Recently the French government announced a tender for securing vaccines for controlling High Pathogenic Avian Influenza in the national flock. This is critically important, in that taking this positive step to control this important disease through a much more scientific and humane approach is the right approach in my opinion. The historical method of slaughter of millions of birds when we have effective tools – and as we are also faced with critical food shortage and cost – only makes sense.

On another note, it seems to me that there is an unusual amount of turnover in senior positions at the leading animal health companies. Where once there was almost benign stability, almost every quarter goes by with a big announcement. I’m not sure what is exactly causing this, but I guess part of is due to the role of being a publicly traded company and be seen to addressing performance issues. But it is not limited to those companies, but in fact is happening throughout the industry. Once seen as a stable environment for leadership and careers, now apparently much more turbulence and unpredictability. Eventually it affects the whole company in some manner, and maybe eventually customers. How is it in your company?

Paul Casady

Recently, I read an article about consumers returning to historical purchasing patterns as it relates to food that struck a chord with me.  We are slowly exiting a high inflation period but food inflation remains stubbornly high (about 8.5%).  Many consumers continue to make difficult economic and purchasing decisions to stretch their food dollars.  This includes trading down from premium food items to less expensive cuts of meat and cheaper store brands.

I started to think about these choices and the linkage to Maslow’s hierarchy of needs.  The first two slices of the pyramid are “Physiological Needs” which relate to basic survival and “Safety and Security” which is where financial uncertainty comes into play and where our ability to fulfill our basic needs are challenged, leading to frugal behaviors.  The article goes on to say that the need to trade down and the constant search for the lowest prices on weekly items has resulted in a new term for me, “frugal fatigue”.

With economic pressures starting to ease, consumers are beginning to make more discretionary purchases, starting to focus on themselves and their emotional needs.  This is the climbing of Maslow’s pyramid up two steps to “Esteem” where people are seeking respect, self-esteem and status.  As a result, consumers should go back to more normal spending habits, purchasing products with more premium attributes.  Hopefully, food producers and ranchers will benefit from future trading up.  The question will be, can supply match changing consumer dynamics?

 Randy Freides

Several companies reporting results in the last few weeks have commented on the “softness” of the companion animal market.  It’s true that visits to veterinary practices are down a bit compared to the prior year.  However, I’m not hearing about any “softness” from veterinarians.  Revenues are up for most, and many practices are still finding it extremely difficult to fill openings both for veterinarians and staff members.

Veterinarians are working more hours than they prefer.  According to AVMA, the median hours worked has climbed from 40 to 45 hours per week over the last couple of years.  Keep in mind that visits increased pretty dramatically during the pandemic, and we’re still dealing with the tail end of above-normal comps.

What’s more, veterinarians continue to be quite bullish about revenue growth in 2023 and beyond, according to recent surveys and conversations with veterinarians.  It’s probably also safe to assume that pets are still getting the preventives, medications, food and supplements they need, even if visits to veterinarians have backed off slightly.  I think we can expect another solid year in animal health and nutrition.

John Volk

The announcement that Farmers Business Network has launched a ChatGPT-based artificial intelligence (AI) platform for farmers caught my eye. AI-based platforms are everywhere these days, including in animal health. But if you’re unfamiliar with it, ChatGPT is next-level disruption in AI. It is a natural language processing tool that can answer questions and assist you with tasks like composing emails or letters, making lists, or even producing computer code. I tried it out, asking to do everything from writing a cover letter, to explaining the steps for CPR, to writing a haiku about cows. The results were more or less indistinguishable from what I might have written myself.

Many have concerns about sophisticated AI that is able to flawlessly mimic human interactions; from worries about students using it to generate essays and test answers, to ChatGPT effectively replacing human employees. From a veterinary perspective, it could expand upon the tendency for pet owners to go to “Dr. Google” for answers about their pets’ problems. But there can also be significant benefits in efficiency and cost savings if it’s used in a thoughtful manner. The bottom line is that AI is not going away, and our industry can either embrace it, or stick our heads in the sand and suffer the consequences.

Lynn Fondon

P.S.  Are you curious about whether ChatGPT could write the Viewpoint?  I was – so I asked it to do that. Here’s the result using the prompt “Write 100 words about ChatGPT in veterinary medicine. Include both positive and negative points.”

“ChatGPT can be a valuable tool in veterinary medicine, providing quick access to a vast database of information about animal health and wellness. With its advanced natural language processing capabilities, ChatGPT can understand complex questions and provide accurate answers, diagnoses, and treatment recommendations based on the latest research and clinical best practices. This can be particularly helpful in rare or complex cases.

However, there are also potential drawbacks to relying solely on ChatGPT for veterinary advice. ChatGPT cannot physically examine or observe animals, which limits its ability to make accurate diagnoses or recommendations. In addition, it may not take into account individual factors, such as an animal’s age, breed, or medical history. Therefore, it is important to use ChatGPT as a complementary tool to veterinary care and not as a replacement for in-person consultations.”

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