Supporting Early-Stage Animal Health Innovation

The launch of Elanco Ventures, along with recent investments by Veterinary Angel Network for Entrepreneurs (VANE), are a welcome boost for early-stage innovators in animal health. This stage is often one of the toughest points in a company’s journey, especially as the company moves beyond friends-and-family funding and begins to look for more substantial capital.

Investors like Digitalis and NovaQuest have helped lay an important foundation, but the industry still needs more capital focused on these earlier stages of development. Investment support at this stage can make a real difference in keeping new ideas moving forward through funding proof-of-principle and proof-of-concept work leading to new tools, solutions and products.

A stronger funding ecosystem from early to late stages, gives the animal health industry a better chance to keep growing and innovating over the long term.

Chuck Johnson- Senior Consultant

Brazil’s Growing Role in One Health Innovation

As the global animal health industry continues to seek innovative solutions to increasingly complex challenges, Brazil is emerging as a strategic center for biotechnology development and One Health advancement. The country’s unique combination of biodiversity, scientific expertise, agricultural leadership, and industrial scale creates an environment well-positioned to support innovation that benefits animals, human, and environmental health alike.

On June 22, industry leaders, investors, entrepreneurs, government representatives, and research institutions will gather in San Diego during BIO International 2026 for the Invest in Brazil | One Health Summit: From Science to Scalable Solutions. Organized by Abiquifi and ApexBrasil, with support from Brakke Consulting, the event will highlight opportunities for investment, collaboration, and international expansion within Brazil’s rapidly growing biotechnology ecosystem.

Brakke Consulting is proud to serve as a sponsor and participant in this important event. Through its work with global animal health companies, investors, and innovators, Brakke continues to support initiatives that foster growth, strategic partnerships, and the advancement of One Health solutions worldwide.

Brazil’s strengths extend beyond its role as a major producer of animal protein. The country offers a diverse research environment, expanding biotech capabilities, and a growing network of organizations focused on translating scientific discoveries into scalable commercial solutions. These assets are increasingly attracting attention from global stakeholders seeking new partnerships and innovation platforms.

Those interested in attending can learn more and register at: https://www.eventbrite.com.br/e/lnvest-in-brazil-i-one-health-summit-from-science-to-scalable-solutions-tickets-1989823578889?aff=o

As innovation becomes increasingly global, events such as this provide valuable opportunities to connect science, investment, and industry expertise while highlighting Brazil’s expanding role in shaping the future of One Health.

Mauri Ronan Moreira- Senior Consultant, Brazil

Click here to listen to Jeff Santosuosso’s Video Viewpoint regarding “Trends Influencing Millennials/GenZ and their Pets”.

A couple of my recent assignments have brought me into the big wide world of animal health, meaning emerging markets in Asia Pacific, Middle East, Africa, and Latin America. There you will find a different landscape for our industry, with different needs and drivers than what we sometimes overly focus on- that being the mature USA and European markets. (Note: Recently I saw that there is state bill being presented in Oregon that essentially outlaws hunting, fishing, and animal farming. Imagine presenting that to someone on the streets of Calcutta?)  

In emerging markets, you see a significant growth in pet care and spending. Innovation is still highly valued and generally does well when brought to these markets. But affordability is a big issue and finding ways to make products more available to larger populations will be one of the big opportunities for our industry.   

As for food animals, it is a big driver of growth- in these markets you have billions of mouths to feed that continue to be growing at a rate exceeding the mature market populations. Food availability, affordability, and security will forever be the dominate theme in this area. While we go into a Whole Foods, or Marks and Spencer and see ‘organic’, ‘free range’, ‘no hormones’ or ‘no antibiotics’ highlighted on the label- go into a store in Brazil or Indonesia and it’s a different choice operating: what’s available and what can I afford it? 

 The duality of these differing markets (mature vs. emerging) creates difficult choices for animal health companies on how to direct their strategic vision and choices. In my view, the ones that do it right will be the winners and the most sustainable. 

Paul Casady 

The recent announcement of Tractor Supply Company’s acquisition of VIP Petcare sets up a formidable challenger to Chewy’s veterinary ecosystem that they are building with their recent acquisitions of Modern Animal and Smart Equine with a few notable differences –Customer Positioning and the value of Brick and Mortar. 

Chewy positions themselves with premium care and service targeting consumers (especially Millennials and Gen Z) who treat their pets like children and are willing to spend more on them.  Tractor Supply, with 85 years in business, has positioned themselves as rural lifestyle retailer focused on low prices.  Two ends of the spectrum of pet care but data shows repeatedly that the income range of all pet owners tends to skew to the lower end of the range not the higher.  

Are the days of Brick and Mortar seeing a comeback?  Tractor Supply plans to grow to 3,200 stores by 2030- opening in rural and exurban communities. In addition, they continue to expand their smaller pet specialty stores, Petsense, in more urban/suburban areas. While Chewy will have some physical space with their veterinary clinics- they aren’t focused on providing retail services ( at least not yet). In addition, they are already being targeted by pet retail competitor Petsmart- calling out the advantages of in-store pickup- a benefit that Tractor Supply also offers. 

Not sure exactly how this will play out but one thing is for sure, it will make for some interesting times ahead. 

Dr. Christine Merle, Newsletter Editor

Like other industries, animal health thrives on innovation, and this edition of the newsletter includes several examples. A new treatment for canine allergic and atopic dermatitis. A new authorization for an established anti-parasitic. A new product for the evaluation of adrenal function in dogs. The addition of a new biomarker added to diagnostic tests.

When we do benchmark studies, one of the key metrics we look at is age of product lines. What percentage of sales are derived from products launched in the last 3-5 years? How do you compare to your peer competitors? It’s an important measure of whether you are keeping pace in your industry.

It won’t be long before management teams start meeting to initiate strategic planning and budgeting for 2027. We encourage you to include age of product lines as one of your core evaluations. Please let us know if we can help.

John Volk, Senior Consultant

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