When Pets Pop Pills

Dale Miller had a problem with his little dog, Button. He was harassing guests, and whenever Miller left the house, the year-old Maltese would melt down in a fit of separation anxiety. But Miller knew just what to do. He put him on a new drug called Clomicalm. Within a month, Button was a new dog. Says Miller: "Now my wife has a bridge party, and he's polite as can be."

Dale Miller isn't just any dog owner. He's president and chief executive of Novartis Animal Health U.S., Inc., a division of one of the world's leading pharmaceutical companies and maker of the drug that soothed Button's troubled canine soul. While many Americans complain about their own health-care bills, they are gladly underwriting a costly pet pill-popping binge, fueled by a new generation of drugs designed to keep "companion animals" ever more healthy and happy. "We're seeing explosive growth," says Miller, who estimates the U.S. market at $3 billion and growing close to 20 percent annually. That's dwarfed by the $65 billion Americans spend each year on human drugs--but it's one of the fastest-growing segments of the entire pharmaceutical industry.

That fact might strike some as outrageous, with human health costs soaring and children dying of malaria and other untreated diseases around the world. But for many, the bottom line is this: pets are important, and their owners are going to ever greater lengths to keep them well. Demographics and changing social attitudes are driving the new market. People are living longer, living singly, delaying having children or not having them at all. As a result, Americans have more pets than ever before--110 million cats and dogs, according to the Humane Society. And like their owners, animals these days are living longer--and getting fatter. That means they're developing many of the geriatric problems of humans, from arthritis to cardiovascular disease and age-related behavioral problems.

For the drug companies, this spells profits in a potentially vast new market. They have found that many drugs developed for humans can often be adapted for pets, with relatively little extra research and expense. There are, as yet, no generic drugs to undercut profits. And because the Food and Drug Administration doesn't require the years of clinical testing that it does for human pharmaceuticals, the approvals process is much quicker. Indeed, the FDA approved 15 new veterinary pharmaceuticals in the past 18 months alone. With pet pharmaceuticals typically costing owners between $1 and $2 daily, says Hemant Shah, an industry analyst at HKS & Co. in New Jersey, "this makes a highly profitable business."

It also promises to change animal medicine. Earlier this year, for instance, Novartis began selling Clomicalm, the drug for treating separation anxiety in dogs--one of the most common and debilitating behavioral disorders. (Agitated pooches, left alone, commonly tear up houses and even jump out of windows.) Several years ago vets discovered that one of the company's older human drugs, Anafranil, used to treat obsessions and compulsions, could alleviate anxiety in dogs. Novartis then organized trials to test its efficacy for pets. Novartis expects Clomicalm to generate as much as $25 million in yearly revenues.

Pfizer Inc., the second largest manufacturer of animal drugs, recently released another pioneering product: Anipryl, effective in restoring memory and controlling age-related cognition disorders in dogs. This, too, was adapted from a human drug--Deprenyl, used to treat Parkinson's. Vets are prescribing it for dogs who, in their declining years, abruptly turn irritable, start losing their way around the house or neighborhood or forget that they aren't supposed to pee in the living room. "I can tell you dozens of miracle stories," says Dr. Amy Marder, a veterinarian and animal psychologist in New York who says she uses it for nearly a quarter of her pet patients. Exhibit A is Rocky, a floppy-eared older dog who happily hops into a visitor's lap in Marder's office at the Manhattan ASPCA. Before Anipryl, he was growly and walking into walls.

Drug companies are spending heavily to promote these new products. Last year, according to Competitive Media Reporting, advertising on pet pharmaceuticals topped $100 million, up from $17 million in 1994. Bayer Animal Health was among the biggest spenders, reportedly putting $23 million last year behind its best-selling drug, Advantage, a flea-and-tick preventive that generates some $200 million a year in revenues. Pfizer spent $21 million advertising Rimadyl, an arthritis drug introduced in 1996 that brings in more than $100 million in yearly sales, and it's putting even more behind a new drug launched last month called Revolution--an all-in-one "spot on" cream for ticks, fleas, mites, heartworms and intestinal bugs.

All the major drugmakers are investing heavily in research and development. Novartis's animal-health group spends roughly 8 percent of its global sales each year, or roughly $55 million, researching new products. At Pfizer and some other companies, the proportion is even higher. Last year alone, according to the Animal Health Institute in Washington, the top 20 drug companies invested a total $430 million in animal-health research and development, about half of which was devoted to pet pharmaceuticals. As a result, an impressive number of new drugs are coming down the pipeline. Among them: drugs for treating cancer in pets, heart medicines and treatments for animal vascular diseases, painkillers, additional behavior-modification drugs and medicines for allergies. Synbiotics Corp. in San Diego, which manufactures advanced veterinary diagnostics and vaccines, has even developed a monoclonal antibody to treat canine lymphoma, says chief executive Kenneth Cohen, who reports sales last year of roughly $40 million, nearly double those of the year before.

How are pet owners to pay for all this costly treatment? Animal health insurance, perhaps. Veterinary Pet Insurance in Anaheim, Calif., was the first of several insurers to offer medical coverage for household animals. Doing business in 47 states, it has an average $200 yearly premium that covers everything from office visits and drugs to hospital surgeries and even exotic cancer treatments. After the company's years of struggle, sales rose 90 percent last year to $26 million, according to its founder and president, Jack Stephens, and he expects to double his business again this year. That success may be another sign of the times, but filling out medical claims for Fido? That's a dog's life, indeed.