Am I the only person reading current economic news that feels perpetually confused?  I read that inflation is coming down (albeit slowly), interest rates are poised to rise slightly (but not too much) higher, employment levels continue to grow, and we are facing a recession in 2023 / 24 (or maybe not!).  My guess is that at least a few of your share this confusion, which of course brings apprehension as well.  Are we doing the right things, and do we even know what the right things are?

Times of uncertainty often call for us to go “back to basics,” to be sure that we are managing the small things. This could mean a careful focus on cost control, aggressive marketing efforts to develop new customers and clients, renewed efforts to simplify our purchasing and inventory management so that the right products are available at the right time, etc.  These are generally the building blocks that successful businesses are built on; and they are effective actions at almost any point in your business’ life cycle.

Whether you manufacture goods or operate a veterinary practice, think about the basics that keep your business going.  Now is the time to be sure that you have control of the issues that you CAN control.  None of us can control the overall economy, but we can make sure that our life – and our business – is in the best possible shape to withstand the pressures of the unknown.

Jim Kroman

On a recent visit to suppliers of animal health products, which had significant store front, I had the opportunity to interact with both the suppliers and some of their clients. I posed a question to both, regarding control of the purchasing decisions.

It was very clear that even though a massive evolution has been and is actively taking place, at least on the cattle side of things one factor remained the number one controlling factor!

Some older clients remembered the days of store credit. Well, credit cards have now replaced that to a major degree. Pricing was obviously expected to be a key decision factor, but most clients felt that due to web-based transparency it is easy to ensure/check parity these days. Reliable information on product choice is becoming a bit more difficult due to oversupply of choice and information, especially via social media. Ease of ordering online has removed some of the time spent in the store, but all clients agreed they still regularly spoke to the folks at the supplier.

I was surprised to see several of the regional suppliers actively in expansion mode, either adding people or floor space. A second observation was that several organizations were truly transforming into family businesses, where the next generation was becoming more actively involved in management and interacting with the client base.

So, what was the number one consideration for suppliers, to ensure that clients would remain loyal; and what was the number one client pre-requisite for motivating them to remain a loyal client?

Both were 100% aligned – simply: TRUST!

It should really not have come as any surprise, as the decision of many folks on how and where they buy their food has shifted to people or organizations they trust; and they are building long term relationships. So, why not animal health supplies? This was not new, just confirmed.

As suppliers or manufacturers, what are you doing to build and/or ensure trust with your client?

Lourens Havenga

I very recently joined Brakke Consulting to help the company expand into Latin America – and this is my first Viewpoint.  I know most of you are based in the US, but I would think that many of you have traveled to Brazil and perhaps know a little about Latin America’s largest animal health market.

While The Brazilian animal health market has always been recognized for its dynamism in the farm animal segment, the pet market continues to emerge as one of the most significant ones in the world.  According to Emilio Carlos Salani, EVP of Sindan, Brazil’s animal health industry association, even with the economic difficulties caused by a pandemic, the country saw a 30% increase in companion animal ownership in 2021. He feels that this expansion in pet ownership is very much related to the commitment of pet owners to offer the best in terms of food and health for their pets.

The growth in ownership of pets has directly impacted the veterinary industry and Sindan’s Market Information Commission forecasts growth in the companion animal veterinary segment by 16% for 2023 and 15% for 2024. So, there is no crisis in the Brazilian pet market! Always known for being an important market for parasiticide products, the Brazilian market is now open to innovations from around the world. The veterinary profession is rapidly developing in terms of veterinary specialties and sophistication and if you’d like to know more about the opportunities Brazil offers to animal health companies, we can help.

Mauri Ronan Moreira, DVM, MBA

H.G. Wells famously wrote, “Adapt or perish, now as ever, is nature’s inexorable imperative.”

Ironically, as humans, we tend to be creatures of habit, which means we’re oftentimes reluctant to changes that must occur to best adapt and adjust to our changing environment.

