This week’s newsletter contains information regarding 4 different investments made in companies related to our industry by private equity or investment firms just in the past week.  I haven’t been keeping count, but each week as I read Animal Health News and Notes, I see more and more similar announcements.  Many are relatively small investments, but the trend is not small at all; capital is available to fund good ideas developed by smart people who are willing to take risks.  At Brakke Consulting, we were proud to recently represent Jorgensen Laboratories as they secured an investment from Main Street Capital to fund future growth.

Interestingly, many of the announcements made in recent months have a digital component as the visionaries of our industry see ways to use our exploding digital power to level the playing field.  The power of mass and scale enjoyed by Big Pharma will be challenged by smaller players who see ways to chip away at that power with disruptive technologies.  Of course, we also see examples of Big Pharma investing in that same sort of digital platform to maintain a market advantage.  Good ideas aren’t limited to small companies, and entrepreneurs exist in large organizations as well.

Years ago, I learned a lesson that was not at all obvious to me; that is, good competition makes everyone better.  Greater access to capital enables competition, which in turn makes us all better competitors.  Isn’t that everyone’s goal?

Jim Kroman 

The Michigan House is considering a bill to codify the ability for veterinarians to conduct telehealth exams without prior in-person visits. Currently, these are allowed there only in emergencies or when the patient is a shelter pet. While some cite the convenience offered, others, including the MVMA, oppose the proposal. Their argument relates to upholding a doctor-patient relationship. Though a vigilant pet parent may be finely attuned, the pets do not talk.

Some may recall that the State of Colorado once considered legislation equating pets to members of the household, such as children. That, too, was opposed locally due to concerns over potentially skyrocketing legal cases and fees.

Brakke Consulting conducted an in-depth review of telemedicine in the veterinary industry and could not find that the practice has gained any traction. Undoubtedly, the service is widely available and touted, but apparently not popular with veterinarians. In fact, uptake was found to be nearly negligible.

Still,  research with pet owners has found that they find the concept quite appealing: a 2020 survey found that nearly half would like their veterinary practice to offer digital/remote consultations

What do you think? Is this an idea whose time has come? Does convenience trump veterinary familiarity?

Jeff Santosuosso

The lingering effect of the COVID Period and returning to normal has created a lot of discussions recently. As we still face a virus that continues to evolve, we can learn much from the Poultry Industry, which has been battling coronavirus (Infectious Bronchitis) since its isolation in 1931. The first variants were later identified in 1956, and evidence of rapid evolutional ability of the virus has resulted in dozens of known variants that have shown up all over the world. Today it is still considered one of the major disease threats to poultry. But successful vaccine development through the years has helped control the impact of the disease and is always on the forefront of research and monitoring by academia and companies.

In today’s environment with a new focus on ‘One Health’ there could be an excellent opportunity to conduct research and vaccine development between human and veterinary pharmaceutical companies to combat Coronavirus. After all, animal health has a lot of experience to share with our human colleagues.

Paul Casady

In a recent viewpoint, John Volk wrote about the Western Vet Conference in Las Vegas and how attendance was nearly back to pre-pandemic levels.  I too was pleasantly surprised at the turnout.  As I walked the convention floor, the largest companies were prominent with their mega-booths.  What amazed me was the number of small and mid-sized companies displaying their products and services to support the animal health industry.

There were numerous instrument, diagnostic, exam room equipment and clinic supply companies displaying their products.  However, what struck me the most was the number of companies promoting services and technologies to help drive efficiencies in the clinic and to assist with a clinic’s financial needs.  Technologies to drive efficiency have become more and more critical as the industry continues to suffer from labor shortages both in terms of veterinarians and for support staff including vet techs.  Stress levels appear to be at all-time highs in the industry both with vets and vet techs.  In the absence of a wave of quality labor supply, clinics will continue to turn to technology to help handle the surging patient volumes.

I hope the efficiency tools help deliver the benefits that were promoted to ease some of the stress the industry is facing.  The need is now.

Randy Freides

This week the state of Wisconsin announced a confirmed case of highly pathogenic avian influenza (HPAI) in a large commercial layer flock, marking the 17^th state with a confirmed case in 2022 and the largest commercial case in the country to date.  This serves as a reminder that the spread of diseases, even those that have been around for a number of years, can have significant financial impacts on the animal health industry.  Control measures for HPAI include depopulating the entire premises where the disease is confirmed – in this most recent case, a facility with 3 million birds.

It’s encouraging to note that the USDA is investing in research into preventing these kinds of devastating animal diseases, but $13 million is a drop in the bucket.  Our industry needs to continue to invest in R&D efforts – not just vaccines, but other novel strategies for disease prevention and control – to stay ahead of these wily microbes.

