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Pet technology experts underline barriers to success in a crowded space

At the recent Animal Health Investment Europe forum in London, Animal Pharm editor Joseph Harvey led a panel discussion on digital personalization in pet care. He spoke to three companies in this area – Fitbark, Antelliq and Felcana. Below is an excerpt of the panel discussion.

Joseph Harvey: There are so many companies out there with technology for pets. What are the big differentiators between these companies and what makes certain companies more relevant to the animal health sector?

Davide Rossi (chief executive of Fitbark): One of the leading drivers if you're a consumer-facing company is branding. You need to nail that and be a marketing powerhouse. People need to feel like they are signing up for a journey, experience or something that is transformational for their lives. We lead with our brand and we try to make people feel good about starting that journey with us.

Another important attribute of companies in this space is something that has been possible only in recent times and that is creating products that are easy to use. This was not possible five or 10 years ago. There were big constraints – smartphones were not available, batteries were just not cutting it and mobile apps were not a part of everybody's life.

Pet Tech panel - March 2019

We have products nowadays that are simple enough to use and can be integrated into the lifestyle of regular people. So, a key attribute for the leaders is to create something that is as sophisticated as you want it to be on the back end but on the front end will be easy enough to use for a massive audience.

Probably another attribute is the accessibility of the data. We've often used our data as a marketing tool rather than hide it or even charge for it, which is a perfectly reasonable business model, but we chose to publish some data and talk about it. So, not only do pet owners have some value in the mobile app but professionals have a database that is coherent and consistent.

Nick Hill (head of pet care at Antelliq): You see a lot more companies coming into the space. One of the reasons for that is the hardware is getting easier to make. When you look at activity monitors for example, an accelerometer combined with radio communication and a sensing device on an animal has become very straightforward. You have a lot of start-ups with a Kickstarter campaign – there are a whole set of activity monitoring companies around.

I think where the differentiation will come in the future is really on the data, the algorithms and the service and integration. With more quality data from a number of different avenues combined together, then really it is the quality of the algorithm that will give you actual insights. So, it's not just a consumer device that will give you some fun facts about your dog but it is actually an animal health device that can extend the veterinarian's view on the pet from a consultation into the home.

You have to make it accessible to the vets. This might be through practice management software or some other route. I think that is yet to be worked out – how do we make this technology as useful as we can?

James Andrews (chief executive and co-founder of Felcana): It's all about integration across the veterinary value chain. How can you actually deliver a product and service that is relevant to pet owners but also pet insurance companies, pet food companies etc?

I think the biggest challenge right now is practice management systems. Most of them aren't very good. So, getting data to flow around the system is really hard and integration across the value chain is a bit tricky at the moment.

JH: If the technology is getting easier to develop, does that mean there are going to be even more pet tech companies in the future or will numbers plateau?

JA: If you Google 'pet wearables', I think you will find a lot of companies out there. In reality, if you filter that for companies that actually have a supply chain or a product that exists, there are very few.

In the future, I expect there will be other companies that come into the market and develop new products and services. There will also be companies that disappear.

We started doing this two or three years ago. If you look at our list of competitors back then versus what it is today, it has completely changed. A lot of the companies we thought nearly had a product on the market have ceased to exist.

JH: What was the main reason behind that?

JA: It is normally them trying to deliver a technology that is too hard to do. Things like being able to remotely speak to your pet through your smartphone for example. There are a lot of companies out there that have got great ideas but, in reality, the technology is impossible to deliver.

NH: When you look at the companies that have come to the market and will come to the market, the barriers to entry for a consumer product are relatively low. Yes, there will be other companies that come to market. Some will have products, some will have Kickstarter campaigns with just videos of products. You will see some of them go by the wayside but you will also see some established players really looking to enter this space properly.

The barriers to entry then become the experience, the algorithm and the performance. That is a much bigger barrier entry than producing a consumer product. That links in to our approach. We really try to solve a problem and a lot of the companies create a consumer product, but does it actually solve a problem?

