- Daily Zen
A gamut of new products is available to treat hair loss, itchy skin, influenza, nutritional deficiencies, and weight loss. You’re mistaken if you believe these healthcare products are aimed at you. Welcome to the growing business of animal healthcare!
According to the American Veterinary Medical Association, not only is pet ownership widespread but cats and dogs are also living a longer, healthier life. About 57 percent of U.S. households owned a pet in 2016.
In 2018, U.S. pet owners spent an estimated $15.5 billion on over-the-counter pet pharmaceutical products and supplies, more than double $6.2 billion in 2001, notes the American Pet Products Association. The amount is only a portion of what was spent on pet health.
With the surge in pet ownership, the global animal health market has peaked $36 billion. Livestock – vaccines, medicines, and medicinal feed additives for poultry, cattle, swine and other animals – accounts for two-third of the market, while pets make up the remainder.
Some of the largest animal-healthcare companies like Zoetis and Elanco Animal Health growing at an unprecedented rate.
“Our companion animal portfolio is continuing its positive momentum, with 22% operational revenue growth, based on diagnostic sales from the Abaxis acquisition, strong sales of our key dermatology products, and parasiticides,” said Juan Ramón Alaix, Chief Executive Officer at Zoetis.
“We remain confident that our latest innovations combined with our core business will spur future growth and profitability,” said Alaix.
For Zoetis, two of its fastest-growing markets are Brazil and China. These are the two developing regions where pet ownership is growing and so is their level of care.
In China, Zoetis’ pet revenue was about $84 million last year, up 47% from $57 million in 2017.
Even smaller players in the industry such as Philbro Animal Health earned 19 times what it was expected to during its fiscal year ending in June.
Industry Leader Zoetis gained an annual return of 25% since it was spun off from Pfizer in 2013.
The animal healthcare sector has its advantages. Developing drugs for animals is faster and less expensive, since it requires fewer clinical studies and therefore, fewer subjects. Most of these companies try to find compounds that have proved to be successful in humans so they don’t have to build from scratch.
Another reason, and a very important one, is that generic drugs are seen as far less of a threat.
A lot of animal health companies are now coming up with life-changing drugs. These include treatments for cattle with bovine respiratory disease; dogs with parasites; cats with weight loss; and dogs with itchy skin or pain issues.
Pain medication for animals wasn’t even a thing in the ‘70s, for instance. Pharmaceutical companies are now starting to develop new approaches toward animal healthcare.
In 2016, Zoetis won approval to launch Cytopoint. This therapeutic drug is injected into dogs to treat atopic dermatitis. It uses the monoclonal antibody to target and neutralizes canine IL-31, which sends signals to itch to the dog’s brain. Cytopoint’s sales totaled $124 million last year.
Animal healthcare products and supplies are also getting simpler. As pet owners would know, it can get hard to keep track of their dog’s monthly flea, tick, and heartworm disease regimen.
Zoetis is now trying to launch a product that includes treatments for all three and others into a chewable tablet administered monthly. Previously, some of these parasiticides treatments had to be applied topically.
Its range of products includes Simparica, a monthly chewable flea, tick, and lice pill for dogs. As a part of its expansion plans, Zoetis plans to roll out Simparica Trio, for flea, tick, lice, heartworm, and other parasites in 2020.
Elanco Animal Health’s product in the chewables category, Interceptor Plus, which controls heartworm in dogs, raked $100 million in sales last year. Merck’s products Bravector, which wards off fleas, ticks and lice in dogs and cats made multimillion gains too.
But some of these innovations are rolling out in the form of better diagnostics, genetic testing, and even electronic tracking of herds in livestock. For instance, livestock healthcare is extremely dependent on protein production, whether it’s beef, milk, cheese, pork, poultry, or fish. It is also hinged on global population growth and evolving food trends, as the middle class in developing economies move from eating rice and grains to proteins that are now affordable.
Things are changing. Companies are now trying to push the antibiotic-free beef, pork, and chicken which is indirectly affecting the medical treatment of livestock. For example, Perdue Foods, now raises its poultry under the label “NEA”, i.e. No Antibiotics Ever. McDonald’s followed in Perdue Foods’ footsteps and announced it would reduce the overall use of antibiotics in its beef.
People are not afraid to spend more when it comes to pet therapeutic products. On the contrary, livestock healthcare is quite price sensitive even today. This doesn’t nullify the growth rate animal health companies are experiencing at the moment. A lot of these companies have been able to identify their financial strengths and are now starting to invest in areas that will amplify the return and bring long-term profits and growth.