We’re halfway through the year and it’s the right time to look at the upcoming big bets in the Animal Health Space. To be fair, it’s been a tumultuous year to date with revenues less than expected and the industry seeing lower clinic visits[1] conversely featuring higher testing and visit costs.[2] Even with that said, the tide is about to turn. The Covid dog population is about 12-18 months away from entering into their senior year driving additional and needed testing. Pet owners overwhelming seeing their pets as integral parts of the family and will be more than willing to spend the money (thus making sacrifices in other places) for their beloved animals. So, in short, the light at the end of the tunnel is indeed the sun and not an oncoming train.
With that said, what are the big bets that the major players should make in the industry. How do the major animal providers ready the products/features for the overwhelming amount of volume and need coming from the ~69MM households that have a pet. Additionally, how do we reach the suspected 78% who are not compliant with wellness exams and will come rushing in at the last min to care for their loved ones?[3]
- Learning from “23 and Me”….I am going to avoid the easy softball of interconnectivity of data systems overlayed with AI to provide the best service for Veterinarians and Pet Owners. That’s too easy. The data I am referring to is the issue with Embark, Wisdom and BasePaws. These three dna companies have, at their fingertips, access to the keys to the treatment needed for these aging (and all life stages) dogs. The challenge they all face is they are sold as one-time, “find out about your dog” moments. In reality, they are much more than that and need to reorient their positioning not as a onetime event, but as a continuous service in the treatment and care of our loved ones. These three can learn from the positioning of 23 and Me and move from a ‘capex’ model to a ‘razor/razor-blade model’ that brings in reoccurring revenue.
- Zoetis purchases a PIMS…The rumors are rampant that allegedly, Zoetis is rethinking the investment into Diagnostics. These are only whispers and in reality, no one knows outside those within the company. So, let’s assume that they remain in the game. Like I mentioned before, the increase of testing is only 12-18 months away and with a new Hematology analyzer, the IMAGYST, and an established Chemistry analyzer; Zoetis is primed for the IHD market. With that said, the corporatization of clinics is accelerating and with that the look at the full value chain is in full effect. IDEXX has several PIMS (Neo, ezyVet, DVMAX, Cornerstone and Animana), Antech has easyVet in the EU, Corporates are picking their preferred PIMS. Rhapsody = Chewy, Vetspire = Thrive, Woofware = VCA, PetWare/Voyager = Banfield, Navetor = Patterson, Modern Animal = Claude, etc…. It only makes sense that Zoetis jumps into the game as a full service provider from data entry into care (assessment and plan).
- Chewy continues to dominate with the Pet-Parent...The focus is on the customer. Chewy has figured out their >20MM customer base and do not sit still. Videos like this are spreading (Chewy_Credit) and focus on the growing millennials population is intense. “We are continuously rolling out enhancements to our on-site and in-app experiences to ensure we are providing an even more enjoyable and convenient shopping journey for pet parents,” said the CEO, Sumit Singh.[4] The Chewy+ paid membership program, which offers perks including free returns and 24/7 customer service, is driving sales as well.
- Insurance becoming easier…Speaking of corporates, Independence Pet Holding is leaning into the insurance business. The aggregation of Spot, ASPCA, AKC Pet Insurance, Pets + US, Pumpkin, etc…. Now, if they can solve these three issues, they will dominate for years to come.. 1) Provide for a seemingly easy rate 2) Ensure that Pet-Parents are given a credit card to tap into their insurance (think like an HSA) and 3) provide coverage for the services that should be covered. The good news is the aggregation of these insurance companies enable an easier road. With the oncoming expenses for pet-parents as their loved one enter their senior years, the need for insurance becomes even more paramount.
Those are the big bets I see coming. Pure speculation on my part, but fun, nonetheless. In the end, these provide better services for our pets on a global scale and that’s a win for everyone.
Enjoy the second half of the year!
[1] https://www.dvm360.com/view/veterinary-visits-decline-as-clients-face-rising-costs-data-reveals
[2] https://www.usatoday.com/story/news/nation/2024/04/16/vet-pet-care-cost-rising/73098326007/
[3] Page 12, https://www.idexx.com/media/filer_public/55/c4/55c4a4f0-21a1-4181-9fec-ebebbdb1627b/2024-08-15-idexx-investor-day.pdf
[4] https://www.customerexperiencedive.com/news/chewy-updated-experiences-active-customers-membership-q3/734780/
Zone 14 Product Management 