(Bloomberg) -- Susann Gentile did everything she could for her dog, a Havanese named Elvis.

Elvis had a heart condition, and over his lifetime, the expense of caring for him added up. There was a $900 echocardiogram. There were cardiology bills, heart pills and specialty foods that came to about $8,000 a year. The costs forced Gentile, a Brooklyn public-school teacher, to work all the overtime she could get. Elvis eventually died when he was nine.

“I look back on it and say ‘How the hell did we do it?’,” said Gentile, who has daughters in high school and college. But she wouldn’t have had it any other way. And after Elvis died, she quickly purchased another dog, a Shih Tzu named Nico. She plans to fit him with a tracking chip and she pampers him with food made exclusively for the breed.

Animal lovers like Gentile, 51, are propelling the rise of a global pet economy that’s projected to reach almost half a trillion dollars — some $493 billion — by 2030, up 54% from today, according to Bloomberg Intelligence. That would put the business of pets on par with more futuristic, flashier industries such as cybersecurity and financial technology. 

A wave of adoptions during the Covid-19 pandemic has created greater demand for basics like food and toys. At the same time, another pet-related business is booming: the use of advanced diagnostic tools and sophisticated drugs to identify and treat injuries and diseases that once could have quickly claimed the life of a beloved family pet.

Drug companies with their roots in Big Pharma are bringing innovations from human life sciences to animals. Zoetis Inc., a former unit of Pfizer Inc., is using monoclonal antibodies to treat osteoarthritis in cats. Elanco Animal Health Inc., which was separated from Eli Lilly & Co., is selling the first oral SGLT2 inhibitors — diabetes drugs taken by millions of people — for pets. Gentile gave Elvis the same hypertension medication her own father takes.

“The revolution in human health is coming to animal health,” Elanco Chief Executive Officer Jeffrey Simmons said. “We’ve added almost 20% to a pet’s life.”

Those gains have come with questions about costs and benefits. The trend toward “humanization,” in which pets are treated like family members, is making people more open to $2,000 MRI scans or $10,000 cancer treatments. Such pricey interventions can stretch household budgets to the breaking point — and may offer animals limited gains in quality of life.

Drugmakers and health-care providers say these medical advances have improved animals’ wellbeing. Additionally, spending on pets tends to stick, executives say.

“We know inflation is impacting pet owners and consumers in general,” said Christine Royal, vice president at Merck Animal Health’s US companion animal and equine team. “They're cutting and saving in other ways before looking at cost savings for their pets.”

Pandemic Pups

Kept at home during the pandemic, Americans embraced animal companionship: While estimates vary, Morgan Stanley said in a 2022 report that there were about 5 million more pets in the US than in 2019, an increase of 4%. Average annual household pet spending reached $770 in 2021, up 13% from 2019, according to the Labor Department — outpacing an 8.5% increase in consumer prices.

Bloomberg Intelligence predicts the US, where it costs about $1,520 a year to own a dog and $950 to own a cat, will remain the world’s biggest pet market, soaring 52% to $195.6 billion by 2030. But the surge is global: Europe’s pet market is expected to increase 43% to $159.7 billion over that span. In the rest of the world, the pet market is forecast to grow 72% to $137.8 billion.

Many new pet owners have grappled with problems and expenses they never bargained for. Camellia Aebischer, a food editor based in Melbourne, Australia, got her dachshund, Morty, during the pandemic, but soon realized he had severe behavioral issues and needed anti-anxiety medication. Because he was a picky eater, she wrapped pills in prosciutto and other treats, which ended up making the treatments cost about $65 a month.

Morty needed to be accompanied at all times after neighbors complained about his intense barking. Dog-sitting, day-care and trainer costs reached about $415 a month, in addition to regular food and vet costs and $115-a-pop behavioral consultations. When Aebischer and her partner had to return to the office more often, it became untenable.

“We could never go in on the same day, as someone had to be home with the dog,” she said.

Aebischer reached out to a special animal behaviorist, who quoted $535 for an initial visit, a “daunting” cost. She ended up re-homing Morty and said only then did she realize how much she had been spending.

