In This Article:
The marijuana industry could be going to the dogs.
Cornell University College of Veterinary Medicine recently announced results from a clinical study evaluating cannabinoids in dogs with osteoarthritis and multi-joint pain. The study found that dogs that received a hemp oil blend showed significant improvement over those that received placebo. A similar study is currently under way testing use of cannabinoids in cats.
There is currently plenty of excitement with legalization of medical marijuana in countries around the world and the impending legalization of recreational marijuana in Canada. But treatment of pets could be a marijuana market that most investors aren't thinking about.
Image source: Getty Images.
Pet pharma on the rise
Developing pharmaceuticals for animals has rapidly become a big business. The world's largest animal health company, Zoetis (NYSE: ZTS), posted total revenue for 2017 of more than $5 billion. Merck's (NYSE: MRK) animal health segment generated revenue of nearly $3.9 billion last year.
It's not just the drugmakers that are doing well. PetMed Express (NASDAQ: PETS), one of the largest pet pharmacies in the U.S., has also seen sales and earnings grow significantly.
There are several reasons behind the rise of pet pharma. The number of U.S. households with more than one pet is increasing as both younger and older Americans seek companionship from pets. Also, the growing middle-class populations in large countries such as China and India are more likely to own pets.
Keep in mind, though, that not all of the money made by the animal health industry is from products sold for pets. For example, over 55% of Zoetis' total revenue stems from its livestock products. Also, roughly two-thirds of the company's sales are for anti-infectives, parasiticides, and vaccines -- some of which aren't viable targets for cannabinoids.
Investing opportunities
Still, the results from the Cornell study indicate that there's a real possibility for cannabinoids in the pet pharmaceutical market. Some veterinarians have referred to use of cannabinoids in alleviating animal pain as "a game changer that will change the face of veterinary medicine."
But are there opportunities for investors? The hemp-based products used in the Cornell study were made by Ellevet Sciences. The company is privately held, so it's not an option for investors right now.
There are a handful of tiny cannabinoid-focused animal health companies with stocks traded over the counter. Tetra Bio-Pharma, for example, announced last year plans to develop cannabinoids for the veterinary market. Medical Marijuana Inc. (NASDAQOTH: MJNA) has a subsidiary, Phyto Animal Health, that focuses on developing cannabinoid products for the pet market. However, I don't view Tetra or Medical Marijuana as good candidates for many investors because of the risks associated with penny stocks.