The Experts in Animal Health

Brakke Viewpoints

We are the experts in animal health

Brakke Viewpoint August 16, 2024

The pressure on protein integrators continue to escalate from both consumers and the retail and fast-food sectors to provide less expensive, chemical and antibiotic-free, organic choices.  A difficult challenge, indeed.

Savvy consumers continue to demand safe, affordable food.  With a continued rise in the desire for antibiotic-free and organic products, producers have pivoted to fill that market.   However, it has been at a high price as their options to keep animals healthy diminish driving up production costs.

Retail chains have also squeezed protein producers reducing margins as well.  Consolidation among retail grocery chains has given them additional leverage. Large organic sections are now commonplace in almost all grocery stores, no longer can it only be found at Whole Foods.

There is help for producers on the horizon as Animal Health companies have realigned their R&D resources to focus on nutritional health and non-drug options.  Delivering these options is generally quicker and less expensive than animal drug approvals.  The ability to demonstrate efficacy and plausible data has improved significantly too.  A strong focus on the microbiome, vaccines, and natural ingredients has been an emphasis.  The technology in this space is continuing to show glimmers of providing real alternatives to antibiotics.  Any R&D dollars dedicated to drug products are now focused on high margin companion animal products.

Despite the challenges, the demand for protein globally continues to grow as 3rd world countries’ economies improve and develop.   Protein integrators are still poised and ready to feed the world.

Simon Hall

Brakke Viewpoint August 9, 2024

I’ve recently been involved in a project related to feral pets and shelter adoptions. That experience has heightened and renewed my focus on the subject. Hill’s just reported a “State of Pet Shelter Adoption Report.” The news is mixed.

On the positive side, our intentions look favorable. Two-thirds polled expressed interest in adopting a shelter pet. Small dogs are the most attractive, followed by medium dogs, cats, and large dogs. Gen Zs and Millennials expressed above-average intentions.

On the negative side, nearly half say the cost of ownership is a challenge to ownership. 84% say the cost of veterinary care is the most expensive part. When coupled with a recent Brakke report, the picture is concerning. We’ve reported that the number of pet visits in clinics is flat to slightly declining. Other major reports confirm our findings. Veterinarians are using price to drive up revenues. (So are suppliers.)

While we do not expect these trends to clash to calamity, here’s another red flag. However, it’s clear that pet owners, veterinarians, suppliers, and entrepreneurs are addressing these issues. A hallmark of our industry is the ability to adjust and innovate.

Jeff Santosuosso

Brakke Viewpoint August 2, 2024

As most of you know, it’s quarterly earnings reporting time.  I’ll admit I was a little down in the dumps earlier this week after reading a few articles in the Wall Street Journal about companies slow or no growth.  How was the 2nd quarter for animal health companies going to turn out, I wondered.

Two weeks ago, Boehringer Ingelheim reported 1H growth of 1% (CC) but Virbac reported 1H growth of 11.3% (CC).  Last week, Nestle reported organic growth of 3.8% for its Nestle Purina PetCare business.  This week, Merck reported that its animal health business grew 6% (CC) in 2Q (up from 4% in 1Q) with the livestock business growing 11% in the quarter and the companion animal business growing 1%.  Also, Cencora’s MWI animal health business reported 6.7% growth over the last three quarters, but only 4% for the last quarter.  Finally, Colgate-Palmolive’s Hills Pet Nutrition reported organic growth in 2Q of 6.1% and 1H growth of 5.2%.

IDEXX and Zoetis report next week and Elanco after that, so we will have a better idea of industry growth this year very soon.  What is apparent is that there is softness in the companion animal parasiticide segment, which we will comment on after a few more companies report.  Even with this softness, it looks like the animal health industry is on a mid-single digit growth trajectory.  Again.

Bob Jones

Brakke Viewpoint July 26, 2024

Succession – Plan your endgame

In the busy day-to-day running of a business, especially start-ups and partnerships, the thought of a planned endgame rarely demands any priority and is often totally neglected until there is a real need for it.

