We recently published the animal health industry’s first Sentiment Index and the respondents’ sentiment for 2026 was “cautiously optimistic.” But after watching the stock market’s response to Zoetis’s 1Q performance and their updated full year outlook, perhaps the sentiment could turn pessimistic. So, I thought I would try to find some optimism for you this week.

Here are the 1Q 2026 growth rates (corrected for exchange) for the animal health businesses in the companies that have reported so far:

Of these 13 companies, 9 of them are at or above the 5-6% long term average animal health industry growth rates. So, when I saw a recent article from McKinsey, The case for optimism in uncertain times, I had to read it.

The author makes a great point when he states, “Many influential figures have argued, correctly, I think, that long-term optimism is not just descriptive, it’s generative: it helps to shape a better future by motivating the search for solutions.” In the article, the author references a book, A Century of Plenty written by several McKinsey authors. “[The authors] …argue that sustained growth is good, that there is enough for all, that it’s up to us to build the future, and that how we think and talk about the future really matters.”

Progress is uneven, unpredictable and driven by innovation. And innovation was the primary reason for optimism in our Sentiment Index.  The article concludes “Again and again, optimists have been on the right side of history. Optimism keeps us moving forward.” Even after some have had slow quarter.

Bob Jones

In the last several decades, the financial performance of the major animal health companies has been driven by the companion animal market segment. Will we join Marty McFly and go Back to the Future where the livestock segment is the driver of performance? It seems that this is the case for 1Q26 as Merck, Elanco and Zoetis all posted strong livestock growth rates.

In 2025, for the first time in many years, the livestock segment grew faster than the companion animal segments in the largest animal health companies. Merck and Elanco both reported that in 1Q26, their livestock segments grew +8% and +13% respectively (adjusted for currency), double the rates of growth for their companion animal businesses. Zoetis also just reported 1Q26 results with livestock posting a growth rate of +12% (adjusted for currency and divestitures) while its companion animal segment declined. This, even though in January 2026, the size of the U.S. cattle herd hit a 75-year low of 86 million head. A report from Piper Sandler mentioned that in 2025, the number of beef cows dropped to the lowest levels since 1961. The 2025 calf numbers declined 2% and cattle on feed dropped 3%, indicating that an expansion in the cattle herd isn’t likely before 2028 if at all. Where is the growth coming from with these declining numbers?

Well, it must be coming from producers seeing the value in utilizing preventative treatments such as vaccines, medical feed additives and premium nutritional specialty products to protect the health of their valuable investments. In addition, international markets are strong and growing, especially in Latin America and Asia. Beyond preventative treatments, the investment in and use of technological solutions to manage herd health is taking hold. Those companies with strong global livestock product lines should see strength as the year progresses. Let’s see if Doc Brown’s Delorean with its flux capacitor, will continue the travels for the rest of 2026. If 1Q26 is any indication, that seems to be the case.

Randy Freides

Why You Should NOT Invest in Animal Health 

Let’s be honest, animal health is not an easy place to make money as an investor. For decades, insiders have repeated the same narrative: great fundamentals, resilient demand, strategic interest. And yet, for many investors, returns have been inconsistent, timelines long, and exits unpredictable. At Brakke Consulting, we’ve heard this frustration for years, and it’s not wrong, and it is not going away.

Compared to sectors like energy or real estate, animal health often looks inefficient. Deals are smaller, markets are fragmented, and scaling can be painfully slow. Regulatory pathways, while faster than human pharma, are still complex enough to delay value creation. Meanwhile, capital is tied up for years with limited liquidity options.

There’s also a structural issue: too many companies chasing too little specialized capital. Unlike tech or clean energy, animal health lacks a deep, broad and educated investor base. As a result, many good companies struggle to get funded, and investors struggle to find high-quality, de-risked opportunities. That’s not a great combination.

And let’s not ignore another uncomfortable truth: we’ve been talking about these problems for decades. Conferences, panels, white papers … same issues, same conclusions, very little structural change. At some point, repeating the narrative becomes part of the problem.

