Animal Health Solutions

22 | Covetrus ph: 855.724.3461 | fx: 888.329.3861 | covetrus.com Did you know that Covetrus offers over 1,200 private brand alternative products in over 100 product categories? Taking advantage of such a broad portfolio can help you both meet your client's expectations and increase your profitability. Covetrus representatives can now provide your clinic with a customized savings report to help identify product categories with the largest areas of savings opportunity for your practice. Ask your Covetrus representative for your personalized savings report today. The gross margin is the difference between the selling price and the cost of goods sold, divided by selling price, expressed as a percentage. Gross profit is the difference between revenue and cost of goods sold, expressed in dollars. Sell price of drug x to client - DVM's cost of drug x Sell price of drug x to client The following sample calculation of markup and gross margin for a generic drug shows how it works: DVM's drug cost from distributor = $25.00 DVM's drug charge to client Markup = $40.00 - $25.00 = 0.60 or 60% $25.00 Gross Margin = $40.00 - $25.00 = 0.38 or 38% $40.00 It makes good financial sense to charge clients lower margins on maintenance drugs and higher margins on drugs used for short-term treatments. Clients often shop long-term therapy drugs, such as nonsteroidal anti- inflammatory drugs (NSAIDs), and will quickly search the internet for lower-cost options. If you only stock brand-name drugs in your pharmacy and do not offer lower-cost alternatives, you risk losing future revenue after the initial prescription runs out. In an age of cost-conscience consumers, clients may feel misled if they learn from another source that a private brand generic drug option existed. After all, many clients purchase human generic drugs as a rule when they are available for their own medications. Key take home points Prescribing private brand generic drugs over brand-name 'pioneers' is a great way to meet cost- conscience client demands and boost profitability for your practice. Consider the following points: • Bioequivalent private brand generic drugs include the same active pharmaceutical ingredient — and in the same amount — as brand-name veterinary drugs. • Private brand drugs usually cost much less than brand-name "pioneers". This helps your practice compete (e.g., against online retailers) while offering you more profit potential. • Clients will be thrilled that you are charging them less for medications, whether they are for one-time use or for chronic disease management, and may reward you with their loyalty and repeat business. About the author Joe Perkins, Senior Marketing Manager of Covetrus Brand products, has over 13 years of experience in the veterinary industry. Holding a BA in Brand Strategy & Communications from the Scripps School at Ohio University, Joe helps veterinary hospitals maximize savings and profitability through program and product development within the Covetrus Brand portfolio. This article was written in conjunction with Norbrook, one of the world's largest manufacturers of veterinary sterile injectables, and one of the nation's largest manufacturers of companion animal and livestock private label brands.

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