“Having a difficult dog is so expensive and something people don’t really talk about Pet,” she said.

Covered Costs

Big-dollar medical bills for pet-health issues that once might have gone untreated are becoming more common. When Pet Fund was founded in 2003 to help pay for veterinary care for people who couldn’t afford it, cancer accounted for 20% of the nonprofit’s requests for help, said Executive Director Karen Leslie. Now it’s over 60% and rising.

“It’s very easy to see bills that start at $10,000, and we’re quite regularly seeing bills of $20,000, $30,000,” she said. “That used to be rare and now it’s not.”  

One tool to mitigate runaway costs is insurance. At the end of 2021, the latest year for which figures are available, the total value of US premiums — meaning what people are actually spending — reported by members of the North American Pet Health Insurance Association was almost $2.6 billion for dogs and cats, up 30% from the year before. At the end of 2017, it was about $1 billion.

In 2021, the group said, the top claims paid included more than $50,000 for a Brooklyn dog who got hit by a car, and almost $22,000 for a cat in Yonkers, New York, who ate something it shouldn’t have.

Accident and illness coverage for a dog averaged more than $580 a year in 2021, though coverage varies, and deductibles can be high. Only 3.9% of the 83.7 million dogs in the US and just under 1% of its 76.8 million cats had insurance.

Generating Cash

Many wealthier pet owners also lavish care and attention on their animals, and there are an increasing number of products and elective medical procedures for that market segment.

There are testicular implants, for example, called Neuticles, to “help neuter-hesitant pet owners overcome the trauma of altering and allowing their beloved pet to retain its natural look and self-esteem.” Actor Jake Gyllenhaal said in an appearance on “The Tonight Show” that he’d bought them for his German shepherd.

More routine items such as pet food are perennial cash generators for manufacturers including General Mills Inc., Nestlé SA, J.M. Smucker Co. and Mars Inc. Companies like Mars, the candy maker known for Snickers bars and M&M’s, are increasingly pouring investment dollars into pet health.

Mars bought veterinary-services chain VCA Inc. for $7.7 billion in 2017, and snapped up AniCura and its 200 animal hospitals in Europe the following year. Petco Health & Wellness Co. has ramped up health services to complement its retail business, going from one animal hospital to 247 in the past six years. It has added dental X-rays, handheld ultrasound capabilities and artificial-intelligence technology to help read medical scans.

Whitney Miller, Petco’s chief veterinarian, said the San Diego-based company is constantly evaluating how to keep services affordable even as it seeks to put more technology in the hands of its vets.

For drug companies, the pet boom means they are less reliant on income from therapies for animals raised for food. “Ten years ago, livestock represented about 64% of our revenues with pet care being the balance,” said Wetteny Joseph, chief financial officer at Zoetis. “It’s the exact opposite now.”

Changing Patterns

More new treatments are on the horizon. Loyal, a three-year-old biotech startup in San Francisco that has raised $58 million, is developing drugs to help dogs live longer by slowing aging. The Dog Aging Project, led by the University of Washington and Texas A&M University, is also testing an anti-aging drug. 

At the same time, there are signs that some people who sought out a pet during the pandemic are finding they can’t sustain the relationship. According to Shelter Animals Count, which tracks animals arriving at shelters, total intakes ticked up last year but remain well below 2019 levels. Relinquishments by owners have held steady at about a quarter of total intakes during the past four years, with more people citing economic and housing-related reasons for the decision during the past 12 months, the organization said.

“This is tough for the vets as well,” said Aimee Gilbreath, president of PetSmart Charities. “Having a pet parent in the lobby who can’t afford care is heartbreaking.”

Some people find that after a pet dies, they are changing their patterns. Gentile, who has two daughters, one a junior in college and another soon to graduate from high school, said she still works overtime, but about half as much since Elvis died.

“The money I was making extra was going to my dog,” she said. “The money I’m making now is actually going to my daughters, like prom and graduation.”

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