So why invest at all? Because inefficiency creates opportunity and open the door for meaningful changes. Better curation, smarter capital structures, and a more engaged investor base could unlock incredible value. Until then, the question stands: is your money better deployed elsewhere … or are you waiting for an opportunity to participate?

Alexis Nahama 

Recently, I traveled from my home in Florida to Tennessee to celebrate my aunt’s 96th birthday. During the long drive, I found myself thinking a lot about change and longevity. One thing my family has taught me in recent years is that you must be tough to make it into your 90s—and if you do, you’ve certainly witnessed a lifetime of change.

Leaving Florida, the heat already felt like mid‑summer. But as we drove north into the mountains, the world shifted to early spring—fresh green grass, budding trees, and cool air. Then one morning, we woke up to frost on the branches and freezing temperatures, a surprise I hadn’t packed for.

Change is expected, but it still manages to surprise us. The veterinary business is no different. People love their animals and will go to great lengths—and expense—to care for them. We continue to see approval of innovative products that give veterinarians new tools to help their patients. Yet at the same time, practices face pressure: clients’ budgets are stretched, and broader economic forces—fuel prices, tariffs, market volatility—affect both owners and clinics. Ambulatory veterinarians have watched their weekly fuel costs climb, and anyone who has traveled to a conference lately has felt the impact. Was this in your 2026 budget?

For me, the takeaway is simple: stay flexible, adapt to the changes, and enjoy the ride. And hopefully, live long enough to see even more of it.

Chuck Johnson, Senior Consultant  

It is my pleasure to announce that Brakke Consulting will make its debut at the BIO International Convention 2026, taking place this June in San Diego, California, and is a meaningful milestone for our firm and the clients we serve.

On June 22, in partnership with Abiquifi, Brakke will host the Brazil One Health Summit, an official satellite event of BIO 2026. A curated group of Brazilian animal health startups will present investment-ready technologies to an audience of industry leaders, MAPA representatives, executives, researchers, and investors from around the world.

Our objective is to advance Brazil’s standing as a strategic biotechnology hub while reinforcing its global leadership in the veterinary sector. The Summit is grounded in a One Health framework, integrating animal, human, and environmental health and will bring high-potential Brazilian innovations to international markets.

We invite you to attend for three compelling reasons. First, you will gain direct access to emerging Brazilian startups with technologies ready for investment and partnership. Second, you will have the opportunity to engage with key stakeholders including MAPA, ApexBrasil, Abiquifi, FINEP, and BNDES. Third, you will develop a deeper understanding of how Brazil’s unparalleled biodiversity and market scale create distinct advantages for validating new therapies and products.

I welcome the opportunity to share additional details. Please contact me directly. I look forward to connecting in San Diego.

Mauri Moreira
Senior Consultant, Brazil 

How would you rate the state of the industry? Up-due to increased pet populations, overall pet spending and recent strength in some livestock trends. Down- due to decreased veterinary visits, consumer-based pricing concerns, and consolidation leading to job losses.  Lots of mixed signals.

One area that seems to be growing is an explosion of industry groups. There are now associations related to therapeutic categories, groups related to women in the industry, those serving hospitals from accountants and architects to software providers and HR professionals. Undoubtedly, efforts to attract interest from outside the industry’s traditional core are paying off.

We’ve also seen a realignment of conference activity. While some local conferences have shrunk or disappeared, others have emerged. One incomplete list notes about 40 veterinary clinic focused conferences this year alone. And that doesn’t include livestock-related conferences or those focused on the ancillary areas supporting the broader animal health industry.

One that is coming soon is the August Nashville conference organized by Viticus Group, the company behind the Western Veterinary Conference in Las Vegas. What’s motivating this bold move? Is it addressing an unmet need?  Will a central US location later in the year offer an attractive option?  We at Brakke are curious to see the attendance and energy that this debut conference brings.

Jeff Santosuosso

In a recent interview with the New York Time’s Athletic, Steve Kerr, coach extraordinaire of the Golden State Warriors, emphasized the importance of culture: Culture creates energy in times of success, and resilience in the face of adversity.

