number of millennials pet owners, pre- Pure • 700% growth 20-21
Players
conditioned to online shopping
• Made in France, personalized and
2018 subscription-based dog food
Direct-to-consumer trend forcing manufacturers to • €7M Serie A and 20% growth in 2020
embrace DTC models (57% in 2019) with effective
impacts in terms of brand awareness, customer

knowledge & data, time to market, etc.
Acquisition of Tails.com by Nestlé in 2018 to enter direct-to-
consumer market and complement Purina's online shop (see
Online sales benefitted from physical retailers' previous slide)
shutdowns during COVID crisis
• Dedicated online retailer of pet food & pet-

related product, with ~$7Bn revenues
Dedicated
• Acquired by Pet Smart in 2017 ($3.3bn –
Share of online sales market Marketplaces largest e-com acquisition at the time)
20% share in 2021, x3 vs 2016 (7%) • Covering 50% + online sales in the US
51
Source: Open research; Euromonitor; BCG Analysis
Executive Summary
Daily Needs
Pet Food
Healthcare
Agenda Pet Pharma

Vet Clinics

Diagnostics Labs
Emerging Healthcare
Pet Insurance
IoT & Wearables
Appendix
52
Executive Summary – Non-medical services
$4Bn+ pet boarding & day care market in the US with some national chains emerging, offering strong synergies with other
segments
• ~6% p.a. '21-'26 growth driven by additional services offered at boarding centers
• Still very local and fragmented, however some national chains emerging (e.g. Camp Bow Wow owned by Mars) with opportunity to achieve
scale synergies
• Strong synergies with other pet care segments:
– Vet clinics since vets play a role in referring boarding sites
– Boarding activity could be an opportunity to capture data on pet activity beyond clinics
$6Bn+ and growing grooming centers market, with less strategic investment since economies of scale and synergies with other
segments appear limited
• Steady growth in the US (largest market with c.35%) driven by rising importance of pet health, wellbeing and appearance
• Highly fragmented market (stand-alone salons, mobile groomers) increasingly captured by pet specialty retailers offering grooming services
in their B&M locations

• Limited economies of scales (procurement, admin) since owners not loyal to a brand
• Some synergies with pet foods & products but limited synergies with vet clinics as they generally don't play a role in grooming referrals
Small <$1Bn (in the US) funeral & crematorium emerging market offering synergies with rest of Ecosystem
• Nascent but growing market with expected +6% p.a. growth '21-'26
• Players appear to be traditional funeral homes expanding in the pet business (15% of funeral homes in US offer pet death care services) yet
with a few emerging pure players
• Synergies with other pet care services since vets play a role in referring crematoriums, or clinics can be customers themselves
Less attractive small $2Bn breeding market declining at -3% p.a. and with limited strategic value in ecosystem
• ~25% of dogs and less than 5% of cats sourced from breeders
• Highly fragmented market with local players
• Pet breeders are key influencers for diets, insurance, vet clinics, early treatments and medication – however single touchpoint only with 53
pet owner
Non-Medical Services Market attractiveness Market Size & Growth
Boarding | US boarding and daycare services market estimated at $4Bn and

expected to grow at a 6% p.a. CAGR over 2021-26
US boarding and daycare services market expected to grow Pet boarding market benefits from the humanization of
by 4% over 20-26 pets and the increase in demand of high value services
Estimated US boarding & daycare services market (2018-2026, B$) • Key trends:
• Market being shaped driven by new offers push
(people used to ask friends/ family to keep their
+6% pets while away)
-19% 6.3
• Humanization of pets increasing demand in volume
+8% +9% 5.9 and in value of services (eg: luxury boarding
5.6 services)
5.3 5.3
5.0 5.0 • Premiumization of services offered at boarding
4.7

4.3 centers
3.6
• Increasing travel with impact on boarding services
• Covid Impact:
• Shelter-in-place orders required many operators in
the Pet Boarding industry to temporarily close early
in 2020
• As people spent more time at home during the
COVID-19 pandemic and limited travel, demand for
pet sitting and boarding declined
2014 2018 2019 2020 2021 2022 2023 2024 2025 2026
• Slow rebound after COVID-19 due to increase of
home office reducing needs for daycare services
Source: IBISWorld ; BCG Analysis Slow rebound 54
after COVID-19
Non-Medical Services Competitive landscape Potential for consolidation
Boarding | US Pet Boarding market is highly fragmented with first emerging

chains with no significant share of the market to date
Market 2020 Countries of
# Centers Share Revenue Margin Services Operation Ownership
Boarding, daycare,
Camp BowWow 213 1,5% $122M 10-15% grooming, training, US
and retail
Daycare, boarding,
Dogtopia 120 <1% $64M 10-15% training, spa, US
grooming, and retail

Daycare, boarding,
Privately
Furgetmenot 120 <1% $21M 10-15% training, god walking, US
owned
pet sitting
BestFriends Boarding, bathing, Privately

52 <1% $18M 10-15% US
Pet Care grooming owned
VCA Range Pet Boarding, grooming,

1 n.a. n.a. n.a. US
Lodge day care, training
Source: Company Information ; IBISWorld ; BCG Analysis 55
Non-Medical Services Strategic rationale
Boarding | Boarding is a highly local market, however there is value in creating

national players
Highly local market Upsides of creating large chain of boarding / daycare centers
• Value in creating a strong brand image with standards of

Boarding and daycare business is quality recognized by pet owners
highly local as convenience of Create strong • Potential for stronger / more efficient marketing campaigns
location is the main driver of choice brand image to attract new customers
for pet owners
• Cyclical business with peak seasons (summer / winter
holidays) where some centers are overbooked
Target customer is located at • Creating a network of boarding / daycare center allows to
a 15 minutes drive from Optimize center better manage capacity by redirecting customers to another

capacity
home / office to boarding center or dispatch pets in partner centers
location
Boarding market expert • Potential to create cost synergies with scale (admin support,
procurement…) and reduce cost
• Price sensitive market, hence higher value for money can be
Gain economies a differentiating factor
of scale
• Vets often involved in choice of boarding center, as they have

a view on those providing maintaining dogs in good health
• With strong brand and systematic relationship building with
Get referrals
Source: IBISWorld ; BCG Analysis from vets vets, opportunity to benefit from referrals 56
Grooming | Global pet grooming services market estimated at $6Bn and

expected to grow at 6% p.a.
Global grooming services market expected to grow by 6% over

21-26
CAGR
Estimated Global grooming services market (2016-2026, B$)
16-19 21-26 • Market can be segmented in 3 segments:
+6 %
• Bathing and brushing (higher share of
9.8 the market, 46% in in 2019)
+5 % -19 % 9.2 • Nail trimming (higher growth, 8% p.a.
+17 % 8.7
8.2 '21-'26)
7.6 7.7 4% 5%
7.2 7.2
3.4 • Others
3.3
6.5 3.1
6.2 3.0

2.7 2.8
2.6 2.7
2.4 2.2 • Key trends supporting market growth
– Rising importance of pet health and
6% 7%
6.4 wellbeing
5.6 6.0
4.6 4.9 4.8 5.2 – Increasing pet population
4.1 4.0 4.5
– New fashion trends
2016 2018 2019 2020 2021 2022 2023 2024 2025 2026
US -35% of total market in 2020 RoW

Source: Grand View Research ; IBISWorld ; BCG Analysis 57
Non-Medical Services Competitive Landscape Key players
Grooming | Pet grooming services is a fragmented market, increasingly captured

by pet specialty B&M retailers
B&M retailers capture most of the of pet grooming

services
Split of providers of pet grooming services
• 34% of the market captured by Pet grooming services
34%
in specialized Salon / Spa
~50% of pet owners go to pet specialty B&M retailers – Within this category, market is highly fragmented
with thousands of groomers operating in stand-
21% alone salons
16% 16% • C. 50% of the market captured by Pet specialty B&M

14%

retailers offering grooming services at their locations
– This offering attracts customers as it is time
saving (buy pet supplies while pet gets groomed)
• Average EBITDA of players is 10-15%

Salon / Spa PetSmart PetCo Stores Veterinary Independant
specializing Stores offices Pet Stores • Characteristics of the market :
in grooming – Low barriers to entry (no legal barriers, no R&D
costs and small initial capex needed)
– Low stickiness to brand, customers being more
loyal to groomer
58
Source: Packaged Facts' January/February 2018 Survey of Pet Owners ; BCG Analysis
Cremation & funeral | Emerging US funeral and cremation services market,

estimated at $0.7Bn in 2020 and expected to grow at a 6% CAGR over 2020-26
US funeral and cremation services market expected to Pet cremation services market is driven by pet population
grow by 6% over 20-26 increase & increasing penetration of individual cremation
'21-'26
Estimated US funeral and cremation services market (2018-2026, B$) Rationale
trends
Pet population Increasing pet ownership
+6%
Volume % of death every Slightly increasing life
0.9 (Annual number of
0.9 year expectancy
0.8 cremated pets)
+14% 0.8
0.7 Growing tendency with
0.7 0.7 % of cremated

higher pet budget and
0.6 animal humanization trends
0.5
0.4
Increasing demand of
Individual cremation individual cremation. At
Mix / Price Higher prices ~35% in UK and ~50% in US
(Average price of
cremation services) Switch from collective to
Collective cremation
individual cremation with pet
2016 2018 2019 2020 2021 2022 2023 2024 2025 2026 Lower prices
humanization trends
New entrants with potential Favorable mix evolution

negative impact on unit price
Source: IBISWorld ; BCG Analysis 59
Non-Medical Services Competitive landscape
Cremation & funeral | Pet cremation and funeral market is highly fragmented
with no consolidation yet
Barriers to entry
2020
Revenue Locations Services
Capital intensive activity
18 Cremation, funeral,
<$5m
memorial products
• Initial investments: at least ~€2-3M for
construction & equipment
Cremation, funeral, • Regular CAPEX investments: ~15 years machine
<$5m 12 ownership
memorial products
• Example: Funecap will invest €5M to build a pet
crematorium in Bretagne

10 Cremation, funeral,
<$5m
memorial products
Regulatory and administrative burden
Cremation,
<$5m 4
memorial products
• Several years of procedures and public inquiries
on impacts on environment, public health and
Cremation, funeral, public order before delivery of administrative
~$4m 3 authorization
memorial products • Common opposition from residents due to
unsatisfying cost-benefit balance: visual and
chemical pollution and limited job creations
Source: Company Information ; BCG Analysis 60
Non-Medical Services Competitive landscape
Cremation | Several value creation levers at … providing additional

company level… synergies
Pricing optimization: +4% p.a. for main operators in human cremation, as increased
spending following " pet humanization" provide favorable underlying trends in companion Topline
animals businesses.
Prices depends on type of cremation (communal cremation ; individual cremation ; • Increase average basket with
private cremation) complementary services
• Limited impact on current
selling process (currently:
B2B2C through vet)
Build-up to gain scale: ~80% of costs from salaries & purchasing (at par) that could

be optimized through reorganization of the business & centralization of flows (e.g. cf.
what was done by laboratory businesses)
Bottom-line
Side funeral services: many cross-selling possibilities: • Improve EBITDA margin with
• Material :boxes, pictures, souvenirs contributive activity (~35%
• Immaterial: on-site pick-up, Pet compassion care line (24/7 service)
…up to 600€ by animal most expensive cremations
EBITDA margin1 )
Source: Experts calls ; Desk research ; BCG Analysis 61

Breeding | Global breeding services market expected to decline at a 3% p.a.

CAGR over 2020-26, due to a shift towards shelters and adoption groups
Global breeding services market expected to decline by 3% Pet breeding market is declining due to a shift towards
over 20-26 shelters and adoption groups to adopt a pet
Estimated global breeding services market (2018-2026, B$)
• Many pet stores that work with breeders have either
shut down or stopped selling pets altogether
-2%
2.3
2.2 -3% • Over the past five years, demand for animal rescue
2.1
2.0 1.9 1.9
shelters has been steadily growing
1.8 1.8 1.8 1.7
• Growing concern about puppy mills has contributed to

the declining number of industry companies
• Public concern about puppy mills is likely to continue

driving consumers away
2015 2018 2019 2020 2021 2022 2023 2024 2025 2026
Average EBITDA: 5-10%
Source: IBISWorld ; BCG Analysis 62
Non-Medical Services Competitive landscape Potential for consolidation
Breeding | US Pet breeders' market appears not to be fit for consolidation and
in decline due to new consumer views and behaviors regarding pets
Breeders represent a small Increased disregard for breeders

The market is highly fragmented portion of adopted pets due to humanization of pets
• Market is highly fragmented with • According to APPA US Survey, only • Along with the humanization of
~2000 federally licensed dog one quarter of dogs adopted come pets comes an increasing trend of
breeders in the US from breeders in 2018 (vs. 34% in "adopt don't shop"
2016) and ~4% for cats
• In addition, there is a large • As pets are viewed as human, they
32%
shadow market with unlicensed should be saved from shelters
28%

breeders (~8000 structures) and (where overpopulation leads to
25% 26% 25%
individuals operating on their own 22% millions of dogs being euthanized
each year) rather than bought
from puppy mills
12%
9% • Lobbying from animal associations
such as PETA or The Human
4% 4%
Society has an impact on
customers behaviors
Friend Breeder Shelter R
escue Stray
Group
Source: 2015-2016 and 2017-2018 APPA Survey ; BCG Analysis

Dogs Cats 63
Executive Summary
Daily Needs
Pet Food
Healthcare
Agenda Pet Pharma

Vet Clinics

Diagnostics Labs
Emerging Healthcare
Pet Insurance
IoT & Wearables
Appendix
64
Executive Summary – Pet Pharma
Pet Pharma is a ~$13Bn, growing and profitable market, but highly consolidated with strong barriers to entry
• Large ~$13Bn market in 2020 (70% in US/EU), growing at ~8-9% p.a. '17-'19 driven by humanization, longer pet life expectancy and
push on preventive medicine
• Profitable business with average 20-25% EBITDA margin (32% for market leader Zoetis)
• Concentrated market with top 4 players accounting for ~70% market (Zoetis, Elanco/Bayer, BI Animal Health, Merck Animal Health),
consolidation being driven by scale benefits (relationship with distributors and vets, cost synergies)

65
Pet pharma Market attractiveness Size & historical trends
Geography | Pet pharma is a $13bn1 market with North America accounting for
40%, Europe for 28%
Europe
$3.8bn
North America
28% of the market
$5.4bn
41% of the market Asia-Pacific
$2.6bn
19% of the market
Rest of World

$1.6bn
12% of the market
1. In 2020 ; only for dogs and cats ; BCG analysis and assumptions
Source: BCG analysis ; Mordor Intelligence Global Veterinary Healthcare Market report 66
Products | Pet pharma products mostly vaccines (32% of the market) and
parasiticides (31%)
Vaccines Parasiticides Anti-infectives Other

Prevent diseases of the Prevent or eliminate Prevent, kill or slow the Allergy and
respiratory, external and internal growth of infectious dermatology, pain and
gastrointestinal and parasites such as fleas, disease such as sedation, oncology
reproductive tracts ticks and worms bacteria, fungi or products, medicated
protozoa feed additives, etc

