U.S. pet doctors steel themselves for online pharmacy challenge
14 June, 2019, 7:00 am
(Reuters) – A David and Goliath battle is brewing in the business of selling prescription medicines for pets, pitching veterinarians against online giants moving into this lucrative corner of the growing market for animal supplies.
Americans spent $72.56 billion last year on their pets, according to American Pet Products Association. Prescription drugs were expected to account for over $10 billion, according to an estimate here from the Federal Trade Commission, and overall pet product sales are expected to keep growing by 4% a year. (Graphic:tmsnrt.rs/2KfxTvy)
With deep discounts and online convenience, Walmart Inc, soon-to-be listed Chewy.com and Amazon.com Inc’s Wag brand have effectively conquered the market for pet food, care products and other supplies, but until now veterinary practices, which both prescribe and sell drugs, have been a major source of prescription medication.
While Amazon so far has shown no interest in that market, Chewy’s and Walmart’s forays into the online pet pharmacy business threaten to change that, prompting veterinary clinics to seek help in defending their turf. Enter Covetrus Inc, Vet Source, which partners with Patterson Companies Inc, and others that offer tools to help vets manage their practices and give customers the convenience they have come to expect from online shopping.
“We started to realize this is what our clients want,” said Stephanie Foster, practice manager at Kings Veterinary Hospital in Loveland, Ohio. “They want to be able to order things at 11 o’ clock at night. They’re used to the Amazon mentality.”
Foster says she began using Covetrus to order drugs and supplies for the practice after it began losing sales of pet food and other products to online retailers. Now, her hospital has a website run by Covetrus under the practice’s name that effectively acts as its online pharmacy.
With that comes software that helps the clinic manage its inventory and track prescriptions, so Foster knows when clients need a refill and for those Covetrus collects a service fee that is a percentage of sales.
Foster said partnering with Covetrus has helped boost overall sales by half over the past three years because it gives clients online convenience, timely reminders and, despite the fees, competitive prices.
“Covetrus now has more leverage with the manufacturers than I will ever have as a small business,” she said. “They’re able to get the manufacturers to agree to instant rebates and they can do flash sales on products and things that we just can’t compete with.”
The company, formed by the combination of medical supply firm Henry Schein’s animal health unit and Vet’s First Choice and listed in February, represents some 100,000 veterinary practices globally. In the United States, 27,000 use some form of its services with over 8,000 – about a quarter of the market – signed up for prescription management, Covetrus says.