Recently, Amazon and Vetsource announced they are partnering to offer hundreds of prescription pet medications through Amazon.  While the partnership with Vetsource may come as a surprise, it shouldn’t surprise anyone that Amazon is moving into the pet prescriptions space. They have offered human prescriptions since 2020 through their Amazon Pharmacy subsidiary; and pet supplies are already big business for them, generating over $22 billion in revenue in 2024.

How much business can Amazon grab from specialty pet pharmacies like Chewy and PetMedExpress?  According to the pet owner survey in Brakke’s 2024 Home Delivery Report, Amazon is already the #2 source for online pet medication purchases (which includes non-prescription products).  And since more than 9 in 10 adults in the USA are active Amazon users, with the right marketing it would seem only a matter of time before Amazon takes over the #1 spot.

Amazon appears to be keenly interested in growing their position in the pet space.  In 2023 there was talk that they might launch a veterinary telehealth service, and they launched human telehealth services in 2024.  It seems inevitable that before long, Amazon will be a one-stop shop for pet owners.

Lynn Fondon

This week I attended the Animal Health and Nutrition Innovation conference in Boston.  This was my second trip to Kisaco’s animal health event here in the US and I thought I would highlight one of the panel discussions that I felt most of us haven’t thought through the consequences of its adoption.

The title of the panel discussion was “AI in Veterinary Practices – Impact on Productivity, Client Engagement, Quality of Care (Clinical Decision Making) and Revenue.  That’s a lot to cover in 30 minutes. One of the panelists, Adam Little, President, Exponential Animal Health, Inc., said something that really caught my attention, “…soon, the veterinary clinic that doesn’t use AI will provide substandard care.”  He went on to say that AI will allow veterinarians to do things they would rather do and reiterated how fast AI will change the quality of care.

What’s happening in human medicine is coming over to veterinary medicine.  AI will improve medical diagnoses by enhancing imaging, predicting risks, analyzing pathology and processing clinical data.  It will be integrated into how veterinarians provide care to pets and more likely will be a “second opinion” for veterinarians. The large language models used, like those from Open ai and Xai, will continue to improve performance and accuracy as they are better and better trained.  We might be experiencing AI fatigue about now, but we need to keep thinking about how our industry is about to change.

Bob Jones

Last weekend I was invited to speak at the Little Fish Conference in Los Cabos, Mexico.  The focus of the conference was business and economics, with a high-protein roster of speakers from both within and outside of the veterinary industry.  Featured were several prominent economists and bankers who provided perspective on the global and US economy, as well as trends within the veterinary industry and the broader consumer market.  My takeaway from the speakers was that the current chaos and uncertainty in the market made economic predictions difficult, but the attendees seemed positive about their outlook for the year.

Now in its 8th year, the Little Fish Conference was conceived by industry veteran Darin Nelson as a meeting and educational venue for executives of smaller corporate veterinary practice companies, hence “little fish.”  Zoetis has been the principal sponsor from the beginning.  Now, the conference attracts leaders of practice-owning companies both large and small, and many were well represented at last weekend’s meeting.   Kudos to Darin Nelson and Zoetis for hosting an outstanding event.

John Volk

Cost of Animal Health represents 0.4% of cwt price in the Brazilian cattle farming
Animal health in Brazilian livestock farming accounts for only 0.4% of producers’ revenues, despite the importance of vaccines and preventive treatments for productivity and sustainability. The low investment contrasts with the high financial risks associated with diseases and parasites.

Vaccines against rabies, clostridial infections, and brucellosis, along with parasiticides, are cost-effective and play a crucial role in disease prevention. The average annual investment in animal health per head is just 20 BRL (USD3.00), ensuring herd protection and financial stability for producers.

Emílio Salani, Executive Vice President of Sindan, emphasizes that the low costs of medicines and vaccines are evident, especially when compared to the risks that diseases and parasites pose to livestock. “In a scenario where a producer has a herd of 100 cattle, the expenditure on vaccines and parasiticides would represent a tiny fraction of the annual operating costs. It is essential that the veterinary industry is valued among large producers.”

In my opinion, based on my long experience working for the Animal Health industry for more than 30 years, this represents a huge opportunity for our industry to help develop the full potential of cattle farming. It has evolved significantly in the last decades, but it has a long way to go towards to what other beef producing countries has already achieved.

Your thoughts on the Brazilian cattle opportunity are welcomed.  And if you would like assistance entering the Brazilian livestock market – or improving your existing business – we are ready to help.

Mauri Ronan Moreira – LATAM Brakke Consultant
*Source – SINDAN

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