兽医追踪：Q1兽医行业调查

1、Equity Research Americas | United StatesAnimal TracksChew on This: 1Q Veterinary Survey; Initial COVID-19 Impact; Sustained Confidence in ZTS and CHWYLife Science Tools and Diagnostics | Channel CheckInitial COVID-19 pandemic impact on 1Q Vet practice volume, revenue: According to our proprietary su

2、rvey of 75 US companion animal veterinarians, 47% of practices experienced positive volume growth in 1Q, declining -0.1% on a weighted avg. basis, the first quarter in our surveys history in which patient traffic was negative on a weighted avg. basis, attributable to social distancing protocols at v

3、ets and calls from veterinary industry organizations to delay routine and elective procedures in response to COVID-19 pandemic. Practice revenues fared slightly better than overall traffic, increasing 0.1% on a weighted avg. basis in 1Q, with sustained strength in acute visits/ER helping to offset d

4、eclines in routine procedures. For 2Q, vets are calling for a more pronounced (-2.4% weighted avg.) decline in practice volume, as expected, but respondents expect the COVID impact to be concentrated in the coming months, with the majority (73%) expecting postponed visits to occur within the next th

5、ree months. More broadly, we reiterate the resiliency of the Animal Health sector, which rebounded relatively rapidly in prior recessionary periods.ZTSLeading the Animal Kingdom: The majority (59%) of respondents selected Zoetis (ZTS, Outperform) as the best positioned in Animal Health, noting its h

6、igh- impact and comprehensive portfolio. Responses regarding its blockbuster Simparica Trio (est. mid-April launch) were encouraging, with over half (51%) likely to prescribe the parasiticide over current offerings, and the vast majority (60%) viewing the launch as in time for the 2020 flea/tick sea

7、son. Feedback on its atopic dermatitis portfolio was incrementally positive, with 55% expecting to prescribe more Apoquel in 2020 (vs. 2019), and the advantages of Cytopoint are increasingly resonating with overwhelmingly constructive feedback, suggesting upside to our 2020 estimate of$227 million,

8、+10% ($802 total atopic derm). The vast majority (73%) of respondents expressed willingness to prescribe ZTSs upcoming monoclonal antibody candidate to treat feline pain (est. 2021 launch), underscoring the dire need for the product. While our recent conversations with the company and latest survey

9、work have been encouraging, we acknowledge near term headwinds in veterinary office visits. Consequently, we are reducing our 2020 EPS estimate to $3.65 (from $4.00), reflecting operational revenue growth of +3.5% for 2020 and -2.7% for 2Q with, importantly more normalized underlying trends into 202

10、1.Research AnalystsErin Wilson Wright212 538 4080 HYPERLINK mailto:erin.wright erin.wrightKatie Tryhane212 325 2713 HYPERLINK mailto:katie.tryhane katie.tryhaneHaley Christofides212 325 3720 HYPERLINK mailto:haley.christofides haley.christofidesMatthew Urbik212 325 2152 HYPERLINK mailto:matthew.urbi

11、k matthew.urbikDISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS,LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, inve

12、stors should be aware that the Firm may have a conflict of interest that couldDognosticsIDXX remains clear leader: While optimism over near-term diagnostic testing was more subdued amidst COVID-19 pandemic, with 48% of vets expecting testing volume to rise over NTM (hist. avg: 81%), we maintain our

13、conviction in long- term growth prospects for IDEXX Laboratories (IDXX, Outperform), amidst continued lackluster traction for competitors offerings, where IDXX holds majority (53%) share in equipment and 51% share in reference labs based on our cohort, and where we view ZTS/ABAXIS integration effort

14、s and reference lab adoption remain in early stages. While there are still several variables and the COVID-19 situation remains fluid, we are lowering our 2020 EPS to $5.33 (from $5.51), reflecting more muted organic topline growth of +7.3% in 2020 (from +9.8%). Our target price moves to $300 (from

15、$308) on the lower view.CHWYs rise continuesheightened channel shifts: A whopping 89% and 83% view Chewy (CHWY, Outperform) is gaining share in the OTC market and the pet Rx market, respectively, suggesting building traction for CHWYs newer pharmacy offerings. Utilization of e-prescription managemen

