A couple of my recent assignments have brought me into the big wide world of animal health, meaning emerging markets in Asia Pacific, Middle East, Africa, and Latin America. There you will find a different landscape for our industry, with different needs and drivers than what we sometimes overly focus on- that being the mature USA and European markets. (Note: Recently I saw that there is state bill being presented in Oregon that essentially outlaws hunting, fishing, and animal farming. Imagine presenting that to someone on the streets of Calcutta?)  

In emerging markets, you see a significant growth in pet care and spending. Innovation is still highly valued and generally does well when brought to these markets. But affordability is a big issue and finding ways to make products more available to larger populations will be one of the big opportunities for our industry.   

As for food animals, it is a big driver of growth- in these markets you have billions of mouths to feed that continue to be growing at a rate exceeding the mature market populations. Food availability, affordability, and security will forever be the dominate theme in this area. While we go into a Whole Foods, or Marks and Spencer and see ‘organic’, ‘free range’, ‘no hormones’ or ‘no antibiotics’ highlighted on the label- go into a store in Brazil or Indonesia and it’s a different choice operating: what’s available and what can I afford it? 

 The duality of these differing markets (mature vs. emerging) creates difficult choices for animal health companies on how to direct their strategic vision and choices. In my view, the ones that do it right will be the winners and the most sustainable. 

Paul Casady 

The recent announcement of Tractor Supply Company’s acquisition of VIP Petcare sets up a formidable challenger to Chewy’s veterinary ecosystem that they are building with their recent acquisitions of Modern Animal and Smart Equine with a few notable differences –Customer Positioning and the value of Brick and Mortar. 

Chewy positions themselves with premium care and service targeting consumers (especially Millennials and Gen Z) who treat their pets like children and are willing to spend more on them.  Tractor Supply, with 85 years in business, has positioned themselves as rural lifestyle retailer focused on low prices.  Two ends of the spectrum of pet care but data shows repeatedly that the income range of all pet owners tends to skew to the lower end of the range not the higher.  

Are the days of Brick and Mortar seeing a comeback?  Tractor Supply plans to grow to 3,200 stores by 2030- opening in rural and exurban communities. In addition, they continue to expand their smaller pet specialty stores, Petsense, in more urban/suburban areas. While Chewy will have some physical space with their veterinary clinics- they aren’t focused on providing retail services ( at least not yet). In addition, they are already being targeted by pet retail competitor Petsmart- calling out the advantages of in-store pickup- a benefit that Tractor Supply also offers. 

Not sure exactly how this will play out but one thing is for sure, it will make for some interesting times ahead. 

Dr. Christine Merle, Newsletter Editor

Like other industries, animal health thrives on innovation, and this edition of the newsletter includes several examples. A new treatment for canine allergic and atopic dermatitis. A new authorization for an established anti-parasitic. A new product for the evaluation of adrenal function in dogs. The addition of a new biomarker added to diagnostic tests.

When we do benchmark studies, one of the key metrics we look at is age of product lines. What percentage of sales are derived from products launched in the last 3-5 years? How do you compare to your peer competitors? It’s an important measure of whether you are keeping pace in your industry.

It won’t be long before management teams start meeting to initiate strategic planning and budgeting for 2027. We encourage you to include age of product lines as one of your core evaluations. Please let us know if we can help.

John Volk, Senior Consultant

We recently published the animal health industry’s first Sentiment Index and the respondents’ sentiment for 2026 was “cautiously optimistic.” But after watching the stock market’s response to Zoetis’s 1Q performance and their updated full year outlook, perhaps the sentiment could turn pessimistic. So, I thought I would try to find some optimism for you this week.

Here are the 1Q 2026 growth rates (corrected for exchange) for the animal health businesses in the companies that have reported so far:

Of these 13 companies, 9 of them are at or above the 5-6% long term average animal health industry growth rates. So, when I saw a recent article from McKinsey, The case for optimism in uncertain times, I had to read it.