$4.3bn $4.2bn $1.8bn $3.1bn 1
~32% of market ~31% of market ~13% of market ~23% of market
In 2020
1. $1.2bn of which are medicated feed additives
Go to Market | Vets still most important drugs sales channel but stores and
online have captured ~25% of drug sales
Pharmaceutical sales process
Manufacturer Distributor (logistics) Sales channel
North America
Drug manufacturer Distributor Vets • Approximately 80% of drugs supplied via
(~ 90% Sales) (~70% Sales) distributor (but demand driven by manufacturer
sales force)
• Vet mark up is often > 100%
Europe
• Nearly 100% of drugs sourced from visit
• Vet mark up of 30–80% (varies by country)
Stores North America
(~ 25% of sales) • Mainly relying on wholesalers for supply

Europe
(Pharmacy, pet-stores, etc.) • Relying on wholesalers for supply
Online North America

Direct distribution (~ 5% of sales) • Purchase from wholesaler, direct sale refused by
(e.g. Apoquel for Zoetis, manufacturers
#1 product in sales) Europe
• Very small online market, appears that
100% of sales are currently via wholesaler
Scope: Companion animal market (US / EU)

Source: Expert interviews, BCG experience 68
Pet pharma Market attractiveness Forecast
Pet pharma market expected to grow at +9% p.a. to reach ~$21bn by 2025 ;
growth is global and especially driven by vaccines
Global pet pharma market evolution over 2020-2025 – in $bn

Geographical evolution Geographical Product evolution Product
CAGR 17-20 | 20-25 CAGR 17-20 | 20-25
20.9 Rest of World 20.9 Other therapeutics

+9.3% +6.5% | +7.9%
+9.3% +6.8% | +7.9%
19.1 2.4 19.1 2.7
17.5 2.2 17.5
+7.8% +7.8% 2.5
16.0 2.1 4.0
Asia-Pacific 16.0 Anti-infectives
2.3 4.5
14.6 3.6
+7.8% | +9.3% 14.6 +7.4% | +8.8%
13.6 1 3.4 1.9 13.6 1 3.4 2.1 4.2
12.6 1.8 3.3 12.6 1.9 3.9

11.7 1.7 1.7 3.0 11.7 1.8 1.8
1.6 6.0 Europe 1.7 3.6
1.5 2.8 1.6 3.3 Parasiticides
.6 2.6
2 5.5 +8.3% | +9.7% 3.2 3.1 6.7
2.4 5.0 3.0 6.1 +8.2% | +9.6%
2.2 4.5 2.8 5.6
3.8 3.8 4.1 5.1
4.6
3.3 3.5 4.0 4.3 4.2
North America 3.7 Vaccines
7.8 8.5 +8.0% | +9.5% +8.5% | +10.0%
5.9 6.5 7.1 5.8 6.4 7.0
4.7 5.1 5.5 5.4 4.4 4.3 4.8 5.3
3.7 4.0
Pushed by authorities
2017 2018 2019 2020 2021 2022 2023 2024 2025 2017 2018 2019 2020 2021 2022 2023 2024 2025 (preventive treatment
to replace antibiotics)
North America Europe Asia-Pacific Rest of World Vaccines Anti-infectives
Parasiticides Other therapeutics
Pet pharma Profitability
Average operational margin of top pet pharma companies around 25% in EBITDA
margin
Operational margin of top 4 animal health pharma companies

2019 2020
32%
30%
28%
24% 25%
22% Ø 25
20%
16%

1
55% of revenue generated on 21% of revenue generated on 3% of revenue generated on ~33% of revenue generated
companion animal companion animal companion animal on companion animal1
1. Before merger with Bayer

Source: corporate websites ; annual reports 70
Pet pharma Competitive landscape
Pharma Market is highly consolidated, with top 4 player concentrating more

than 70% of the global market
Non-exhaustive
Top Animal Health players active in companion animal pharma, ranked by est. revenue in pet pharma1 (USD M)
3.3
> 70% of global pet pharma
revenue generated by top 4
2.7 players2
2.2
1.6

0.6
0.4 Est. pet pharma revenue <100M€
0.4 0.3 0.2
0.1 0.1 0.1 0.1 0.1 0.1 0.1
Zoetis Elanco BI Animal Merck Virbac Dechra Ceva Central Vetoquinol Kyoritsu Zenoaq Hipra Norbrook Bimeda Meiji Animalcare Neogen Orion Dômes Chanelle Bioveta Calier OURO
/ Bayer Health / Animal Garden Seiyaku Seika Pharma Fino
Merial Health & Pet Pharma
1. Share of revenue in companion animal health not always public, hence estimated based on available information on portfolio. Player not shown if est. share of
companion anima pharma < 10% (except Big 4)
2. Top 4 players generating $9.8bn out of a $13.6bn global market
Source: Orbis, Company websites, Capital IQ, Press 71
Pet pharma Strategic rationale Backup
Acquisition
Overview of smaller pharma players
Est. pet pharma

Company name Ownership Country revenue (USDm) Short description
Bimeda Private USA ~50-100 • Manufactures and distributes drugs for companion and production animals
Meiji Seika Pharma

Private Japan ~50 • Manufactures and distributes drugs for human, companion and production animals health
Animal Health
Animalcare Private United Kingdom ~50 • Manufactures and distributes drugs for companion and production animals
• Manufactures and markets products and services dedicated to food and animal safety, including
Neogen Public USA ~50
genetic identification services, disinfectants and insecticides.
• Manufactures and markets human and veterinary pharmaceuticals, active pharmaceutical ingredients
Orion Public Finland ~50
and diagnostic tests

Dômes Pharma Private France ~30-60 • Manufactures and distributes drugs for human, companion and production animals health
Chanelle Private Ireland ~20-50 • Manufactures and distributes drugs for human, companion and production animals health
Bioveta Private Czech Republic ~20-50 • Manufactures and distributes drugs for human, companion and production animals health
Laboratorios
Private Spain ~20-50 • Manufactures and distributes drugs for companion and production animals health
Calier
OURO
Private Brazil ~20 • Manufactures and distributes drugs for companion and production animals health
Fino Saúde Animal
Note: 100% in revenue not necessarily in animal health

Source: Orbis, Company websites, Capital IQ, Press 72
Executive Summary
Daily Needs
Pet Food
Healthcare
Agenda Pet Pharma

Vet Clinics

Diagnostics Labs
Emerging Healthcare
Pet Insurance
IoT & Wearables
Appendix
73
Executive Summary – Veterinary clinics
Veterinary clinics is an attractive $75Bn market growing at 6% p.a. '14-'19 with runway of remaining consolidation
opportunities in both US and Europe
$75Bn global market ($47Bn excl. food, drugs sales and labs services) in 2020 growing at 6% p.a. '14-'19 driven by increasing pet ownership and medicalization
(humanization, new treatments, longer pet life expectancy)
• Fragmented global vet clinics competitive landscape, with few aggregators generating synergies through procurement optimization (drugs, lab services,
equipment), operational improvements (e.g. staff efficiencies) and revenue enhancement (optimized pricing, new services, focus on increasing # of visits)
• Vet clinics being key stakeholder in the pet lifecycle, high potential leverage clinics as ecosystem backbone to improve traction of other businesses
• US and Europe accounting for 70% of total market; emerging markets with rising trends driven by urbanization and emergence of a middle-class (though
medicalization rate and spend per pet still far below mature markets) with potential opportunity for investors in the mid-term to launch consolidation of
clinics with above-average quality of service (e.g. Brazil, Mexico)
Focus US: $33Bn US market in 2020, growing at 4% p.a. over '14-'19 driven Emergency & specialty clinics (+12% p.a.), experiencing fast consolidation yet with
potential strategic play to further consolidate market, at least 5-7 years potential for consolidation at current rate
• GP market growing at ~4% '14-'18, specialty market growing at ~12% '14-'18 driven by secular trends in pet owner behavior and willingness to spend

• Further strategic consolidation opportunities for investors (remaining 20K+ independent clinics), at least 5-7 years possible at current rate
Focus Europe: Growing market at 6% p.a. '14-'19, with consolidation lagging behind US and experiencing acceleration
• Strong historical growth (6-7% p.a. for '16-'19), driven by volumes (increasing number of pets esp. cats, penetration of services due to humanization &
higher number of # visits per pet due to prevention) & prices (rise in spend & positive mix towards more value-added services)
• 3 type of players: European groups backed by large cap PE funds or large corporates (e.g. IVC Evidencia, Anicura, VetPartners), national groups (typically
40-80 practices) owned by individuals or by midcap PE funds and regional groups
• UK and Nordics ahead in terms of consolidation with respectively 40-50% and 35-45% consolidation, with other European markets still below 10%
consolidation (Germany, Italy, Spain, Belgium, France) and set to accelerate in the next 5 years
74
Vet clinics Market attractiveness Overview
Vet practices are at the crossroads of providing services, selling drugs and food
to pet owners in a multi-stakeholder environment
Sales of food &
Pet health services (care & surgery): Sales of drugs
accessories
~79% of vet activities ~18% of vet activities
~3% of vet activities
$59B
in 2020 Laboratories Food manufacturers
Of which $48B
excluding
lab services
Professional Buying groups

Veterinary practices
Provide health services Sell prescription & Sell petfood &

(diagnosis, surgery, etc.) nonprescription drugs accessories
Pet owners
Source: Expert interviews ; BCG Analysis 75

Vet clinics Market attractiveness Overview
Food and drugs account for ~15% of vet clinics profit and declining vs. growing
share of lab services, surgical procedures and dental care
In absolute terms all categories are expected to increase,
despite potential decrease in revenue/profit pool mix
Vet clinic revenue & profit breakdown Expected shift mix
3% 2% Food Majority of the shift towards online has happened already
Still, increasing competition from online channels preferred
Supplies
4% 7% Non-prescription drugs

Pet food, drugs for price and convenience (even for prescription drugs)
and products 14% 6% Prescription drugs
3% Dentistry
Dental care awareness increasing among pet owners
3% 10% Surgical procedures
Surgical Surgical procedures likely rising as share of senior pets increases
procedures 12%
Growth driven by new types of tests (eg. Carcinoma), increasing use
20% Lab services on healthy pets, diseases of the elderly, and rapid result diagnostics
Lab services 15%

Vet services
Key gateway product for procedures / services

Routine 27% Routine exams Potential for increase in usage from adoption of pet plans,
25% insurance
exams
3% 5% Radiology/Imaging Key gateway product for procedures / services

9% Potential for increase in usage from adoption of pet plans,
Non-surgical 15% Vaccinations -
procedures insurance
13%
6% Other
Revenue Profit
1. Profit pool estimation based on Gross Margin 2. Gross Margin hypotheses utilized for calculation of Profit Pool
Source: IBISWorld ; AVMA Report on Veterinary Practice Business Measures 2013 ; BCG Analysis 76
Vet clinics Market attractiveness Growth
Global veterinary services is a $75Bn market growing at +6% p.a. over 2014-19
driven by increasing pet ownership, pet medicalization and pet expenditures
Global veterinary services market expected to grow

by 7% in 2021-26, with a profitability of ~20-25% Key drivers
Estimated Global veterinary services market (2014-2026, B$)
Including sales of drugs, foods and accessories
and revenues from lab services CAGR
14-19 21-26
7 % • Rising pet ownership, in
117 # of pets both mature and
110 emerging markets
104 Volume
-7 % 9 % 97 35 8% 8% (Number of visits) • Increasing attention to
6 % 90 33 % pet medicated pet health, growth
81 82 31 boosted by emerging
76 75 29

27 countries
23 24 6% 6% • Aging population of pets
61 22 22 29 # visits per pet
28 (in US and EU) boost
26
16 25 #visits per pets
23
21 22 22
20 • Humanization of pets
16 leading to higher
Spending on
53 4% 8% expenses on services
46 49 services
36 36 40 43 Price • New treatments
29 34 33 • Pet insurance
(Average price per visit)
Spending on
2014 2018 2 019 2020 2021 2022 2023 2024 2025 2026 food/pharma
Rest of the World Europe US
Source: MordorIntelligence; BCG Analysis 77
Vet clinics Market attractiveness Growth
Focus on emerging markets | Urbanization and emergence of a middle class

driving pet ownership and increasing medicalization of pets
Drivers of vet clinic market USA Emerging markets
Increasing pet ownership driven by focus Increasing pet ownership driven by

# of pets on human well-being/ mental health ("a urbanization and emergence of middle
pet is good for you") class
Increasing attention to pet health with

Volume % pets Already mature with vast majority of
medicated pets starting to be viewed as members of
(Number of visits) pets seeing a vet regularly
the family

Ageing pet population causing more
Frequency of visits still limited by family
# visits per pet diseases and requiring more frequent
budgets
monitoring
Humanization of pets leading to higher

Spending on Emergence of services with higher living
services expenses on services, new treatments
standards
Price and pet insurance
(Average price per
visit)
Spending on Already relatively mature with past Increasing importance of pet medication
food/pharma premiumization waves and premiumization of pet food
Source: Mordor Intelligence ; BCG Analysis 78
Vet clinics Competitive landscape
Global vet clinics market remains fragmented, with consolidation trends

ongoing in some geographies
13%
market
share
13%
market
share
Percentage of vet clinics in Networks

20%

13%
Europe US
Note: Market share is calculated in volume based on total number of clinics

Source: FVE ; AVMA ; Mordor Intelligence ; BCG Analysis 79
Vet clinics Strategic rationale
Vet clinics are the key stakeholder and influencer of spend decision in the pet
lifecycle, hence key backbone of Pet Care Ecosystem
Early stage Everyday life Late stage
Initial dog Diets, Products Emergencies
Choosing a Pet Routine vet Training
Moments treatments + preventive (toys, Pet Food Boarding Grooming /Advanced Death
dog insurance care obedience
equipment medication supplies) surgeries
# Touchpoints One shot One shot One shot Yearly Monthly Monthly Monthly Bi-yearly Monthly Bi-yearly One shot One shot
Overall
Typical cost 100–5000$ 100–1000$ 500$ 200–300$ 100–600$ ~100$ 250–700$ 400-1,000$ 100–500$ 100–500$ 500–5000$ 120-150$
range1 p.a. p.a. p.a. p.a. p.a. p.a. p.a. p.a.
Breeder
Vets

Retailers /
e-retailers
Social Media
/ Web /
Advertising
Insurance
Influencer of decision Key Influencer of decision Actual purchase

1. Average observed, cost range can not be summed up to find average spend per pet as some "moments" do not apply to all pet owners (boarding, grooming, training…) 80
Source: BCG Analysis
In addition, consolidation of veterinary clinics generates value with greatest

opportunity in procurement and pricing, with 300-500 bps EBITDA lift potential
Importance EBITDA uplift potential
High value Description of scale Small consolidator Major corporate
potential
(<50 practices) (>50 practices)
• Focus on COGS (e.g. surgical supplies, lab costs)
Procurement • Increasing focus on other buckets (e.g. insurance) High 100-150bps 200-300bps
• Focus on pricing rigor, including regular price increases

100-200 bps
Pricing • Typically opportunity to be more competitive on retail/ Low
No inherent scale advantages
commodity items, increase margins on services (e.g. labs)
Back office • Centralization of accounting, HR standard 0-100 bps 0-200 bps
centralizatio • Others (e.g. branding/marketing) less common outside of Med Lower bound of zero as consolidators may
n prescriptive consolidators such as Banfield, VCA bring additional professionalism/overhead
• Focus on increasing throughput at peaks (e.g. wknds, evenings)
Staffing & • Critical to balance value of change with damage to reputation Low-Med 50-100 bps 50-150 bps
utilization from heavy-handed intervention (affects M&A pipeline)

