Dr. Peter Brown is president and co-founder of Cara Veterinary, a network of family-owned veterinary hospitals.Read Articles Written by Peter Brown
As practicing veterinarians, we often have many choices for what we prescribe our patients. Many drugs come in multiple forms, such as caplets, liquids and chewables. Compounding pharmacies give us even more options. Why do we choose one over the other? What do our clients prefer? In this article, let’s explore chewable medications.
From the perspective of pets, they like to consume something that tastes good to them, not necessarily what might taste good to us. The time my dog spends in the cat’s litter box is a testament that pets have different tastes than we do.
If you were a dog or cat, would you prefer a finger shoved down your throat or would you rather consume a “treat”? We often get the pill down using butter, bread or a tasty pill wrap, but pets are talented at spoiling our trick. I sometimes find a lonely pill on the carpet or wood floor after a “successful” pilling of my dog. Regardless of the pet, they prefer chewables.
Chewable medications can pose occasional challenges. Certain food allergy cases (rare) can limit the doctor’s prescribing options. One of the biggest challenges is how palatable chewables can be, leading to overdoses in a few cases I have seen. You don’t often see a dog consuming a 100-count prescription bottle filled with a bad-tasting tablet. It is possible, though not as likely.
A Low-Stress Option
From the client’s perspective, do you want to chase your pet around the house, your fingers covered with peanut butter and saliva, as you try to shove a pill down its throat? Clients want easy administration of pet medications. They want to avoid stress, which can mean not coming into our clinic for an exam, not giving the monthly preventive every month or skipping the last four days of antibiotics.
Cost is certainly a consideration with pet medications. In most cases, chewables are more expensive than tablets. How much more a client is willing to pay varies. The decision often is based on the perceived ease of getting a pet to take a medication. As veterinarians, we should not assume that clients won’t pay an extra couple of dollars a day for easier drug treatments. It is cheaper than a daily cup of coffee. Give clients the option.
From the veterinarian’s perspective, our first goal is to do what is best for the pet and secondly, what is best for our pocketbook. From a business perspective, let’s look at the math. A chewable that costs us $1 might be sold to the client for $2, earning us a dollar. In comparison, a tablet that costs us 70 cents is sold for $1.40, a 70-cent profit. This is a basic lesson in pricing. How I approach it is to charge the client $1.70 for the tablet, ensuring an equal margin on a per-dose basis.
A Competitive Environment
Now let’s look at the competition. In many cases, a race to the bottom is going on — the dramatic cutting of margins. Some prices I see online indicate the sellers are using prescription drugs as loss leaders to drive customers to their websites. The vast majority of the low, low prices are tablets. There is less price competition with the more expensive chewables.
Profit is revenue minus cost. Revenue is the number of units (volume) sold multiplied by the average cost of the unit. We do not have a lot of control over cost except during contract negotiations. Where we can drive profit, more than anywhere else, is through driving volume. Chewables will drive volume.
Pet owners who can easily give a medication are more likely to give it. A chronic med that is given daily or monthly will be given more often if the task is easy. A course of medication prescribed for a short-term disease is more likely to be completed if giving it is easy.
Lower Prices, More Profit
My experience with carprofen was dramatic. I decided to cut prices — non-chewable carprofen at a level competitive with online pharmacies and a chewable formula at about 20% over the internet price.
In the 12 months before I lowered my prices, I sold $24,000 worth of non-chewables, for a $12,000 margin, and $50,000 worth of chewables ($25,000 margin). After the change, the first 12 months saw $30,000 in non-chewables sold, for an $11,000 margin, and $85,000 in chewables at a $35,000 margin. Overall, I drove the product margin from $37,000 to $46,000. I also was able to increase my medication monitoring screens by 15% and provide better medical care for what is often the geriatric canine.
We should always be looking at dollars of profit, not the percentage of profit. In the example above, clients looking for the lowest possible price were driven to non-chewables at a price competitive with online merchants. The majority of clients wanted the chewable option and liked the convenience of getting it from me.
By reducing the gap between online and in-hospital pricing, I was able to drive sales volume.
I am aware that every hospital is different. We have different clients and a variety of competitors. In addition, each product has its own set of challenges and opportunities. Clients choosing a more expensive type of medication because it is easier to give likely are less price sensitive.
You Can Do It
As practice owners and veterinarians, we have many ways to approach our pharmaceutical business. I have observed some colleagues writing scripts for all medications, making product sales less than 10% of their revenue. Others have approached today’s market by partnering with a home-delivery platform, which can maintain the sales volume but dramatically decrease the margin percentage and sometimes the margin dollars. Others, like myself, believe that in-house sales of pharmaceuticals can still be a viable profit center.
No, we cannot approach pricing and sales the same way we did when I started as a veterinarian. We need to be strategic, using script writing when it makes sense and a third-party home-delivery partnership when it is logical. The process can be made simple.
The factors to look at are:
- Opportunity (the number of doses).
- Current utilization (the percentage of opportunity).
- Marketplace pricing.
- Your current pricing.
The Trusted Source
Sales of chewable medications can help your business considerably. Like I mentioned, chewables are what the client and pet desire, and that pet owner is likely less price sensitive. Clients want to know where a pet’s medications are coming from, and they trust you, the veterinarian. Many clients will pay more to get a medication from their local pet doctor.
The No. 1 factor in making any decision within our hospitals needs to be centered on this fundamental question: “Is it best for the pet?” Prescribing a chewable medication over a non-chewable, except in certain circumstances, is oftentimes what is best for the pet. The pets are more likely to receive the full prescribed course (potentially decreasing antibiotic resistance), clients are more likely to come back for refills, clients are more likely to be happy with our service, and the pet will be less scared of getting medicated.
Chewables provide a larger margin potential and, by driving sales volume, a larger dollar figure at the end of the month. Good medicine is never bad business as long as you remember to charge the client for it.