Analysis: Pet health players bet on retail and DTC channels as vet visits decline

US-based animal health care company Elanco added warehouse retailer Costco and discount retail chain Dollar General as new customers in recent months to reinforce its over-the-counter (OTC) offerings, while investing in sales teams and distribution partnerships. 

The result of this focus was double-digit growth in sales to pet retailers in the first quarter (Q1) of 2026. 

During the same period, Zoetis also invested in direct-to-consumer (DTC) activities to increase its presence in retail and home delivery, and to simplify point-of-sale choices with affordable options and an enhanced loyalty program.

The decision to expand DTC sales is an attempt to offset the impact of rising veterinary-care costs, which are contributing to fewer vet visits.

Higher prices on the market

Data released by the US Bureau of Labor Statistics (BLS) on 12 May for April shows that veterinary service prices increased by 5.5% year-over-year (YoY) nationwide. 

According to Kristin Peck, CEO of Zoetis, while the company saw about 3% revenue growth in clinics, it was entirely price-driven, as clinic visits declined by about 3%.

Pressure on consumers’ budgets is also happening across other pet-related categories, such as food and supplies, whose prices rose 2.6% over the same period. Peck also attributes lower demand for premium products in preventative and chronic care to “increased price sensitivity.” 

Despite this, the category remains a priority in the industry. “There’s pressure on the consumer, but what we’ve seen in our market research and our business, especially on the pet side, is the consumer is prioritizing pet care even over priorities,” said Elanco’s CEO Jeff Simmons during Stifel 2026 Jaws and Paws Conference on 27 May. 

Even in the face of a tight economy, the company is not considering lowering prices. Elanco’s CEO reiterated that “pricing is not being used as a lever” this year. “This is a market that responds to value and differentiation, and that’s where we’re leaning in,” he stated. 

Senior pets drive veterinary demand

Veterinary visits are generally down, but there is a promising segment within the category, according to the veterinary tools company IDEXX: aging dogs.

“We’re seeing green shoots of growth in dogs over 5, and we’ve seen this now for 3 quarters. And in Q1, we saw it both in well and in non-well dogs. The [vet] visits that are happening are happening with even more quality from an overall care perspective and medicalization,” said IDEXX’s CEO, Michael Erickson, also during the Stifel Conference.

Erickson added that aging dogs boosted the company’s diagnostic performance for the Companion Animal Group (CAG). IDEXX reported revenue of $1.1 billion (€970M) for Q1, a 14% increase, driven by 15% CAG YoY growth.

Parasiticides on the rise

Parasiticides were one of Elanco’s subsegments that gained the largest market share in 2026, helped by an increase in infections in the US. Data from the Centers for Disease Control and Prevention (CDC), published on 23 April, showed that weekly emergency visits for tick bites are at their highest in 9 years. 

The company expects this increased attention on infections to drive sales of its new chewable medicine for dogs, leading to “one of the most robust parasiticide seasons in a long time,” Simmons said during the company’s earnings call.

To prepare for this expected growth, the company expanded its offer of Credelio Quattro, sold as a 6-in-1 parasite protection, by adding over 2,500 new clinics from January to April.

Zoetis’ parasiticide portfolio, on the other hand, saw a mixed performance. In international markets, especially in Europe, it was the main segment driving 15% growth in companion animal product sales in Q1. 

However, in the US, the company’s chewable flea and tick prevention for dogs, Simparica, suffered pressure from cheaper competitors and slower vet traffic too, registering an 8% sales decline in the quarter. 

“Fewer patient visits drove lower prescription volumes and impacted new patient starts,” Peck explained. “While competition is not new to us, what was different in Q1 was the pace and level of activity. More entrants across more markets with competitors leaning more heavily in aggressive pricing and incentives for extended periods of time to drive share,” she added. 

Health of the animal health sector

A report on the animal health industry published by financial advisory firm DanaShift shows that Zoetis, despite having one of the largest market capitalizations in the sector, recorded a decline in top-line (revenue) growth in 2025 (2%) compared to 2024 (8%). Elanco went in the opposite direction, from 0% growth in 2024 to 6% in 2025.

Other health, pharmaceutical and insurance companies also presented mixed results: while IDEXX and Phibro Animal Health reported their strongest growth last year, Virbac and Trupanion saw growth momentum slow in 2025. 

For DanaShift, the results point to a normalization of growth, but the category remains “structurally attractive.” According to the company, results were also affected by foreign-exchange headwinds last year. 

From a valuation perspective, the firm compares a selection of companies in the pet consumer products and services sector with another group in the animal pharmaceuticals and medical devices sector.

Animal health companies trade at higher EV/Revenue multiples (4.4x) than pet consumer products and services (3.1x). This suggests investors trust their business models and sustained demand. 

However, when looking at profitability, EV/EBITDA multiples are slightly lower for animal health pharma companies (14.2x) than for pet consumer businesses (15.4x), suggesting that investors’ expectations for future earnings growth are more cautious.

Market size

The latest market analysis by Future Market Insights (FMI) classifies the animal healthcare sector as “entering a stable growth phase,” with prioritization of disease prevention, nutrition management and advanced veterinary care solutions.

The market intelligence and consulting services provider values the market at $44.4 billion (€38B) in 2025, with estimates that it will reach $67.6 billion (€58B) by 2036. Companion animals represent 30% of the market.