• Consolidators bring scale to increasingly challenging
Recruiting recruitment process (e.g. relationships with schools) Med 10-30 bps 30-60 bps
• Reduces lost revenue and down-time associated with churn
• Basic support (e.g. client reminder tools) common
Marketing • Standardized brands, coordinated marketing limited to select Med ~0 bps 0-50 bps
few consolidators
• Basic standardization of practice management common but
Software not required – many smaller consolidators use software layer Med ~0 bps 0-50 bps
to combine data feeds for mgmt. purposes
• Some revenue mix adjustment associated with pricing, but
Revenue mix most significant moves have been toward wellness programs Med ~0 bps 0-50 bps
• Widely disliked among independents; difficult to adopt
Source: Expert Interviews ; BCG Analysis Target impact 200-300 bps 300-500 bps 81
Raw total ~250-500 bps ~400-1000 bps
Vet clinics Strategic rationale Backup
While small groups focus on Pricing, Invoicing & Procurement levers, Large groups
leverage their scale & density to increase EBITDA margin
Levers existing both at Practice and Group levels
'21-'25 Target
Global Players
600+ practices
Current
• Adjacent services: Development
Large multi-country groups of adjacent activities (e.g.
200-600 practices crematorium, software) with
accretive effect on margin
• Adjacent services: Internalization typically 15-20% of revenues
Local leaders of new offerings (e.g. online
0-200 practices • Hub & Spoke: Leveraging density
sales) or in-house capabilities & financial capacity to deploy
(e.g. in-house testing) systematic hub & spoke strategy
Independent Clinics • Pricing & Invoicing: Pricing review • Hub & Spoke: Opportunistic • Procurement: Negotiation at
& systematic invoicing

strategy where density allows global-level with suppliers & labs
• Procurement: Volume • Marketing & Revenue mix: Push (not only on drugs &
• Often part of a Professional commitment to benefit from on wellness plan & omnichannel consumables, but also on
Buying Group higher rebates vs Professional engagement equipment or insurance plans)
Buying Groups • Procurement: Negotiation at
• Back-office centralization: region-level with suppliers / labs
Centralization of main G&A tasks based on geographic expansion
(incl. accounting & HR) • Staffing & Utilization: ASV
upskilling & schedule optimization
by leveraging density
Group
EBITDA ~15% Bottom-line levers 17-18% Bottom-line levers 18-20% Mainly Topline levers (incl. 20+%
margin (+100-200 bps) & Topline (+100 bps) & Topline Adjacent services & Hub &
impact (incl. Pricing) impact (incl. Pricing) Spoke) 82
Source: Expert interviews ; BCG Analysis
Focus US
83

Vet clinics Market attractiveness Size & growth
Veterinarian services in the US segmented into three offerings: General,

Emergency and Specialty with different value propositions
Percentage Experience DVM
Service of DVMs Description Required Salary Considerations Perspective
General ~75-80% • Offered by GP practices General ~85- Predictable The vast majority
General • Perform routine DVM license 120K schedule and of individuals pursue GP
Play exams/procedures case load
in all
with longer work which is your
segment
relationships standard puppy kitten
with patients vaccines and neutering
-Medical Director, VCA
Emergency ~5% • Offered primarily by General ~125- Less predictable GPs generally select
Urgent specialty hospitals and DVM license 160K themselves out of
Specialty/ Care Only
sometimes by urgent caseload with emergency care because
Emergency
care of GP practices shift focused
Players

• Treat myriad of hours and very few are willing
conditions with a higher burnout to do this work
primary focus on -Former CSO, Lyceum
emergent/critical cases
Specialty ~10-15% • Offered by private Specialist DVM ~180- Longer hours Only about 10%
specialty practices and requiring 350K than GP given of students end up
specialty hospitals only internship on call shifts. specializing in any given
• Treat conditions within and residency Higher salary
specialty offering they but more graduating class
provide (oncology, years training -Medical Director, VCA
ophthalmology, etc. … )
1. Based on percentage of vet school graduates who elect to each discipline

Source: Industry interviews; BCG analysis 84
US veterinary services expected to grow at c.8% p.a. over 2021-26 driven by

specialty services growing at 14% p.a.
US veterinary services market expected to grow by 8% Vet clinics benefit from an upward trend impacting
in 20-26, with a profitability of ~20-25% products and services
Estimated US veterinary services market (2018-2026, B$) CAGR '20-'26
Including sales of drugs, foods and accessories 14-19 21-26 trend Rationale
and revenues from lab services
Covid
impact • Pet ownership to grow by ~2% p.a. in
8% Pet ownership
53
49
-7% 9% 46
4% 43 12% 12%
40 18
36 16
36 15 14% for specialty • 0.5% growth following pre-pandemic

34 33 13 Disease
12 (excluding trend of incidence due to aging pet
29 7 8 11 Emergency) incidence
9 population
5
3% 6%
32 33 34
27 28 28 30
24 24 26 • 0.5% increase of % of pets using
Treatment
rate treatments
2014 2018 2019 2020 2021 2022 2023 2024 2025 2026
• Average spend per visit likely to
Emergency & Specialty services
Spend per increase at ~4% p.a. due to aging more
GP services severe disease (aging population) and
visit
Average EBITDA: 20-25% more expensive treatments
Source: MordorIntelligence ; AVMA ; APPA ; Euromonitor ; BCG Analysis 85

Pet population expected to age in the US as life expectancy increases – no major

change vs. recent historical trend is expected
Share of senior has decreased in crisis years due to euthanasia of
senior dogs but should increase in next years Highlights
Historical and forecasted dog population split by age group in the USA from 2013 to 2025
• Decrease in pet population during crisis mostly
Forecast CAGR affecting senior dogs
– "The recession did not greatly affect the
13-18 18-23
93 95 owner’s decision on relinquishment—except
88 90 for the relinquishment of senior dogs,
84 86 4% 3%
79 80 82 which may be associated with increased
76 78 26% 26%
72 73 75 25% 25% costs of care"1
71 24% 25%
24% 24% 24%
22% 23% 24%
21% 21% 21%
• Life expectancy of pets continuing to increase

in coming years
1% 2% – US dogs average lifespan increased from
55% 54% 54% 54%
55% 55% 55% 55%
58% 58% 58% 57% 56% 56% 55% 10.6y to 11.0y from 2002 to 2012, cats from
10.9y to 12.0y
• All things equal, this should increase share of

21% 21% 21% 21% 21% 21% 21% 21% 21% 21% 21% 21% 20% 20% 20% 2% 2%
"senior" pets, growing at ~4% p.a. vs. ~2-3% for
overall pet population
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
• As surgery spend on senior pets is higher on
Seniors (9+y) Puppies (0-2y) average, this will drive pet surgery growth
1. Extract from "Impact of (3-8y)
Adults the Economic Recession on Companion Animal Relinquishment, Adoption, and Euthanasia: A Chicago Animal Shelter’s Experience", Journal of Applied
Animal Welfare Science, 2015 Key Hypothesis: Stable birth rate in pets population of ~11%
Source: Banfield Pet Hospital’s State of Pet Health report ; Press, Acta Vet Scand, Journal of Applied Animal Welfare Science ; National Council on Pet Population Study and Policy ;
Euromonitor ; BCG analysis 86
Focus specialty | US emergency and specialty vet services market grew ~12%
'17-'19; expected similar pace going forward over '20-'25
US market for specialty vet services($B) +5% in volume Commentary
+4% in price
$16.5B CAGR • In 2020, the specialty veterinary
Including sales of drugs, foods and accessories 17-19 20-25 services market was ~$9.4B
12%
and revenues from lab services $14.7B – Driven by over 9% p.a. growth
across all service lines
$13.1B $6.2B Emergency • Rapid market growth (~12%) from
9% 9%
$11.7B 2017-19, then increase to 18% in
$5.6B
18% 2020 due to COVID
$10.5B
$5.2B – Likely tailwinds include trends
12% $9.4B in pet ownership, increased
$4.8B 16% 16%
$2.3B Internal Medicine humanization of pets, and
$8.0B $4.4B
$7.2B
$2.0B increased number of pet
$4.0B
$1.7B owners working from home

$6.4B 12% 12%
$3.3B $1.5B $3.5B Surgery • Expected Post-COVID market
$3.0B $1.3B $3.1B 16% 16%
$2.7B $1.1B $2.8B Oncology growth in line with historical pre-
$0.9B $2.5B 14% 14% crisis trend (~12% overall), with
$0.8B
$0.8B $2.2B Cardiology
$0.7B $2.0B $0.6B
$0.7B
$0.8B 15% 15% elevated pet populations and
$1.8B $0.5B $0.7B Radiology
$1.4B
$1.6B
$0.4B
$0.5B $0.7B
$0.8B 14% 14% increased humanization of pets to
$0.4B $0.6B
$0.3B $0.3B
$0.4B $0.5B $0.5B $0.6B Neurology continue to drive growth
$1.0B $1.2B $1.3B $1.5B Other Specialties
$0.6B $0.7B $0.7B $0.8B $0.9B 13% 13%
2017 2018 2019 2020 2021 2022 2023 2024 2025
Emer. 43% 42% 41% 43% 41% 39% 38% 37% 36%
Spec. 57% 58% 59% 57% 59% 61% 62% 63% 64%
Source: MordorIntelligence ; Euromonitor Pet Care 2021 ; Industry interviews ; BCG experience and analysis 87
Vet clinics Market attractiveness Resilience
The pandemic increased demand for specialty veterinary

services while also increasing productivity per DVM
GP Emergency Specialty
Level Post-COVID Level Post-COVID Level Post-COVID
Trend of impact sustainability of impact sustainability of impact sustainability
Demand increased Increased pet ownership
with higher overall pet
population and more Increased referrals due to high GP
visits workload
Increased attentiveness to pet needs
Competitor ER closures N/A N/A

Productivity increased Decreased patient time per visit
by necessity to meet
demand;
Increased total time with patients
priorities shifted to
care
and away from admin Reduced downtime
Additional responsibilities for support

staff
Trend Legend COVID Sustainability Legend

Low High Likely to revert post- Likely limited impact Sustained
Source: Industry interviews ; BCG experience 88
impact impact COVID (one-time trend) post COVID tailwind
Vet clinics Competitive landscape Overview
While market is still fragmented, several consolidators are establishing national

platforms
Number of hospitals— Number of hospitals—
Group Owner Focus 2019 2020
NVA Compassion First JAB GP / Specialty 700+ 1200+
Banfield MARS GP 1000+ 1000+
VCA MARS GP / Specialty 925+ 1000+
Oakhill CP, Harvest CP,

VetCor GP 336 373
Cressey & Co
Pathway
TSG Consumer Partners GP 200+ 225+
Veterinary Alliance

PetVet Care Centers KKR GP 182 200+
BlueRiver Pet Care Partners Group GP 98 113
Southern
Shore Capital Partners GP 90 92
Veterinary Partners
BluePearl MARS Specialty n.a 92
Source: Companies Information : Press release ; BCG Analysis 89

Vet clinics Competitive landscape Overview
… and has maintained a high pace of external growth since 2019 to create a
national leader
Group Date of acquisition Focus Number of hospitals acquired
Ethos Veterinary Health 08/21 Specialty / Emergency 23
Sage Veterinary Centers 06/21 Specialty / Emergency 16
PetWell Partners 10/20 GP 47
Plantation Animal Hospital 12/19 GP n.a.
Haven Animal Hospital 08/19 GP n.a.

Overland Veterinary Clinic 08/19 GP n.a.
Lange Veterinary Center 08/19 GP n.a.
Big Sky Animal Medical Center 08/19 GP 90
Hamby Road Animal Hospital 06/19 GP n.a
Source: JAVMA, DVM360; The Veterinary Idealist; company websites; BCG Analysis 90
Multiples have increased in past 5 years but are expected to remain around 8-
13x for individual and small chain clinics in near term
EBITDA multiples have more than doubled in past five years, but are not expected to continue increasing significantly in next 5 years
Potential for short-term multiple compression due to COVID-19 (est. 6-18 months)
Expected change in purchase
multiples for individual practices 5-6 years ago, 5x EBITDA was the standard
a Multiples for typical GP between 5-7x VP Biz, Dev, Corporate Chain
EBITDA multiple
10-13x 10-13x
10 b d I would say 10x EBITDA is pretty much standard out
8-10x Increased M&A activity and growth of there but I've seen them pay as high as 12x EBITDA
b
consolidators caused multiples to double
8 Former President, Medical Ops., Corporate Chain
c
In short term, multiples may decline slightly due
Sellers may anticipate multiples to COVID-19 I think if you're looking to get a deal, it will likely
6

5-7x rebounding and choose to wait to sell, • Lower demand: Some consolidators may be in the next 18 months. The COVID-19 situation
a decreasing available pool c have more difficulty obtaining funding has made more vets think about exit strategy
• Increased supply: Vets more keenly aware
4 Former VP, Medical Ops. Corporate Chain
of need for exit strategy
Multiples expected to be consistent with current

2
levels in longer term I expect multiples to be steady. There may be some
• Consolidators cite a natural multiple cap, regional variation but overall I expect them to be
d after which they would be unwilling to consistent
make purchase Vet Business Transition Consultant
5 years ago Today 18 months 3-5 years
– Especially if multiples for practice
from now from now
chains remain consistent
Base case Low case • Ideal targets more sparse as acquisition
activity continues
Future multiple outlook to be
Source: Market participant interviews further tested in vet survey 91
Focus Europe
92

Vet clinics Market attractiveness Market Size & Growth
Total EU vet clinics market at $20B, with an expected CAGR of 6% 2021-26

UK, France and Germany account for c.60% EU market
EU veterinary services market expected to grow by 7%

in 21-26, with a profitability of ~20-25% ~60% of the EU market is concentrated in 3 countries
Estimated EU veterinary services market (2014-2026, B$) CAGR Revenue Share(%), by Country, Europe, 2020
14-19 19-20 21-26
+6%
29
-7% +8% 28 32%
+6% 26 58%
25 7 4% -7% 7%
23 7
21 22 22 6
20 6 23%
6 5 4% -7% 6%
16 5 5 5 5
5 5

4 18% 17%
4
4 4 4 4 5 5 5% -7% 6%
3 4 5
4 4 4
3 4 4
3
10 11 11 12 8% -7% 6%
8 9 8 9 10 6%
6 4%
2014 2018 2019 2020 2021 2022 2023 2024 2025 2026
UK Germany France Rest of Europe United France Germany Spain Italy Rest of
Kingdom Europe
Covid impact: decrease due to
closure of practices during
lockdowns
Source : MordorIntelligence ; Experts interviews ; desk research 93
Vet clinics Market attractiveness Market structure
70% of EU veterinary clinics are small practices with less than 5 veterinarians
Practices breakdown by size (# of clinics, EU, 2019)

27% 3% 100%
27%
17%

26%
1 veterinarian 2 veterinarians 3-5 3-30 30+ Total

veterinarians veterinarians veterinarians
70% of practices count
less than 5 veterinaries
Source: FVE (Federation of Veterinarians of Europe) ; BCG Analysis 94

Vet clinics Competitive landscape Potential for consolidation
EU market is still fragmented; consolidation ongoing with UK and Nordics

leading the way
Overall highly fragmented with some consolidation … with trend towards consolidation in
ongoing, UK and Nordics leading the way… other countries
% clinic in networks
Consolidation has started in Europe :
40 • Mostly in the UK and Nordics countries
Consolidating
SE • Groups are mostly national in low consolidated
countries
UK • Strong strengthening of chain groups visible in
30 SL historical consolidated market (UK, Nordics) and also
highly fragmented markets (e.g. Germany, France)
NO PR • Trend toward expansion in other countries

