Some people get a little sensitive about Kansas City’s “Cowtown” nickname. But it’s hard not to feel a little proud of the moniker when you consider just how much the animal health industry has done for the region.
The Kansas City Animal Health Corridor—an industry group that stretches from Manhattan to St. Joseph to Columbia—encompasses more than 300 companies and organizations. The membership includes up-and-coming startups, as well as internationally known brands like Bayer, Hill’s Pet Nutrition and Cargill.
These ventures develop innovative products and support a highly skilled workforce that includes executives, researchers, sales professionals and more.
All told, “corridor companies” represent about 56 percent of all global animal health sales, said Kimberly Young, the president of the KC Animal Health Corridor.
The sector is growing, too. According to Brakke Consulting, the industry saw more than 5.1 percent growth last year.
Several companies with a KC presence outperformed that. Boehringer Ingelheim Vetmedica Inc. had a growth rate of 21 percent, according to industry news source Animal Pharm, while Ceva Animal Health grew by 12 percent and Bayer by 13 percent.
“These businesses and these technologies, they’re driving innovations to solve worldwide issues,” Young said.
Case in point: The increasing global demand for meat. As the world’s middle class grows, more people have the means to add poultry, pork and beef to their diet. Ag producers need solutions that will keep their productivity high. That includes help battling avian flu and other diseases that can devastate livestock.
Of course, not every animal ends up on a plate. Spending on pets is expected to pass $60 billion this year, and the Kansas City area has nurtured several startups that are developing cures to protect and prolong the lives of companion animals.
In recent months, there has been a wave of growth:
» Boehringer Ingelheim Vetmedica, whose U.S. headquarters is in St. Joseph, announced plans this summer to acquire Atlanta’s Merial from Sanofi. The deal stands to double Boehringer Ingelheim’s revenues and vastly expand its portfolio of products.
» Ceva Animal Health is moving forward with a new effort to develop and sell custom vaccines for the swine industry. Ceva already has a thriving business for poultry—in fact, it was one of two companies chosen to produce avian flu vaccines for the USDA stockpile.
» Aratana Therapeutics—which develops biopharmaceutical treatments for pets—could receive regulatory approval of its third product very soon, possibly this month. The company is planning to double its staff to nearly 100 people, including 25 sales representatives based around the country.
“Over the past years, several animal health companies—some with no prior U.S. presence—have been attracted to the region and have set up shop,” said Dr. Albrecht Kissel, president and CEO of Boehringer Ingelheim Vetmedica. “Every addition of that kind increases the region’s importance and adds to the diversity of animal health companies and related jobs in the region.”
Why KC Is a Leader in Animal Health
Kansas City’s strength in animal health is rooted in our agricultural past. But it is human talent that has allowed the industry to endure here over the long term.
The Kansas City Stockyards, which opened in the 1870s, were a fixture in the West Bottoms for 120 years. During the stockyards’ heyday, they were among the busiest in the nation, second only to Chicago.
While the stockyards were officially open until 1991, the historic flooding of 1951 devastated the West Bottoms and throttled business there. Packing plants and others were driven out of business.
Over the decades, though, the stockyards had attracted vaccine and feed companies to the area, and they stayed even after the stockyards went away.
To serve those companies, Kansas City grew a network of law firms, marketing agencies and other service providers that had special expertise serving the animal health industry. The region’s universities also produce the research and scientists necessary to develop new, innovative products.
“Regional partners understand our needs because so many companies have deep roots supplying and supporting animal health companies,” said Craig Wallace, Ceva Animal Health’s CEO and North America/Pacific Zone director.
“From warehouse support to building specifications, the Kansas City region has so many experts we can call upon to help us manage our growth. We don’t have to start at square one explaining regulations and compliance. They know what we need because they’ve done this work before.”
“We chose the Kansas City marketplace because of those things,” said Joe Young, chief operating officer at AGL, which grew out of research developed at Georgia Tech. The company produces Vetrax, a new type of wearable sensor that tracks pets’ activity more accurately than other solutions. Veterinarians receive data that enables them to better treat their patients.
The corridor has continued to make strategic investments in programs that are useful to animal health companies. Examples include St. Joseph’s Innovation Stockyard business incubator at Missouri Western State University and the K-State Olathe Innovation Campus, which makes K-State expertise available to local businesses.
“That’s been a great way to attract some of these companies to the KC area,” said Steve Schram, president and CEO of AgriLabs. The company is responsible for marketing a range of products, including the VetGun, a paintball-style gun that lets users fire topical insecticide at cattle.
In Manhattan, construction is underway for the National Bio and Agro-Defense Facility (NBAF). It’ll serve as the nation’s premier researcher of animal disease, replacing the federal government’s facility on Plum Island, N.Y.
There’s also the KC Animal Health Investment Forum, which has helped raise more than $170 million for scores of young companies. This year’s forum is scheduled for Aug. 30.
As the CEO of ELIAS Animal Health in Olathe, Tammie Wahaus was able to present at the forum in 2014 and 2015.
“That program, I would say, has been very helpful to us in getting our initial investor commitment, our first $2 million round,” Wahaus said.
By participating in the forum, she also met suppliers and contract manufacturers that will help ELIAS continue to grow.
What’s on the Horizon?
Boehringer Ingelheim’s acquisition of Merial is a sign of a larger trend in animal health: consolidation. Kansas City leaders want to make sure that, as the number of enterprise-level companies decreases nationally, the survivors retain a presence here.
Elected officials can help, said Aratana CEO Steven St. Peter, by getting to know the leaders of local animal health companies and making sure government policies help nurture the businesses here.
“The biggest thing I see—and I know the city’s working on it and the region’s working on it—but funding for startups,” said Schram of AgriLabs.
R&D costs a lot of money, and that can be a challenge for early-stage companies in the biosciences.
To date, ELIAS Animal Health has raised nearly $2.7 million, Wahaus said. The region’s angel investors have been very supportive, but she knows that she will have to raise larger rounds to commercialize ELIAS’ cancer immunotherapy solutions for companion animals.
She’s been heartened by the announcement of several new KC-based investment funds.
“That’s going to be critical for the region to sustain the continued growth of these animal health companies and to retain those companies,” she said.