That’s important. And look, the sales force will be part of the organic growth of our existing portfolio and our existing innovation like parvovirus and others. So I start there and we made that conscious decision knowing that there is an investment, there is added cost. But no matter the exact timing and we don’t know the exact timing of these clearances, we’re going to be a more competitive U.S. pet sales force calling on these vet clinics and we’ll be prepared and our existing portfolio will win because of it. Now relative to the late-stage pipeline, look it’s progressing well, we’ve committed, we completed this submissions early in the quarter — in the third quarter, Credelio Quattro and Bovaer. We’ve also with Zenralia put submissions in internationally with Canada and Japan.
Others will follow as we globalize these products. But look, just like human pharma, we’re in the final regulatory stage. We’re proactive, we’re in productive discussions, it’s rolling, it’s iterative, we’re encouraged. Also, I would think by the big markets you see, derm still growing double digit, par is growing. And we’re opening up this livestock sustainability market. So preparing the market also I think is really key. So that hopefully gives you some framework.
Jon Block: It does. Thank you.
Operator: Your next question is from the line of Erin Wright from Morgan Stanley. Please go ahead.
Erin Wright: Great. Thanks for taking my question. So on the retail business, this is a differentiator for you and less connected to a vet office visit trend but can you speak to the trends that you saw in the quarter. You mentioned some seasonal destock that you expect in the fourth quarter, I think, and was there any outsized stocking in the third quarter at all that we should know about? And how are you thinking about your ability to kind of expand the physical availability into the pet retail channel that you mentioned in 2024? And how do you think about just consistency and visibility on growth across that retail segment? Thanks.
Jeff Simmons: Yes. Great. It’s a great question, Erin. And it’s one that we spent an awful lot of time on. And if you’re inside the walls of Elanco in the last 18 months, when you look at the talent that Bobby’s brought in mixed with the Bayer talent and the Elanco talent, we are re-imagining what we can do with the overall retail side, OTC side, and really it’s an end, right? I mean we’re going to bring new products into the vet clinic, there’s more scripting, scripting is growing in the e-com area. So there is more and more synergy here as we build as we said from day one on Bayer, meet more pet owners, where they want to shop at the price point and the portfolio that they want. And that is coming to life, and I give a lot of credit to the team.
So I’ll just hit each one of these. I think first of all share of voice. We’ve increased campaigns, largest Seresto Advantage campaign we’ve had, probably since we’ve owned Bayer and that’s benefited well. So we’re tracking awareness in a big way. I think this total distribution point comment, it isn’t all about bricks and mortar but bricks and mortar gives us a lot of opportunity, Erin. So I think it’s kind of surprising to see that para for instance is in 75% of brick and mortar and we’re only in 25% and we’re the leader. So we’re up 10% year-to-date in our OTC business in the U.S. So our focus right now and we’ve locked in quite a few commitments in the areas from pharmacy to dollar, to club stores and grocery. So, and we’re looking also at how we can create increased value in our offering, these retailers have a lot more needs in different needs and we currently offer.
I think lastly is just innovation. It doesn’t take a lot of and Ellen and Bobby and the team have created a new arm of innovation on OTC and this is different types of innovation and we’ve seen that as we brought in about the three overall, I think, four Advantage products. And lastly, is this is not just U.S. based. I credit the international team, we grew 16% in international Pet Health, I point to a product like AdTab, that is in that oral OTC product. It’s got the active ingredients of Credelio but it’s got the brand of Advantage and we’ve taken share there, we’ve come into that market and really shown the power of how to launch in retail well. So this is an area of heavy focus for us. Again, I emphasize, it’s an end and we will be one of the top innovators inside the U.S. vet clinic and I hope to say we’ll continue our leadership and take share in the U.S. pet retail as well.
Erin Wright: Okay. That’s helpful. And then just you mentioned Farm Animal generics and cattle dynamics in the U.S. as a headwind in 2024, I guess can you elaborate on that what you’re seeing across the livestock segment? Thanks.
Jeff Simmons: Yes. I think as you look at just overall the Farm Animal segment, I think, Erin, we’re going to see a tougher market in ’24 in Livestock and Farm Animal. And just a couple of quick comments that drive that, I think overall input cost have gotten better, corn has gone from 660 down to 540 or so, but it’s still high when you look at the conversions in historical rates. Poultry profitability, especially in the U.S. but globally. The global tensions have created trade tensions. And there’s less product trading and that’s usually higher margin, cattle numbers are down and there is the reg changes on implants. And lastly, I think the swine market, the two that matter, U.S. and China. We’ve got a — too much supply, prices aren’t recovering and demand is flat.
So we see those markets. Now with that said, we’ve been in this business a long time. It’s a durable resilient market. Protein demand is still moderately growing. There’s a lot of countries and candidly the countries are much better at managing supply demand than they’ve ever been. So I don’t see this as a steep valley but I do see this as a market that’s going to be challenged. Elanco as we look at it, I think we’re well positioned. We continue to see the business able to grow, take leadership and share over time, there will be volatility, but we’ve got a value-driven portfolio that benefits in this environment, and specifically, Erin, I would say cattle we’ve got innovation. Experior and Bovaer will help drive both on beef and dairy, even with less cattle numbers.
We’re leaders in poultry, there’ll be pockets of challenge with this profitability issue but the Tyson returned, the ionophores will be helpful and swine will probably be a tougher market, but we’ve got a good portfolio and a good team in China and the U.S. and will hold as much share whether the market gets bigger or smaller. So that’s what we see so far, we’ll monitor it closely and share more at JPMorgan in January as we study the market.
Erin Wright: Great. Thank you.
Operator: Your next question comes from the line of Chris Schott from JPMorgan. Please go ahead.
Chris Schott: Great. Thanks so much. Just two for me. I guess, first, I was just interested in your views on the vet visit trends we’re seeing and what that’s kind of implying about the economic health of the pet side of the customer base. I think there’s been some debate in the market about how much of what we’re seeing right now is macro versus ongoing capacity issues and maybe, Jeff, just be interested in, kind of where you — where you weigh in on what we’re seeing there and then one follow-up after that.
Jeff Simmons: Yes. Great. Great question. Thanks for the question. Actually, it’s something that I’ve spent a lot of time on, our team has. And look we’re going to monitor vet visits are down 1%, 1.5%, but it is not our most critical metric, we’re less sensitive as a company, maybe than we were three years ago. We think spend per visit is one of the metrics to watch and that’s meaningful, that’s up. There’s a lot of resilience in this industry. There’s still a lot of desire from the younger generation that want to spend more on their pet to actually rewarding innovation. And innovation is driving actually awareness, which whether it’s pain or derm, you see the market still continues to be very robust, specifically looking crisp for us, it’s back to this omnichannel leadership.