It's those insights that come from the data and how they integrate with people's lives and how it actually solves a pain point or allow you to do something you couldn't do before, rather than a nice look or style or being quite fun – that fades quite quickly.

Pet Tech panel - March 2019

DR: For every Felcana, Antelliq or Fitbark, you get five companies that have folded in the past year.

In reality, there are not a lot of companies that have been able to successfully launch a product. There have been even less companies that have been able to generate a customer acquisition cost that is compatible with their business model.

JH: I was wondering how the panelists think their companies fit into the animal health ecosystem?

DR: We're working hard to offer our data to pharmaceuticals companies and other types of companies, with a goal of helping them to acquire and retain customers. There are various steps in working together. There's an easy step, where there is a company that has signed up a pet owner on their drug – if they have the customer's information, how much money is that worth to them? And how does that information keep that customer around for longer?

If it only cost a few dollars to acquire that customer information, their lifetime value goes from $700 to $900. It's worth it.

If we go ahead with a data integration, we can match what we see on our platform with a baseline for that type of pet and with the change in behavior before and after the drug is administered. You can even run a clinical study using half the dogs you used to because we have the data in the cloud.

So, the ultimate goal is to offer pet data to pharmaceutical companies to help them make more money.

James Andrews: "From my perspective, no-one in this space actually knows how it all fits together. Everyone knows that digital is a big thing and they should play here but no-on actually knows how or what or why it is going to fit together. We will have to see how this evolves over the next 10 years."

A friction point we have often observed is the fact that you need to do things the right way. You need to acquire the user consent to get that data. That's not always straightforward because not a lot of pharmaceutical companies have a mobile app or web app where they can link their credentials to your product. So, there's one extra step there that consists of getting a pharmaceutical company to create a little piece of software and start owning some of that direct-to-consumer journey they never had before.

Pharmaceutical companies can make more money if they have direct access to the final consumer. On the flip side, if we can market a certain drug to folks with pets on our platform with a specific disease, then we can lower their customer acquisition costs as well.

NH: There is a lot of interest within the animal health industry in monitoring technology. You will have seen a lot of companies really trying to establish their digital strategy. That has matured a lot and we see a strong interest in animal monitoring.

One of the key things is the skillset for animal monitoring is a new skillset. Whether it's in the pet space with a consumer product or whether it's a device for monitoring livestock, this skillset of developing a device, manufacturing, scaling, support, algorithm development are new skills to bring into major animal health companies. That might be done through acquisition or through developing products themselves or partnering. I think we will see a combination of acquisition and partnering in this space.

JA: From my perspective, no-one in this space actually knows how it all fits together. Everyone knows that digital is a big thing and they should play here but no-on actually knows how or what or why it is going to fit together. We will have to see how this evolves over the next 5-10 years.

A good example is the pet insurance space. No pet insurer in the world that I'm aware of knows if wearables are good or bad for their claims. Does having more data about a pet mean you identify things earlier and actually have more claims? Does it mean you identify things earlier and therefore treat them better and reduce your claims? No insurers know that yet.

Question from a conference attendee regarding the ability of data to drive veterinary visits.

JA: The real reason we started building Felcana three years ago was linked back to the data we'd seen in small animal practice and realizing pet owners don't have a clue what their pets are doing. Getting quantifiable measurements that can support the vet in diagnosis is what we set out to do. In doing so, you can use those quantifiable measurements to better inform a pet owner.

I think linking all of this together is definitely increasing traffic to the vet and supporting vets in monitoring, diagnosing and treating as well.

NH: I think this is going to develop a lot over time. The ideal situation might be you have a device that is focused on a particular condition that you're monitoring and it is giving you specific insights of when to visit the veterinarian and presents the data to the veterinarian. You won't get that from day one. What you'll get to start off with is patterns of performance, which you'll compare with a baseline and look for a statistical event that can be interpreted within the context of the condition that you're tracking.