16、t platforms remains in its nascent stages, as (49%) of respondents use either Vets First Choice (Covetrus/VFC, 20%) or Vetsource (29%) for e-prescription management, but sales generated from online platforms represent only 4.7% of practice revenue, and ad hoc commentary continues to indicate that th

17、e platforms fail to compete with CHWYs pricing and customer mindshare. Importantly, 40% of respondents expressed willingness to partner with CHWY instead of VFC/Vetsource if the economics were favorable (vs. 29% in 4Q). While vet commentary on CHWY remains naturally contentious, our view is that it

18、is steadily gaining share in the prescription space, particularly as manufacturers sell directly to e-commerce channels and as COVID accelerates shifts to online channels. Of note, we will be hosting virtual meetings with CHWY management on Thursday. Please let us know if you would like a follow up

19、call.Table of Contents HYPERLINK l _TOC_250026 Veterinary survey takeaways 4 HYPERLINK l _TOC_250025 1Q Survey Executive Summary by Company 4 HYPERLINK l _TOC_250024 State of the Industry 8 HYPERLINK l _TOC_250023 1Q Patient volume & practice revenues: Initial COVID-19 impact 9 HYPERLINK l _TOC_2500

20、22 Seasonal factors Slight negative impact noted 12 HYPERLINK l _TOC_250021 NTM and 2Q outlook 13 HYPERLINK l _TOC_250020 Animal health supply chain 16 HYPERLINK l _TOC_250019 E-Commerce Platforms 17 HYPERLINK l _TOC_250018 Chewy takes a bite of the Rx market 24 HYPERLINK l _TOC_250017 Practice mana

21、gement software 25 HYPERLINK l _TOC_250016 Amazon, negligible presence to date 26 HYPERLINK l _TOC_250015 Dognostics dynamics 26 HYPERLINK l _TOC_250014 Diagnostic testing momentum impacted by COVID-19 26 HYPERLINK l _TOC_250013 Diagnostic equipment share analysis: IDEXX remains clear leader 27 HYPE

22、RLINK l _TOC_250012 Factors influencing point-of-care equipment purchases 29 HYPERLINK l _TOC_250011 Diagnostic equipment shifts minimal 30 HYPERLINK l _TOC_250010 Innovation Tracker: Initial Feedback for IDXXs Digital Cytology Offering 32 HYPERLINK l _TOC_250009 Reference laboratory dynamics: A duo

23、polistic market, limited share shift, with minimal ZTS traction yet, as expected 33 HYPERLINK l _TOC_250008 Reference laboratory innovation 35 HYPERLINK l _TOC_250007 Animal Pharm: A look at Animal Health therapeutics 36 HYPERLINK l _TOC_250006 Fleas and Ticks: A look at Simparica (ZTS) and Credelio

24、 (ELAN) 37 HYPERLINK l _TOC_250005 Assessing veterinarians appetite for a triple combination parasiticide 38 HYPERLINK l _TOC_250004 Apoquel A notable driver in veterinary medicine (Zoetis) 39 HYPERLINK l _TOC_250003 Cytopoint (Zoetis): Cited as the most impactful new product 41Addressing feline pai

25、n: Overwhelming demand for a feline chronic pain product41 Galliprant (Aratana Therapeutics, PETX): Demand Steady 43 HYPERLINK l _TOC_250002 Entyce: Solid trajectory for appetite stimulant 44 HYPERLINK l _TOC_250001 Generics 45 HYPERLINK l _TOC_250000 Relevant detailed commentary 47Zoetis 60IDEXX La

26、boratories 62Veterinary survey takeawaysWe commissioned a survey of 75 practicing veterinarians dispersed across 24 states in the U.S., with the highest number of responses in Texas (9), New York (7), Colorado (6), Florida (5), and California (5). Respondents were exclusively small/companion animal

27、veterinarians with an average tenure of 18.1 years, only slightly lower than previous surveys (historical avg. = 20.1 years). Of note, the vast majority of respondents were from independently-owned offices (76%) or from corporate chains of over 100 hospitals (16%), a breakdown we will monitor as con

28、solidation plays a greater role in the industry.1Q Survey Executive Summary by CompanyZoetis (ZTS, Outperform)Top pick in Animal Health: Despite near term COVID- related headwinds to veterinary traffic, we note that no respondents cited pharmaceutical sales as a revenue category experiencing signifi