Essentially, change is inevitable, and the ones who don’t adapt will be left behind.  And, now with rapid advancements in computing technology – think AI, autonomous driving, Google Maps — the “evolution of the ever-changing” is happening much faster than previous generations.

Managing this change dynamic is especially important in today’s business world.  For example, COVID-19 pushed many consumers away from retail stores and into online shopping platforms with home delivery options and/or online shopping with curbside pick-up.  Businesses from Amazon to pet product manufacturers and veterinary hospitals to Apple stores have all made significant changes in day-to-day operations in effort to meet different customer needs.

Once popular retailers like Bed, Bath & Beyond, Party City and David Bridal have all recently filed for bankruptcy.  However, people haven’t stopped sleeping in beds, having parties or getting married.

In reality, the key driver behind these downfalls is inexplicably linked, in one critical way or another, to the failure to adapt to the changing environment in which it finds itself.

Richard Hayworth

It’s becoming hard to avoid hearing about artificial intelligence (AI) and how every company has or will have a generative AI engine, which will cut costs and eliminate thousands and thousands of jobs.  Well, to quote Yogi Berra, “It’s like déjà vu all over again.”

Back in 1982, John Naisbitt authored a book called “Megatrends” in which he chronicled ten new directions that were transforming our lives.  This was a time when we were transforming from an industrial era to an information era.  Apple, Tandy (Radio Shack) and Commodore all launched PCs in 1977 and IBM launched it’s more muscular PC in 1981.  I have always remembered this megatrend:  “High Tech/High Touch” – the more we become surrounded by high technology (or the more it is forced upon us), the more we value the human touch in our lives.

I feel like this is where we are with Chat GPT and its cousins: the more AI is forced upon us, the more we will value “High Touch” in our lives.  The animal health companies, including veterinary clinics, that will use AI to make their employees and customer experiences better – more personal, warmer – will be the winners in the long run.  The goal of this technology should be to make our lives richer, not so companies can reduce payrolls.  Remember, it’s all about people.

Bob Jones

The Society for Human Resource Management, SHRM, just posted two warnings. For the first time, productivity dropped for five consecutive quarters . Meanwhile, compensation rates reached their highest level since the 2008 financial crisis .

Together, these factors might send finance managers and stockholders swooning. While SHRM makes no connection between them and recent stock market stagnation, they send reassurance.

For inefficiency, SHRM points not to hybrid work itself, but to its poor implementation. They also point to high turnover and adoption of technology.

For compensation, they point to tight labor markets. They add that life sciences has increased compensation at the highest rates. However, they note that 2023 projections look to slow from 2022’s peaks.

For suppliers to our industry, the effect of these trends is not yet clear.  We continue to enjoy a robust industry which finds ways to overcome many obstacles. Yet while it’s unclear if veterinary hospitals are less efficient, we’ve seen spikes in compensation. These rising cost are offset by rate increases. Will those efficiency losses and wage pressures catch up with us?

Jeff Santosuosso

Recently the French government announced a tender for securing vaccines for controlling High Pathogenic Avian Influenza in the national flock. This is critically important, in that taking this positive step to control this important disease through a much more scientific and humane approach is the right approach in my opinion. The historical method of slaughter of millions of birds when we have effective tools – and as we are also faced with critical food shortage and cost – only makes sense.

On another note, it seems to me that there is an unusual amount of turnover in senior positions at the leading animal health companies. Where once there was almost benign stability, almost every quarter goes by with a big announcement. I’m not sure what is exactly causing this, but I guess part of is due to the role of being a publicly traded company and be seen to addressing performance issues. But it is not limited to those companies, but in fact is happening throughout the industry. Once seen as a stable environment for leadership and careers, now apparently much more turbulence and unpredictability. Eventually it affects the whole company in some manner, and maybe eventually customers. How is it in your company?

