After attending the successful KCAHC 2023 Animal Health Summit in Kansas City this week, it is clear that innovation in the animal health space is very healthy.  What was even more encouraging, was the breadth of the innovation from these start-up companies, spanning pet therapeutics and livestock vaccine technologies, to implantable electronic devices and several technologies monitoring animals for early identification of discomfort or disease.

To me, start-ups are definitely improving their communication. Clearly defining the problem they are solving, clearly explaining how it is achieved and then clearly illustrating the benefits to the pet and the pet parent or the guardian of food producing animals was the norm.

It is also very clear that a great supporting base exists today in the USA, from consultants able to assist with go to market strategies to engineering firms with great experience to solve design issues and manufacture items locally.

Finding funding and the right talent were almost universal for these start-ups. It was encouraging to see a substantial number of private equity and venture capital firms looking for investment opportunities. Moreover, several of the big animal health companies are actively considering early-stage investment in these companies in order to drive innovation.

I look forward to seeing these companies succeed and commercialize their concepts, some which are very close to launch. And thanks to Kimberly Young and Emily McVey for another fantastic Animal Health Summit.

Lourens Havenga

During the PetVet Expo 2023, held in August in the city of São Paulo, Brazil, the SINDAN (National Syndicate of the Animal Health Products Industry) held the event Pet Talks – the future of the pet market, which I had the pleasure of attending.

During the event, Professor Robson Gonçalves from FGV (Fundação Getulio Vargas) presented data on the evolution of the economic index Participation in the Family Budget (POF) that measures spending on food, veterinary services and hygiene services by Brazilian families that own dogs and cats. The data shown were obtained through the analysis of public data from IBGE (Brazilian Institute of Geography and Statistics).

The data showed that the food industry managed to recoup its prices, above the inflation of the post-covid period, but the same did not happen with the sector of veterinary and hygiene services, these have been suffering with a significant reduction in the family budget, losing to inflation. Professor Robson pointed out that if the participation of the 3 segments in 2017-2018 had been maintained in 2023, Brazilian families would spend an additional R$7.5 billion annually for the year 2023. We hope that this market growth opportunity for veterinary and hygiene services will be resumed in the near future.

One last number to share with you is about the dog population in Brazil, today estimated at 61 million, and cats 30 million. Growth between 2021 and 2023 of 5.2% in the dog population, and 9.5% in the cat population.

Mauri Ronan Moreira

A topic of much discussion in the veterinary market is the labor shortage.  Many are advocating for more veterinary schools in the US  (as many as 8 are under consideration or already underway), and some are advocating for a new mid-level professional equivalent to a physician’s assistant in human medicine.   In addressing this issue, I think it’s important to take the long view.  In 2012, in response to low and stagnant incomes, the profession commissioned a workforce study that estimated the profession would have excess capacity for the next 25 years.  Yet less than10 years later the profession was perceived as being in a “severe shortage.”  The 2012 study was no doubt heavily influenced by the impact of the Great Recession, at a time when household discretionary income was as at a modern low.  Likewise the 2021 “severe shortage” was no doubt influenced by the tremendous amount of money poured into the economy during the COVID-19 pandemic.  Discretionary income, especially in middle to upscale households, was robust.

The point  is, there will always be ebbs and flows in demand for veterinary services  (i.e. labor) based on the availability of discretionary income (given that companion animal practice employs the majority of veterinarians).  But there are more fundamental drivers of demand for the amount and type of veterinary services.  These can best be viewed from a much longer perspective, say 25 to 50 years.  In making decisions about opening up more vet schools or creating new practitioner levels, the long view is the most prudent perspective.

John Volk

Lately, it seems to me that the delivery of veterinary healthcare is evolving at an ever-increasing pace.  In this newsletter alone, we have news items about a telehealth provider, a mobile vet franchise, and a brick-and-mortar clinic chain that also offers telehealth and mobile services.  In contrast to these examples of expansions of traditional practice models, there are the items about the AVMA’s position on preventing efforts to broaden the scope of practice for non-DVMs, and France’s ruling against non-DVM control of veterinary practices.

When I graduated from vet school three decades ago, veterinary practice for a companion animal practitioner pretty much meant going to work at an independently owned brick-and-mortar veterinary practice, and maybe one day becoming a practice owner. While that is still the primary model, today’s graduates have many more options to choose from in crafting a career path, and that’s a good thing. However, it’s still important to make thoughtful decisions about how veterinary care can best be provided without compromising the quality of that care. While there are many parallels between human and veterinary medicine, what works for one doesn’t always make sense for the other.

Lynn Fondon

Pet owners like to shop around…and that’s ok.

One of the leading big box retailers recently studied shopping habits of customers who regularly purchase pet products and discovered there seems to be no “one stop shop.”

For example, Ms. Jones buys toys, treats and grooming products at the big box retail store.

After seeing the daily commercial that runs during her favorite tv show, Ms. Jones enrolled in an online Auto-Ship program offered by popular website so she can have large bags of dog food and cat litter shipped right to her door.  She likes the discounted price, convenient next day delivery and not having to carry these heavy items home.

She buys cat food, treats and collars from the neighborhood pet specialty store because she likes the cat-friendly owners and wants to support local business.

Sometimes, she buys pet stuff at the grocery store if there’s a big sale.

Heartworm medicine, vaccines and any prescriptions are purchased from ABC Animal Hospital because Ms. Jones has taken her pets to Dr. Smith for decades and trusts his staff will help with any questions or issues.

Today’s pet parents tend to buy products from a variety of places based on many factors including individual preferences, generational group, income level, type of pet and product category, among others.