Nick Hill: "The cool new stuff will be implantables. We have a temperature microchip. When you start building other things into the implantable – pulse, respiration or chemical sensors for glucose monitoring – this will be interesting."

It is very much going to be working in partnership with the veterinarian and actually seeing when you should get professional advice. We're not trying to replace the veterinarian, we're trying to augment.

What will happen over time is, as the level of data and algorithms improve and as connected pet care improves, it will get more specific.

Question from a conference attendee on the possibility veterinarians might get overwhelmed with a flood of data.

JA: You need to work very closely with the veterinarians to make sure the data you're providing is provided in a way that has a good user experience with a good interface – making sure they are only getting the data points that are relevant to that pet at that point in time.

Clearly, we can't overwhelm vets with tons of analysis. We need to keep it simple and intuitive, so vets can quickly understand what's going on.

The challenge is how you integrate across all the bad practice management systems. They are always taught in vet schools that if there are half a dozen ways of doing something, it's because none of them are very good. We've got 30 or 40 vet practice management systems in the UK.

Question from a conference attendee regarding the potential synergies between wearables and telemedicine.

JA: I see data from connected devices and telemedicine linking together very nicely. Using an example of a Labrador with osteoarthritis, you can start putting it on Metacam or another NSAID. Using the data from connected devices to enable vets to remotely understand how that dog is responding to treatment provides a much slicker experience for the pet owner – they don't necessarily have to take the dog into the clinic. It also enables the vet themselves to be efficient.

Question from a conference attendee on the lack of intellectual property protection for technologies.

NH: Most algorithms you can't patent and wouldn't want to either. It's more of a trade secret. The barrier to competition is the quality of the reference data set you need to generate those algorithms. I think there is more of a defensible position IP-wise but it's more down the trade secrets route rather than the patent route.

DR: There are not a lot of patents you can put around this. If you look at what some of the human health wearables companies have patented, it's all weak stuff – there's nothing meaningful.

Davide Rossi: "A key attribute for the leaders is to create something that is as sophisticated as you want it to be on the back end but on the front end will be easy enough to use for a massive audience."

Of course, there are concerns about competition and commodification but I don't think that comes until several of us have become $100m or $500m companies.

We try to separate ourselves via a branding play. What we can't perfect with patents, we try to create in terms of building a group of people that subscribe to what our mission is.

Question from a conference attendee on the possible unwillingness of vets to use or trust data from pet monitors.

NH: I think the business case for pets will be different from human health. The difference is pets can't talk. The business case is stronger in pets and that will actually drive some of the uptake and some of the business models.

Pet Tech panel - March 2019

JA: We're actually surprised how much vets like the data we provide to them. When we first started, we thought the vets would want to see the research. We're surprised we've not seen that.

I think this is because we're providing data the vets just don't have at the moment. We're providing data around drinking patterns for a dog or toileting patterns for a cat with a lower urinary tract disease. The only other way to get this data is by interviewing the pet owner or setting up a webcam.

Vets are pragmatic people. They understand that this isn't the perfect data-set we are providing but it's a lot better than misinformation and the gaps a pet owner provides. It does help that 25% of our company is vets and we kind of know how it works.

Question from a conference attendee regarding other sensors needed for pet monitoring.

JA: Things like heart rate, blood pressure is the Holy Grail and serum measurements would be really useful. Heart rate is particularly tricky to measure in pets because of fur.

NH: The cool new stuff will be implantables. We have the first mass-market pet implantable – a temperature microchip. When you start building other things into the implantable – its pulse, respiration or starting to include chemical sensors for glucose monitoring – this will be interesting.

DR: A lot of these sensors we're talking about are extremely battery hungry. We could have a breakthrough in that department in the next few years, which I hope will happen because it opens up a lot of new opportunities. It will take a little more time to incrementally add these sensors as they become compatible with business models.

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