The animal health industry continues to have its ups and downs, but the food-animal portion of that industry still remains strong, as was discussed at a roundtable Wednesday in Kansas City, Mo.

The roundtable, offered by Stinson Morrison Hecker LLP, and Brakke Consulting, gave an overview of the animal health industry from 2011 and what is trending for 2012.

Ron Brakke, Brakke Consulting, noted that some of the wake-up calls in 2011 included a decline in veterinary visits in companion animal practices; the fact that a major product in veterinary medicine (parasiticide) went generic; and veterinary student debt and the number of veterinary students is being recognized as a major issue.

“Veterinary student debt is now higher than credit card debt in this country,” Brakke said.

What follows are a snapshot and trends of the animal health business from 2011, as well as information on where the food-animal animal health industry is going, according to Brakke Consulting:

Overall

  • 2011 animal health business is up 8% worldwide
  • 2011 animal health business is up 8% in the U.S.
  • The regulatory environment continues to be difficult.
  • Generics are comprising a larger portion of the market.
  • New “blockbuster” animal health products are few and far between.
  • More products are going off-patent, leading to more generics.
  • There is a decline in veterinary practice visits (companion), often due to “sticker shock”, as well as the availability of generic products from other retailers.

Food animal

  • The drought in the Southwest caused a herd reduction of up to 25%.
  • Herd numbers could be down over 1.5 million at the end of 2012.
  • It will take two to three years to replace that number of animals (under the best conditions).
  • Beef production remained flat from 2006 to 2011.
  • High grain feed prices impact protein production costs and influences other food production such as pet food (cereal grains a key part of pet food).
  • Grain prices will remain high and will continue to be a factor in production.

Brakke and his associate Susan Warren also discussed that in the $7.3 billion U.S. animal health market (worldwide $21.5 billion), the flea and tick market (especially generics) is likely to grow dramatically due to advertising and weather conditions; veterinary practices will have more vulnerability to big box stores (Walmart/Target/etc.) for generic products; and that if passed, House Resolution 1406 would require when writing prescriptions, veterinarians must give clients other available options of where they can fill the prescription, thereby further taking product sales away from the practice.

On the food animal side, Brakke noted that the food animal segment (44% share of the animal health market) of the animal health industry will continue to be strong in the next several years, but most of its growth will be due to inflation and price increases.