– 4 international groups with clinics in several
20 S MK
LU E FI European countries
Median % in – 3 of them are from UK
networks: CZ IT SR
RO FR DK NL
~15% EE
10 "By 2030, I expect 2/3 of the vet practice market in
LT BE CH
Europe to be corporatized following the US & UK"
DE
Highly fragmented AT BCG industry expert UK
0
1 100
Median clinic size: ~5 FTEs
Average clinic size (FTEs)
Note: "Networks" defined as groups, chains, or franchises.
Source: FVE (Federation of Veterinarians of Europe) ; press research ; expert interviews ; BCG analysis 95
Vet clinics Competitive landscape Key players
IVC Evidensia and Anicura top players (in terms of # of clinics) across European
markets
KPIs
Level of consolidation (market

<5% 15-20% 15-20% <10% 30-40% 35-45% <15%
share)
~60 ~280 ~60 ~35 ~920 ~1401 ~80

Main groups and number of vet
practices ~45 ~20 ~35 ~15 ~440 ~1101 ~80
~20 ~20 ~35 ~15 ~420 ~50
~420 ~45
1. Based on vet practices featured on their website
Source : Companies website ; expert interviews ; desk research ; BCG Analysis 96
International chains seem to have National chains expand their

National and adopted a structured approach networks through a more
esp. towards specialty services opportunistic approach
European vet Hub & Spoke approach Generalist and proximity clinic as focus
clinic chains have • Focus on the acquisition of specialized
practcies./CHV in potential anticipation hub
• Acquisition of small to mid-size clinics
offering generalist and preventive medicine
adopted different & spoke strategy – little available targets which not require strong equipment upgrade
M&A strategies Focus on Specialty practices

• Objective to offer a wide range of medical
Mostly acquiring vet owner willing to
retire
care services across various therapeutic area • Negotiation with vet owner often stopping
(especially true for Anicura, less for IVC practicing, which enables the chains to
Evidensia) avoid obstacles linked to integration and
faster implementation of new methods,
Targeting vet clinic owners willing to stay software, and medication choices
involved in the clinic's daily operations
• Especially when targeting specialty clinics, More opportunistic expansion
avoiding difficulty to recruit specialists • Opportunist expansion from the original
• Leaving certain level of autonomy to local footprint through activation of local

facilitate integration network identifying opportunities
Rapid expansion thanks to strong financial Lighter integration machine

firepower • HQ teams of 10-20 people for integration
• Rapid acquisition ramp-up and capacity to
invest in extension of in-house capabilities
Strong integration process

• Deep experience in optimization of clinic
operations, deployment of new protocols,
implementation of management principles,
supportive HQ
• Diversification to value-added services (eg:
IVC in crematoriums)
Example
97
of players
Major large players concentrated in UK and Nordics with "cross border" moves
to France, Italy and Spain
2020
Vet clinic group # Clinics #Vets Revenue Countries of Operation Ownership
Sweden, Austria, Norway, Denmark,
AniCura ~400 ~3,500 NA Netherlands, Germany, Switzerland,
France, Belgium, Italy, Spain
Sweden, Finland, Norway, Denmark,
IVC Evidensia ~1500 ~22,000 NA Netherlands, Germany, Switzerland, UK,
Ireland, France, Belgium, Spain, Portugal
Vets 4 Pets ~395 ~1,100 ~£123M UK LSE:PETS

UK, Netherlands, Republic
CVS Group ~500 ~1,900 ~£510M of Ireland
AIM:CVSG
Medivet ~390 NA ~£249M UK, Germany and Spain
VetPartners ~160 NA NA UK, Italy, France
Vetone ~50 180 NA France NA
Note: Country of origin in bold 98

Source: Company homepages ; expert interviews ; Orbis ; BCG Analysis
Successful cross border move - IVC has initiated a rapid expansion of its network
in France, with a dedicated team and specific buying criteria to respect
Example of IVC entry case in France
IVC Evidensia's historical IVC's key criteria to select a

expansion in France targeted clinic IVC's M&A strategy
Ramp-up of 2-3 years Dedicated local M&A team
in a new market Rapid expansion 1 Revenue growth and profitability • Dedicated French team (~4 FTEs) specialized
Historical growing revenues and good level of
in M&A and integration + support from HQ
profitability with little need for restructuring •
June 2021: Acquisition of Proven track-record in quick acquisition of
Veternity (crematorium + +100 sites in less 1 year in mature countries
software suite) - 75 clinics • Average timeline for integration: 3 months
in IVC's network linics with vets desiring to stay
2 C
Vets driving revenue growth and owners of the
Feb. 2020: Acquisition of Fregis (CHV) customer relationship
Diversification of complementary services
Oct. 2020: Acquisition of CHV Cordeliers 75 Acquisition of value-added services along the pet's
(Meaux) + 13 other structures 1 life cycle with an incentive scheme to encourage

vets to recommend these services (eg:
otential for procurement synergy
3 P
Acquisition of Oncovet (oncology) crematorium services with Veternity)
Vet ready to apply the group's in-house processes
& Vetotech (radiotherapy)
and tools
<5 5-15 '"The CEO of IVC Evidensia has announced

~2
that France is now their most growing market. I
eographical footprint
4 G
2017 2018 2019 2020 2021 think that when they entered France, they
Clinics close to hospitals or specialized clinics to
considered the option to buy an existing group
refer customers to the rest of IVC network
but maybe they realized that it was less
• First wave of expansion, focused on acquisition
expensive for them to build their own network as
of strategic specialized centers (Oncovet,
the market was still very fragmented"
Vetotech, 2 CHV), took time due to IVC's lack of ittle CapEx investment
5 L
knowledge of the French market Focus on up-to-date facilities & equipment Former M&A finance manager at IVC
• Since 2020, Hub & Spoke strategy & acceleration
1. Clinic Castelvet at Bresles (60), Clinic Cèdre at Epron (14), CHV Cordeliers at Meaux (77), clinic Evolia at l’Isle-Adam (95), a group of 3 clinics "l’Escapade et Vaudois" at Saint-
Parres-lès-Vaudes, La Chapelle Saint-Luc and Saint-Parres-aux-Tertres (10), clinic Vet Alienor at Saint-Pierre-du-Mont (40), a group of 5 clinics CVA at Anthony, Chatillon, Clamart, Le 99
Plessis-Robinson et Montrouge (92)
Source: Expert interviews ; BCG Analysis
Executive Summary
Daily Needs
Pet Food
Healthcare
Agenda Pet Pharma

Vet Clinics

Diagnostics Labs
Emerging Healthcare
Pet Insurance
IoT & Wearables
Appendix
100
Executive Summary – Veterinary medical devices & equipment
Veterinary medical devices & equipment is an attractive ~$5.4Bn market, growing at +8% p.a. '15-'20 supported by increasing
specialization of clinics
• Global ~$5.4Bn market in 2020, strong growth at 8% p.a. '15-'20, with machinery & diagnostics most dynamic segments
– Diagnostics equipment (e.g., in-clinic blood tests equipment): ~$2.3Bn market projected to grow at +10% CAGR ('21-'26)
– Machinery (e.g., imaging, anesthesia & surgery equipment, dentistry, …): ~$1.7Bn market projected to grow at +7% CAGR
– Consumables (e.g., syringes, needles, bandages): $0.7Bn market projected to grow at +7% CAGR
– Orthopedics: ~$0.4Bn global market (of which 50% in the US) projected to grow at +7% CAGR
– Software (inventory tracking, patient scheduling, e-store): ~$0.3Bn market (of which 50% in the US) projected to grow at +4% CAGR
– Hard equipment (e.g., cages, kennels, surgery table): ~$0.1Bn market with high maturity
• Growth driven by increasing specialization of vet services, and complexity of equipment (through technology transfers from human medicine
yet with need to be adapted for pets – e.g. size)
• Main key purchasing criteria for vet clinics is quality/ ease of use, followed by price across all segments. Vendor support is a key for machinery

101
Medical devices Market attractiveness
Global vet medical devices market is a growing market (+9% p.a.) of ~$5.4Bn in
2020
Market projected to grow at +9% YoY, especially in Europe Comments

Estimated Global vet medical devices revenues for Pets (2015-2026,
$Bn) • US growth fueled mainly by increasing
Estimated
specialization of vet clinics (cardiology,
CAGR CAGR oncology, …), driven by pets humanization
+9% 8.9 15-20 20-26
• EU growth mainly driven by increasing

+8%
5.4
4.2 North America 6% 7% penetration of pet insurance

4.6
3.7 2.9 • Large equipment getting more complex with
2.5 2.7 Europe 8% 11%
2.0 inspiration from human medicine (MRI, …)
1.2 1.4
0.9 2.0 RoW 8% 10%
0.7 0.9 1.1
• Sustainability trend across product categories
2015 2018 2020 2026 with vets & end clients looking for eco-friendly
Average 10-15% (manufacturers1) materials & sourcing
N/A
EBITDA1 5% (distributors2)
1. Based on Heska and Midmark financials – existing players with higher margins on sub-segment niches; 2. Based on MWI and Covetrus financials
Source: Mordor Intelligence, Grandview, Orbis, Expert Interviews, BCG analysis 102
Market is split into 6 segments, diagnostics equipment and machinery being

largest and most profitable; with existing other high value categories as well
2020 market size ($Bn)
Description '20-'26 CAGR Profitability
• Equipment for in-clinic blood tests

1 Diagnostics +10% 2.3
(immunology, hematology3, blood gases4, …)
High complexity & IP1
• Anesthesia & surgery, dentistry

2 Machinery • Patient monitoring & pain mgmt. +7% 1.7
• Imaging (X-ray, MRI, …) High complexity & IP1
• Syringes, needles, bandages, …

3 Consumables • Simple surgery equipment (scalpels, …) 0.7 +7%
Existing high-value categories with wide
range of products needed (e.g. size)

• Trauma devices
4 Orthopedics 0.4 +7%
• Joint & ligaments reconstruction
High complexity & IP1
• Practice management (planning, …)

5 Software • Imaging software2 0.3 +4%
• Inventory tracking, e-store solutions, … High value for clients
• Specialized furniture (cages, kennels,

6 Hard equipment 0.1 <3%
cabinets, surgical tables, sinks, …)
Existing high-value categories with wide
range of products needed (e.g. size)
1. Intellectual Property; 2. Often bundled with hardware; 3. Detecting blood diseases (leukemia, …); 4. Oxygen levels, pH, …
Source: Mordor Intelligence, Grandview, Orbis, Expert Interviews, BCG analysis 103
Machinery is the most complex segment in the veterinary medical devices

market and can be divided into 5 sub-segments Non exhaustive
Pet anesthesia & Pet

surgery monitoring
• Monitoring of heart rate, temperature, …
• Administration of anesthetic drugs • Management of fluid levels
• Surgical suites • Resuscitation equipment
Pet dentistry
• Day-to-day maintenance (e.g.

descaling)
• Dental surgery
Pet Imaging Pet pain

management
• X-Rays (inc. digital), ultrasound and MRI • Laser therapy

• Endoscopes • Electromagnetic therapy
Source: Expert Interviews, Distributors websites, BCG analysis 104

Medical devices Profitability trends
Margin levels have mostly been stable recently, with a few evolutions linked to
prices and limited impact of clinics consolidation
No major recent surges or drops in prices, with some Clinics consolidation is putting limited additional
evolutions linked to Covid and increasing maturity pressure on suppliers' margins
• Increasing price of steel due to supply chain pressure • Most individual practices already had access to central
increasing raw materials costs for hard equipment purchasing even before being part of large groups
(+5-10% over '19-'21)

• Medium-sized groups usually leave each practice the
• Slightly decreasing prices in machinery thanks to autonomy to choose its suppliers
evolutions in technology & economies of scale, likely to
stabilize soon as market reaches maturity • However, very large groups such as Mars will put all their
– Partially compensated by increasing demand for clinics on same contracts with strongly negotiated prices
some devices becoming accessible to all practices,
e.g., ultrasounds
Source: Expert Interviews, BCG analysis 105

Medical devices Competitive landscape
Key Purchasing Criteria differ depending on client type, but with quality and
ease of use always the prime criteria
Relative importance
Private Large
KPCs Description practices groups Selected quotes
• Products safety, solidity & level of Lives are at stake, so quality comes first
Quality for all equipment – Member of VCA Group
technicity
As a practice manager, I have a budget to

Price • Pricing competitivity follow – Member of VCA Group
• Services provided (delivery, We like to get services associated with each

Vendor support equipment we buy – Small US practice owner
installation, warranty, …)

• Word of mouth inc. through We always check what other vets are saying
Reputation about new vendors – Small US practice owner
specialized social media
• Existing suppliers favored over new We stick with Covetrus because that's who
Relationship we know – Small US practice owner
ones
• Especially for hard equipment You want your equipment to look serious to
Aesthetics your clients – Small US practice owner
visible by clients
Legend Most important Least important

Key Purchasing Criteria also slightly differ depending on equipment segments
Relative importance
Diagnostics,
Hard
machinery & Consumables Software
KPCs equipment Selected quotes
orthopedics
Lives are at stake, so quality comes first
Quality for all equipment – Member of VCA Group
Price is usually our #2 criteria, after

Price quality – Member of VCA Group
Software & large hardware installation is

Vendor support always helpful – Small US practice owner

We always check what other vets are saying
Reputation about new vendors – Small US practice owner
We stick with Covetrus because that's who

Relationship we know – Small US practice owner
You want your cages to look welcoming to

Aesthetics your clients – Small US practice owner
Legend Most important Least important

Medical devices Go to market
In the US, go to market is mostly controlled by three distributors
US go-to-market shares (2020)

100% • ~15% of US market controlled by manufacturers selling directly to end
clients, especially in diagnostics (Idexx) and machinery
15% Manufacturers Manufacturers • Many of these manufacturers also present in human medical devices
(esp. surgery) but with an opportunistic approach to veterinary
applications – zoom next slides
15% Other distributors
Inc. Midwest (5% MS)
20% Patterson
• ~85% of US market controlled by distributors with very high

consolidation & long tail of regional players
• Top 3 distributors present across all medical devices segments (and
25% Covetrus sometimes diagnostics, pharma, …) for animals only1
Distributors • Value proposition from local services (leasing, installation, …) that
manufacturers usually do not provide
• MWI with very competitive pricing favored by large clinic groups while
25% MWI others have similar shares of large groups & privately owned
1. Since Covetrus separation from Henry Schein in December 2020

US manufacturers market is more fragmented as most players specialize in a

few segments, with vet specialists and opportunistic human-focused players
In-lab diagnostics Machinery
Imaging (software & hardware) Dentistry

~90%
(Zoetis)
1 > 90% > 75%
Consumables
Mainly white labels Anesthesia, surgery & patient monitoring

~90% Smaller players examples
from distributors
~50%
2

+ Niche players
Orthopedics
Practice management software
< 50%
3 4
~50%
Hard equipment
Also present Total market share Concentrated

