This week, I draw your attention to the notice in the Newsletter regarding Glenmark Pharmaceuticals, Inc. and the issuance of a recent FDA Warning Letter stopping importation and recall of 39 different generic products manufactured at the Glenmark facility in India.

While this recall should have virtually no effect on the availability of drugs to veterinarians, it comes at the same time as the US administration’s establishment of substantial tariffs on pharmaceuticals made outside the US in an effort to shift overseas production of pharmaceutical products back to the United States, primarily for national security and balance of trade reasons.

There is no question that the US is vulnerable to shortages outside of its control due to the high volume of imported medicines, for both animals and humans.  Some estimates are that over 90% of antibiotic APIs sold in the US are imported from China.  It is not known how much of veterinary drugs are imported from China, but we feel 20-40% might be a good estimate.

Generic, non-patented, low-cost products often don’t support the high cost of establishing production in a US based site when lower cost sources can be found overseas.  The threat of tariffs can certainly cause companies to plan production moves, but the time and cost associated with moving from off-shore to a US production site means this is a very long-term solution to an immediate problem.  Look for trade deals soon between major exporters and the US.

 Jim Kroman

The Hidden Math Behind Veterinary Rx Sales: A Tale of Two Channels

How do margins really stack-up for pet Rx products in-clinic vs. clinic online store sales?

Let’s crunch the numbers: A 30-day supply of Carprofen priced at $50 (wholesale $30) appears to offer a healthy 40% margin. However, VHMA benchmark data shows the reality is far different. In-clinic dispensing incurs labor costs ($5-$10 per prescription), inventory carrying costs (20-30% annually), and credit card processing fees (averaging 3.5%). Factor in 5-10% annual inventory loss from spoilage and 2-5% shrinkage reported by VHMA, and that 40% margin mirage evaporates to roughly 14.5%.

And while vet clinic-owned online stores through platforms like Covetrus, Vetsource and Blue Rabbit will help ease physical inventory costs and reduce labor burden, they also introduce platform fees, marketing costs and competitive pricing pressures. AVMA Economic Reports suggest the automation and efficiency gains can help preserve margins while freeing staff time for higher-value services.

Also consider, the 2024 Brakke Pet Rx Home Delivery Study revealed “pet owner demand” is the main reason vet clinics have online stores, and nearly 80% of pet owners said home delivery helps Rx compliance. Today, people expect to buy everything in a couple of smartphone clicks and have it delivered to their door.

Smart practices are adopting hybrid strategies to maximize overall practice profitability by leveraging online platforms for maintenance medications while maintaining in-clinic inventory for acute needs. According to AAHA guidelines, this approach optimizes inventory investment while enhancing customer service.

Richard Hayworth

One can say that we certainly live in interesting times!

The US administration believes that a “rebalancing” of trade conditions is required, and part of the rebalancing involves tariffs.  This has sparked a huge debate and also a panic in the stock markets- resulting in wild swings in the days after.

Those of us that have been involved in international trade are well aware of the “inconsistencies” that occur in trade across the globe and maybe we have just become “immune” to the impacts that they make. In fact, tariffs are just one of the trade issues that impact our business. Biosecurity measures, inconsistent regulatory requirements, and other controls actually have a far greater impact. Access to markets both ways are manipulated to control imports and exports to protect national interests. And it certainly impacts the animal health industry.

My suggestion is to do your own homework to understand the issues and the dynamics. WTO.ORG provides a nice, consolidated list of tariffs by country. Also, a great study in tariff strategy is the history of the Australian automobile industry. As for the veterinary pharmaceutical industry, my view is that the tariff impact will be limited, but time will tell. The bigger threat is supply chain disruption if events escalate.

Meanwhile, try not to look too often at your 401K…and have multiple suppliers of critical items in your products.

Paul Casady

Coloradoans recently voted in favor of a Veterinary Professional Associate (VPA) position, with responsibility and authorization between a licensed technician and a veterinarian.

I attended one of the liveliest panel discussions on this very topic during a recent conference. Both pro and con voices were passionate and well-informed. The bill’s origin centers around a perceived (short-term?) imbalance between veterinary care demand and supply. By creating a hybrid position, the bill’s supporters seek to supplement veterinary care without requiring the time and expense of earning a veterinary degree. That said, the VPA can make medical recommendations only under the direct supervision of a licensed veterinarian.

