Covetrus

12 Covetrus | ph: 855.724.3461 | fx: 888.329.3861 | cvet.co/shop Dispelling common myths of private brand drug alternatives M Y T H 5 Selling private brand generic drugs over brand-name drugs will decrease your clinic revenue. Historically, many veterinarians have taken a general approach to drug pricing: one markup fits all. So, if you simply double your cost to create the selling price to your clients, then yes, you will decrease your pharmacy profit by selling private brand generics over brand-name drugs. However, if you focus on maintaining your desired gross profit margin and adjust your pricing strategy accordingly, you will increase your pharmacy profit and save your clients money. It will benefit you to base pricing on the gross margin or profit dollars you target for each drug in your pharmacy and set your client pricing based on your target margins. The desired gross margin should drive your markup, not the other way around. The markup is the ratio between the cost of a good or service and its selling price (client charge). Markup is expressed as a percentage over the cost. Sell price of drug x to client - DVMʼs cost of drug x DVMʼs cost of drug x 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. Norbrook ® Inc. USA (2017, August ). Know the Facts About Generic Veterinary Drugs.

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