Very often partial planning is the biggest issue. When a key partner experiences a catastrophic event, like an accident or severe health issues, a short-term plan is usually available, but the longer-term impact of the event is usually never considered.

There is no single successful endgame, and it may even change over time:

  • In some businesses, a total sale is the best fit, especially when all partners have the desire to exit at the same time. In this situation, what is your plan to maximize the value of the enterprise? As partners what is your plan to ensure the business is “clean” and does not have private financial considerations? Should one partner fall away, what is the short and long term plan?
  • In other businesses there may be a next generation to consider. How do they take over assets, without any major disruption?

Regardless of what the endgame is, it needs be defined and communicated to all stakeholders.  My hope is that this piece, stops you to think about the ultimate outcome of a lifetime’s work and sweat equity, which you have/are putting into your business. Why not plan early and well for a WIN?

How often do you evaluate your succession strategy, to ensure it aligns well with YOUR planned endgame?  We’d be happy to help.

Lourens Havenga

Brakke Viewpoint July 19, 2024

In today’s dynamic marketing landscape, effectively connecting with your target audience is crucial for business success. However, traditional demographic and behavioral segmentation methods often fall short in capturing the nuances of individual consumer preferences and behaviors.

I have been lucky to work in the companion animal, livestock and aquaculture business of several major animal health companies and have personally felt the limitations and challenges of traditional market segmentation studies.  The reliance on static criteria, like demographics, limited data sources and the lack of behavioral insights has probably held us all back from better segmentation and messaging.

But I think this is about to change. With the tools offered through generative artificial intelligence, large datasets and the ability to assess subconscious needs, desires and motivations of audiences, we can now much better segment our customers and develop messages that better hit the targeted audience.  We are working with a couple of partners to bring these new tools to the animal health industry and to our clients and are excited about what we can do with them.

Ready to elevate your marketing efforts to a new level of effectiveness? Contact me today to schedule a personalized demo and discover how Brakke Consulting can transform your marketing strategy.

Mauri Moreira

Brakke Viewpoint July 12, 2024

In business, “blind spots” can significantly undermine value and growth. These are the unseen or unacknowledged areas in operations that increase the chances for strategic errors, missed opportunities, and catastrophic failures. Blind spots can arise from overconfidence, cognitive biases, ignoring consumer trends, insufficient data analysis, ineffective communication, and resistance to digital technology.

Consider PetSmart’s acquisition of Chewy in 2017 for $3.35 billion. Aiming to boost its online presence amid declining brick-and-mortar sales, this strategic move was meant to compete with Amazon and other e-commerce giants. However, the complex integration process between the two companies strained PetSmart financially. This ultimately led to significant restructuring, and in 2019, PetSmart spun off Chewy through an IPO to alleviate debt pressures.

A common blind spot in the pet care industry is ineffective communication. The 2024 Brakke Pet Medicine Home Delivery Study highlighted a couple of examples here: 1) An overwhelming majority of pet owners say home delivery helps them remember to give pet medicines, while more than half of veterinarians remain skeptical about increased compliance; 2)  75% of veterinarians say their staff actively promotes their practice’s online store and home delivery service, yet more than half of pet owners say they don’t know if their vet offers this.

Identifying and addressing these blind spots requires constant market analysis, rigorous risk management, and adaptive leadership. As the pet care industry evolves, businesses must continually refine their vision to avoid unseen challenges and ensure sustained value and growth.

Richard Hayworth

Brakke Viewpoint July 3, 2024

Those of us in the USA celebrate Independence Day tomorrow, July 4th.  Here in our country, as well as in so many countries around the world, we’re surrounded by division and polarization as the political noise level increases.  Independence Day is a perfect day for us to remember that we have the privilege to disagree, to dissent, to protest, to argue; but all the while we are united by so much more than the petty differences that we hear so much about.