> 70% Legend X%
in humans of these players More fragmented
1. Through Sound Imaging; 2. Through Etican; 3. Through Cornerstone; 4. Through Impromed and AVIMark
Zoom on machinery | One of the most attractive sub-segments in terms of

growth and margins, with potential targets if human players choose to divest
Machinery benefits from high growth and margins driven Anesthesia & surgery present the most consolidation
by technology transfers from human health opportunities, especially from human player divestiture
Machinery competitive landscape
2nd largest segment on medical devices market (30% of Imaging (software & hardware) Dentistry
total 2020 value) with high growth (+7% YoY '20-'26)
1 > 90% > 75%
High margins (~15% average EBITDA) driven by higher

complexity of most devices & associated intellectual Anesthesia, surgery & patient monitoring

property Smaller players examples
+ Niche players
~50%
2
Most innovation coming from technology transfers from
human health, where mature human devices start to be
used for animals (e.g. MRI, laser pain management, …) • Potential for consolidation mainly in anesthesia, surgery
& patient monitoring (~$1.5Bn or ~65% of 2020 market)
• Large opportunity could come from human player
Nowadays, pet owners in the US want their animals to have access to
the same devices they have seen in human hospitals
divesting animal health activity (e.g., Medtronic sold
– Former executive, Patterson human health division to Cardinal Health in 2017)
Also present Total market share Concentrated

Legend X%
Source: Grandview, expert Interviews, BCG analysis in humans of these players 110
More fragmented
Zoom on diagnostics equipment | There are 3 types of players in the market:

distributors, hybrid, manufacturers
Distributor model Hybrid model Manufacturer model

Description Full service distributor, with limited or no Full service distributor, with internal Manufacturer of analyzers/ consumables,
internal development capabilities development capabilities and long term with limited distribution capabilities
partnerships to lock-in supply
Scil strategy to integrate
CVS signed purchasing and
3rd party hardware with
distribution agreement to
Manufacturing None proprietary software in Limited to some analyzers, Focused on a few types of
fit Fujifilm hardware in
/development order to provide a personalize 3rd party products analyzers/ consumables their clinics and to
capabilities differentiated offer to fit only their supply (e.g. distribute their hardware
consumables) in external clinics

Distribution 1-3 years distribution contracts Up to 20-30 years distribution Sign 1-3 years distribution
contract terms with manufacturers agreements for 3rd party contracts with distributors or
Purchasing, inventory,
order management,
analyzers & consumables with Vet Clinics
installation, training, first
Portfolio Full product range level maintenance and Full product range Limited product range
repair, logistics,
consumables supply
Service level Full service distributor Full service distributor Limited distribution
capabilities in some regions,
rely on distributors
Margins (20-30% Gross margins) (50-60% Gross margins) (40-50% Gross Margins)
111
Zoom on diagnostics equipment | US market concentrated with 3 players owing

+90% market share; Heska being an attractive potential M&A target
In-clinic diagnostics equipment is a concentrated Amongst top 3 players only HESKA is accessible and
market with 3 players owning +90% market share… independent, representing most interesting M&A target
In-clinics testing in US - Estimated MS (2020, %)
Company Ownership Comments
market value
~$1.2Bn
100%
Other~ ~5%
• Very large company ($2.2Bn total
~10% ~35% of the market is Listed
Scil/ Heska revenue)
fragmented, but with only 15%
Abaxis ~20% independent

• Acquired in 2018
• Strategic partnership with Antech
to offer integrated solutions
Idexx ~65%
• Heska acquired Scil from
Listed Covetrus in 2020
• Acquired Biotech Labs on Sept
2021 to enter central lab market
2020
Source: Source: BCG Experience, Expert Interviews, BCG Analysis 112

Human-focused players present on market but not aggressively pushing for

consolidation due to smaller size and lower regulatory focus
Veterinary applications are not the most attractive to Human-focused players are present where there
human-focused players is opportunity but with no major investments
• Some operational/ R&D synergies (similar devices used between

humans and animals, testing already done on animals), but…
• Opportunistic approach (e.g., making dog-sized
scanner based on human version) on many
• … much more stringent regulations on human devices
segments (esp. machinery where many human
products used as-is for animals)

• … limited commercial synergies (few cross-referrals)
• No major investments (organic or M&A)
• … different go to market with majority of direct sales for humans v.
distributors for pets, due to higher level of specialization of human
• Some players divesting their animal activities
doctors v. most vets requiring a "one stop shop"
(e.g. Medtronic in 2017)
• … 100x smaller market size ($450Bn for humans v. $5.4Bn for pets)
• … lower margins (up to 80% GM for humans1 v. 50% for pets)
1. Based on Medtronic gross margin on large equipment

Executive Summary
Daily Needs
Pet Food
Healthcare
Agenda Pet Pharma

Vet Clinics

Diagnostics Labs
Emerging Healthcare
Pet Insurance
IoT & Wearables
Appendix
114
Executive Summary – Diagnostic Labs
Diagnostic Labs is an attractive market, highly profitable and growing…
• Large (~$3Bn globally in 2020), highly profitable and growing market (+11% p.a '15-'20)
– Central labs to see particularly fast growth (compared to also fast-growing in-clinic testing) due to increasing tests
complexity and small vet clinics unwilling to invest in equipment
– Europe market still underdeveloped vs. U.S. with twice higher diagnostic spend per pet

115
Diagnostic labs Market attractiveness Overview
The veterinarian is the key decision-maker in the animal testing journey, with
tests either performed in-clinic or outsourced to central labs
Animal testing journey
Description
Sample • Typically, first used diagnostic tool for inconclusive

Symptoms Consultation collection Tests can be either clinical examinations
Animal is unwell Vet conducts clinical Blood / urine performed in-house • Tests are either performed in-house or outsourced
and taken to the vet exam and decides to samples taken by vet or send to
outsourced private lab
to private labs
perform biological by the vet in his
analysis office – Most routine tests are performed in-clinic
because of attractiveness (ease of use, affordable
Performed on site (in the Vet clinic) analyzers, higher margins vs. outsourcing, higher
(usually routine) level of service for the client)
– Most specialty tests are outsourced to central
Treatment Diagnosis

labs because of their complexity and the large
Pet owner receives Vet gets to final volumes required to be profitable
final diagnosis and diagnosis based
moves on to treatment on test results Post-analytics Analytics Pre-analytics
Zoom on next slide
Outsourced to private lab
(usually specialty)
Logistics
Analysis
Samples
Samples are prepared
are transferred to
and analyzed in lab
private laboratory
technical platforms
Service provided by private labs
Source: Expert interviews; Desk research 116
Diagnostic labs market is split between in-clinic testing and central labs, that
have different dynamics and trends
Focus of this section
In-clinic testing
Zoom in "medical devices" section Central labs
Description Sale of bench top instruments, test kits Collection of samples from vet clinics,
and consumables enabling vet clinics to analysis done in a central location and
conduct diagnostics on site results sent back to clinic (online or offline)
Key success factors + Breadth of offering + Logistics efficiency
+ Ease of use of products + Quality of service / Turnaround
+ Salesforce and customer time
relationship with clinics + Accuracy of results

+ Software (& integration to PMS) + Software (& integration to PMS)
Typical gross ~55-60% ~55-60%
margins
Share of market ~45% in the US (esp. rural areas) ~55% in the US (esp. urban areas)
Key players (US) Idexx (~65%) Idexx (~40-45%)

(est. market share) Abaxis (~20%, owned by Zoetis) Antech (~45-50%, owned by Mars)
Source: Insight Partners, expert interviews, Idexx investor presentation, BCG analysis 117
In-clinic and central lab testing are complementary segments
Both segments present advantages, and are preferred

In-clinic testing today does not cover all diagnostic needs depending on the situation and type of use
With in-clinic testing, it is possible to see results when the pet is

Test coverage comparison between In-clinic testing and Central labs still in the hospital, this simplifies the interactions for both vets
and pet owners
Type of test In-clinic testing Central labs - Veterinary, US
Using external labs here in NYC is less expensive than using in-
Hematology
clinic instruments, they pick up samples 3 times a day and they
offer result interpretation
Chemistry

- Veterinary, US
Immunoassay Test kits are great for an initial diagnosis – for a more detailed
Not covered picture you need additional lab tests
by in-clinic
Blood gases
testing - Veterinary, US
Microbiology
If you are in North Dakota, labs are further away and can take up
Histology to 48 hours to send back results – that is just not possible with a
sick pet
- Veterinary, US
Total coverage Minimal coverage
Source: BCG Experience, Expert Interviews, BCG Analysis 118

Diagnostic labs Market attractiveness Size & Growth
Global vet diagnostic lab market is a growing market (+11% p.a.) of ~$2.6Bn in
2020 – US accounting for 50% of global market
Market has grown by 11% p.a. across the world and

should continue at similar rate Comments
Estimated Global vet diagnostic lab revenues for Pets (2015-2026, $Bn)
• High growth across geographies driven by both prices
Estimated and volumes increases
CAGR CAGR
+11% 15-20 20-26 • Marginally faster growth in Europe than the US with
5.0
alignment on higher standards of care
+11%
2.5 North America 10% 10% • Most of market driven by consumables (kits &

2.6 reagents, 70% of total value) followed by instruments
2.1 (20%) and software/ services (10%)
1.6 1.4 1.2 Europe 12% 13%
1.2
0.9 0.6 • Growth will be sustainable in the future thanks to
0.3 0.5 1.2 RoW 12% 12%
0.4 0.5 0.6 pets' humanization driving
– Offer sophistication and spillover from human
2015 2018 2020 2026
labs practices and tests into veterinary domain
Idexx – Increase in preventive care expanding volumes
22% 22% 26% N/A
EBITDA1
1. EBITDA in Companion Animal Group Worldwide. Note: excluding imaging (assuming similar split of instrument/ kits/ software as all other diagnostics)
Source: Mordor Intelligence, Expert Interviews, Idexx investor presentation, BCG analysis 119
Diagnostic labs Market attractiveness Size & Growth Backup
EU market is expected to grow faster than US and catch up the higher standard
of care existing today in US, with an increasing relevance of in-clinics testing
Key trends Quotes
I think in Europe corporate consolidation is generating demand

Higher growth of European market vs US due to
1 for an higher standard of care, and therefore the market will
convergence towards a higher standard of care for pets grow exponentially in Europe through the addition of many
• In US today ~15% of Vets revenues are diagnostics preventive exams that today are more rarely performed
• In Europe only ~5%
- Former VP International OPS, Idexx

2 Market shift towards more in-clinic compared to central
It is expensive to buy a suite of instruments and run them at
labs
reasonable cost. A lot of smaller veterinary practices in Germany
• Technological innovation will make instruments more can't afford them. But now new instruments coming out are
accessible to veterinaries smaller, less expensive and they will be forcedly more
• Important countries like Germany that are still revolving affordable to run. Central labs will focus on more complex
around reference laboratories are starting the transition exams
now - Former VP International OPS, Idexx
• There is an overall tendency to offer routine exams in the
point of care, making results almost real time
Source: Expert Interviews, BCG Analysis 120

Diagnostic labs Market attractiveness Size & Growth
Europe appears underpenetrated vs North America market, while clear benefits

for pet owner can result from more frequent tests
… while veterinary diagnostic lab can drive clear
Europe market still underdeveloped vs North America…. benefits for pet owners
Improve diagnostic and monitoring – through:

Estimated North America and Europe pet diagnostics market (2020)
• Objective fact-based diagnostic, as the animal cannot describe
its symptoms
• More precise and appropriate treatment duration through
Despite similar size pets
population, Europe is x2 diagnostic monitoring
~$1.4Bn • Ability to monitor health on the longer-term and on a recurring
smaller than North America
basis through regular visits and comparable tests fact bas
~$0.6Bn

Provide longer term benefits for owners – through:
• Longer lifespan of the animal due to a better care
Europe North America • Reduced medical costs for owner on the longer term through
earlier detection of illnesses (e.g. diabetes) and regular
Dogs and cats 160 160 monitoring
population (M)
Maximize health resources – through:

Spend per pet in the U.S. is around twice higher • Reduced lengths of stay in veterinary clinics due to improved
than other countries. International Countries are treatment
at an Early Stage of Diagnostic Utilization • Lower readmissions due to better informed treatment
IDEXX Investor Day 2019 termination
Source: IDEXX Investor Day 2019; Global Market insights; Expert interviews; Desk research 121
Diagnostic labs Competitive landscape
Central Labs | Highly consolidated US market with top 2 players accounting for
85%+ market; Europe is less concentrated with successful secondary platforms
Consolidated market in the US Presence of few secondary platforms in Europe

Central Labs - Estimated evolution of MS (2013-2020, %) Central Labs - Estimated market size and market shares (2020)
Market value in 2020 Estimated values Preliminary
$1.4Bn
Estimated
Other includes ~0.08 ~0.03 ~0.07
market size, $Bn
Marshfield, universities
Other 16 10-15 and small local players
(of which 3-4 labs with Others Inc. 3 players
rev. 10-20M$) Others 40% with 3-5% MS

45-50 55% Others
Antech 52 72%
Antech acquisition Zoolyx
part of Mars network 15%
San Marco
Sonic
10%
Mylav 20%
40-45 Idexx valued at ~10x 15% Idexx
Idexx 32 revenues (~20-25B$) Synlab 10-15%
Idexx Cerba
20% 25%
15%
2013 2020 IT FRA
Source: BCG Experience, Expert Interviews, Capital IQ, BCG Analysis 122
Diagnostic labs Competitive landscape Backup
Central Labs | Two vet diagnostic labs in Europe have already relevant cross-
country presence
Preliminary - Not exhaustive
Main countries Vet diagnostic

EU labs Core business Description served by lab revenues 2020
• Veterinary diagnostic arm of Synlab

Human lab Germany, UK, Italy, Belgium ~$40M
• Cross country presence (est.3-5% MS of EU mkt)
• Founded in 1989 in Germany as independent lab Germany, UK, Italy, Ireland, Spain,
Pure player lab tbd
• Cross country presence (est. 3-5% MS of EU mkt) Austria, Netherlands
Pure player lab • Part of veterinary division of Patterson Companies UK ~$30M

• Entered in vet diagnostic through acquisitions
Vet clinic network • Strategic agreement with Japanese in-clinic equipment UK ~$25M
supplier to cross-sell with central lab
• Veterinary diagnostic arm of Cerba (present in many EU

Human lab France ~$10M
countries but only France for vet testing)
• Veterinary diagnostic arm of Sony Healthcare (present in

Human lab Belgium ~$5M
many countries worldwide but only Belgium for vet testing)
Source: Expert interviews, Web search, Capital IQ, BCG Analysis 123
Executive Summary
Daily Needs
Pet Food
Healthcare
Agenda Pet Pharma

Vet Clinics

Diagnostics Labs
Emerging Healthcare
Pet Insurance
IoT & Wearables
Appendix
124
Executive Summary
Daily Needs
Pet Food
Healthcare
Agenda Pet Pharma