The author makes a great point when he states, “Many influential figures have argued, correctly, I think, that long-term optimism is not just descriptive, it’s generative: it helps to shape a better future by motivating the search for solutions.” In the article, the author references a book, A Century of Plenty written by several McKinsey authors. “[The authors] …argue that sustained growth is good, that there is enough for all, that it’s up to us to build the future, and that how we think and talk about the future really matters.”

Progress is uneven, unpredictable and driven by innovation. And innovation was the primary reason for optimism in our Sentiment Index.  The article concludes “Again and again, optimists have been on the right side of history. Optimism keeps us moving forward.” Even after some have had slow quarter.

Bob Jones

In the last several decades, the financial performance of the major animal health companies has been driven by the companion animal market segment. Will we join Marty McFly and go Back to the Future where the livestock segment is the driver of performance? It seems that this is the case for 1Q26 as Merck, Elanco and Zoetis all posted strong livestock growth rates.

In 2025, for the first time in many years, the livestock segment grew faster than the companion animal segments in the largest animal health companies. Merck and Elanco both reported that in 1Q26, their livestock segments grew +8% and +13% respectively (adjusted for currency), double the rates of growth for their companion animal businesses. Zoetis also just reported 1Q26 results with livestock posting a growth rate of +12% (adjusted for currency and divestitures) while its companion animal segment declined. This, even though in January 2026, the size of the U.S. cattle herd hit a 75-year low of 86 million head. A report from Piper Sandler mentioned that in 2025, the number of beef cows dropped to the lowest levels since 1961. The 2025 calf numbers declined 2% and cattle on feed dropped 3%, indicating that an expansion in the cattle herd isn’t likely before 2028 if at all. Where is the growth coming from with these declining numbers?

Well, it must be coming from producers seeing the value in utilizing preventative treatments such as vaccines, medical feed additives and premium nutritional specialty products to protect the health of their valuable investments. In addition, international markets are strong and growing, especially in Latin America and Asia. Beyond preventative treatments, the investment in and use of technological solutions to manage herd health is taking hold. Those companies with strong global livestock product lines should see strength as the year progresses. Let’s see if Doc Brown’s Delorean with its flux capacitor, will continue the travels for the rest of 2026. If 1Q26 is any indication, that seems to be the case.

Randy Freides

Why You Should NOT Invest in Animal Health 

Let’s be honest, animal health is not an easy place to make money as an investor. For decades, insiders have repeated the same narrative: great fundamentals, resilient demand, strategic interest. And yet, for many investors, returns have been inconsistent, timelines long, and exits unpredictable. At Brakke Consulting, we’ve heard this frustration for years, and it’s not wrong, and it is not going away.

Compared to sectors like energy or real estate, animal health often looks inefficient. Deals are smaller, markets are fragmented, and scaling can be painfully slow. Regulatory pathways, while faster than human pharma, are still complex enough to delay value creation. Meanwhile, capital is tied up for years with limited liquidity options.

There’s also a structural issue: too many companies chasing too little specialized capital. Unlike tech or clean energy, animal health lacks a deep, broad and educated investor base. As a result, many good companies struggle to get funded, and investors struggle to find high-quality, de-risked opportunities. That’s not a great combination.

And let’s not ignore another uncomfortable truth: we’ve been talking about these problems for decades. Conferences, panels, white papers … same issues, same conclusions, very little structural change. At some point, repeating the narrative becomes part of the problem.

So why invest at all? Because inefficiency creates opportunity and open the door for meaningful changes. Better curation, smarter capital structures, and a more engaged investor base could unlock incredible value. Until then, the question stands: is your money better deployed elsewhere … or are you waiting for an opportunity to participate?

Alexis Nahama 

Recently, I traveled from my home in Florida to Tennessee to celebrate my aunt’s 96th birthday. During the long drive, I found myself thinking a lot about change and longevity. One thing my family has taught me in recent years is that you must be tough to make it into your 90s—and if you do, you’ve certainly witnessed a lifetime of change.

Leaving Florida, the heat already felt like mid‑summer. But as we drove north into the mountains, the world shifted to early spring—fresh green grass, budding trees, and cool air. Then one morning, we woke up to frost on the branches and freezing temperatures, a surprise I hadn’t packed for.

