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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5 Proven Strategies to Slash Your Veterinary Practice’s COGS
The following blog is written by Epicur Pharma’s Advisory Council member, Nicole Clausen, CSSGB, CCFP. With over 15 years of experience in the veterinary industry, Nicole understands successful practice’s operations, intricacies, and internal workings, including sustainable inventory management strategies. Picture this: you’re looking at your practice’s financials, and despite healthy appointment numbers and solid revenue growth, your profit margin keeps shrinking. Sound familiar? You’re not alone. I see this scenario play out time and time again in veterinary practices across the country. Here’s the thing about inventory costs and cost of goods sold (COGS) – when they’re creeping up, it’s rarely because you’re suddenly spending wildly. More often, it’s like a slow leak in your profit tank. A little extra inventory here, a missed charge there, some expired products pushed to the back of the shelf. Before you know it, your COGS have jumped from 22% to 29%, and you’re left scratching your head, wondering where all that profit went. The good news? The profit didn’t actually disappear; it’s being eroded by system failures that are possible to fix. And here’s what I love about reducing COGS: when you get it right, you’re not just cutting costs, you’re freeing up cash to do amazing things—for patients, staff, or the practice. I’ve seen practices use their COGS savings to give staff raises, buy that new ultrasound they’ve been eyeing, or finally hire that additional technician. Here are the five strategies that consistently deliver the biggest impact for the practices I work with. Strategy #1: Eliminate Formulary Redundancy This is probably the fastest way to see results, and it’s where I always start with new clients. Walk into your pharmacy right now and count how many different flea and tick preventions you carry. Five? Six? Now think about your smallest size—say, the 4-9 pound option. If each product comes in a sleeve of 60 doses and you stock five different brands, that’s 300 doses of the tiny dog size sitting on your shelf. Unless you’re seeing 300 tiny dogs a month (and let’s be honest, most of practices aren’t), you’ve got way too much cash tied up in inventory. Every practice has these “doctor preference” situations where one vet loves Brand A, another swears by Brand B, and before you know it, you’re carrying everything under the sun. Here’s what I recommend: have an honest conversation with your team about consolidating. Pick one or two options per category and stick with them. Yes, there might be some pushback initially, but your bottom line will thank you. Strategy #2: Optimize Your Inventory Turnover Think of your inventory like produce at the grocery store: you want everything moving quickly and efficiently. When it comes to turning inventory, the magic number I like to aim for is every 30 days or less, or to match your billing cycle. That means if you buy 10 units of something, you should sell through those 10 units within 30 days. The key here is setting up reorder points for your inventory; these are especially important for high-volume, high-value items. Your flea and tick products, your commonly used antibiotics, your surgical supplies—these should be on a weekly or bi-weekly replenishment schedule. This might feel scary at first (what if we run out?) and it might be a big change, but it can be invaluable for your practice. You’ll carry less inventory overall and have better cash flow. I always tell my clients: aim to use or sell everything before you have to pay for it. If you’re on statement billing and purchase something at the beginning of the month, ideally, it should all be gone by the time you have to pay at the month’s end. Strategy #3: Leverage Your Practice Management System This one’s huge, and it’s something I see practices miss all the time. Most modern practice management systems have an auto-markup function that will automatically recalculate your prices when costs go up. But here’s the thing: it only works if you’re actually receiving your purchase orders through the system. I can’t tell you how many times I’ve done audits and found items priced below cost because nobody updated the prices when the vendor raised their costs. We’re talking about generic medications, supplements, and other basic medications or supplies that quietly go up in price without any fanfare. If you’re not leveraging your PIM’s markup function, you might be leaving money on the table. Also, take advantage of those associated entries and service packages. If you’re using pre-meds during surgery but not adding them to the medical history or invoice, set up your system so that when someone enters “pre-med administration” (which could even be $0, as the price is included in the surgery procedure), it automatically deducts the appropriate medications from inventory. This gives you accurate usage tracking without having to charge clients separately for every injection that was administered. Strategy #4: Implement Bulletproof Charge Capture Let me paint you a picture that might make you a little queasy. Is your inventory management system the right fit for your practice? Our online ordering platform, iFill, helps you stay stocked, compliant, and efficient Track drug expiration dates with ease Access detailed order history anytime Take advantage of price breaks to manage costs Streamline fulfillment so you can focus on patient care Create your account online or call 888-508-5032 to get started! Sign Up for iFill Imagine you have a product that costs $90 and sells for $121.50. If you miss charging just one a week for a year, you’ve lost about $6,000 in revenue. Miss two per week? Now your costs are actually higher than your sales for that one product. This is where charge capture becomes absolutely critical. I recommend regular medical record audits, either during appointments or after the fact. Train your team to fully understand how to charge for everything they’re using. Set up your codes in a way that makes it easy to capture charges correctly. Strategy #5: Plug Your Revenue Leaks Here’s