Lynn Fondon

The most welcome sign yet that we are “returning to normal” was the Western Veterinary Conference, held March 6-9 in Las Vegas.  Attendance was excellent, nearly back to pre-COVID levels.  The sessions were well attended and the exhibit hall was large and busy.  Our compliments to the Viticus Group that hosts the conference.  It was also wonderful to see so many industry colleagues – truly see them; not many people were wearing masks.  (Hopefully there won’t be any coronavirus repercussions!)  The Brakke Consulting Industry Overview was standing room only.  A special thank you to Greg Hartmann/NVA, Randolph Legg/Boehringer Ingelheim, and Steve Shell/MWI for providing fascinating insights during the panel discussion.  (The Overview – without the panel discussion – is now available to present to your management teams live or via Zoom.  Just contact us to schedule it.)

Let’s hope that this is truly a trend back to regular activities.

John Volk, Senior Consultans

Zoetis’s Draxxin® has been the best example for me to use to explain that livestock producers will pay for innovation.  Tulathromycin, the antibiotic in Draxxin, is highly effective and livestock producers are willing to pay the high price for it to treat their cattle and swine – it works.

Merck and Elanco now join Bimeda, Ceva and Virbac in having a generic tulathromycin approved, bringing the total FDA approved generic products to five, proof that imitation is the greatest form of flattery in animal health as well. In Zoetis’s earnings call last month, they announced that generic competition reduced Draxxin revenue 15% in 2021 compared to 2020 and they expect another decline in 2022 of 20% compared to 2021 – peak sales are now in the past.

Unfortunately, these tulathromycin competitors will be battling in a livestock market this year that is forecasted to not grow much from 2021.  The USDA expects beef production to be up fractionally in 2022 and pork production for 2022 will likely be slightly lower that 2021.  And producer profits will be under pressure all year due to higher feed and input costs.  (But tulathromycin costs won’t be higher.)

Draxxin is a great product, a great brand.  Given the successful innovation from Zoetis and the other major animal health companies, we hope there is a new “Draxxin” being discovered.  Remember, livestock producers will pay for innovation.

Bob Jones

This newsletter contains news of a worrying development for the US poultry industry; a reminder that highly pathogenic avian influenza (HPAI) has been found in commercial poultry operations in Indiana, Kentucky, and now in a backyard flock in Virginia.  The last substantial outbreak of HPAI occurred in 2015, and resulted in a significant cull of chickens and turkeys in the US.  The current findings of HPAI come at a time when US wholesale broiler/fryer prices as reported by the USDA / ARC are already over 50% above pricing at this same time in 2021.  Let’s hope that discipline in infection control will succeed in extinguishing this outbreak among US growers.  The whole animal production industry suffers when consumers are bombarded with news about health concerns in our food supply chain.

Have a great week!

Jim Kroman

Just as the industry understands Facebook, it’s time to think about TikTok. Far-fetched? Consider that Meta/Facebook’s market cap lost ¼ of its value, ¼ trillion dollars in one day last week. That drop is attributed to disappointing earnings, to a near-halt of new users. Why? Increased preference to TikTok.

TikTok’s valuation reached $280 billion last August. It boasts over 1 billion users, including 100 million here. It has more users than Twitter, Snapchat, and Instagram.  37% US of mobile users check TikTok, an eight-fold increase in less than two years.

As anticipated, users skew to the young: Nearly half of US users are between 10 and 29. Yet, adult users increased by nearly 6X in less than two years.

Why all the fuss? Think back to Facebook’s origins: remember Mafia and farm games? Our industry tends to be laggards related to media. Yet, in 2019, the AVMA observed, “Tech-savvy millennials already comprise a major animal owning group today and generations of pet owners to follow will certainly demand high-tech solutions for much if not most of the pet care they will seek. This trend will favor practices that are more technologically and temporally connected to animal owners.”

All industry players, particularly those in pet care, should consider how they can adjust to and capitalize on this rising medium.

Jeff Santosuosso

Happy New Year!

Recently I attended the VMX convention in Orlando. I thought the overall attendance was excellent and more importantly, the positive attitude of our industry was clearly on display for all to see. I really believe we can show great leadership in helping our country move from the ‘pandemic’ to the ‘endemic’ state as it is time to get on with our livelihoods. We humans are social animals and we need the interface – as much as vaccines – so as to ensure a positive mental state for keep having overall better mental and physical health.

At the Brakke Industry overview, during a panel of industry leaders we asked them what worried them the most right now. One of the consistent answers was workforce shortages. My challenge to you is: we can help solve our own problem and be strong ambassadors for our industry during these difficult times. Let’s all go out and help recruit people to join the animal health profession right now. It’s the best profession, in my opinion!

Paul Casady