Change is expected, but it still manages to surprise us. The veterinary business is no different. People love their animals and will go to great lengths—and expense—to care for them. We continue to see approval of innovative products that give veterinarians new tools to help their patients. Yet at the same time, practices face pressure: clients’ budgets are stretched, and broader economic forces—fuel prices, tariffs, market volatility—affect both owners and clinics. Ambulatory veterinarians have watched their weekly fuel costs climb, and anyone who has traveled to a conference lately has felt the impact. Was this in your 2026 budget?

For me, the takeaway is simple: stay flexible, adapt to the changes, and enjoy the ride. And hopefully, live long enough to see even more of it.

Chuck Johnson, Senior Consultant  

It is my pleasure to announce that Brakke Consulting will make its debut at the BIO International Convention 2026, taking place this June in San Diego, California, and is a meaningful milestone for our firm and the clients we serve.

On June 22, in partnership with Abiquifi, Brakke will host the Brazil One Health Summit, an official satellite event of BIO 2026. A curated group of Brazilian animal health startups will present investment-ready technologies to an audience of industry leaders, MAPA representatives, executives, researchers, and investors from around the world.

Our objective is to advance Brazil’s standing as a strategic biotechnology hub while reinforcing its global leadership in the veterinary sector. The Summit is grounded in a One Health framework, integrating animal, human, and environmental health and will bring high-potential Brazilian innovations to international markets.

We invite you to attend for three compelling reasons. First, you will gain direct access to emerging Brazilian startups with technologies ready for investment and partnership. Second, you will have the opportunity to engage with key stakeholders including MAPA, ApexBrasil, Abiquifi, FINEP, and BNDES. Third, you will develop a deeper understanding of how Brazil’s unparalleled biodiversity and market scale create distinct advantages for validating new therapies and products.

I welcome the opportunity to share additional details. Please contact me directly. I look forward to connecting in San Diego.

Mauri Moreira
Senior Consultant, Brazil 

How would you rate the state of the industry? Up-due to increased pet populations, overall pet spending and recent strength in some livestock trends. Down- due to decreased veterinary visits, consumer-based pricing concerns, and consolidation leading to job losses.  Lots of mixed signals.

One area that seems to be growing is an explosion of industry groups. There are now associations related to therapeutic categories, groups related to women in the industry, those serving hospitals from accountants and architects to software providers and HR professionals. Undoubtedly, efforts to attract interest from outside the industry’s traditional core are paying off.

We’ve also seen a realignment of conference activity. While some local conferences have shrunk or disappeared, others have emerged. One incomplete list notes about 40 veterinary clinic focused conferences this year alone. And that doesn’t include livestock-related conferences or those focused on the ancillary areas supporting the broader animal health industry.

One that is coming soon is the August Nashville conference organized by Viticus Group, the company behind the Western Veterinary Conference in Las Vegas. What’s motivating this bold move? Is it addressing an unmet need?  Will a central US location later in the year offer an attractive option?  We at Brakke are curious to see the attendance and energy that this debut conference brings.

Jeff Santosuosso

In a recent interview with the New York Time’s Athletic, Steve Kerr, coach extraordinaire of the Golden State Warriors, emphasized the importance of culture: Culture creates energy in times of success, and resilience in the face of adversity.

Culture matters. A positive workplace culture is the most important contribution an employer can make to employee wellbeing, according to the Merck Animal Health Veterinary Wellbeing Studies. Although these six studies were conducted over an 8-year period with veterinarians and team members, the results held whether the respondents were in a clinical or non-clinical setting (industry, academia). We believe culture drives wellbeing in all workplaces.

What attributes contributed most to a positive workplace culture?

• A strong sense of belonging to a team.
• A high degree of trust in the organization.
• Candid and open communication among team members.
• Sufficient time and opportunity to do quality work.

Do these characteristics define your workplace? It’s never too late to evaluate your culture.

On a different note, this is a solemn and happy time for believers. A time for family gatherings and celebrations. Today is the third day of Passover. Sunday is Easter. Muslims recently celebrated Eid al-Fitr. We wish you and yours a wonderful weekend, and hope for peace in the coming days.

John Volk