The issue runs much deeper than that. Questions abound related to surgical procedures, unforeseen circumstances within patient care, the establishment of a VCPR, pay rates, and more. Virtually all accreditation and regulation fall under a state licensing board. VPAs would be no different, which raises issues of interstate reciprocity.

What’s certain is livelier debate. A recent study conducted by Brakke Consulting on behalf of AVMA demonstrated that rather than a true shortage of veterinarians, the industry’s recent tight labor market now easing, the equilibrium comprising a basic tenet of economics.

Jeff Santosuosso

In last week’s viewpoint, Lynn Fondon discussed how the veterinarian profession needs to look beyond price and fee increases to maintain revenue growth.  I totally agree.  Volume increases is critical to drive growth.  This not only holds true for veterinarians but also for animal health companies.

First quarter earnings reports are right around the corner.  With visits  to veterinary clinics continuing to decline it will be interesting to see how 1Q25 revenues will be impacted.  Those companies riding a wave of innovation in the companion animal business including Zoetis and Elanco may fare better than companies with aging product lines.

The latest wave of innovation fueling growth in companion animals is also geared toward driving patients back to the clinic for treatment, especially for monoclonal antibodies to address pain and dermatological conditions along with injectable parasiticides (expected in the next 12-18 months in the US).  And we will not be surprised to see livestock perform well this year.

In the long run, volume growth is more important than raising prices because it drives sustainable revenue and market share gains – and it also has an impact on margin expansion.  While raising prices has a significant and short-term impact on profitability, companies run the risk of a strong competitive response, of having weak commercial capabilities to support higher prices or of having customers decide not to purchase.

Randy Freides

This week’s news items included a white paper from data analytics company Vetsource that indicates that vet visits are down, and revenue growth at clinics is slowing. The profession benefitted from a surge in demand for veterinary care during the pandemic, as well as post-pandemic price increases that were above inflation rates. It appears that the near future may not be quite as rosy for veterinary practices.

Pet owners are no doubt feeling squeezed between higher vet costs and current economic headwinds, and this is unlikely to improve in the short term. A “state of the profession” address by the AVMA’s chief economist at the recent Western Veterinary Conference reinforced this assertion, citing economic indicators that point to a potential recession.

Decisions on wellness care for pets have been particularly impacted: the Vetsource data showed that wellness visits declined in 2024 (non-wellness, or sick, visits were stable). Additionally, parasiticide purchases were down, both in number of patients purchasing and in months of protection dispensed. Some of the decline may be due to pet owners switching to purchasing products from retail channels, but it may also reflect cost-cutting choices.

The veterinary profession will need to look beyond price and fee increases to maintain revenue growth. Industry partners, it’s time to step up and support veterinary practices in their efforts to drive pet owners to visit their veterinarian, for both wellness care and product purchases.

Lynn Fondon

Last week’s newsletter contained an announcement about Brown Food’s UnReal Milk, lab-made whole cow milk.  It may be instructive to review the status of plant-based meat.

When introduced, plant-based meat was viewed as a major disruptor of the meat industry.  Companies claimed it would displace animal protein in the not-too-distant future ¬ a major threat to the livestock and poultry industries.  BeyondMeat went public in 2019 and soon hit a high of $239.  Sales of plant-based meat substitutes climbed to $1.3 billion in 2020 with forecasts to hit $10 billion or even $20 billion within a few years.  It didn’t pan out that way.  Category sales have been plummeting and today are probably under $500 million.  BeyondMeat stock hovers around $3.  Many stock analysts have stopped covering the company and the sector.

What happened?  It turns out that it costs a lot more to manufacture plant-based meat than to produce beef, pork and chicken.  Non-meat meat also created complications for fast food restaurants because of the need to inventory and serve a completely different, additional line of burger and nugget products.  And ersatz meat really isn’t healthier.  The protein is lower in quality, the products are higher in sodium, and calories are similar.  Perhaps even more important, manufacturers haven’t been able to match the umami, or savoriness, of meat.  So the products are pretty much relegated to the vegan and vegetarian segments of the market, which are tiny.  Consequently, the animal health industry doesn’t have to worry about cattle, swine and chicken production declining after all.

