I am continually surprised at the number of veterinarians who tell me they have not read the Bayer Veterinary Care Usage Study
released in early 2011. Without rehashing a report you owe it to yourself to read, I'd like to draw your attention to a number
of factors at play that affect veterinary client visits and the veterinary marketplace. If you are not aware of these factors,
how will you respond? Indeed, how will your practice survive?
More players at the table
Michael Paul, DVM
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One of the key factors cited in the study is fragmentation of the industry. Simply stated, this means that traditional veterinary
practices are not the only game in town anymore—pet owners have many choices about where they receive services, products and
professional input. Now, a lot of this fragmentation is not new. There have long been not-for-profit programs, such as county
and municipal facilities, that offer full care. For-profit mobile vaccination clinics that set up at various retail facilities
have existed for years in many areas of the country—there are just more of them now, or at least they're more visible. Online
pharmacies and retail outlets that compete with veterinary dispensing have been around for long enough that they're taken
for granted as a reality of our business. Most of their impact has been on practices' sales of flea and tick control products
and other parasiticides, although some Internet shoppers also purchase ongoing prescriptions such as NSAIDS or endocrine drugs.
In most cases, the cost differential is relatively small, but reality and perception are not always the same. Pet owners may,
at times, believe that veterinarians overcharge or make recommendations based on their own financial benefit. Again, it doesn't
matter what's true—that belief alone may lead pet owners to seek alternative care and product providers.
Another factor: Patents on a number of veterinary drugs will expire shortly, opening the gate for new generic products. Most
veterinarians use and prescribe generics every day. Why? Because they believe these products to be of equal efficacy and know
them to be less expensive for them and the pet owner. The marketplace also has a number of parasite control products to choose
from, which have become largely commoditized. As a result, the Internet has become a prominent supplier of these products.
The lack of almost any value differentiation among products or product sources to the consumer has made it almost inevitable
that price would be pet owners' primary decision driver.
In the future, pet owners will purchase drugs and other products from one of three sources: the veterinarian, the Internet
or retail superstores. Surveys have indicated, using flea and tick products as an example, that about one-third of pet owners
are loyal to the veterinary distribution chain. About one-third primarily shop "elsewhere" and about one-third purchase somewhat
by convenience: "I'm here. It's here. I'll take it."
Deal in the big box stores
Recently we've had new entrants into the veterinary marketplace. Big stores such as Walmart, Target and some supermarket chains
have begun filling pet prescriptions not only with generic products but also with veterinary-labeled drugs. I'm sure the CEOs
of these companies, which see billions of dollars in annual revenue, aren't thinking that a few packets of heartworm preventive
will affect their bottom line directly. The impact will come with the "while you're here" factor. Generally, when you go to
the market for a quart of milk, you come home with a quart of milk, a loaf of bread, a carton of orange juice and, oh yes,
a Snickers bar.
While a prescription is being filled at a superpharmacy, the shopper can wander the aisles. First she loads her arms, then
she grabs one of those little plastic baskets and, finally, she graduates to a cart so she can carry the case of Diet Coke
that's on sale. That's the impact a free or greatly discounted prescription has. When a pet owner comes to a veterinary hospital
for a refill, she waits in the reception area reading expired magazines and guarding herself from friendly pets waiting their
turn. Not quite as pleasant, productive or profitable.
The "human model" of drug distribution that's being promoted by consumer protection legislation, chain stores and, of course,
some members of the pet health industry is based not only on price but on convenience—and what's wrong with that? Isn't that
what you want when you're a consumer making buying decisions?
Now look at what client compliance has been with veterinary recommendations. The emerging manufacturers and retail market
chains have absolutely huge marketing budgets. How effective are we at marketing our products or services?
So is it all bad? Do these companies represent the evil empire? Is Walmart or Sam's Club really Darth Vader's death star?
One of our goals as veterinarians is to provide healthcare for as many animals and pet owners as possible. Clearly, we reach
only about half of pets. Their owners simply don't come to us, don't believe what we tell them or don't value what we do.
Our name is in front of them only when it is necessary. Now look at the chains we have mentioned. How many Walmart stores
are in your area? How prominent are their signs? How can you miss the Target logo everywhere you go? It's not uncommon to
see four Walgreens pharmacies in a quarter-mile circle. Kroger. Publix. Winn-Dixie. All are making an entrance into the veterinary
pharmacy and dispensing world.
It is unlikely that the existing prescription model will disappear anytime soon. Change comes fast, but adoption of change
comes more slowly. The new model that involves commercial pharmacies will not replace the old—it will augment it. They have
bigger marketing budgets and a consumer perception we can only envy.
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