Vet Clinics

Diagnostics Labs
Emerging Healthcare
Pet Insurance
IoT & Wearables
Appendix
125
Executive Summary – Emerging: Pet insurance
Pet insurance is a new market being shaped, mostly underpenetrated to date (2% in the US, <10% in most
European countries except Sweden & UK) experiencing strong growth at +17% p.a. '13-'20…
• Global ~$6Bn market in 2020, +17% p.a. growth '13-'20 driven by increase in premiums and penetration
– Penetration: except for Sweden & UK, pet insurance markets mostly underpenetrated to date (<10%) and expected to catch-up
– Premiums: increasing spend per pet expected to be passed onto insurance price (as observed in Sweden)
• Focus US: Low pet insurance penetration to date ~2%, but could further develop up to c.3-4%+ by 2025
– Historical barriers due to limited push from insurers, unable to offer optimal pricing (lack of data points) and limited distribution
capabilities to access vet clinics/ pet owners, leading to limited awareness and interest from both vets and pet owners
– Yet market structuration has started since ~2015 with first partnerships between insurers and vet clinics (e.g. Trupanion-VCA since 2015),
and improving offering (e.g. simplified enrollment process, simplified claims process) resulting in +1pt penetration over the last 5 years
– Going forward, penetration expected to further accelerate further pushed by insurers and increasing spend per pet (specialty clinics)
which should boost pet insurance demand from pet owners
• Pet insurance profitability lower than other P&C products to date, but getting better as market is becoming more mature (e.g. Sweden),
thanks to better risk control, optimized pricing and costs

• 2 type of players: pure players (e.g. Agria, Anicom, Trupanion) and large insurance companies (e.g. Petplan by Allianz, Mapfre, Nationwide),
with opportunities for consolidation while market is being shaped
… with strong strategic synergies in pet care ecosystem: (1) insurers benefiting from vet clinics data to optimize
pricing while decreasing risks and (2) locking in pet owners with exclusive referrals
• Strong strategic synergies with pet care ecosystem:
– Insurance players would benefit from statistical data from vets, diags in order to build new insurance products, optimize premium and
decrease risks (by better pricing & control over claims)
– Opportunity to "lock-in" customers within ecosystem through exclusive referrals to clinics, insurance companies being key prescribers of
specific clinic networks
– Virtuous circle since pet insurance penetration should drive further increase in spend per pet (x2 spend)
126
Pet insurance Market attractiveness
Pet insurance market is a $6Bn concentrated in Europe and US, expected to

grow at +16% p.a. going forward
Global pet insurance market evolution over 2020-2025 – in $bn Key drivers
Geographical CAGR
13-20 | 20-25
1• Pet population:
12.6 Rest of World Increase in the global
+16% 0.5 n.a.| +13% pets ownership
10.5 1.7 Asia-Pacific
0.4 +20% |+12% Zoom next slides
8.9 1.5
+17%
0.4 Europe 2• Product penetration:
7.6
Increasing penetration

1.3 4.7
6.7 0.3 +11% | +14%
rate of pets insurance
5.9 0.3 1.2 4.0 products
0.3 1.1
1.0 3.5
3.1
2.7
2.5 North America
5.7 3• Premiums per pet:
2.0 4.5
+26% | +21%
3.7 Increase in premiums
2.2 2.6 3.1
1.2 2.2 paid to insurers
0.4 (38%) Forecast based on
base case scenario of
2013 2020 2021 2022 2023 2024 2025 c.3.5% penetration
Source: BCG analysis ; NAPHIA ; Arizton ; Magna 127

2 Insurance penetration
Except for Sweden & the UK, pet insurance markets mostly underpenetrated
(<10%) ; US behind with 2% penetration
Estimated penetration of pet insurance per country, as % of pets insured, est. 2021
In geographies with high penetration (e.g.
Other markets
UK, Sweden):
Highly mature / developed
• Long history of data points collected
~65% by insurers enabling optimal pricing
• Educated markets where pet insurance
is almost a must
• Highly profitable business for pet
insurers
In geographies with lower penetration

~30% (e.g. France, USA)

• Lack of pet health data points leading
~20% to unoptimized loss ratio
• Cost of claims often underestimated
~7% by entrant insurers leading to
~6%
~2% ~1%
exclusions in their policies and high
dissatisfaction from customers
• Little knowledge on what is covered
(e.g. disease, accident) and what is
not (e.g. routine visits) from
customers leading to dissatisfaction
when in need of reimbursement
Pets' population (m) 2.4 16.6 1.3 2.3 22.4 186.7 9.8 • Low awareness of both end consumers
Pets' insured (m) 1.5 5.0 0.3 0.2 1.3 3.4 0.1 & vets leading to lower world of
mouth effect
Source: Euromonitor ; experts' interviews ; Association of British insurers ; BCG Analysis 128
growth
Focus US | Major barrier to penetration in the US due to limited push from

insurers leading to low awareness of both vets and consumers
… resulting in low awareness & interest by end-

Limited push from insurers… customers and vets
• Non optimal pricing due to lack of maturity and • Low awareness of both vets and end-consumers
limited data to size risks – Lack of vets engagement esp. referrals vs. pet
• Limited interest for generalist insurers, with loss ratio insurance mature countries
below other insurance segments – Limited word of mouth due to low penetration
• Limited distribution capability with difficult access to – Limited knowledge of pet total spend
vet clinics/ pet owners • Limited customer satisfaction and challenged

reputation of insurers due to:
– Non optimal pricing
– Difficulty for pet owners to understand coverage
– Claims too often declined
"Lack of willingness of insurers to push pet insurance products led to "One of the reason why the US market is still underpenetrated is that
little awareness of vets and end-users, as the market barely existed end-consumers may not be used or have a bad image of insurance.
so far" Behavior of some insurers is to be blamed"
Former Development Director of a US pet insurance company Former Head of European pricing in a global pet insurance company
Source: Market research, press search, pet insurance comparison websites, BCG experience, BCG analysis 129
In more developed pet insurance countries, market leaders pushed awareness

and established partnerships with vets
No referral system as vets are

Regulation No key differences detected in regulation for the pet insurance industry not allowed to distribute or
push insurance offers
• Market growing at double

Increased • Product around since 1924
• Leading brand Petplan
digits only boomed after • Strong investment by key
around since 1976
awareness • Strong market leader
• Yearly spent in
legal changes in 20062 players on brand image
of end- (Agria, ~60% MS) created • Anicom (~60% MS) pushed with events (e.g. pet
communication around 1-
awareness through vets awareness and set high shows), apps, social media
consumers 1,5% of Pet GWP (2011-15)
loss ratio (entry barrier)

• Very early establishment • Strong direct purchasing
• Anicom operates under the • Leading brand SantéVet
of strong relationship channel
Partnerships with vets • Preferential networks
co-payment model in recognized in 90% of vets
with vets • Agria with phone line and gaining relevance
large partners network clinics
(~5.700 hospitals)
~10k Q&A online (RSA in 2015)
1. According to Forbes “ [Pet insurance] didn’t come to the U.S. until 1982, and then it got a bad rep. Some US insurers dropped sick pets or excluded certain chronic or hereditary conditions”
2.Insurance already existed since the 1980's in the form of mutual aid societies collecting capital from subscribers. Under the amendments to the Insurance Business Law in 2006 mutual aid
societies were required to register as insurance companies or small amount and short term insurance providers Source: Euromonitor; Press ; Petplan Pet Census; UBS ; Expert calls 130
growth
Focus US | Though still limited, pet insurance penetration has accelerated over
the last 5 years since historical barriers are progressively being unlocked
Recent improving pet insurance offering by key players has increased awareness … which translated into
and reputation… penetration acceleration
Vets End-consumers awareness
awareness
Penetration rate (% pet population)
Vets engagement through Ongoing education efforts Simplified enrollment New tools to simplify claims
first large-scale and word of mouth likely process & offer enhancing process via internet and ~2.1%
partnership (VCA- to improve awareness and experience and mobile devices
Trupanion) reputation reputation ~1.8%
In January 2015, Trupanion and Ongoing education efforts Clarified offers (esp. on • E.g. owners taking a ~1.6%
VCA announced a partnership, enhancing consumer awareness coverage) likely to improve photo of their vet bill and

~1.4%
making Trupanion preferred reputation uploading it when
~1.2%
medical insurance vendor for Marketing efforts and consumer • Trupanion offering a submitting a claim via e- ~1.1%
VCA’s network of veterinary education by pet insurance single insurance plan for mail or a web portal
hospitals in the USA (including companies and associations ease of understanding by • E.g. insurance payments
in-clinic signage and brochures veterinarians, staff and made directly to
as well as a presence on the Growing base of pet policy owners veterinarians becoming
VCA website) holders recommending pet • Healthy Paws providing a more common
insurance by word of mouth single plan covering • E.g. Nationwide
surgeries, diagnostic partnering with VitusVet1
testing, hospitalization, so policy holders can use
2016
2017
2018
2019
2020
2021
prescription medications the VitusVet app for
claims submission, access
Enrollment process: pet the vetHelpline, set
insurance companies reminders, and look at
increasingly providing tools to pets’ medical records
Source: NAPHIA ; AVMA ; BCG analysis enroll online 131
Focus US | Going forward, penetration expected to reach c.3.5% by 2025
Penetration rate
(% pet population) Rationale "Due to a very low penetration rate, the American
market is surely the most promising.
• Increase of vets' awareness and availability of
products: Trupanion (leader of the pet insurance Its surge has begun in some defined states, and the
C.+1-2 pts US market) has signed a partnership with US market will certainly grow rapidly in the coming
veterinary hospitals network VCA to push years, pushed by marketing from insurers"
c.3.5% Trupanion products (including in-clinic signage
Base case scenario; and brochures as well as a presence on the VCA Former Head of European pricing in a global pet
could be accelerated website) insurance company
with additional push
• Increase of end-consumer awareness: strong push
2.1% of pet insurance through marketing campaign

"The US market is the biggest pet market in the
• Stronger rationale for insurance due to higher world, yet penetration rate of insurance product is
1.1% medical costs driven by specialty development very low.
and new treatments The market has begun surging and the trend should
continue. For the moment, the industry is located
in some states, which understand the benefit from
insurance products, mostly on the Eastern and
Fct
2016
2021
Western coasts"
2025
Former Development Director of a US pet

insurance company
1. NAPHIA, historic CAGR forecasted over 2020-2025

2. Assuming premium increase of +4.4% p.a. and pet population increase of +3.1% p.a. in line with historicals
Source: BCG analysis ; NAPHIA (North American Pet Health Insurance Association) 132
Pet insurance Market attractiveness Backup
Example of UK | Steady growth of pet insurance penetration gaining ~1% per year
since 1986 standing at around 30% in 2020
Historical evolution of pet insurance penetration in the UK (in %)

• Dynamic growth of pet insurance
penetration in UK since 1986
after slow take off between 1976
& 1986
• Market gaining ~1% of additional

penetration per year since take
~1% p.a. off, driven by:
– Increasing spending per pet

~30%
~27% – Increased awareness of
~25%
~22% consumers about insurance
policies and policy types
– Role of the vet community in
educating pet owners
~0% ~1%
1976 1986 2012 2017 2019 2020
Source: ABI, FortuneBusinessInsights, Expert calls, Desk research 133

3 Premium
Example of Sweden| In Sweden, pet insurers have passed on increase spend on

vet services onto end-customers via increased premiums (+9% p.a. '2006-18)
Pet insurers have passed on increase spend on vet Rationale

services onto end-customers via increased premiums
Evolution of annual pet insurance claims paid by insurers in Sweden (€M) "From a certain point, pet insurance enters a virtuous circle: the more insured pet
owners are, the more they spend and the more they visit the vets. At the same
time, as spending and vets' costs increase, more and more people are willing to
400 383 +9% CAGR ensure their pets to cover increasing costs"
345 Former Head of European pricing in a global pet insurance company
324
299
300 274
251 260 +9% CAGR
234 "Average spend in vet clinics has risen over the last years in Sweden linked to both

215 220 increase in the coverage of procedures treated by vets and from pure price
196 205 196
200 178 increase"
165
154 145
127 Swedish expert specialized in vet clinics
99
100
"Insurance players in Sweden are quite consolidated but not as much as vet clinics
where 2 players control almost all the market and are able to pass on price
0 increase. Insurance players cannot really try to control prices in this context"
2006 2008 2010 2012 2014 2016
Insurance premiums paid (in €m) Swedish expert specialized in vet clinics
Insurance claims paid (in €m)
Source: Expert interviews, Konkurrensverket report 134

Pet insurance Stakeholder value creation
Pet insurance profitability lower than other insurance markets to date but
getting better as market is becoming more mature, as demonstrated in Sweden
Pet insurance loss ratio for US at 74% vs. 67% average Experts interviewed confirm margin improvement
in Property & Casualty and pet insurance in Sweden potential to be unlocked
Market loss ratio1 "Pet insurance is a highly attractive market: it has a lot of room for
growth / increasing volumes and present many opportunities to increase
~74% margins"
~70% ~69%
~67% ~67%
Former Head of European pricing in a global pet insurance company
Expand distribution channels by (i) increasing penetration

among vets and breeders and (ii) push on online sale

Price Better assess risks with (i) big data use and (ii) increasing
increase historicity
opportunities
Benefit from vets' costs increase with (i) premiumization of
the market and (ii) virtuous circle implementation between
insurance and vets' prices
Sweden UK Trupanion Property & Private
(US) Casualty (US) passenger Decrease of products' costs distribution with online sale
auto (US)
Mature Cost Reduce frauds with analytics and big data
decrease
opportunities
Optimize claims' handling costs with digitization allowing to
1. Loss ratio = claims reimbursement / premium have a direct contact with consumers (damage claims, relation
Source: Experts calls, National Association of Insurance Commissioners 135
Pet insurance Competitive landscape
Pet insurance market is being shaped by few players, either vet specialists or
generalist insurance players; Mars positioned on the market in the US
USA UK SWEDEN
Date introduction 1982 1947 1890 (horse) and 1924 (dog)
• Healthy Paws and Trupanion proposing • Landscape reshuffled with AXA and Lloyds • Strong and steady concentration of players
Key trends single insurance plan to ease understanding Banking Group exiting in 2015, and Allianz in the market
by vets and pet owners losing Sainsbury's Bank as a reseller in 2019 • Consolidation of veterinary channel (Mars
• Trupanion developing partnership with • RSA launched network of preferred referral acquired vets' clinics network Anicura in
hospitals chains (e.g. preferred insurance vets for non-emergency procedures 2018 ; PE firm EQT acquired Evidensia in
for VCA – owned by Mars - since 2015, of Pet 2016 and continue consolidating the
Partners since 2016) market) increase vets' costs
Pet GWP ($B) – GWP = Gross Written Premium Pet GWP ($B) Pet GWP ($B)
~2.0 ~1.6 ~0.4

2%
Others 10% Others
20%
Other 31% 10% Sveland
Aviva
Players in 8%
18% IF
8% Bought By Many (3)
the market Healthy Paws 16% 9%
Direct Line Folksam
13%
Trupanion 21% RedSand
Trupanion partnering 14%
with vets' clinics VCA, RSA 60% Agria
owned by Mars Nationwide 32% 28% Allianz
Pet specialized insurer 2020 estimate1 2020 estimate2 2020 estimate1

Generalist insurer
1. BCG estimate based on number of pets insured
2. UK market worths £1.2bn at a 1.36$/£ rate ; GlobalData figures ; Allianz incorporates PetPlan and Pets At Home ; RSA includes TescoBank and Argos ; RedSand includes Animal Friends
3. BCG estimates: assumption of 80% of Bought By Many pets insured based in the UK 136
Pet insurance Competitive landscape Backup
Mapping of key pet insurance players in main countries
Position GWP Broker, distributor Pure player, Universal

Country Player Ownership on domestic market ($m) only underwriter insurer
Private 645
1
Listed 2 420 ~10% operational

profit2
Private 3 320 Chosen model to

save on frictional
Listed 370 costs and establish
1
direct relationship
with regulators
Listed 2 200

