‘Unleashing’ growth: Maine's emerging ‘Silicon Valley for animal health’

The room has a chill vibe, with Fleetwood Mac’s “Dreams” on the sound system, goat-yoga wooden figurines and minimalist décor.

This isn’t some hipster hangout. Rather, it’s the waiting room for Portland’s PetMedic Urgent Care Vet Clinic, sandwiched on Marginal Way between two clinics for human patients. PetMedic is owned by Rarebreed Veterinary Partners, a Portland-based network of 130 veterinary practices in the northeastern U.S. and Florida.

Urgent care marks a new direction for the company, ranked No. 35 on the Inc. 5000 list of America’s fastest-growing private companies. It recently opened its seventh PetMedic clinic, in Vienna, Va., with plans for more.

“I think we can continue to grow really fast,” says CEO Dan Espinal, a former corporate dealmaker at Westbrook-based IDEXX Laboratories Inc. who teamed up with colleague Sean Miller to start Rarebreed, adding to the Portland area’s reputation for pet and livestock medicine.

“I wouldn’t be surprised if there were more really exciting animal health companies to come out of Portland,” predicts Espinal, a former venture capital investor in early-stage technology companies. “I call it a Silicon Valley for animal health.”

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Photo / Tim Greenway

Dan Espinal is the co-founder and CEO of Rarebreed Veterinary Partners, a Portland-based network of 130 veterinary practices ranked No. 35 on the Inc. 5000 list of America’s fastest-growing private companies.

Like the original Silicon Valley in California, the southern Maine version is home to innovative companies from established players to startups pursuing new markets and products.

While the handful of firms form a small sub-group of Maine’s 484 life sciences companies, they’re all expanding and hiring, creating fertile ground for further entrepreneurial endeavors.

Westbrook-based veterinary diagnostics firm IDEXX leads the pack, joined by ImmuCell Corp., Covetrus and, of more recent vintage, Rarebreed and ElleVet Sciences.

The sector has attracted investors including private equity firm Clayton, Dubilier & Rice, which took Covetrus private in a $4 billion deal in 2022, and U.K.-based Dechra Pharmaceuticals, which acquired Portland-based generic pet-medicine maker Putney Inc. for $200 million in cash from Jean Hoffman, the company’s founder and CEO, in 2016.

Today, “given the continued growth of IDEXX, Covetrus and Dechra … not to mention Rarebreed and others, there is a nucleus of people with experience in animal health in the greater Portland area,” Hoffman says.

“Add in proximity to the Boston and Route 128 biotech corridor and attraction of Maine as a place to live and raise a family, the talent to start and build other animal health-related companies is here and can be recruited to scale here.”

Pet care’s ‘long runway’

The global animal health market, valued at around $58.7 billion in 2022, is expected to expand at a compound annual growth rate of 8.8% from 2023 to 2030, according to Grand View Research Inc., a San Francisco-based market research and consulting firm.

Factors driving that growth include robust consumer spending on pet products and services, as detailed in a June report by ValuePenguin, a research and analysis firm owned by LendingTree. Out of nearly 2,000 people surveyed, three out of four spend an average of $1,507 a year on medical care for their non-human charges. About the same percentage said they would spend much more and even take on debt if it meant saving their fur baby’s life.

The same report shows that three-quarters of Americans own at least one pet, and that those without children spend more on their pets than those with children, shelling out $2,334 a year on Fido and Morris.

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Photo / Courtesy of Jon Ayers

Jon Ayers, board member and former CEO of IDEXX

Jon Ayers, an IDEXX board member who ran the company for close to two decades, is bullish on the sector. “The pet care market has a huge total addressable opportunity and a long runway of growth ahead,” he says.

IDEXX growth

IDEXX’s runway goes back to 1983, when veterinarian David Shaw developed a diagnostic test for cows, pigs and chickens and started a five-person company in rented space at the Portland Co. on Portland’s East End.

Today, IDEXX (Nasdaq: IDXX) has a global reach, supplying diagnostic and software products to more than 50,000 veterinary practices worldwide.

Products include single-use test kits for in-office use and in-hospital analyzers highlighted in an Aug. 1 research note by Morningstar senior equity analyst Debbie Wang, who also mentions the firm’s strong position in off-site lab testing.

“Its focus on developing and broadening its menu of tests makes IDEXX more of a one-stop shop for animal hospitals,” she says. “IDEXX is uniquely able to cross-sell many products and services, and it has developed a strong sales organization to provide tailored solutions.

The company raised its full-year financial guidance last month on the heels of second-quarter results that beat expectations. The stock had a market value of $40.5 billion on Sept. 8, with shares trading 37.5% higher over a year ago.

Wang notes in her report that while the 2% decline in second-quarter visits per practice was larger than expected, veterinarians’ continued reliance on diagnostic tests suggest that most pet owners are willing to shoulder increased health care costs.

She also observes that IDEXX’s ability to sniff out opportunities crosses over to its other business areas, including water testing. IDEXX has developed one test, for example, that can detect two of the most common bacterial contaminants and is easier and faster to use than traditional methods.

“We like the innovation IDEXX has demonstrated,” Wang says in her report, “and we expect there is more to come.”

ImmuCell’s First Defense

ImmuCell (Nasdaq: ICCC) is a publicly traded company with early ’80s roots. The Portland-based biotech firm makes health products for dairy and beef cattle.

