I decided to learn more about the 1918 Spanish flu and just finished reading The Great Influenza by John Barry, which tells a thoroughly engaging story about the virus and the time that it infected the world.  I wanted to specifically understand more about the influenza virus and how society responded to this pandemic – and maybe learn something about pandemics caused by coronaviruses.

But after the news this week, I am back thinking about how we as an industry should respond to influenza in animals, specifically poultry.  The first death of a Chinese person infected by an avian H3N8 influenza A virus should make pause.  Until recently, I underappreciated the fact that influenza viruses are endemic in six animal species or groups (wild waterfowl, domestic poultry, swine, horses, dogs and bats) and that the human influenza pandemics were caused by viruses that jumped from primarily birds and swine to humans.

The most common response to avian influenza outbreaks is to contain the spread of virus by killing the birds, and because of the rampant highly pathogenic avian influenza virus, there are now about 60 million fewer poultry in the US.  So, it’s good news to hear that Ceva and Boehringer Ingelheim are helping France battle his and that companies like Zoetis are bringing new technology to the influenza war.  As an industry, we need new and better ways to fight zoonotic diseases, not another generic product.

Bob Jones

This week’s announcement by Nationwide Insurance about its partnership with Walmart to sell pet health insurance should stimulate your thinking.  Walmart already offers prescriptions from its pharmacies at a discount to Nationwide policyholders, and selling Nationwide pet insurance on the Walmart website will certainly make Nationwide’s pet insurance more broadly available.  According to industry statistics from the North American Pet Health Insurance Assoc., slightly less than 4.0 million pets were insured in the US in 2021 (the last year statistics were available), with that number growing from 17% to 28% per year.  This calculates to a market share of about 2.5% of the pets in the US in 2021.  Clearly there is an opportunity to grow the number of insured pets to the benefit of all veterinary service providers.

When the world’s largest retailer and a top 10 US property and casualty insurance company partner to offer pet health insurance,  we can expect a significant impact.  Walmart houses a growing number of pet clinics within its stores across the US, so today’s business model for delivering veterinary service will continue to change and evolve.  The already enormous pressures on the traditional delivery model for veterinary services will continue to build, and successful practices and suppliers will prepare themselves to adapt.  How will these changes affect your business?  Are you ready?

Jim Kroman

Developing team members has always been a desirable goal, both for those in the veterinary hospital environment and those who serve it. These days, with low unemployment and changing workforce demographics, upskilling and development are more important than ever. Consider how COVID, hybrid/remote work, technological advances, globalization, etc. affect your team.

After all the dedication of creating a great team, how do we build and retain it, particularly through skills development? Sending staff to conferences for CE, skills enhancement, networking, and some diversion is a classic means. Self-teach options abound, particularly online at little or no cost. Manpower reports that 57% of workers are “currently pursuing training outside of work.” Key gaps in company-provided training include: relevant skills, career advancement, and staying competitive in the job market.

Surprisingly, SHRM suggests that the largest companies are doing a poor job. Maybe this is because far too often, training doesn’t work and we think this is primarily due to the person not having the natural talents needed for this skill.

We recommend that you work closely with team members to uncover their individual training and development desires based upon their natural talents. How can you facilitate this pursuit? How can you partner? We can help.

Jeff Santosuosso

As my colleague Bob Jones shared recently, we attended the Kiasaco Animal Health conference recently in London. It was very well attended and kudos to organizing in conjunction with an executive meeting for Health For Animals, which as a result meant a lot of the company CEO’s were in attendance.

The program was very good, but there was some concern over the consolidation of these sort of events, and also the availability of general market information. Dominant companies may show predatory behavior in pricing, or simply cancelling out anyone they perceive as competition. For example, you can no longer subscribe to the old ‘Animal Pharm’ newsletter, if they deem you as competition. One of the only real global market surveys, CEESA, is only available to subscribers that have sales.

While this may have made some sense in the past when we were a ‘cottage industry’, today we have a >$40B industry with large, publicly traded companies. And we are attracting serious interest from private equity and other sources of funding which is critical for investing in innovation.

My view is that we need to make industry events and market information more available so that we continue to support the growing interest and investment in animal health. What is your company’s position?

Paul Casady

Last week, Paul Casady and I attended the Animal Health, Nutrition & Technology Innovation Europe conference held in London.  We conducted two sold-out round table sessions on the topic, “From Startup to Grownup, Go To Market Strategies for Companies in the Animal Health Industry – and why It’s All About People”.  The Kisaco Research team produced the well-attended event, showcased 19 startup companies, and brought in some energetic speakers.

One of those speakers was Sven Smit, Chair of the McKinsey Global Institute (MGI), and he made everyone listening start to think about what’s next for the global economy.  He thinks the world is not just going through another business cycle, but is on the cusp of a new era, which is driven by the global pandemic, energy scarcity, rapid inflation and geopolitical tensions.  The data presented was taken from a new paper from the MGI and he highlighted three past eras: the Postwar Boom (1944–71), the Era of Contention (1971–89), and the Era of Markets (1989–2019).

The most remarkable part of his presentation was on energy systems and how utterly unprepared we are as a global economy to achieve net-zero and how utterly dependent the global economy, including animal, feed and food production, is on fossil fuels.  Mr. Smit wouldn’t speculate on a name for the new era and I won’t either, although if I did, it would have something to do with energy supply.

Bob Jones

Earnings season 2022 is behind us and believe it or not, earnings announcements for 1Q23 are right around the corner. The animal health industry’s growth was largely driven by the companion animal market as evidenced by the announcements by the largest companies where Zoetis, Merck, IDEXX, Virbac, and Dechra  showed above industry average growth. The livestock segment however, tempered the overall growth of the bigger companies, with the exception of Huvepharma and Phibro.

