Competition in drug sales
Ten years ago, I was already saying that it was not the Internet-based pharmacies that would be our long-term competition, but rather the local big box and grocery stores with pharmacies willing to sell veterinary drugs at a steep discount as a way to attract customers. My guess is that every prescription filled through one of these sources generates additional revenue for the store through the sale of groceries and other things.
For practices in which profits from drug sales represent a substantial portion of the net practice profit, the loss of these sales could mean bankruptcy.
One obvious answer to the loss of drug sale profits is to raise our fees for other services. We can then provide prescriptions that clients will have filled wherever they want, while still offering a few drugs at competitive prices, if we choose to do so. We would still need to stock those drugs the competition does not carry or that are needed immediately, knowing that many of these products can be obtained by pet owners almost overnight from Internet-based pharmacies as well.
Importantly, raising fees for services infrequently provided will do little for the bottom line. To maintain profitability, therefore, fees for services that are provided frequently must be raised first. Unfortunately, these are also the services that are most often price-shopped. The problem then becomes who is willing to be the first in any area to raise his or her fees. I suspect most of us are not willing to take that chance and just hope we can wait it out until other practices have been forced to close. Those of us who are debt free will be able to live the longest if we can keep our overhead within reason.
Unless I miss my guess, veterinarians will be out of the drug retailing business within 3 to 5 years and there will be many more practices for sale.
Ronald E. Whitford, dvm