We are united in our knowledge that we are a free people; free to practice our beliefs, free to hold opinions that matter to us, free to say what we choose and free to take action on our beliefs and opinions within the framework of laws that we have created in the almost 250 year history of our Republic.

I intend to focus more of my attention on our common good and less of it on political argument.  I am proud of my country, and I will continue to be.  On Independence Day I celebrate every American who has fought to keep America free, and I resolve to help solve our problems, not to seek division and separation.  The citizens of the USA and all free countries around the world deserve nothing less.  Happy Independence Day!

Jim Kroman

Brakke Viewpoint June 28, 2024

I had the pleasure to attend the AVMA Convention in Austin last weekend, along with around 7,500 veterinarians, staff, and exhibitors. There was great traffic in the Exhibit Hall and a wide variety of educational opportunities available.  Congratulations to the AVMA staff on another successful meeting.

At one of those educational lectures Brakke’s own John Volk, along with Warda Elakkari of Merck Animal Health, presented some of the results of the 2023 Merck Veterinary Well Being Study.  This 1-hour seminar focused on the well-being of veterinary staff (previous presentations at VMX and WVC focused on veterinarian well-being). Veterinary teams are critical to the success of veterinary practices, and every practice owner and industry partner should be actively investing in their well-being. If you’d like more information about the results, you can find it on Merck’s dedicated website.

Lynn Fondon

Brakke Viewpoint June 21, 2024

Recently I attended the 91st WOAH Congress in Paris, which in fact was the 100th anniversary of the organization( formerly known as the OIE). At the event, a new Director General was selected and she is Dr. Emmanuelle Soubeyran. Dr. Soubeyran is the Chief Veterinary Officer in France and amongst her many experiences and attributes, has been very strong in being pro-vaccination on controlling HPAI. In fact France is the only country currently vaccinating, albeit in the duck population. Let’s hope she can bring that support the global level as the HPAI causes serious challenges to both domesticated animals and wildlife. In my opinion, the only way to get this under control is through aggressive vaccination.

In fact, Transboundary and Emerging diseases, under the broader subject of Veterinary Public Health, represents one of the greatest threats, but also one of the greatest opportunities, for our industry. To provide solutions to threats like HPAI, which is a major threat to global food supplies; or rabies, for which the leading cause of death in human rabies comes from exposure to disease infected dogs, is what we as an industry can provide.

However, companies struggle with the vagaries associated with this activity, and try (incorrectly) to apply traditional private models for business operations. It takes a different approach and willingness to be successful. And our customers and the general public expect this from us. How is your company doing in the VPH segment?

On a final note, take time off this summer to enjoy friends and family. Turn off social media and enjoy the quiet. You think it is crazy now- just wait as we get closer to elections this fall!

Paul Casady

Brakke Viewpoint June 14, 2024

Telephonophobia is a new term that I recently learned when reading an article in the Wall Street Journal.  It means the avoidance of using the phone for a good old phone conversation.

I am going to show my age a bit here but the lack of willingness of our younger generations to pick up the phone and talk to someone drives me crazy.  The article says that the younger generations actually experience anxiety with placing a phone call.  Likewise, the roadblocks that companies put in place to prevent you from speaking to a human to help resolve an issue drives me over the cliff.

During my professional life working for a major pharma company, I could see this evolving.  With the explosion of email, employees communicated primarily via email instead of by phone and that further evolved with text messaging and instant messaging tools.  An issue that could be resolved with a five-minute conversation routinely took 10 or more back-and-forth messages with the incidence of misunderstandings increasing.

The phone now fits somewhere between a text message and a Zoom call. I realize that convenience and speed drive us toward electronic communications, but have we lost the ability to simply use a phone?  Try it, you might like it.

Randy Freides
P.S. Call your father this weekend to wish him a Happy Father’s Day…with your phone.

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"Brakke Consulting Animal Health News & Notes” provides a summary of relevant articles, as well as the Brakke Consulting Viewpoint on the news and major industry meetings. The newsletter is available at no charge to individuals involved in the animal health industry.
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