This week the state of Wisconsin announced a confirmed case of highly pathogenic avian influenza (HPAI) in a large commercial layer flock, marking the 17^th state with a confirmed case in 2022 and the largest commercial case in the country to date.  This serves as a reminder that the spread of diseases, even those that have been around for a number of years, can have significant financial impacts on the animal health industry.  Control measures for HPAI include depopulating the entire premises where the disease is confirmed – in this most recent case, a facility with 3 million birds.

It’s encouraging to note that the USDA is investing in research into preventing these kinds of devastating animal diseases, but $13 million is a drop in the bucket.  Our industry needs to continue to invest in R&D efforts – not just vaccines, but other novel strategies for disease prevention and control – to stay ahead of these wily microbes.

Lynn Fondon

The most welcome sign yet that we are “returning to normal” was the Western Veterinary Conference, held March 6-9 in Las Vegas.  Attendance was excellent, nearly back to pre-COVID levels.  The sessions were well attended and the exhibit hall was large and busy.  Our compliments to the Viticus Group that hosts the conference.  It was also wonderful to see so many industry colleagues – truly see them; not many people were wearing masks.  (Hopefully there won’t be any coronavirus repercussions!)  The Brakke Consulting Industry Overview was standing room only.  A special thank you to Greg Hartmann/NVA, Randolph Legg/Boehringer Ingelheim, and Steve Shell/MWI for providing fascinating insights during the panel discussion.  (The Overview – without the panel discussion – is now available to present to your management teams live or via Zoom.  Just contact us to schedule it.)

Let’s hope that this is truly a trend back to regular activities.

John Volk, Senior Consultans

Zoetis’s Draxxin® has been the best example for me to use to explain that livestock producers will pay for innovation.  Tulathromycin, the antibiotic in Draxxin, is highly effective and livestock producers are willing to pay the high price for it to treat their cattle and swine – it works.

Merck and Elanco now join Bimeda, Ceva and Virbac in having a generic tulathromycin approved, bringing the total FDA approved generic products to five, proof that imitation is the greatest form of flattery in animal health as well. In Zoetis’s earnings call last month, they announced that generic competition reduced Draxxin revenue 15% in 2021 compared to 2020 and they expect another decline in 2022 of 20% compared to 2021 – peak sales are now in the past.

Unfortunately, these tulathromycin competitors will be battling in a livestock market this year that is forecasted to not grow much from 2021.  The USDA expects beef production to be up fractionally in 2022 and pork production for 2022 will likely be slightly lower that 2021.  And producer profits will be under pressure all year due to higher feed and input costs.  (But tulathromycin costs won’t be higher.)

Draxxin is a great product, a great brand.  Given the successful innovation from Zoetis and the other major animal health companies, we hope there is a new “Draxxin” being discovered.  Remember, livestock producers will pay for innovation.

Bob Jones

This newsletter contains news of a worrying development for the US poultry industry; a reminder that highly pathogenic avian influenza (HPAI) has been found in commercial poultry operations in Indiana, Kentucky, and now in a backyard flock in Virginia.  The last substantial outbreak of HPAI occurred in 2015, and resulted in a significant cull of chickens and turkeys in the US.  The current findings of HPAI come at a time when US wholesale broiler/fryer prices as reported by the USDA / ARC are already over 50% above pricing at this same time in 2021.  Let’s hope that discipline in infection control will succeed in extinguishing this outbreak among US growers.  The whole animal production industry suffers when consumers are bombarded with news about health concerns in our food supply chain.

Have a great week!

Jim Kroman

Just as the industry understands Facebook, it’s time to think about TikTok. Far-fetched? Consider that Meta/Facebook’s market cap lost ¼ of its value, ¼ trillion dollars in one day last week. That drop is attributed to disappointing earnings, to a near-halt of new users. Why? Increased preference to TikTok.

TikTok’s valuation reached $280 billion last August. It boasts over 1 billion users, including 100 million here. It has more users than Twitter, Snapchat, and Instagram.  37% US of mobile users check TikTok, an eight-fold increase in less than two years.

As anticipated, users skew to the young: Nearly half of US users are between 10 and 29. Yet, adult users increased by nearly 6X in less than two years.

Why all the fuss? Think back to Facebook’s origins: remember Mafia and farm games? Our industry tends to be laggards related to media. Yet, in 2019, the AVMA observed, “Tech-savvy millennials already comprise a major animal owning group today and generations of pet owners to follow will certainly demand high-tech solutions for much if not most of the pet care they will seek. This trend will favor practices that are more technologically and temporally connected to animal owners.”

All industry players, particularly those in pet care, should consider how they can adjust to and capitalize on this rising medium.

Jeff Santosuosso

Happy New Year!

Recently I attended the VMX convention in Orlando. I thought the overall attendance was excellent and more importantly, the positive attitude of our industry was clearly on display for all to see. I really believe we can show great leadership in helping our country move from the ‘pandemic’ to the ‘endemic’ state as it is time to get on with our livelihoods. We humans are social animals and we need the interface – as much as vaccines – so as to ensure a positive mental state for keep having overall better mental and physical health.