In short, there may be an omni-channel mega-store offering “all pet services and products under one roof” and people will continue buy the pet products they want from all the places they like based on a plethora of personal preferences.

Richard Hayworth

News out of Vietnam this week brings word of the first ever commercial sale of vaccine for African Swine Fever (ASF).  Two new vaccines have been approved for use against this dreadful pathogen that was responsible for the deaths of as much as 25% of the global pig population during the most recent outbreak in 2018/19.

Although ASF has been known since the early 1900’s, these appear to be the first ever commercial vaccines made available to producers.  There are at least 24 genotypes of ASF virus based on sequencing in Africa and there is limited cross-protection between different strains of the virus.  Introduction of an effective broad-spectrum vaccine would be an absolute game-changer for global swine production organizations. Current strategy to contain an ASF outbreak is to either quarantine the pig population (if possible) or slaughter them.

The world will be watching for evidence of real-world efficacy on the part of these vaccines.  This is an example of what our industry contributes to the good of mankind through animals that we raise for food; and it serves to remind us that there can still be new solutions to old, intractable problems.  ASF reminded us that old problems, until solved, always have the potential to become new and potent challenges.

Jim Kroman 

When it comes to timely hiring of top talent, we are not alone. We reported last year hiring time worsened for 59% of our industry colleagues, with less than 10% improving. And turnover increased vs. pre-pandemic and acceptance rates declining slightly.

On the clinical side, vet tech positions were averaging 9 months to fill, with veterinary roles averaging 16!

SHRM reports that hiring time is up 40% vs pre-pandemic times. As our industry innovates into non-traditional areas such as insurance, data, wearables, consumer packaged goods, and more, we’re competing for talent there. And our competition is among the most attractive and most agile in the world. One recruiting expert offers, “One reason is that the unemployment rate is very low, so people can be very discriminating in the jobs they take. Another reason is that the hiring process in many companies is a bureaucratic mess.”

Make sure your process is accessible and convenient. Follow up promptly with applicants. A good recruiter can help improve and streamline your process thereby securing that top talent you need.

Jeff Santosuosso

Recent announcements about some key leadership positions in animal health caused me to reflect on how well our industry is doing developing new leaders.

When talent is brought in from ‘outside the shop’, or even outside the industry, it raises the question: Do companies today have strong developmental programs for developing talent that leads to a strong succession capabilities?

Many careers in the past were successful more by ‘default than design’ and maybe we as an industry could do a better job in this area. When leadership roles are filled from ‘non-industry’ persons, the reasons can vary, but generally are reflecting a need of change or a perceived lack of talent for the role. But the message to some may be: ‘that there are limited career paths for me at this company.’

It is critical to understand the process of career development which is a combination of formal training and well thought out career development steps. Another way of thinking is the ‘horizontal’ development of a person, through thoughtful application and attendance to formal education programs to augment the professional portfolio of skills and knowledge. And the ‘vertical’ development of a person, providing the individual with professional challenges through time that push the person both from a scope of responsibility(sales volume, direct reports, etc.) and even a cultural challenge, working in different cultures and possibly living abroad while taking on the professional role.

All of this, however, requires a two way commitment: both the company and the employee. And my advice is to take charge of your own career!

Paul Casady

My colleague, Jim Kroman, recently wrote about the confusing messages we receive regarding the state of the economy and inflation rates.  While we hear inflation, which is the rate of price growth, is moderating, prices are now at a much higher level than they were just 2 years ago.  We are seeing a slowing of food price growth but are not seeing actual price decreases with the exception of the price of eggs which has declined due to increased supply, bouncing back after the decimation that avian influenza had on layer flocks.

One of the biggest costs of pet ownership is the cost of pet food.  Pet food inflation continues to be stubbornly high with prices growing +13.8% in May 2023 vs. May 2022, a rate that is three times the rate of the Consumer Price Index growth of +4% and price increases for human food of +5.8% for the same period.  The good news (?) is that the rate of growth is down from +14.6% in April.

Per the St. Louis Fed economic data, the Producer Price Index for dog and cat food manufacturing has grown +14.3% May 2023 vs. May 2022.  Part of the rationale for the hefty increases centers around the average producer price increases for key inputs such as rendered meats and meat by-products, which has grown +22% during the same period of time.  Some of these inflation trends have plateaued.  Will prices actually decline, or will they be stuck at the higher levels for a while?  As you can see, having a four-legged family member is now an even more significant financial commitment – will this impact future pet ownership?

Randy Freides

What is the fastest growing pet product in the US?  A case can be made for pet health insurance.  The industry has been growing at more than 20% per year for more than 5 years.  Revenues in 2022 were $3.5 billion, 23.5% higher than 2021, according to NAPHIA, the North American Pet Health Insurance Association.   There are now nearly 5 million pets – mostly dogs – covered by pet health insurance.

What’s driving the growth?  There are several likely factors. Veterinarians – the number one influencer – have embraced pet health insurance more enthusiastically thanks to educational efforts by NAPHIA and its members.  Veterinary costs are rising due to inflation and more advanced, more expensive medical treatments.  And pets owners are more emotionally attached to their animals than ever before, willing to protect their health.

Even with this rapid growth in the US market, we get asked frequently why pet insurance here isn’t as common as in many European countries. There are several reasons, but the most important is that the industries are not comparable. The US is a much more regulated insurance market; policies are sold by licensed insurance agents. Veterinarians for example, can’t sell it.  In many European countries pet insurance is much more of an OTC product, similar to travel insurance here.

John Volk