RedSand Private 3 140
Private n.a. 220
Länsförsäkringar 1 200 Worldwide GWP
PE (Columna Capital) 1 n.a.
Private 2 n.a.
1. Subsidiary of Länsförsäkringar - large bank and insurance group
2. Trupanion annual report: $57m operating profit for $500m GWP worldwide
Source: Annual reports, Web search, Expert interviews, BCG analysis 137
Pet insurance Strategic rationale
Potential opportunity for Ecosystem to "lock-in" customers through referrals to

the clinics network and own insurance with strong benefits for all stakeholders
Overview of vet, insurer and pet owner

Potential benefits of an integrated ecosystem
relationships
For vets
• Insurers' referral – e.g. exclusive referrals or discounts within
Pet owner clinics chain
• Insurers' education on novel treatments
din s
en sit
Op
re ize
A u b u rs p r e m
g
sp t vi
im d
ti m
to e m i u
For insurers
ed n
ma e
Be sati
as ue
• Vet's engagement in increased awareness and/or distribution (if
te nts s
tte sfa
e
re re q
ar

r c c ti
licensed1)
rc
In c re f
us on
tte
• Transparency on claims expected evolution (from billed vet

Mo
to
Be
m
services to insured pet owners)
me
• Pet owners' stickiness

r
Referral For pet owners

Education • Better care for their pets
• Optimized premiums based on ecosystem knowledge of pet and
Data on pets/pet owners owner historical background
Vet Pet insurer
Referral / Distribution1 • Simplified customer journey within vet-insurer ecosystem
Transparency on costs (fee schedule)
1. If licensed: due to regulation, in most countries, a vet must be licensed to be allowed to distribute/sell insurance products. Investment for a license ~500$ per vet (in the US) 138
Source: BCG, experts call
PE firm EQT invested in $220m GWP1 pet insurer Bought by Many to reinforce
its presence in the pet industry and generate synergies
EQT investment in pet companies
Description Investment date

$220m GWP pet insurer present in the
Potential synergies UK and in the US, covering nearly 2021
500,000 pets worldwide
between entities

1,700 vet clinics and hospitals across 12
European countries (mostly in the UK), 2014
and an online pet pharmacy
Vets' clinics
Pet insurance 277 stores in Finland, Sweden, and
network
Norway distributing pet furniture - pet
2014
food, accessories and services such as
grooming (#4 network in Europe)
IPO completed in 2020

– fully exited by EQT
1. Worldwide GWP
Source: press releases and EQT website 139
Pet insurance surge would have a snowball effect on the Ecosystem, since
would lead to increase in spend per pet
Illustration of pet care spend over pet lifetime, with & without insurance
Pet care spending
per pet
1 2 1 Increasing preventive & curative visits

• Pet owners increase preventive vets' visits when
insured
• Pet owners with higher spend per visit as
treatments and medical operations are taken
Initial over by the insurance

spend1
Increasing pet life expectancy, which results in

Pet life Pet life 2
expectancy expectancy increasing spend
without with • Pets are better healed and lives longer
insurance insurance • End-of-life spending being higher, strong impact
on average spend per pet over lifetime
Healthcare spending for an insured pet
Pet average life
(years)
Healthcare spending for a non-insured pet
1. Includes for example – bed, toothbrush, toothpaste, coat, lead, collar, tag, microchip, food bowl, water bowl, initial course of vaccinations and monthly wormers to six months of age,
toys, neutering
Source: Expert interviews, BCG analysis 140
Back-up | Recent study in the US show impact of average x2 visits and spend
per pet with insurance adoption
Impact of pet insurance on vet dog spend in the US, study by pet insurer Nationwide, n=~10M
Amount spent ($) Annual visit (#) Virtuous circle in place

with:
+488 +2 • Insurances
(+92%) (+73%) increasing vets
1,017 4.2 spending & prices

• Higher vets prices
leading to increasing
2.4
529 pet insurance
products
penetration
Without pet insurance With pet insurance Without pet With pet insurance
insurance
Source: NAPHIA (North American Pet Health Insurance Association), BCG analysis, The Impact of Pet Health Insurance on Dog Owners’ spending for Veterinary Services, MDPI ; AVMA report 141
Executive Summary
Daily Needs
Pet Food
Healthcare
Agenda Pet Pharma

Vet Clinics

Diagnostics Labs
Emerging Healthcare
Pet Insurance
IoT & Wearables
Appendix
142
Executive Summary – IoT / wearables
IoT / wearables is a nascent market experiencing strong growth though low profitability to date, with strong
ecosystem strategic value in the mid-term
• Wearable devices and IoT market expected to grow at ~9% p.a. in the coming years, driven by technology innovation (cloud, ai,
data, connectivity)
• High number of players (small startups and established pet companies) however with limited profitability to date
• Strong synergy potential with vet clinics leveraging data gathered to better diagnose and treat pets, and push users to visit
specialty vets clinics (ongoing experimentation between Mars-owned Whistle and Banfield)
• Additional synergies with pet pharma and food bringing highly valuable insights (e.g. better matching of drugs/ food and pet
characteristics) and with pet insurance by supporting their development (through optimized premium pricing)

• Need to define the ecosystem / partnerships for the Ecosystem to access the technology and best collect and value its data
143
Pet wearables Market attractiveness
IoT / wearable products in pet care market are developing with several
end-uses
Products End-uses
Smart collar and harness

• Smart pet collar or harness
fastened around pet neck or Identification Medical diagnosis Behavioral
body and tracking & treatment monitoring & control Safety & security
• Embedded sensors tracking
Definition Manage and safeguard Track vital signs such Monitor pet's behaviors Track pets in real-time
pet's posture, body language
pets as respiration levels and receive alerts through through an app
and sounds
and heart rate, seek video monitoring solutions connected to a collar-
• Providing available insights in
Ensure consistent expert advice, check and noninvasive sensors attached device
app: pet's location, training,
identification, as well symptoms, set goals attached to a collar
activity and health
as safety, and security and store record in Receive alerts on by cell

the cloud phone call, text
message, or email
Technology Radio-frequency Sensors RFID/ GPS RFID/ GPS

Smart camera identification
• Pet cameras capturing pet’s technology (RFID)
actions from collar or mobile
device
• Device allowing owner to
interact and monitor Estimated
behavior with pet remotely market 60% 15% 15% 10%
share
1. Radio-frequency identification technology (RFID)

Pet wearables Competitive landscape
Competitive landscape is still very fragmented with a majority of start-ups at

various stages of their development
Non-exhaustive
Company Started Products Status
2019 Collar with GPS, activity & health tracker Not launched yet
Collar with GPS, activity & health tracker Launched

2012 + telemedicine services Owned by Mars
Smart collar
& harness1
2013 Collar with GPS, activity & health tracker Launched – privately owned

2010 Smart identification Launched – privately owned
One product for pet monitoring (inc. laser Launched

2017 to play with pet), baby & home Privately owned
Range of smart cameras for home, baby Launched (Amazon spin-off) –

Smart camera 2017 & pet monitoring privately owned
2015 Smart pet camera, smart feeders, … Launched - privately owned
1. Some pet owners also using trackers designed for suitcases or valuables (e.g., Trackimo)
Source: Expert interviews, press & company websites, BCG analysis 145
Pet wearables Competitive landscape
~$600m raised by pet wearables companies since 2012 with acceleration over
the last 5 years
Focus on companies having raised

Fund raised by pet wearables companies since 2012 ($m) >$40m
Non-exhaustive
173 Smart collar tracking dog's
behavior, well-being and
position
46
121
Smart collar tracking dog's
behavior, well-being and
51 position

106
40 Smart devices such as leashes,
bowls, fountains, and litters
76 for dogs and cats
45 14 36
25 14 21 14
11 5 11
Tags attached to pets collars
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 and harnests used as GPS
trackers
(1)
Amount raised by pet wearable companies – excl. >$40m fundraisings
1. As of September 2021
Source: Pitchbook ; BCG analysis 146
Pet wearables Strategic rationale
There are several potential revenue enhancement opportunities for the

ecosystem
I II III IV V VI VII
Pet pharma Pet Food Pet products Med devices Non-med Medical
suppliers suppliers suppliers and equipment service providers service providers Retailers
Identification and
tracking
Medical diagnosis
& treatment
Behavioral
monitoring &
control

Safety & security
Revenue • Support R&D and • Support R&D and • Extend range of • No impact • Improve pet's • Clinics: Develop • Extend range of
enhancement product product products for sale handling telemedicine, products for sale
impact development by development by (pet trackers, proactive visits, (pet trackers,
enabling direct enabling direct activity monitors, better diagnostic, activity monitors,
collection of collection of etc.) monitoring etc.)
behavioral data on behavioral data • Increase price of treatment • Increase price of
pets on pets efficiency 1
existing products existing products
by adding Zoom on by adding
functionalities next slides • Insurance: functionalities
Improve
profitability by
Impact of technology on segment: Low High premium 2 147
adjustment
Pet wearables Strategic rationale Backup
1 Clinics
Wearables may become an accelerator of telemedicine, with first partnerships

with vet clinics already launched
Partnerships between IoT products

and vet clinics … … enabling development of new telemedicine services
Example of FirstVet and Pitpat Teleconsultation Remote consultation given by a veterinarian in real time
partnership launched in 2020 • Strictly regulated by the Decree n° 2020-526 May 5th 2020
• Declaration by the veterinarian of its teleconsultation activity to the
• Partnership between PitPat, a UK dog regional council of L'Ordre, specifying the type of medical care services
activity monitor through wearables, and experimented
FirstVet, a startup providing pet owners on-
Telemonitoring Remote interpretation of the data necessary for the medical monitoring of the
demand video consultations with vets
pet
• PitPat Life plan members offered free video
• Strictly regulated by the Decree n° 2020-526 May 5th 2020
vet appointments
• Recording and transmission of data can be automated or carried out by the

pet owner or any organization authorized by the owner for this purpose
Example of Whistle product

launched in 2020 Tele-sorting Remote orientation of the pet owner in a case of emergency to the appropriate
service
• Whistle wearable born by pets and tracking • Can be done either by a veterinarian or an ASV
pet's activities • Often implemented through call centers
• Whistle app allowing owner to access pet's
data, get alerts and set goals Tele-advice Remote conversation between a pet owner and a veterinarian/ASV about
• Whistle app giving the possibility to get general pieces of advice regarding the pet's health, in the respect of three main
instant access to a free Tele-Vet service, constraints:
within the app • No element can be collected in order to make a diagnosis
• No diagnosis can be made
• No prescription of drugs can be provided
Source: BCG analysis ; Whistle website ; press article 148
Pet wearables Strategic rationale
In the mid-term, IoT for pets with potential to transform

current pet (owner)/ vet interaction Disruption potential
Technology services could
increase loyalty and drive
Functionality & application Impact/Benefits
care / prevention
Wearables for pets offer GPS & As incremental impact, vet efficiency compliance
fitness/health trackers combined increases and vet can make better Long-term adherence
with mobile interfaces, e.g. informed treatment decision and
• Location tracking
required to create
monitor recovery
• Geo-fencing: Notifications meaningful data – same
when pet leaves pre-defined In the long-run, vet treatment focus challenge as for humans,
zones could shift, as less profitable flea & but with less regulatory
• Activity tracker, e.g., tick segment moves away and gives challenges
accelerometer/ altimeter to room for more profitable complex

flag unusual tiredness procedures & treatments Technology to improve
• Temperature further usability, value
• Signals send for training proposition & data
purpose compatibility, e.g., with
For the pet owner, vet visits will be
less frequently required, especially practice mgmt platforms
not with the pet – owners are more To reach scale, investor
informed and can better engage with
with broad reach required –
their pets well-being and health care
opportunity for Animal
Health or consolidated
Source: PetPace; FitBark; Wearable.com; BCG Expert Interviews; BCG Analysis service provider 149
Pet wearables Strategic rationale Backup
2 Insurance
UK insurer RSA has launched a preferred referral network and invested in pet
wearables to better control costs
Preferred Referral Network Pet telematics

• Increasing veterinary costs • Pets with longer lives more prone to lifestyle-
Problem • Strong power of vets to recommend unnecessary related diseases such as obesity
expensive treatments • Need to educate consumers
• Establishment of preferred referral network for • PitPat launched at CES 2016

specialist vets in Dec 2015 • RSA invested in February 2017, considering
– Current 52 partners through the UK, looking PitPat a tool to educate customers and to
for practices that offer high-quality service collect data

for reasonable cost
Actions – £200 “penalty” for non-urgent referrals “We essentially provide private health
outside network insurance for dogs and (...) education and
encouraging prevention of disease is
– 10,000 payments in 1S 2016 paramount”
– Higher convenience as vet fees can be paid
by RSA directly to the vet
“For us, being able to control costs with our vet “PitPat offers us a powerful and practical way
partners in the network will help us manage our of generating lots of secure and robust data
claims cost more effectively and ensure that about 200 breeds of dogs that is incredibly
policy limits last as long as possible” easy for us and valuable for our customers”
Source: Company websites; press article 150

Executive Summary
Agenda Deep dive on key segments

Appendix
151
Ecosystem perspectives
Largest players of the pet care industry are starting to build ecosystems
covering several segments, yet with limited synergies to date
Zoom next slide on each player's acquisitions
I II III VII IV V VI I II III VII IV V VI

Pet pharma Pet Food Pet products Distributors & Medical Non-medical Digital Pet pharma Pet Food Pet products Distributors & Non-medical
suppliers suppliers suppliers Retailers service service solutions suppliers suppliers suppliers Retailers Medical service service Digital solution
Standard pet Vet digital
Core business in Pet Food Core business in Pet Food

Vet digital
Antibiotics Cat litters Distributors Generalist clinics Pet grooming Antibiotics Standard pet food Cat litters Distributors Generalist clinics Pet grooming
food platforms platforms
but progressively expanded but progressively expanded

Premium pet Traditional Boarding / Hotels IOT / wearables Traditional Boarding / Hotels IOT / wearables
Parasiticides Toys Specialty clinics Parasiticides Premium pet food Toys Specialty clinics
food retailers Day care for pets retailers Day care for pets
Treats and Specialty Laboratories / Crematoriums / Laboratories / Crematoriums /

Vaccines Other accessories Others (apps…) Vaccines Treats and mixers Other accessories Specialty retailers Others (apps…)
mixers retailers Diagnostics Funerals Diagnostics Funerals
Dietary Dietary
Others Online channel Pet insurance Breeding Others Online channel Pet insurance Breeding
supplements supplements
Drug Drug
compounders compounders

Result of a merger between
I
Pet pharma
II
Pet Food
III
Pet products
VII
Distributors &
IV V
Non-medical
VI
Henry Schein Animal Health I
Pet pharma
II
Pet Food
III
Pet products
VII
Distributors &
IV V
Non-medical
VI
suppliers suppliers
Standard pet
suppliers Retailers Medical service service Digital solution
Vet digital
(distribution of medical suppliers suppliers
Standard pet
suppliers Retailers Medical service service Digital solutions
Vet digital
products to vets practices) Core business in Pet Pharma

Antibiotics Cat litters Distributors Generalist clinics Pet grooming Antibiotics Cat litters Distributors Generalist clinics Pet grooming
food platforms food platforms
Boarding / Hotels Boarding / Hotels

