This small cap reckons the next big market for COVID-19 disinfectants is horse racing

While hand sanitiser demand took off thanks to COVID-19, there are also new markets emerging for products to protect animals.

One small cap started with the pig industry, but is now eyeing the potentially lucrative horse racing industry.

Last October, well before COVID-19 hit Australian shores, Apiam acquired the distribution rights for Zoono’s (ASX:ZNO) Z-71 Microbe Shield disinfectant.

In recent weeks, the Bendigo Jockey Club turned to Apiam Animal Health (ASX:AHX) for disinfection services to make sure races can go ahead safely.

The Z-71 Microbe Shield disinfectant lasts for up to 30 days on surfaces and is effective against COVID-19.

“We’d been applying that in the pig industry to improve the environment for live stock,” Apiam’s managing director Chris Richards explained to Stockhead.

“The equine industry is part of that too but of course when COVID came in we were fortunate in that the product we had was registered by the TGA [Therapeutic Goods Administration] as effective against COVID-19.

“So we’ve been applying that since March at Bendigo racecourse not only to make sure that all those surfaces in the horse area are covered in terms of COVID-19, but we’ve also been applying it in the jockey’s rooms, in the stewards’ rooms and everywhere the officials have been going as they’ve kept that industry going.”

Bendigo-based Apiam does more for the races than disinfection. Last month it became the naming rights sponsor for October’s Group 3 Bendigo Cup.

Racecourse demand will go up

Richards anticipates more racecourses will start utilising its disinfectants as racing gets back underway and crowds are welcomed again.

“I’m expecting that we’ll be rolling this out across a number of other racecourses, particularly as crowds start to come over the next month or two,” he said.

Similar to other small caps entering the disinfection field, Richards said this wasn’t a short-term cash grab.

“Over 70 per cent of our sales have actually gone into the animal health industry, not related to COVID. The use of this product as a surface disinfectant is pretty exciting; that’s where we see the real growth,” he said.

“Certainly the use of hand sanitiser and these products will increase. But for us the excitement is in the animal health side.”

Apiam is also looking beyond Australia, having launched itself over in the US back in January.

It has begun supplying into the country’s pig and turkey industries. But Richards says Apiam hopes to expand its client base, naming racecourses and zoos as two specific opportunities.

Apiam’s fortune prevails during pandemic

Prior to the pandemic Apiam was better known for its vet services and technological solutions for livestock. The company made $111.7m in revenue last financial year and an after-tax profit of $4m.

Richards told Stockhead its other businesses had continued during the pandemic because they were deemed essential services.

“From a business point of view we’ve probably been one of the more fortunate businesses being an essential service,” he said.

“In our mixed animal clinics and companion animal clinics there’s been a surge for the demand in services on the veterinary side.

“There’s been a high demand for pets during the period, a lot of people have gone and got new dogs and the pounds are empty.

“We’ve certainly seen that in our business. We’ve seen an increase in services on the companion animals side.”

Richards also noted things weren’t all bad for the large animal side — farmers were happy that the drought had eased in the last six months.

“The last six months have been productive on the rural side with good rain falls and pretty good commodity products in most of the industries,” he said.