The livestock industry is looking at a cyclical slowdown and an important question is how long it will last. Will this cycle have an impact on innovation in the livestock segment? There is no doubt an ongoing need for products and services to be provided to livestock and poultry  producers to continue to drive increased efficiency and yields for the proteins that feed the world. We know the livestock industry will pay for innovation, but we are worried about the investment in innovation for livestock.

In recent years, both Merck and Zoetis have made significant investments into technology to drive efficiency. But we hope there is still investment in preventative and therapeutic products for livestock. We would like to see the livestock industry to remain a “star” and not become a “cash cow”.

Randy Freides

A couple of weeks ago, we reported in the newsletter about Arkansas’ efforts to legalize the use of Veterinary Technician Specialists (VTS) – a certification of advanced training – to handle some tasks that only licensed veterinarians can currently perform. Examples would include prescribing some drugs and performing minor procedures such as suturing.  The objective of the bill is to expand access to veterinary care in the state, which currently struggles with a shortage of veterinarians.

It’s a solution that follows the human model of using Physician’s Assistants and Nurse Practitioners to manage some of the routine care needs of patients. While in theory it would seem to offer a way for veterinary practices to be more efficient and see more patients, I wonder about the degree to which the veterinary profession would fully utilize this potential new resource.

Recently, we surveyed veterinarians as part of our annual industry overview, and asked what one improvement they could make that would most impact their practice productivity. The #1 response was to improve their staff utilization and training.  If veterinarians know that they aren’t getting the most out of the staff they have now, would anything change with the addition of VTS-certified staff who can perform higher-level tasks?  It may require more than just legally permitting technicians with advanced certification to take some of the load off of over-worked veterinarians; the profession may also need to shift the mindset of DVMs so they more consistently prioritize training for staff, and then empower the staff members take on new responsibilities within the practice.

Lynn Fondon

We are getting close to the end of earnings release season and with only a couple of the top companies left to report, it’s looking like the global animal health industry grew just a bit over 5% in 2022 versus 2021, correcting for exchange rates.  This seems like tepid growth compared to the growth in 2021, which we estimated was 12%, but in reality, we are back to normal growth rates now.

This topic and more were covered in our annual Industry Overview, which was presented this week and the Western Veterinary Conference held in Las Vegas.  Thanks to all those that attended the Overview during WVC and previously at the VMX.  Both conferences were very well attended, and the trade show floor seemed very busy – all seemed better than normal.

I would also like to thank all our panelists who offered their ideas on “Managing AH Companies in Times of Uncertainty” – at WVC, Nicki Baty, from Hill’s Pet Nutrition, George Fennell, from IDEXX, and at VMX, Scott Bormann, from Merck AH, Kurt Green, from Vetsource, and Kevin Pohlman, from Patterson.  If you attended Overview, I am sure you picked up some great insight, from managing people, supporting customers and strengthening supply chains thanks to these remarkable leaders.

Bob Jones

The item in this week’s newsletter from Arkansas discussing Certified Veterinary Technician Specialists (VTS) merits attention.  A bill has been introduced in the Arkansas legislature to give certified VTS’s the authority to prescribe certain drugs and to perform minor surgical procedures, similar to the scope of authority granted to nurse practitioners in human medicine.  It would require that the certified VTS would work for and under the supervision of a licensed veterinarian, and the supervising veterinarian would be required to personally see the treated animal within 15 days after the VTS has administered care.

The effort to educate veterinary technicians to a higher level and to allow them to become certified in areas of specialties has been ongoing for at least 20 years.  However, a successful legislative effort to empower technicians to expand their scope of practice and responsibility could substantially change the dynamic between veterinarians and certified VTS’s.

The shortage of veterinarians in rural areas has left Arkansas with the lowest ratio of veterinarians per capita at 14 veterinarians per 100,000 population.  Passage of this bill could result in critical relief to farmers and their animals as well as expand the availability of care for pets in places where veterinary care remains difficult to deliver.  Of course, it is to be expected that some veterinarians might see this effort as competition for the traditional veterinary practice.  And, as quoted in a recent article published in the Northwest Arkansas Democrat Gazette, Dr. Everett Rogers, president of the Arkansas VMA, said that there are currently no certified VTS’s in the state of Arkansas.  Any impact on accessibility of care would appear to be on a fairly long timeline.  We’ll keep you posted on this topic as there is more news to report.

Jim Kroman

The FTC recently proposed banning non-compete clauses in employment agreements to increase competition and provide career fluidity. The rule would end the practice, retract existing non-competes, and prohibit indicating that anyone is or may be subject to one. Stay clauses for a business sale are exempted. The federal rule would supersede all local rules.

Is this an issue in our industry?  CNBC reports that about 30M Americans are bound by non-competes, including 15% without a college degree and 14% earning less than $40k/yr.

Along with increased autonomy, proponents cite that executives have greater flexibility in circumventing non-competes. Employers will undoubtedly point to resultant cost increases.  Some estimate that salaries will rise by $300B. The Bureau of Economic Analysis recorded nearly $10T in 2020 salaries, making this a 3% impact. CNBC suggests that if confirmed, the ruling will be trimmed.

The legal profession has historically crafted employment terms to protect the hiring company.  The American Veterinary Law Association suggests that veterinarians’ best approach is to stipulate non-solicitation. Dr. Lance M. Roasa, a director at AVMLA, points to geographic and chronological constraints as the most reasonable, practical, and enforceable. Still, for the entire industry from those in the clinic to those serving and supplying them, the current tapestry of local rules draws intensive attention to this issue.  Given the corporatization and shortage of veterinarians and the relatively small animal health industry, this FTC proposal will impact our industry.

Jeff Santosuoss