Gary Clarence, Nicolas Balon and Jan Willem Jonkman from the healthcare advisory team explain how the humanisation of animals, success of novel therapeutic approaches and technologies in human health, as well as the increased drug resistance will continue to underpin focus on R&D.

The humanisation of companion animals, demand for sustainable food sources for livestock, as well as requirements for improvements in animal welfare are driving innovation and consolidation in the animal health sector. These three trends were at the centre of discussions at our inaugural Animal Health conference, where industry leaders and advisors discussed whether the R&D investment is a prerequisite for survival or is it still predominantly undertaken for growth.

Animal health market comprises multiple categories, such as vaccines & medicines, veterinary services, pet supplies & serves, and feed additives. The sector, which was valued at approximately £130 billion in 2023, has a forecast compound annual growth rate (CAGR) of 5-8% per annum until 2030.
 

Companion animals to remain a key segment driving future growth

Increased pet ownership in developed economies, the growing importance owners place on their pets, and higher awareness around animal health and wellbeing have boosted spending on veterinary treatments, preventative health measures, and wellness products for companion animals. Pet owners’ primary focus on quality of life and longevity is driving innovation in disease and symptom control. As pet ownership has been shown to have physiological and emotional benefits for humans, the positive impact on global human health cannot be underestimated. However, conversely, 75% of over 30 new human pathogens identified in the last few decades, originated in animals¹.
 

Continuous R&D focus on translating advanced human technologies to animal health

Success of novel therapeutic approaches and technologies in human health are among key drivers of increasing animal health R&D spend. Clinical drivers behind the trend are potential to translate novel treatment benefits from human to animal health (e.g., monoclonal antibodies and mRNA vaccines), growing scientific basis for the use of new technologies to address animal disease (e.g., gene therapies and stem cell therapy), and evolving treatment paradigms due to microbial resistance concerns (including increasing focus on proactive prevention).

Further underpinning the trend are non-clinical drivers such as growing willingness to spend disposable income on pets, emerging role of technological advancements in healthcare (e.g., across spectrum of big data and artificial intelligence), and increasing government and non-government investment into sustainable animal health (e.g., sustainable agriculture / farming)².

What is clear is that as the animal health market is becoming more specialised and sophisticated. Therefore, investors and operators must carefully consider which are the most appropriate areas and specialties to drive their business forward.

Sources
¹ World Health Organization ‘One Health’ guide 2019
² L.E.K. Consulting

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