In last week’s viewpoint, Lynn Fondon discussed how the veterinarian profession needs to look beyond price and fee increases to maintain revenue growth. I totally agree. Volume increases is critical to drive growth. This not only holds true for veterinarians but also for animal health companies.
First quarter earnings reports are right around the corner. With visits to veterinary clinics continuing to decline it will be interesting to see how 1Q25 revenues will be impacted. Those companies riding a wave of innovation in the companion animal business including Zoetis and Elanco may fare better than companies with aging product lines.
The latest wave of innovation fueling growth in companion animals is also geared toward driving patients back to the clinic for treatment, especially for monoclonal antibodies to address pain and dermatological conditions along with injectable parasiticides (expected in the next 12-18 months in the US). And we will not be surprised to see livestock perform well this year.
In the long run, volume growth is more important than raising prices because it drives sustainable revenue and market share gains – and it also has an impact on margin expansion. While raising prices has a significant and short-term impact on profitability, companies run the risk of a strong competitive response, of having weak commercial capabilities to support higher prices or of having customers decide not to purchase.
Randy Freides
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