This opinion piece was first published Aug. 21, 2018, by Michael Helmstetter, Ph.D., at Forbes: "The Future of Animal Health."
Kansas City is at the center of the animal health ecosystem, especially during Global Animal Health Week when the KC Animal Health Corridor hosts its annual Market Insight Seminar, Homecoming dinner, and Investment Forum. Collectively, these events draw more than 1,100 industry executives from across the country and world.[caption id="attachment_1196" align="alignright" width="300"] At the KC Animal Health Corridor events in Kansas City[/caption]
The KC Animal Health Corridor, an economic development agency, brands the region from Columbia, Missouri, to Manhattan, Kansas, as the largest concentration of animal health companies and service providers in the world. With more than 300 companies and 20,000 workers in animal health, the annual event pulls the community together in an aptly named “Homecoming.” If you know Kansas City at all, you know that it’s a small town at heart, where everyone easily finds a connection to everyone else.
That feeling was especially evident this year, as the animal health industry’s massive consolidations seemed to hold center stage. Much like the seed and chemical agriculture business, consolidation has created an industry in flux. Mergers like Boehringer Ingelheim Animal Health and Merial last year; numerous acquisitions by Zoetis, Merck Animal Health and others; and now the pending Elanco IPO announced in late July (on the heels of their Novartis Animal Health acquisition in 2014) all signal potential disruption.
These merger and consolidation events typically introduce corporate cost-cutting measures that can be brutal on R&D budgets. The reality of consolidation can strand innovative animal health technologies in labs because leaner budgets demand resources stay trained on only the most commercial-ready products. Couple the reality of neglected advances with the workforce reductions of highly skilled vets and Ph.D.s, and the future of the animal health field can feel uncertain.
But as is so often the case in business, it’s the times of transition and challenge that give birth to the greatest periods of innovation. Today’s animal health giants are finding themselves increasingly tasked with outsourcing innovation to hungry start-ups and other collaborators. It’s technology—biotech, genomics, AI, cloud computing and big data, for starters—that will revolutionize the future of animal health.
There was evidence of that revolution at the Corridor events where new companies were welcomed, new products spotlighted and new activity launched. (Full disclosure: at the event, my company, TechAccel, announced the creation of a new partnership, Covenant Animal Health Partners.) This revolution includes a host of animal health experts flooding the market, some striking out on their own entrepreneurial endeavors or joining technology and capital development companies Recently, the $26 billion animal health market has moved beyond straight pharmaceuticals and vaccines, with investors pouring $156 million in pet tech startups alone, according to CB Insights. New venture funds are targeting feed nutrition and data technology as well.
So what are the most exciting opportunities in a changing industry? Let’s look at three major growth sectors:
The world population is projected to reach 9.8 billionpeople by 2050 (a staggering jump from today’s 7.6 billion). Meat production is expected to double by 2020with the population growth, coupled with changes in dietary preference and rising income levels. The pressure on farmers to feed more people, with less water and land available, in an environmentally sustainable fashion, will be extraordinary. Livestock production, while increasing, still faces barriers in infectious and parasitic diseases, especially in developing countries while public funding for disease control has been on the decline for decades.
Innovation and biotechnology promise assistance with improved diagnostics and genomics applied to develop next-generation vaccines to prevent disease as well as the development of alternatives to antibiotics tackling disease resistance.
The trend toward antibiotic resistance poses a global threat to humans and animals. Alternative products—vaccines, prebiotics, probiotics and immune modulators, for instance—provide veterinarians and farmers with new options to reduce the use of antibiotics. Their areas of use target herd growth promotion, disease prevention and disease treatment. Major industry players like Tyson and Perduehave already responded to consumer demands for the reduction or elimination of antibiotic use in raising livestock.
Another focus area for livestock production is improving nutrition via feed quantity and quality. Efforts include microbial improvements to soil to make stronger plant nutrients, ways to reduce spoilage, employing microbes to improve animal digestive ability, new mineral and enzyme supplements, and applying gene editing technology to improve nutrient levels in plants.
The flip side of increasing livestock production is an approach to grow the next generation of meat-like proteins or build a market for alternative proteins. Today’s market has witnessed the growth of novel sources of protein, from baking flour made of crickets to the production of meat protein from cell-based cultures. Companies like Memphis Meats and Impossible Foods are earning passionate followings for their innovative approaches to a clean diet that’s friendly to both the palate and a sapped planet.
The livestock sector has no choice but to respond to urgent global demands. The pet segment, however, faces a different challenge: How to cater to pet owners who’ve started seeing their animals as family, and are desperate to help these family members live longer, healthier, more comfortable lives? In the U.S. alone, 68 percent of householdsnow include a pet, up from 58 percent in 1988. People lavish their pets with love and concern like they do other family members, with total U.S. pet industry expenditures project to rise almost $6 billion in two years to more than $72 billion in 2018.
Consumer-facing, natural pet products are a booming industry, with middle class owners shelling out the extra dollars to give their animals the same organic lifestyle—from holistic food to natural flea and tick repellents to toys made from non-synthetic fibers—they afford themselves. See also the rise of pet insurance, advanced pet surgical procedures, digital devices and specialty pet services to understand how much money pet owners today are willing to spend on man’s best friend.
The Internet of Animals
When it comes to livestock animals, heed the example of the “connected cow.” Farmers are using mobile sensors on various parts of their herds’ bodies to monitor health and increase productivity. The Irish startup Moocall says it hopes to reduce mortality rate by 80 percent simply by affixing a small sensor onto a cow’s tail that will alert farmers to any birth-related complications. US-based HerdDogg uses a DoggTag attached to the ear of the herd animal and on-board smart radio and sensors to transmit a host of health-related data back to the farmer.
Smart technology can empower farmers with information they can use in real time, alerting them to how and when to intervene in feeding and caring for animals.
Meanwhile in the pet sector, the market is hot with wearable activity and health monitors. FitBark and WoofTrax are examples of brands capitalizing on owners’ desire for healthy, data-driven engagement with their dogs. But today’s innovations go beyond fitness tracking and video monitoring. In the future, connected wearables aim to detect health issues before they debilitate your animals or wallets, giving owners new ways to communicate with their vets and arming the vets themselves with telemedicine apps.
The Future is Coming
From nearly the origin of our species, history tells us that caring for other living creatures is an innately human act. Innovative ways to protect, treat and tend to the animals means the field of animal health is now evolving to parallel advances in human care. For example, the One Health Initiative urges co-equal collaboration between medical disciplines to link human and animal medicines.
Take heed from the advancements all around us. The animal health industry finds itself in a state of major transition and chaos brings opportunity. And we humans continue to find new, innovative ways to live alongside the animals in our lives.