 John Volk

It’s time to go on a diet.  I have always believed for us in the animal health industry, the first quarter is the toughest to get through – the caloric intake always exceeds the caloric output.  The big tradeshow, conference and sales meeting season starts right after Christmas and New Year holiday feasting.  We’ll have fewer excuses now to get out after work and burn off calories…Daylight savings time starts Sunday for those of us in the USA.

It’s also time to say thank you.  Thank you to all of you that attended our 2025 Animal Health Industry Overviews at VMX and WVC this year.  We are not sure how many Overviews Brakke Consulting has given over the years, but we are sure that this was the best attended ever.  And for that we are grateful.  I’d also like to thank our presenting consultants, John Volk, Darrell Klug and Mike McGinley, Randy Freides for tallying up the numbers and Amanda McDavid for organizing everything from start to finish.  And I’d like to thank Paul Casady for organizing two great panel sessions and the panelists, Dr. Jay Price, CEO SVP+MVP, Jeff Simmons, CEO of Elanco, Jesper Nordengaard, CEO Dechra and Tammi Lesser, Sr VP Sales & Marketing, Antech.

If you missed it, let us know – we recorded the WVC session.  And if you have topics to suggest for us to cover at next year’s Industry Overview, please let us know.  Thanks again and time to burn some calories.

 Bob Jones

INNOVATION and PARTNERSHIPS: the key message at Animal Health and Nutrition Innovation Conference, London

Attending the recent AHNTI conference in London, it was great to catch up with old friends, but also to meet new innovators. The overall spirit was very positive in both the pet and food animal spaces.

This year’s major topic was Artificial Intelligence (AI) and several speakers commented on the potential benefits this could bring to our industry.

What became very apparent, is that several leading companies are looking more and more towards the innovative entrepreneur, to bring growth to their companies via partnerships. This method definitely cuts down the time to market as they simply screen proven concepts that require investment getting the product or service or technology to market.

Navigating the early development phase and especially funding for the early startup, was flagged as a challenging area, stifling growth.

Another trend observed, was the increased interest from Human Biopharma companies, looking at entering the pet space with either focused therapeutic vaccines or monoclonal antibody technologies. These companies have done their homework and were well aware of the different challenges and different pricing structures in our industry.

Brakke consulting had several interactions with clients and potential clients and we will be assisting them in several areas, ranging from finding potential partners, testing the market to gain clear understanding of where and how their product offering will fit into the USA market as well as finding target areas to launch products into. Yet another partnership to drive value from an innovator!

Lourens Havenga
Paul Casady

The Smartphone Revolution: How “Buy Now” Changed Shopping Forever

Buying pet products used to require planning—lists, trips to multiple stores, and weekend shopping runs. Before 2010, a gap existed between deciding to buy and actually making the purchase. The effort often led to forgotten orders, second-guessing, or abandoning the purchase altogether.

Then came smartphones, and everything changed.

By 2010, shopping on mobile was clunky, but by 2012, smartphone adoption surpassed 50% of U.S. adults, pushing retailers to optimize mobile shopping. Pet owners no longer had to wait to order—if they saw a product at a friend’s house, got a vet’s recommendation, or ran out of food, they could buy it instantly.

Between 2013-2015, mobile shopping exploded. Chewy, Amazon, and pet retailers refined their apps, making it effortless to compare prices, check reviews, and tap “Buy Now.” Apple Pay and one-click checkout made shopping seamless. Instant gratification became the norm.

The COVID-19 pandemic accelerated this trend. With lockdowns restricting access to vet clinics and pet stores, owners turned to mobile shopping for essentials. Companies like Chewy and Amazon thrived, while brick-and-mortar retailers scrambled to keep up. Even after restrictions lifted, the convenience of mobile shopping remained a habit.

Today, if a product isn’t available for purchase the moment a pet owner decides, another brand or retailer will win the sale. Consumers expect frictionless shopping and fast delivery. Businesses must adapt to this shift, and the 2024 Brakke Home Delivery Study offers crucial insights into pet owners’ evolving habits.

Smartphones didn’t just change how we shop—they raised expectations permanently. In a world where instant access drives action, being available now isn’t just an advantage—it’s essential.

Richard Hayworth