The company's main product is First Defense, which provides immunity against E. coli and other viral infections in newborn dairy and beef calves, reducing the need for traditional antibiotics

After completing significant investments to boost capacity, the company was forced to scale back in the first half of 2023 due to contaminated milk supplied by farms. The stock has fallen around 37% in the past year. ImmuCell told investors last month that it is conducting product testing at all stages of the process as it gets back to full production.

“The contamination is behind us, we just have to complete the backlog and get back to regular business,” said Michael Brigham, the company's president and CEO. The 12-person sales team “is scratching and itching and ready to go, so we’ll transition them from allocation to new customer acquisitions.”

ImmuCell is also in the late stages of developing Re-Tain, a treatment for a common disease in lactating cows that costs the dairy industry an estimated $2 billion a year.

Brigham, who was a CPA and had a finance background, joined ImmuCell in 1989 after dropping his resume off at a recruiter’s office while vacationing in Maine. His hope was to create or run a business instead of just auditing them. Initially hired as director of finance and administration, Brigham was promoted to vice president in 1988 and CFO in 1991 before taking the reins as president and CEO in 2000 while still wearing the treasurer and secretary hats.

Today, Brigham leads a company with 75 employees — up from 65 nine months ago — and a market capitalization of around $36.3 million.

Hiring remains a priority, with current openings for two manufacturing associates and a product quality associate. Once the company gets the FDA green light for Re-Tain, which is expected around April 2024, Brigham says he expects to add even more hires. 

Covetrus and the cloud

Covetrus, a private equity-backed provider of animal-health technology and services, is also in growth mode. The company, founded as Vets First Choice in 2010, employs 5,700 people, including 277 in Maine.

Two focus areas are online prescription management and Covetrus Pulse, the industry’s first cloud-based veterinary operating system used by more than 3,000 practices in North America.

Over the past year, Covetrus has continued to advance the platform in areas vet practices need the most, including tackling staff management and workflow challenges and strengthening client communication, according to Matt Yordy, president of Covetrus North America.

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Photo / Courtesy of Covetrus

Matt Yordy, president of Covetrus North America

“Covetrus estimates veterinarians who use Pulse could schedule an additional 200 to 250 appointments per veterinarian each year, increasing revenue for the practice,” Yordy says. “In addition, more than 40% of Pulse users are accessing the system on a mobile device, further streamlining operations for vet practices and pet parents alike.”

Maine Technology Institute was an early investor, providing a $12,500 grant in 2008 to a two-person entity at that time made up of Benjamin and David Shaw.

“Follow-on debt and bond-funded infusions in the years that followed helped the firm grow exponentially,” says MTI President Brian Whitney. “Just 14 years after conceiving its innovative idea and receiving its initial funding from MTI, the company truly emerged as a unicorn.”

Earlier this year, Covetrus opened a distribution center in Ocala, Fla., to furnish veterinarians in several southern states, as well as the Caribbean and U.S. military bases in Europe, with more than 5,000 product offerings to manage their practices as well as medicines made by Covetrus and others.

The 62,500-square-foot-plus Ocala facility includes a drive-through option for mobile vets, as well as same-day and scheduled deliveries.

“Given the extensive equine presence in the southeast, the company has seen increased demand for products in this category,” Yordy says. “This expanded facility also allows for greater inventory depth and operational efficiencies, as well as future operational growth.”

Asked whether there’s room for more animal health startups in Maine, he says, “Absolutely. The animal health industry is a vital and robust part of Maine. There is always room for startups passionate about veterinarians and the animals they care for.”

Startup stars

Among newer startups, ElleVet Sciences is a South Portland-based maker of over-the-counter cannabis products for cats and dogs, including chews, creams, soft gels and oils. The company sells through veterinarians and also directly to customers via its ecommerce site.

The company was founded in 2017 by IDEXX alumnus Christian Kjaer and Amanda Howland, who has a background in science and public health. She started probing the use of cannabinoids for animals inspired by her uncle, a cancer research physician in Boston who studied the use of cannabinoids in humans.

Today, the firm employs 50 people. Over the next six months, it plans to hire 12 to 15 more after recently obtaining its first patent, for the use of hemp extracts to treat pain and other conditions in animals.

“This is a huge win for ElleVet and embodies our dedication and belief in the scientific process,” says Howland, the company’s chief creative officer. “The issuance of this patent proves our long-held belief that hemp is not all the same, that the specific product is where success lies, and that ElleVet is truly the best product for pets.”

In coming years, the plan is to roll out innovative products for multiple species and enlarge the company’s international presence, Howland says: “Our goal is to reach as many people and pets as we can, so we can help any pet who needs safe and effective relief.”

Agnieszka Carpenter, executive director of the Maine Bioscience Association, lauds the patent news as a big win for both ElleVet and the state’s emerging animal health cluster, a small but key part of Maine’s $2.2 billion life sciences sector.

“Every success story like this one fuels the strength of Maine’s animal health hub, which makes it more attractive for investors and new talent,” she says.

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Photo / Courtesy of Rarebreed

Not just cute: Animal health is a growing business in Maine.

Back at Rarebreed Veterinary Partners, Espinal and Miller have sought to create a positive employee culture at all the practices in their network, in an industry notorious for a high prevalence of stress and job dissatisfaction.

Besides offering opportunities for career advancement, profit sharing, a quarterly bonus and continuing education, Rarebreed “celebrates the people in the practice as the heroes of the story,” according to Espinal. Most of the practices are locally owned, with Rarebreed typically taking a 60% to 75% stake.

Espinal’s longer-term goal: “We’d love to be national at some point, maybe even international.”

Editor's note: Article updated to clarify the expected FDA approval timeline for Re-Tain.