Quick Facts:
- The veterinary compounding market is expected to increase from US$ 1.1 Bn in 2020 to over US$ 2.7 Bn by 2031, expanding at a CAGR of around 8.5%
- CNS agents and anti-infective agents show the most lucrative market opportunity
- 2/3 of the market share will come from oral formulations
Source: Persistence Market Research
- Pet healthcare accounts for about 30% of the $100 billion-plus pet industry (American Pet Products Association)
- Animal medication sales, including over-the-counter and prescription, added up to roughly $10.8 billion in 2020 (Packaged Facts)
- Pet medication sales have grown at a healthy CAGR of 9% since 2017 (Packaged Facts)
Veterinary practices are unique in that they can sell medications directly to their clients, which provides an important revenue stream for the business. However, retail stores and online pharmacies have stolen a lot of market share, especially during the pandemic. An article in Veterinary Practice News claims that one “online pet retailer added more than five million customers during 2020 and net sales grew 45 percent.”
These online retailers not only pose a threat to veterinary practices’ revenue, but they also create challenges in regulating quality animal healthcare standards. Most U.S. states require veterinarians to issue prescriptions to clients upon request, allowing the client to fill the prescription at the pharmacy of their choosing. Clients who used to depend on the vet for prescriptions now have more freedom, but veterinarians continue experiencing lost revenue from what used to be a high-value revenue stream with large margins.
So how can veterinary clinics regain market share in pet pharmaceuticals and ensure the best quality of care for patients? Vet hospitals and clinics have to adapt to retain pharmacy revenue, but they can still be competitive, and in the process, increase client loyalty.
Explore how these three approaches can help your practice:
1. Elevate Your Veterinary Pharmacy
Use the 80/20 rule to identify in-demand commercial and compounded drugs and keep those in stock. Consider limiting the pharmaceuticals you carry to those that serve your clientele the best, and most often. Carrying multiple versions of similar items is expensive, especially flea and tick preventives which are more of a commodity. Stand out from the mass retailers and refocus your offerings on the highest quality, in-demand medications.
When stocking medications, pay close attention to shelf life. When ordering compounded medications, keep in mind that 503B manufactured products have a shelf-life range of months to years, without compromising quality. Medications from 503A pharmacies with beyond-use dates (BUDs) have small usage windows – as little as 12 hours for sterile products – which can create a lot of waste. Stocking niche medications is another way to differentiate and increase revenue.
2. Take Control with Online Ordering
Today’s pet owners value convenience and expect online ordering, automatic refill reminders, and home delivery. Relying on clients to remember prescription refills, without calling the clinic in a panic, is not a sound business model. Avoid the hassle and provide the service your clients expect by setting up an online ordering system. Use the system to send reminders about required lab tests and blood work – this simple activity can remove barriers to prescription refills.
Explore more tips for improved inventory management processes – for both your practice and your clients!
3. Stock 503B Manufactured Drugs to Maximize Profits
When a commercially available drug is not available and you look for a compounded medication to fill this need, consider stocking manufactured drugs from a 503B outsourcing facility before purchasing from a 503A compounding pharmacy. 503B manufacturers adhere to FDA guidelines and meet strict quality regulations regarding sterility, stability, and potency. Did you know that per federal law, hospitals are permitted to purchase 503B medications for unlimited hospital administration and dispensing (FDA Federal SEC. 503B. [21 U.S.C. 353b])? By stocking these drugs, veterinary hospitals can offer their clients a wider range of treatment options and earn a higher profit margin on each sale.
Why Carry 503B Medications?
- Improves patient safety
- Long shelf life (less waste!)
- Improves treatment adherence
Offering 503B medications can help veterinary clinics remain competitive by growing revenue, all while helping vets deliver the best possible service to clients and patients. When selecting an outsourcing partner, be sure to choose one with a proven track record of quality and safety, which even includes how the products are packaged (more on that here!).
Want to review more best practices for dispensing and managing veterinary pharmaceuticals?
Our eBook offers more guidance on how to improve your veterinary pharmacy revenue:
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