There’s an old song from my generation called the ‘Wreck of the Edmund Fitzgerald’, in which the lyrics waxed about the ‘Gales of November’(hurricane force winds) and their effect on ships crossing the Great Lakes which could be quite catastrophic.

It seems we have something like this now as some companies are presenting their results this month for Q3.  And like those ships, it can be rough sailing for companies if expectations have not been managed well.

The animal health business has very strong and reliable long term success drivers- but it can be in the short term impacted by the same issues that affect all businesses: supply chain disruptions, workforce issues, and cost increases. Management must recognize these problems and provide clear, effective solutions to keep the business moving forward. And communicate those to our customers and investors, in that order. How is it in your company or practice?

We as an industry also need to see that COVID provided a strong tailwind for the last couple of years that unfortunately may have been used to build future growth targets. As the business appears to be settling back to a more ‘normal’ performance( which is still very good), this now becomes an ‘uncomfortable truth’ for some to explain.

But animal health has a great story to tell, and it reminds me of a famous saying: success is a journey, not an event.

Paul Casady

For humans, wearable technology is something that has been around for a number of years.  The first Fitbit device was introduced in 2009.  Since then, the technology continues to evolve such that the latest Apple watch can detect heart rate changes as well as arrhythmias, far beyond just tracking steps and movement.

For pets, technology to track movement, location via GPS monitoring and temperature continues to gain traction.  In an interesting collaboration, two divisions under the Mars umbrella have collaborated to develop a canine activity tracker that tracks key health metrics such as a dog’s activity levels, eating and drinking times, and scratching and licking habits.  This provides pet parents with data-driven insights to detect potential health concerns, monitor and manage chronic health conditions, and make data-driven decisions on the best way to care for their pets, including how to choose the best food to meet their dog’s nutritional needs.    Hello technology, meet marketing.

Given that our four-legged family members can’t vocalize when they are not feeling well, technology provides an easy and convenient way to gather data, provide potential early insights to potential illnesses and improve the overall health of our furry companions.  Maybe the next tech breakthrough will be a voice box that vocalizes what your dog is thinking when they look at you with their head tilted sideways…you never know. Well,  you may not want to know.

Randy Freides

The AVMA held its 10th annual Veterinary Business and Economic Forum earlier this week.  If you like data, you’d love this conference.  It’s a chock full of results from the latest AVMA studies, as well presentations on other research and economic data.  Attendance has grown steadily from a few dozen people in 2013 to several hundred today, aided in recent years by its online format.

Dana Peterson, chief economist of the Conference Board was the keynote speaker and gave an excellent overview of the state of the US economy.  The Conference Board is predicting a US recession in late 2022 or 2023, but does not expect it to be a deep recession.  Even if there is a recession, veterinarians are likely to fair well, however.  There was ample evidence presented at the Forum that demand for veterinary services is strong and will likely continue that way.

Kudos to AVMA for hosting a very worthwhile event.

Speaking of data, the Brakke US Flea Control and Heartworm Market Report will be available soon.  Flea control is the biggest single product category in animal health and this study provides a great overview of the products and market trends.  Take advantage of the early order period!  It’s one of our most popular studies.

John Volk

The announcement of the One Health Joint Plan of Action (OHJPOA) by the four health-related global NGOs should help guide our collective efforts to prevent or reduce the impact of pandemics and epidemics in animals and humans.  This five-year plan (2022-2026) focuses on supporting and expanding capacities in six areas: One Health capacities for health systems, emerging and re-emerging zoonotic epidemics, endemic zoonotic, neglected tropical and vector-borne diseases, food safety risks, antimicrobial resistance and the environment.

Oddly, innovation is mentioned only a few times as one of the actions and deliverables of the OHJPOA.  Universities and companies with R&D teams in animal health space should play a key role in developing innovations in vaccines, diagnostics, and technologies but they need the right incentives to conduct this research.  Money spent on R&D for pandemic and endemic diseases needs to generate a return.  Perhaps the four NGOs will help with incentives – I am confident we have the innovative capabilities in the animal health industry, especially with some of the exciting new animal vaccine technologies on the horizon.

Bob Jones

Pet insurance has been available in the USA for more than four decades, and yet the latest statistics from the North American Pet Health Insurance Association (NAPHIA) say that only about 4 million pets in the USA are insured – that’s only 4% of dogs, and a mere 1% of cats. That stands in stark contrast to some other countries; for example, in the UK 61% of dogs and one-third of cats are covered by health insurance; and in Sweden 9 out of 10 dogs, and half of all cats, are reportedly insured.

A higher proportion of insured pets would be a plus for the veterinary profession – more pet owners able to afford the kind of “gold standard” care that all veterinarians wish for their patients.  The good news is that growth in insured pets is outpacing overall growth in the pet population. NAPHIA reports that average annual growth in the number of insured pets in the USA since 2017 has exceeded 20%, and the pace is accelerating: in 2021 the growth was close to 30%.  Maybe we can only aspire to reach coverage levels in the UK or Sweden, but we’re moving in the right direction.

Lynn Fondon

Brakke Consulting started using Zoom before it became cool, or at least before its use exploded by the pandemic-driven closure of offices.  Our business needed a “virtual” telephone system that our previous telecommunications provider couldn’t offer and we chose Zoom, which for our business model has been very good.