Paul Casady

Recently, I read an article about consumers returning to historical purchasing patterns as it relates to food that struck a chord with me.  We are slowly exiting a high inflation period but food inflation remains stubbornly high (about 8.5%).  Many consumers continue to make difficult economic and purchasing decisions to stretch their food dollars.  This includes trading down from premium food items to less expensive cuts of meat and cheaper store brands.

I started to think about these choices and the linkage to Maslow’s hierarchy of needs.  The first two slices of the pyramid are “Physiological Needs” which relate to basic survival and “Safety and Security” which is where financial uncertainty comes into play and where our ability to fulfill our basic needs are challenged, leading to frugal behaviors.  The article goes on to say that the need to trade down and the constant search for the lowest prices on weekly items has resulted in a new term for me, “frugal fatigue”.

With economic pressures starting to ease, consumers are beginning to make more discretionary purchases, starting to focus on themselves and their emotional needs.  This is the climbing of Maslow’s pyramid up two steps to “Esteem” where people are seeking respect, self-esteem and status.  As a result, consumers should go back to more normal spending habits, purchasing products with more premium attributes.  Hopefully, food producers and ranchers will benefit from future trading up.  The question will be, can supply match changing consumer dynamics?

 Randy Freides

Several companies reporting results in the last few weeks have commented on the “softness” of the companion animal market.  It’s true that visits to veterinary practices are down a bit compared to the prior year.  However, I’m not hearing about any “softness” from veterinarians.  Revenues are up for most, and many practices are still finding it extremely difficult to fill openings both for veterinarians and staff members.

Veterinarians are working more hours than they prefer.  According to AVMA, the median hours worked has climbed from 40 to 45 hours per week over the last couple of years.  Keep in mind that visits increased pretty dramatically during the pandemic, and we’re still dealing with the tail end of above-normal comps.

What’s more, veterinarians continue to be quite bullish about revenue growth in 2023 and beyond, according to recent surveys and conversations with veterinarians.  It’s probably also safe to assume that pets are still getting the preventives, medications, food and supplements they need, even if visits to veterinarians have backed off slightly.  I think we can expect another solid year in animal health and nutrition.

John Volk

The announcement that Farmers Business Network has launched a ChatGPT-based artificial intelligence (AI) platform for farmers caught my eye. AI-based platforms are everywhere these days, including in animal health. But if you’re unfamiliar with it, ChatGPT is next-level disruption in AI. It is a natural language processing tool that can answer questions and assist you with tasks like composing emails or letters, making lists, or even producing computer code. I tried it out, asking to do everything from writing a cover letter, to explaining the steps for CPR, to writing a haiku about cows. The results were more or less indistinguishable from what I might have written myself.

Many have concerns about sophisticated AI that is able to flawlessly mimic human interactions; from worries about students using it to generate essays and test answers, to ChatGPT effectively replacing human employees. From a veterinary perspective, it could expand upon the tendency for pet owners to go to “Dr. Google” for answers about their pets’ problems. But there can also be significant benefits in efficiency and cost savings if it’s used in a thoughtful manner. The bottom line is that AI is not going away, and our industry can either embrace it, or stick our heads in the sand and suffer the consequences.

Lynn Fondon

P.S.  Are you curious about whether ChatGPT could write the Viewpoint?  I was – so I asked it to do that. Here’s the result using the prompt “Write 100 words about ChatGPT in veterinary medicine. Include both positive and negative points.”

“ChatGPT can be a valuable tool in veterinary medicine, providing quick access to a vast database of information about animal health and wellness. With its advanced natural language processing capabilities, ChatGPT can understand complex questions and provide accurate answers, diagnoses, and treatment recommendations based on the latest research and clinical best practices. This can be particularly helpful in rare or complex cases.

However, there are also potential drawbacks to relying solely on ChatGPT for veterinary advice. ChatGPT cannot physically examine or observe animals, which limits its ability to make accurate diagnoses or recommendations. In addition, it may not take into account individual factors, such as an animal’s age, breed, or medical history. Therefore, it is important to use ChatGPT as a complementary tool to veterinary care and not as a replacement for in-person consultations.”