IDEXX Laboratories: Leading the way in Veterinary Healthcare

A key focus of the WCM Quality Global Growth portfolio is to find quality global companies with durable, strengthening economic moats and corporate cultures aligned to this growth.

IDEXX Laboratories has become the leading provider of veterinary products and services in the US. This industry-leading position is underpinned by a culture of meticulous planning and long-term strategy. In this brief update, Brian Huerta of WCM Investment Management (WCM) explains how Idexx Labs maintains its position in the industry and continues to strengthen its competitive advantage.

Stock in Focus: IDEXX Laboratories

Alistair Dunne (AD): Hello, and welcome to Stock In Focus. My name’s Alistair Dunne and joining me from WCM Investment Management is Brian Huerta. G’day Brian.

Brian Huerta (BH): G’day Alastair.

AD: The stock we’re going to focus on today is Idexx Labs. Are you able to give us an understanding of what it is they do?

BH: Idexx Labs sells diagnostic equipment to veterinarians here in the U.S. It’s really to keep our companion animal friends, our cats and dogs, merely helps them stay safe and healthy.

AD: And what does WCM define as their competitive advantage?

BH: Yeah, so they really are the industry. If you were to look at some of their R&D dollars that is spent on companion animal health, they spend about 75 to 80 per cent of all the dollars. So they are the category.

What really makes their competitive advantage really unique is that they have a huge install base. They put equipment in the offices of a vet, it incentivises the vet to go back and purchase more, use the equipment first of all, but also purchase more things from Idexx Labs, and send items to the reference labs. It really creates kind of a razor and razor blade type model. Once the equipment’s in the system, it immediately generates additional sales of consumables and other things that they’ll use in their veterinarian offices.

AD: Brian are you able to give us an understanding of the organization’s culture, and how it supports that competitive advantage?

BH: As I mentioned they are the category and they spend the most dollars. So, they really have a responsibility, they feel to themselves and to the industry to think and plan long term. they’re meticulous planners, they spend a lot of money and put a lot of effort behind making the best equipment.

They don’t want equipment being returned to them, they want that equipment to be in the labs and in the vet offices. So, the culture really brings in talent that are the strongest engineers, the really good customer service reps, and a culture that seeks perfection and good account management with the vet offices.

AD: Brilliant. Thank you so much Brian. Thanks for your time.

BH: Thanks Alastair.

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