So, I was interested in what Eric Yuan said yesterday about the future of hybrid work at a BoxWorks 2002 virtual panel discussion.  He said that the hybrid work model is “not that straight forward” and that his video communications company is “still trying to figure out what’s a sustainable business model for us.”  This strikes me as odd, that the company that facilitated hybrid work doesn’t have their own hybrid model figured out.

We asked several questions of our readership last year about hybrid work and thought it would be interesting to look back on what we can learn.  When asked one year ago about working conditions in the next 12 to 18 months, over 50% said their companies will implement a hybrid style with both remote and in-person work.  We asked about productivity last December, over 60% said they were significantly more or more productive.

Now that we are in the middle of budget season, many companies, like Zoom, are trying to figure out what that model will be for 2023.  Cool or not, Zoom (and Teams) are here to stay.  Let’s hope it truly does drive productivity.

Bob Jones

If you read this newsletter each week, you know we’ve been following the progress of Zoetis’ Solensia (frunevetmab) into the US market.  Although approved by the FDA in January 2022, it was just launched in the US by Zoetis this past week.

Solensia opens finally opens the osteoarthritis treatment segment for cats in the US; the product is predicted to be a blockbuster (>$100 million) when it matures.  Since the market for OA products in dogs has been a major driver of growth in the animal health industry over the past 20+ years, launch of the first OA treatment safe and effective for cats will have a strong additional effect.  Today Zoetis remains exclusively positioned to supply monoclonal antibody products in veterinary medicine.  We also expect to see the launch of Zoetis’ Librela (bedinvetmab) in the US to treat OA in dogs sometime in the next 12 months.

Market research conducted by Brakke in late 2021 showed >90% of veterinarians are likely to use Solensia, primarily in cats with OA that aren’t being treated with a prescription medication.  We believe that Zoetis has worked hard this year to create awareness of OA in cats.  Today this feline market is substantially underserved, so the Solensia launch will cause significant market expansion.  The OA market in dogs is of course quite crowded already, so the effect of the Librela launch may be less impactful, but still significant.  Time will tell.

Jim Kroman

We are trying something new this week in our Viewpoint, hoping to dispel the idea that you can’t teach an old dog new tricks. To learn about the impact of videos in recruiting, all you need to do is click on the link below…to a short video.  Even an old dog would have seen that coming!

Click here to view our video viewpoint.

Jeff Santosuosso

It was with sorrow we learned of the passing of Queen Elizabeth last week , a long and fruitful life in service to her country and countrymen. As an American, you grow up and are taught certain ideas about the British Monarchy and its role. But after living under the constitutional monarchy under the Queen, both in Australia and The United Kingdom, I gained a greater understanding and appreciation of the positive things they present.

And while I was in the UK, I quickly learned how adamant a supporter of Agriculture the Queen was. Of course well known for her love of horse racing, what was not well understood or appreciated was her steadfast support for farming and the ‘countryside’. She served on various Agricultural societies including the Young Farmers Clubs and The Great Yorkshire Show, a large agriculture event. UK farming will miss her steadfast loyalty and support.

Unlike Queen Elizabeth, many of our leaders across the world today do not really understand agriculture and its critical role in feeding the world and national security. They are too willing to trade off farming requirements for ‘green’ initiatives that many times inevitably damage or restrict farmer’s abilities to supply food to feed the world. For example, The Netherlands, a country that is twice the size of New Jersey, happens to be the 2^nd largest exporter of agricultural products in the world, behind the USA. Recent ‘green’ legislation passed by their government aims to reduce the number of farms by half, believing that this will benefit climate change. So now what? Where does the production go? And what about the loss of the farming industry? This could easily happen here; just look at California.

Recently the FDA announced its intent to open a dialogue on how to deal with ‘environmental claims’ on pharmaceutical products. We as an industry need to be very careful in how we address this issue as it may become a Pandora’s box. In principle, our products are developed to prevent or treat diseases. While some products may have collateral environmental benefits, if a pathway is developed to support such a claim, it may in fact be desirable. But it may end up being a future standard that does not fit all products, and even may be retroactively required of all. Be careful!

Paul Casady

For those who are Saturday Night Live fans from the late 70’s may recall Roseanne Rosannadanna’s famous line, “It’s always something.  If it’s not one thing it’s another”. Gas prices continue to decline.  Inflation rates are beginning to moderate.  It seems that the recent economic woes are stabilizing and even improving.

The cattle producing states are facing one of the worst droughts in recent history.  According to a new survey by the American Farm Bureau Federation, this year’s drought conditions are taking a harder toll than last year’s, as 37% of farmers said they are plowing through and killing existing crops that won’t reach maturity because of dry conditions. In addition, ranchers are being forced to sell off their cattle herds earlier than normal due to extreme drought, as water sources dry out and grass burns up. Ranchers in Texas reported the largest reduction in herd size, down 50%, followed by New Mexico and Oregon at 43% and 41% respectively.

In the short run, there should be reduction in beef prices as the additional supply works its way through the value chain, which is good.  However, in the medium/long term, prices should increase as supply moderates while ranchers rebuild their herds which can take years.  The animal health companies will likely be adversely impacted this year and into the future by losing potential doses of vaccines, antibiotics, parasiticides and hormonal implants as a result of early cattle harvesting and reduced herd sizes.

There are so many variables out of our control that impact key segments of the US economy.  Drought, floods, what’s next…pestilence?  Like Roseanne Roseannadanna said, “if it’s not one thing it’s another”.

Randy Freides