29、cant headwinds, with channel shifts to online growing rapidly, helping to support prescription sales. All in, the survey results continue to bode well for ZTSs US companion animal business (32% of sales) longer term, where the majority (59%) of vets selected ZTS as the best positioned animal health

30、company.That said, focus will be on 2Q and beyond, amid COVID disruption, where we anticipate social distancing protocols to inevitably negatively impact veterinary office visits, as depicted in our survey. Consequently, we are reducing our 2020 EPS estimate to $3.65 (from$4.00), reflecting operatio

31、nal revenue growth of +3.5% for 2020 and -2.7% for 2Q with more normalized trends into 2021. We recently caught up with ZTS amidst ongoing stock volatility and COVID-19 inquiries from investors. While certain elective and wellness companion animal procedures will inevitably be postponed, according t

32、o the AVMA and the government, veterinary medicine/animal health products are considered essential in nature. Many veterinarians are adapting to new social distancing protocols with many allowing curbside drop-off of pets and pick-up of medications along with greater utilization of alternative onlin

33、e channels, mitigating some of the disruption. ZTSs field sales force has been working from home since mid-march, but we expect this dynamic to create limited disruption, unless prolonged for several months. As for Simparica Trio, it continues to view awareness of the product as strong and will like

34、ly see stocking from distributors NT.In our survey, veterinarians were optimistic on the potential blockbuster Simparica Trio, its upcoming flea/tick/heartworm combination product that received FDA approval in February and is expected to begin shipping in the US mid-April. Importantly, 60% of vets v

35、iew the product launch is in time for the all-important 2020 flea and tick season. According to our survey, 51% (vs. 49% in 4Q) of respondents noted they would be inclined to prescribe the product (assuming it is safe and effective). See our analysis of the broader flea/tick/heartworm market in our

36、note (Animal Tracks: Triple Check).Importantly, livestock is relatively more insulated as more of a consumer staple, representing 48% of total revenue at ZTS, underscoring the advantages of ZTSs diversified portfolio. From a supply chain perspective, ZTS noted limited disruption (business as usual)

37、with ample supply on hand.Our survey revealed continued broad-based enthusiasm for Cytopoint, with 17% of respondents ranking the monoclonal antibody as one of the most impactful products to practice sales currently, more than any other product in our survey, with the top four products cited stemmin

38、g from ZTS. Cytopoint sales rose 60% in 2019, to $206 million, and we forecast a 10% rise in 2020, to $227 million, with growth of +22% internationally and +7% in the US, where we may be conservative, given the overwhelmingly positive feedback in the survey.A vast majority of respondents (73% vs. 71

39、% in 4Q) expressed willingness to prescribe ZTSs upcoming monoclonal antibody candidate to treat feline pain, cited as the most critical unmet need in animal health, which ZTS recently filed for approval and expects to launch in 2021. Even more respondents (81%) view there is a meaningful opportunit

40、y touse this product to treat chronic feline pain, indicating a vast and severely underpenetrated market opportunity for ZTS to capture should this product be approved.In Dognostics, while ABAXIS integration from 2018-2019 was slightly slower than initially expected, ZTS now has an integrated field

41、force (fully staffed internationally) and is better positioned to more seamlessly bundle ZTS therapeutics with the legacy ABAXIS portfolio with opportunities to expand internationally and into livestock longer term. Additionally, the addition of several domestic reference labs (ZNLabs, Phoenix Centr

42、al Lab, and Ethos Diagnostic Science) should create further cross-selling opportunities, which we view should offer substantial opportunities for future growth, leveraging its extensive sales footprint, consistent with commentary from our survey. While ZTS remains in the early stages of its expansio

43、n into diagnostics services and equipment, we highlight 44% of respondents expect ZTS to eventually be successful in bundling therapeutics with diagnostics, and 16% either use ZTS (1%) or express willingness to switch (15%) to ZTS as their primary reference lab provider.IDEXX Laboratories (IDXX, Out

44、perform): While COVID-19 will have an impact on routine diagnostic testing volumes, with only 48% of respondents expecting diagnostic testing to rise over the NTM (vs. 87% in 4Q), we remain encouraged by the clear leadership of IDEXX, sustained rapid testing volumes, and enthusiasm for new offerings