At the Brakke Industry overview, during a panel of industry leaders we asked them what worried them the most right now. One of the consistent answers was workforce shortages. My challenge to you is: we can help solve our own problem and be strong ambassadors for our industry during these difficult times. Let’s all go out and help recruit people to join the animal health profession right now. It’s the best profession, in my opinion!

Paul Casady

Towards the end of 2021, Bob Jones wrote about the US economic situation and the inflation the country is experiencing.  As 2021 came to a close, the CPI posted an annual rate increase of +7%, the highest rate since 1982.  While nominal wage gains were higher than seen in many years, when adjusted for inflation, real wages declined by -2.5%.

Recall that in the early 1980’s, the inflation rate (CPI) peaked at 14.8%.  To tackle inflation, the Fed drove the country into a recession, increasing their benchmark interest rate as high as 19%.  Two critical differences between the 70’s and today relate to the labor market.  Back in the early 1980’s, unemployment peaked at almost 11% whereas today’s rate is 3.9%.  However, today we are experiencing significant labor shortages partly driven by the labor participation rate (work rate for prime-age people; 25-54 yrs. old) that peaked at 67% in 2000 and is now about 62%.

The Animal Health industry is facing similar inflationary challenges.  We heard from one senior executive at VMX that costs continue to rise due to supply chain disruptions, labor shortages and wage increases, especially for manufacturing talent.  Companies are passing along the cost increases to customers to the extent they can, trying to maintain margins.

2021 was an extremely strong year for the Animal Health industry.  2022 may prove to be much more challenging forcing business leaders to navigate choppy waters driven by the multitude of headwinds facing global economies.

Randy Freides

Brakke Consulting View Point

Almost back to normal.  That’s how a lot of people, including me, felt this week at the VMX veterinary meeting and expo in Orlando.  Attendance was down from non-COVID years, but still over 15,000 attended the conference and many exhibitors felt that their time there was well spent.

At VMX, Merck Animal Health released findings of the Veterinary Wellbeing Study, the third survey of veterinarians since 2017 and the first survey of veterinary technicians and support staff.  The concept of the wellbeing study started with Brakke Consulting’s John Volk and with the collaboration of the AVMA, this report showed how COVID impacted people working in clinics.  Another notable observation was how serious staff shortages were and the stress that this caused the clinic teams.  From Merck’s press release:

“The percentage of veterinarians with serious psychological distress has increased to 9.7% in 2021 as measured by the Kessler Psychological Distress Scale, compared to 6.4% in 2019, due in large part to the ongoing pandemic. Among staff, the prevalence of serious psychological distress was nearly twice as high (18.1%). In addition, half of staff respondents (49.6%) and approximately one-third (30.5%) of veterinarians reported high levels of burnout.”

Back to VMX.  The Brakke Consulting Industry Overview was well attended, the KCAHC/UVSA/Animalytix Networking Summit was well attended and, in the evenings, the bars at the Hyatt and Hilton were well attended.  Almost back to normal.

Bob Jones

Next week marks the return of VMX at its regularly scheduled time in January, as well as the return of the in-person Brakke Industry Overview.

In these turbulent times, it pays to have as much information as possible about the current trends in our industry and what is driving them.  This year, in addition to all the valuable insights you expect from the highly experienced Brakke team at our Industry Overview, we are including a panel with other industry leaders, bringing you wide-ranging insights into the companion animal segment. Our annual Overview is the best 2 hours you’ll spend at VMX – be sure to register today!

Lynn Fondon

ANIMAL HEALTH NEWS & NOTES CELEBRATES
22 YEARS OF INDUSTRY NEWS

Wow – it’s hard to believe that 22 years has passed since we at Brakke decided that an industry-focused e-newsletter would be a good idea.  Our first newsletter was sent out in August of 1999 to about 200 subscribers.  As of December 15, we had over 6,700 active subscribers in more than two dozen countries, and many more readers view the newsletter online or see it forwarded from a colleague.

The industry has changed more than a little in the ensuing two decades.  The very first newsletter featured a “top 10” list that included the following: Merial; Pfizer; Bayer; Intervet; Fort Dodge; Novartis; Schering Plough; Elanco; Pharmacia & Upjohn; and Hoffmann-La Roche.  Who would have predicted back then that 9 out of 10 of those names would no longer be around in animal health 20 years later?!

Our first News & Notes was pretty brief compared to the newsletters in 2021, with only a half-dozen announcements.  It wasn’t easy to get news about our industry back then, and we felt we could serve an unmet need with a weekly news roundup.  Now, most of us are besieged with e-newsletters on a daily, weekly, and monthly basis.  We hope that our weekly digest continues to be of value by presenting the week’s important news in a way that allows you, our readers, to effortlessly stay caught up on the industry.

Thanks for your readership, and we look forward to serving you for many years to come.

Lynn Fondon