Premium pet IOT / wearables Premium pet IOT / wearables
and Vets First Choice

Traditional Traditional
but progressively expanded

Parasiticides Toys Specialty clinics Parasiticides Toys Specialty clinics
food retailers for pets food retailers for pets
Day care Day care
(practice management
Treats and Other Specialty Laboratories / Crematoriums / Treats and Other Specialty Laboratories / Crematoriums /
Vaccines Others (apps…) Vaccines Others (apps…)
mixers accessories retailers Diagnostics Funerals mixers accessories retailers Diagnostics Funerals
Others
Dietary
supplements
Online channel Pet insurance Breeding
software for vets & online Others
Dietary
supplements
Online channel Pet insurance Breeding
Drug
compounders pharmacy) Drug
compounders
152
Ecosystem perspectives Backup
The top global pet care companies are making acquisitions in all regions every
year to reinforce their Pet care ecosystem
Non exhaustive
2017 2018 2019 2020 2021
Vet Vet
clinics clinics
+ Diagnostics
& boarding
Pet food Pet food Pet food

Practice
mgmt. Vet social Pet wellness
software & network platform
training1
Practice
Diagnostics Pet food mgmt. Pharma
software
1. Merged with Henry Schein to form Covetrus

Source: Capital IQ, press review, BCG analysis 153
Illustration: Mars Petcare is creating an ecosystem through segment expansion

and cooperation, as well as entities fostering innovation for the whole ecosystem
Preliminary
Mars Petcare is expanding into multiple segments, and In addition, Mars Petcare created transversal entities
creating cooperation between players to reflect on scientific improvements and tech
• Research and development center of Mars

Petcare
Pet food Medical Service Non-med. Pet tech • Performing scientific studies to improve and
supplier provider Service provider solutions innovate in products (creating innovative
food products for the Pet food supplier
branch) and services (new techniques in pet
dentistry for medical service provider

branch)
Mars Petcare is pushing cooperation between companies in its

portfolio Zoom on next slide
• VCA clinics only using Antech labs for diagnostics
• Independent entity within Mars Petcare
• Whistle and Banfield Hospitals partnering to create The Pet
launched in 2016
Insight Project (Leveraging data to uncover insights on pet health)
• Created to assess and reflect on the
potential for tech developments in pet care
Cooperation sometimes limited by ethical / regulatory reasons
• Threefold mandate (Think tank, venture
• Vet clinics owned by Mars Petcare can not sell exclusively pet
capital fund, and startup incubator)
food products from Mars Petcare due to risks of Antitrust law in
US
• As medical professionals, veterinarians can not be asked to push
exclusively Mars Petcare for ethical reasons 154
Illustration: Zoom on Kinship – Entity allowing Mars Petcare to be at the

forefront of tech innovation in pet care market
Preliminary
A dedicated entity within Mars Petcare… …With multiple initiatives to create an ecosystem
• Launched in 2016 by L. Sudakov, former CMO of Mars

• Think tank to reflect on the overall future of pet care
Petcare, as a small think tank to reflect on the future
market, organize events to generate new ideas (such as
of pet care market
hackatons), and advise different entities of Mars Petcare
• Core team of 200 employees today
• Main role of finding and partnering with pet industry

• Accelerator program for startups (Partnership with

startups
– Upside for startups: Mars Petcare’s financial Michelson Found Animals Foundation) offering mentorship
backing, data tools and industry expertise to & data from the Mars Petcare ecosystem
accelerate their businesses
– Upside for Mars Petcare: potential new revenue
streams, head start on the trends shaping the
future of pet care, and access to consumer data • Venture Capital Fund of $100M
• Mars only investing not buying, to be seen as partner of
choice and create a network of startups with capabilities
it can leverage
155
Preliminary
Vision for the • What are the synergies and use cases
envisioned within the ecosystem?
ecosystem
and value at • What is the value at stake derived from
stake those synergies / use cases?
Key questions to
address when
defining an
ecosystem

• Which segments/geographies are
Segments & intrinsically attractive to address?
geographies in • Which segments have most strategic
which to play value to the ecosystem in terms of
referral synergies and data?
156
Vision
Vision for Petcare ecosystem: a pet care leader offering unmatched benefits to
all stakeholders in its ecosystem
Illustrative
Pet owners Petcare ecosystem Companies

• Better, more personalized • Truly differentiated offer for
and timely care and customers
protection for their pets • Referrals from other Petcare
• More convenience businesses
• A trusted set of services • Deeper relationships with
customers (full ecosystem)
• Access to best practices and
tools from across ecosystem
• Financial upside

Pets Partners
• Healthier life through • Access to Petcare
better, more ecosystem's
personalized care capabilities, market
access and data
• Financial upside
157
Vision
Commercial synergies: Veterinarians are the most used source of information

closely followed by social media & web, while breeders are far behind
Veterinarians are the most used source according to pet owners

What sources of information do you use for your dog? (potential multiple
answers)
60%
42%

28%
15%
7% 5%
Vets Social Media Friends / Retailers Breeders Advertising

/ Web relatives
Potential bias regarding breeders due to one shot
touchpoint at beginning of pet's life only, however
Source: APPA US Pet owners Survey 158
still important source of info in pets early life
Vision
Commercial synergies: Going forward, veterinarians and social media will have
more influence, with most frequent interactions
Frequency of
touchpoints Key characteristics Trend in level of influence
Breeders One shot + First person to interact with pet owner, critical time with early life of pet Decrease in percentage of pets
+ Seen as highly knowledgeable due to past experience with similar breeds sourced from breeders (tbc)
- One shot touchpoint during early life, rapidly replaced by other specialists
Veterinarians Yearly + Touchpoints at different stages of life, with critical times (Health issues) Vets increasingly perform
+ Scientific posture of vets provides them with strong influence preventive care on healthy pets
+ Potential to create long-lasting personal relationship with pet owners

Retailers Monthly + Retailers increasingly offer advices for customers in specialty stores Increase in specialty retailers
- Pet owners tend to disregard health advices from non medical sources offering trusted advices
- Difficult to build personal relationship with a individual customers
Social media / Daily + Pet owners trust fellow pet owners who have experienced similar questions Increasing penetration of social
Web - Contradictory advices available from multiple sources can confuse owners media (incl. specialized ones) as
source of info for pet owners
Insurance One shot + Contractual duties influence pet owners in their decisions Majority of pet owners still
- Insurance can only influence a small scope of pet's life (vet clinics) uninsured so low influence
159
Vision
Data enabled synergies: Selected high value potential use cases could be
enabled by the ecosystem
Highly preliminary figures
Connected devices for Accurate insurance Digitalization of the Fully personalized offers
everyday health quotations merging medical relationship on pet food / diet.
monitoring multiple data sources (telemedicine, forums) supplements / drugs
• Combination of real-time • Combination of statistical data • Combination of data from • Combining individualized data
Description tracking activity (from from vets, diags, insurers to multiple sources to redefine of pet (Medical history, DNA
iot/wearables) & pet health build new insurance products access to vets for pet owners results, pet owner purchase
(from vet medical records) • Data from pet and pet owner • Centralized self-service access to history) to adapt offering and

• Automatically detect potential personal situation (from vet trusted information, diagnostics propose fully personalized
diseases or deficiencies and clinic/insurer) helps results, history of medical diets / therapy
send alerts to owner (& other personalize plan and premium records, telemedicine, IoT for
stakeholders) check-ups from distance, etc.
• Vets: Uplift in # of routine care • Vets: Increased penetration of • Vets: Increased number of • Vets: Increased revenue from
Main visits due to owner receiving pet insurance, driving visits, routine consultations, ability to food, drugs & products for vet
benefits & alerts and reminders esp. for expensive procedures capture patients outside of clinics able to sell those
value at • Device maker: increased • Vets: distribution / brokerage immediate neighborhood exclusive products
usefulness driving sales & usage fee (tbc) • Vets: Uplift in sales from online • Food/Drug makers: uplift in
stake (incl. premium subs.) • Insurer: Increased revenues pharmacy, with direct sales links pricing
• Food/Drug makers: Increased and decreased risks by better • Food/Drug makers: Promotional
sales by pushing personalized pricing & control over claims platform (although controlled by
promotions based on pet's health vet) 160
Vision
Data enabled synergies: These use cases would require sharing and analyzing
data across many different players
Illustrative
Food & Drugs

Vet clinics² suppliers Diag. labs Insurance Wearables & IOT
Connected devices for • Electronic health • Diagnostic results • Activity and behavioral
everyday health records (EHR) of pets (incl. DNA) (food, drug, etc.) data
monitoring (incl. health, diet)
Accurate insurance • Probability of disease / • Diagnostic results • Data from past claims
quotations merging condition by pet (aggregated (avg. lifetime cost by
multiple data sources • List of treatments / statistical data of pet type)
procedures and disease prevalence
associated costs by breed, age)

• Pet EHR (for
Digitalization of the personalized quote)
medical relationship • Pet EHR • Diagnostic results • Activity and behavioral
(telemedicine, forums) (incl. DNA) and (food, drug, etc.) data
disease prevalence of pet
for this genomics
Fully personalized • Pet EHR • List of food/drugs • Diag. results (incl. • Activity, behavior data
offers on pet food and • Pet owner profile and offerings and genomic profile) from pets
diet supplements preferences specification
Secondary data to 161

Primary data enabling
enhance / personalize
use case delivery
use case
Executive Summary
Agenda Creating a Global Pet Care ecosystem
Appendix

Methodology & sources
162
Executive Summary
Agenda Creating a Global Pet Care ecosystem
Appendix

Methodology & sources
163
Methodology and data source (1/2)
The sources of information we primarily used for this analysis are:
• Interviews with BCG sector experts and BCG wider experience in the sector (incl. past due diligence in the vet clinics space) - see below
• > 40 interviews with market experts (from competitors, sponsors, CROs…) - see below
• Public & private data sources: American Pet Products Association, American Veterinary Medical Association, North American Pet Health Insurance, Companies
websites and press releases, Euromonitor, Mordor Intelligence, Grandview, Allied Market Research, IBISWorld etc.
Segment BCG Experts Experience

James Tucker Managing Director & Partner, US vet clinics market
Medical Services Victor Corzo Managing Director & Partner, European vet clinics market
Torben Danger Managing Director & Partner, leads BCG's Global Medical Technologies Sector, Diagnostic labs
Johann Stiessberger Global Topic Leader Animal Health
Pet pharma Jean-Marcel Ciet Principal, led several projects in AH

Eduardo Guemes Principal, led several projects in AH
Jean-Christophe Gard Managing Director & Senior Partner, Insurance Global Sector Leader
Bryan Marcovici BCG DV Venture Architect Director; Responsible for launch of Pumpkin.care in US
Pet insurance
Ines Relvas Pet insurance project for leading Portuguese insurer
Nick Gagnon Knowledge Team Insurance
Ulrich Pidun Director, global topic leader for Corporate Strategy, research on ecosystem strategy
Others Nikola Vukovic Partner, led several projects in pet food market in Europe
Raphaël Blanchin Principal, core member of Consumer Products and MSP practices
164
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Pet Care

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​Retailers & ​Non-medical ​Veterinary ​Medical

Stakeholder value creation

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Potential for consolidation

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191 ​Daily needs 3% 4% • Food premiumization in mature countries (US,

​2013 ​2018 ​2020 ​2021 ​2026

Split of EBITDA Margin & Revenues per segment (2020, $Bn)

Copyright © 2021 by Boston Consulting Group. All rights reserved.

​+4% p.a. 27 ~40% 8% 10%

Copyright © 2021 by Boston Consulting Group. All rights reserved.

​2008 ​2013 ​2018 ​2019 ​2020 ​2021E ​2026E

Not relevant for emerging healthcare

​Pets per household

Copyright © 2021 by Boston Consulting Group. All rights reserved.

​spend/ pet ($)1

Copyright © 2021 by Boston Consulting Group. All rights reserved.

Copyright © 2021 by Boston Consulting Group. All rights reserved.

Copyright © 2021 by Boston Consulting Group. All rights reserved.

Market size (US, B$) ~$95Bn5 ~$65Bn2 ~$19Bn3 ~$13Bn4 n.a.

Market size (Global, B$)~$225Bn1 ~$350Bn

Companion animal Production Animal

Vaccines and medicines ​~10% Vaccines and medicines 5%

Copyright © 2021 by Boston Consulting Group. All rights reserved.

Purchased feed 87%

1. Nutritional feed additives

Packaged food, with a Feedstock

Cat litters, toys, other • na na

Distributors & retailers Mostly B2C Mostly B2B

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Platform to exchange tips, Tagging & monitoring to

Source: BCG, companies websites 13

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Copyright © 2021 by Boston Consulting Group. All rights reserved.

Pet care is a ~225B$ market comprised of Daily needs, Healthcare and

• Manufacturing & supply of pet food

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Pharma suppliers ~$15Bn

Distribution Products Services Products Services Products Service

Copyright © 2021 by Boston Consulting Group. All rights reserved.

Specialty Treats and Crematoriums / Vaccines Software

~$30B ~$3B ~$2B ~$3Bn ~$0.5B

Online channel Dietary Breeding Others Other Devices

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191 ​Daily needs 3% 4% • Food premiumization in mature countries (US,

​2013 ​2018 ​2020 ​2021 ​2026

Split of EBITDA Margin & Revenues per segment (2020, $Bn)

Copyright © 2021 by Boston Consulting Group. All rights reserved.

Source: expert interviews, company reports, BCG analysis 19

​+4% p.a. 27 ~40% 8% 10%

Copyright © 2021 by Boston Consulting Group. All rights reserved.

​2008 ​2013 ​2018 ​2019 ​2020 ​2021E ​2026E

Source: BCG analysis 20

Copyright © 2021 by Boston Consulting Group. All rights reserved.

1. Service formerly provided by family and friends, becoming a paid service

12 ​Speciality Clinics 12% 12%

Copyright © 2021 by Boston Consulting Group. All rights reserved.

9 • Increasing tests complexity driven by new treatments

​2013 ​2018 ​2020 ​2021 ​2026

Source: BCG Analysis 22

Retailers & Non-medical Veterinary Medical

191 Daily needs 3% 4% • Food premiumization in mature countries (US,

2013 2018 2020 2021 2026

+4% p.a. 27 ~40% 8% 10%

2008 2013 2018 2019 2020 2021E 2026E

Pets per household

spend/ pet ($)1

Vaccines and medicines ~10% Vaccines and medicines 5%

191 Daily needs 3% 4% • Food premiumization in mature countries (US,

2013 2018 2020 2021 2026

+4% p.a. 27 ~40% 8% 10%

2008 2013 2018 2019 2020 2021E 2026E

12 Speciality Clinics 12% 12%

2013 2018 2020 2021 2026

2013 2018 2020 2021 2026

-20 -20 -20

-40 -40 -40

Daily needs Healthcare Emerging Healthcare

Emergence of millennial pet owners already USA Western RoW

2013 2020 2026 2013 2020 2026 2013 2020 2026

6% 20% 60

23.1 22.7 22.4 22.1 21.8 21.4 -1.7 pts

20.3 19.8 19.8 19.8 -1.6 pts

33.9 35.3 36.5 36.7 37.2 37.2

2015 2016 2017 2018 2019 2020

29.3 29.0 28.1 27.3 27.2 27.3 -2.0 pts

19.2 19.3 19.1 18.8 -0.3 pts

7.1 6.9 6.6 6.5 6.8 7.4 +0.3 pts

2015 2016 2017 2018 2019 2020