45、 in our survey, helping to strengthen our conviction in IDEXXs longer term growth prospects as its direct sales effort matures and expands with compelling advantages in a comprehensive test/instrument/service portfolio, innovative product launches (i.e. Digital Cytology), cohesive IT systems, and an

46、 expanding global presence.In terms of equipment share shifts, ZTS/ABAXIS and IDEXX were even, with one respondent noting they switched from IDEXX to ABAXIS in the last 6 months and one noting they switched from ABAXIS to IDEXX in the last 12 months, and our results emphasize the stickiness of diagn

47、ostic relationships, as 80% of respondents do not expect to switch vendors over the next 12 months.We highlight that only seven respondents reported using VetScan SA, ABAXIS/ZTSs urine sediment analyzer launched in March 2018, 13 respondents reported using ABAXISs FLEX4 rapid test (vs. 16 in 4Q), an

48、d only two respondents cited ZTS as their primary reference lab provider, emphasizing IDEXXs still compelling competitive positioning.While there are still several variables and the COVID-19 situation remains fluid, we are lowering our 2020 EPS to $5.33 (from $5.51), reflecting more muted topline or

49、ganic growth +7.3% in 2020 (from +9.8%), largely on COVID headwinds. Our target price moves to $300 (from $308) on the lower view.Distributors Covetrus (CVET, Neutral), AmerisourceBergens MWI (ABC, Outperform), Patterson Companies (PDCO, Outperform): While 27% of respondents cite CVET as their prima

50、ry distributor, second only to ABCs MWI (41%), we note that the company has faced significant challenges since its February 8th, 2019 spin related to customer losses, distribution disruption, incremental IT costs, and recurring expenses related to exiting TSAs. Until recently, the core supply chain

51、business, representing 95% of revenue and 100% of EBITDA, largely remained out of focus, with the majority of management commentary around Vets First Choice and value-add services (see note Tempering Estimates). However, management, with now a permanent CEO appointment, is seemingly committed to dri

52、ving greater focus and accountability across the business, dynamics we will monitor through 2020. Going into 1Q, we note that all distributors, CVET included, will likely face inevitable headwinds to in-clinic prescription volumes related to lower veterinary utilization amidst COVID-19.In terms of e

53、-Rx platforms, in our survey, 49% of veterinarians use either VFC (20%) or Vetsource (29%), vs. 33% and 22%, respectively in 4Q. Utilization thereon remains relatively low in its early days (representing 5.1% of practice revenue for VFC users and 4.4% for Vetsource), and while we are encouraged by t

54、he ramping onboarding of the relatively new solution (particularly in a COVID world), we view building contributions will notfully offset near term pressures from e-commerce competitors with new pharmacy offerings and direct manufacturer relationships with alternative channels. While veterinarians h

55、ave seemingly warmed to e-commerce platforms like Vets First Choice, underscoring their inherent value proposition in helping veterinarians drive revenue growth and profitability, particularly amidst COVID-related shifts to online, much of the justification for veterinary adoption is to fend off com

56、petition from alternative e-commerce retailers such as Chewy (CHWY, Outperform). Our results indicate that CHWY is making incremental progress in this market, heightening the competitive dynamics in the space and contributing to our view that the market is evolving more quickly than expected.In term

57、s of COVID-19 impact, we note that online pharmacy and prescription management services may benefit from increases in demand amidst COVID-related mandates to limit in- person contact and the implementation of social distancing protocols at vets. According to recent commentary by CVET, the number of

58、prescription medications and therapeutic diet food products shipped on behalf of veterinarians through VFC has accelerated, rising 45% month-to-date as of March 23rd compared to March 2019, with also a sharp increase in VFC practice enrollment as veterinarians seek alternatives. We view this heighte

59、ned demand for e-Rx services (VFC represents 6.7% of total revenue) can help to provide partial offset to likely COVID-related supply challenges and overall declines in practice visits (see Catching up with CVET: Online Pharmacy Demand Accelerates Amidst COVID-19).In 1Q, we forecast CVET revenue of

60、$999 million (est. +3.5% growth), predicated on Supply Chain revenue growth of +2.5%, Vets First Choice revenue of $90 million (est.+54.0%), and Technology revenue of $10 million (-66.4%). Note, exact growth rates are unknown, as CVETs pro forma 2018 and 2019 quarterly sales by business segment have