October 15, 2008 (Vol. 28, No. 18)

Market Shows Ample Opportunities in Both Companion- and Food-Animal Sectors

The animal body is similar to the human body in terms of structure and functioning parts, thus providing an incredible need for safe and effective treatments. Many of the products offered to the human pharmaceutical and device industry are identical or similar to those in the animal sector. For example, a number of antibiotics are approved for use in both human and animal indications, such as amoxicillin, penicillin, and erythromycin.

The $24 billion worldwide animal therapeutics and diagnostics market and the 7–8% annual growth rate are evidence of the demand and continued stability of the companion animal segment. This considerable market growth is due to the changing role of the companion animal over the last decade. Sales for companion animal products are expected to reach $12.1 billion by 2013, displaying average annual growth of 7.8% from 2008 through 2013.

Although companion-animal sales represent the fastest growth segment in the animal health market, the demand will begin to level off with increasing competition and price pressures.

The worldwide market for animal therapeutics and diagnostics includes a list of more than 350 competitors that compete in various worldwide markets and treatment areas. Companies such as Merial, Pfizer, and Intervet have a wide range of products and participate in several areas of the animal health industry.

There are several significant trends that continue to influence the companion-animal market. These include vaccination, animal obesity, new trends in pet aging, and companion-animal ownership.

Vaccinations and Obesity

Vaccinations are an important part of the preventive healthcare program for companion animals and food animals alike. The future of vaccination is looking to the development of protocols that individualize vaccine schedules, instead of having every animal vaccinated for every disease. There is also research that will hopefully provide optimal revaccination intervals.

As with humans, obesity, which in animals is defined as an increase of over 20% above the optimum body weight, is becoming a growing issue. Approximately 24–40% of pets in the U.S. are classified as overweight.

Another area that has generated intense interest is the aging of animals. A common problem in dogs and cats is the development of cataracts, which normally leads to blindness. Today, cataract surgery is an option for pets and is performed in the same manner as cataract surgery in humans, with the most common technique being phacoemulsification.

The companion-animal business is being fueled by the growing bond between owners and their pets, and companies are ramping up their offerings of pet care and luxury services ranging from cancer and arthritis treatments to cat and dog massages, acupuncture, and specialty services. Much of the demand is being driven by the more affluent baby boomers, since the average age of a pet owner is now 43 years old. This group contributes over $35.9 billion to the pet-care industry.

Companion Animals

The role of the companion animal has changed significantly over the last decade, from simply pets to members of the family. As a result, the number of households in the U.S. with pets has increased. There are between 65 and 70 million households in the U.S. with at least one type of pet. In 2007, an estimated 43 million homes had at least one dog, while the average was two. Comparably, 37.4 million households owned cats, also with an average of two per household.

The growing demand for companion animals and products to diagnose, treat, and pamper is not confined to the U.S. Internationally, there are growing numbers of households with pets. The companion-dog population has increased to approximately 12.5 million in Japan, while cats have increased to 11.6 million. Similarly, in Australia, the companion pet population has increased to 3.75 million dogs, 2.43 million cats, and 32.9 million other animals, which includes birds, rodents, and fish.

Market Growth and Developments

Despite the steady growth over the years in the food-animal market segment, an outbreak of disease, such as bovine spongiform encephalopathy, has a considerable impact on the outcome of this market, especially in Europe and occasionally in the U.S. and Canada.

Although beef production may be down at times, this provides an opportunity for pork and poultry production to excel. Many people have accepted red meat as a favorable diet ingredient, and the market is expected to thrive despite setbacks. Therefore, cattle, swine, and poultry producers should take necessary preventive steps, and if needed, treatment should be optimal to ensure successful returns.

The market will continue to show healthy growth through 2013, reaching nearly $21 billion or 5.8% average annual growth over 2008. Driving this market segment will be the demand by consumers for safe and healthy meat products and a growing industry in developing markets.

Melissa Elder ([email protected]) is an analyst with BCC Research.
“Animal Therapeutics and Diagnostics” was recently published by BCC Research. Web: www.bccresearch.com.

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