Culture matters. A positive workplace culture is the most important contribution an employer can make to employee wellbeing, according to the Merck Animal Health Veterinary Wellbeing Studies. Although these six studies were conducted over an 8-year period with veterinarians and team members, the results held whether the respondents were in a clinical or non-clinical setting (industry, academia). We believe culture drives wellbeing in all workplaces.

What attributes contributed most to a positive workplace culture?

• A strong sense of belonging to a team.
• A high degree of trust in the organization.
• Candid and open communication among team members.
• Sufficient time and opportunity to do quality work.

Do these characteristics define your workplace? It’s never too late to evaluate your culture.

On a different note, this is a solemn and happy time for believers. A time for family gatherings and celebrations. Today is the third day of Passover. Sunday is Easter. Muslims recently celebrated Eid al-Fitr. We wish you and yours a wonderful weekend, and hope for peace in the coming days.

John Volk

We turn to dogs for companionship, friendship and unconditional loyalty. Beyond psychological support, they may also hold the keys to healthy aging. On March 22, the CBS TV show, 60 Minutes aired a segment, “Why dogs are ideal for studying human aging”. It spotlighted the Dog Aging Project an initiative focused on unlocking secrets to a longer, healthier life for humans, and our furry friends.

Dogs are living longer due to healthier lifestyles, better diets and improved medical care and face many age-related diseases like ours, including dementia. Dogs’ brains are amazingly similar to ours thus making them great natural models for tracking how brain conditions naturally progress. Since dogs age faster than humans, the adage- one human year equals seven dog years- means researchers can observe  aging processes far more quickly and draw meaningful parallels.

The segment also highlighted Loyal, a company founded by Celine Halioua, developing drugs to aid in the healthy aging and life extension of dogs. Loyal has raised $250 million to fund its efforts to bring its pipeline products to market, notably LOY-002. To date, the FDA has accepted key safety data for LOY-002 and has granted a reasonable expectation of effectiveness, however results from the clinical trial won’t be known for several more years.

Our four-legged family members already enrich our lives. Now, they are paving the way for us to enjoy longer, healthier physical lives.

Randy Freides 

As mentioned in last week’s viewpoint, several Brakke consultants including myself participated in the AHNTI conference in London.

The event saw strong attendance, drawing nearly all major animal health companies and much of their senior leadership. Additionally, a wide range of affiliated organizations—including CDMOs, suppliers, and consultants —were present. 

The central theme was ‘Innovation,’ explored through a variety of engaging speakers and panel discussions. While innovation is crucial for industry growth, regulatory agencies face ongoing challenges to keep pace and ensure timely approval of new advances to the market. Investment is also a key component, particularly for independent startups, yet there remains a significant shortage of venture capital funding available within animal health to support them. 

In my opinion, unless we improve regulatory processes and expand investment opportunities, innovation in animal health will remain more of a discussion point than a reality. 

Paul Casady 

It was my pleasure this week to join my Brakke colleagues and many global animal health industry leaders in London for Kisaco’s Animal Health & Nutrition Technology and Innovation Conference.

The quality and quantity of presentations and conversations highlighted the strength of the animal health industry and its many innovation opportunities ahead.

A particularly refreshing presentation was a conversation facilitated by Kristin Peck, CEO of Zoetis, and Dr. Timothy Shell, Director of the FDA’s Center for Veterinary Medicine (CVM). Dr. Shell shared his vision for reforming the CVM’s animal health approval process, noting that FDA interactions will play a key role in determining how future innovations reach the market.

He touched on several proposed changes—cautioning these are not formal guidance and likely require 3–5 years to implement:

• Reducing average approval time from 10 years to 5 years
• Tripling MUMS approvals from 2 to 6 per year, with a voucher program for expedited review
• Extending conditional approval from 5 to 7 years for chronic diseases and including the CMC section
• Updating the user fee program to enable shorter reviews with applicable fees
• Evolving residue and toxicology regulations
• Leveraging foreign agency data and approvals, while addressing regulatory gaps within set timelines
• Utilizing AI to accelerate administrative processes

In closing, Dr. Shell stated that the CVM is evolving and encouraged companies never to pause or delay projects without first consulting the agency. This collaboration will support the timely introduction of valuable animal health products for pets and livestock.

Chuck Johnson DVM, MBA