We’re expanding our core capabilities and evolving new ways to partner with you. Make sure you follow us at… https://t.co/g1VkE0UlKB
Article: Destination Pet - COVID-19 will see vet clinic consolidation and distribution efficiency
This is an article taken from our animal health coverage dated 16 June.
David Tinsley (managing director of MWI Animal Health UK) and Mark Beaney (veterinary consultant to Destination Pet) discuss the future aspects of the animal health world in a post-COVID-environment. Both are supply partners to Destination Pet - a corporate group that owns day care, grooming and boarding facilities alongside vet clinics across the US.
The unprecedented COVID-19 pandemic will undoubtedly have an impact on society, the business landscape and the future of healthcare - including the animal health industry.
This time of unknowns has certainly raised questions and concerns, but it has also strengthened belief in the promise of our animal health supply chain. We seldom think about the people working behind the scenes to ensure our pets can continue to access the same level of care they've always been receiving, but there's a person behind every prescription - picking it off the shelves and placing it into a tote to be delivered to a clinic the next day.
During this period, it's become even more clear what the future can hold for veterinary distribution. In the past, distribution decisions have been primarily driven by cost as the unit of measure. The reality with distribution is this is an industry built on service. Therefore, placing all value on the price of the product focuses the mind in the wrong place.
If we are to think about price in the value chain, then we should really be focused on efficiency. How efficiently can my distribution partner get products to me? More importantly, how efficiently can I process those products? To unlock this efficiency, veterinarians will need to work with distribution providers in partnership, to extract value from the supply chain in all areas. However, for this to work the veterinary market will need to look different at a distribution level than what had existed in the pre-COVID-19 world.
It's important to understand where distributors fit into the value chain. It's true distributors are highly proficient logistics partners. We deliver pharmaceutical products to thousands of sites of care every day, all while navigating a complicated regulatory environment and sustaining a complex supply chain. We carry an enormous number of different items in stock and allow the whole market, regardless of location, to order in the evening and receive that product the very next day. That product could be a rubber dog bone of very little value or it could be a cold-chain vaccine worth thousands. Both will be delivered with the same care and attention, on temperature-controlled vehicles and in the same package, making the ordering, receiving and payment process incredibly efficient.
MWI's distribution model unlocks pharmaceutical access. A manufacturer's product can be in thousands of sites of care on day one of launch, allowing patients to access the latest and most novel therapies as soon as they become available. Beyond logistics, however, this model also enables us to serve as an effective and efficient partner to thousands of veterinary clinics. These are healthcare providers who depend on us for more than product sourcing and delivery; they rely on us to help them navigate change, optimize business performance, implement the latest technology, amplify their value in the community and most importantly, find more time to focus on what matters most - their patients.
There is much more that we could do. It is widely accepted 20% of all products purchased by a practice will not make it onto a customer invoice. These products are either lost, damaged, given away for free or expire. By investing in this area and recognizing the prize on offer, we can make the practice more successful.
Connected technology is the future
The dynamic market conditions COVID-19 has brought about have made us all acutely aware of the need to have facts at our fingertips, monitoring what is happening in real time. Corporate customers are now seeing the substantial benefit of cloud-based practice management systems, not only to facilitate remote working but also to receive regular sales data that can inform business decisions based on what's happening in real time within the practice.
Enterprise-wide, connected technology is the future to unlock the potential within corporate groups that have grown rapidly under their acquisition phases. The next stage needs to be on professionalizing and driving efficiency through the estate. Distribution partners that can deeply integrate product supply with technology will help to drive efficiency within practice, but also provide greater visibility into performance.
Despite the efficiencies and benefits that exist with the distribution model today, it is impossible to neglect the challenges and opportunities that remain ahead. Whether that's reducing waste and streamlining daily deliveries to only take place a few days a week, or moving to a single distribution partner system to manage and distribute across multiple countries and reduce procurement activity.
Solving these problems will take a new level of collaboration and partnership with veterinarian partners and stakeholders across the supply chain, in order to continue creating greater value and creative solutions. Distributors are not just here to survive the changes taking place across healthcare. They will help to shape the next phase and ultimately ensure people within the practices can continue to focus on what matters most - caring for their patients and ensuring their businesses thrive for years to come.
COVID-19 impact on veterinary practices?
Obviously, it is early days and at the moment most practices are just fighting to keep going. Of course, in the short term, income will fall. But people love their animals and still need the services of vets. They also need many other services for their animals, such as day care, grooming, food, retail products and boarding. Apart from food, all of these will have been hit hard during the pandemic but all are seen as necessary for most pet owners and will recover.
As with many industries, COVID-19 has forced business owners to look hard at their model and service offerings. There have been lots of technological advances in the veterinary sector in recent times but most have been relatively slow to be implemented. Practice management software has progressed but many practices do not use it to its full potential. There have been other services overlayed onto these systems to help with customer communication and drive repeat sales. Telemedicine is just starting to emerge. There are lots of other technological advances that are starting to gain momentum.
All of these will enable both the practice and the customer to have much more information about the pets and buying patterns. For some customers they will be everything, others will have no or little interest. But if the practice wants to engage its customers and communicate openly, then they will have to embrace much of this change. COVID-19 will help drive some of this as customers realise there are other ways to interact with their practice.
So, what is going to happen next?
Further consolidation, especially outside the UK is inevitable. Consolidators are already in existence in Europe. The pace might slow as, after COVID-19, businesses will need to focus on their existing practices and stabilise them before accelerating acquisitions. Prices will fall in the short term but probably start to rise slowly in a few months as the industry recovers. Quality will shine through both in performance and value.
Many expect animal ownership and spending on pets to continue to grow. The level of growth may slow in the short term but I expect the sector will recover and demonstrate it is robust. How long this will take is the million-dollar question. Wherever a practice is located, quality will shine through both in performance and value.
David Tinsley is managing director of MWI Animal Health UK and Mark Beaney is an independent veterinary accountant. Both are supply partners to Destination Pet - a corporate group that owns day-care, grooming and boarding facilities alongside vet clinics across the US. The firm has 60 sites in the US, is expanding rapidly and embarking on a European development plan. Destination Pet is taking a new approach to veterinary clinic consolidation, with the integration of other pet services, a comprehensive digital play and strong veterinary engagement.
- Climate Change and the Impact on Crop Supply- Demand
- Grains and oilseeds under strain
- Special Report: Food & Ag Commodity Inflation
- US lawmaker tables bill to rein EPA’s pesticide regulatory powers
- Global Feed Demand 2023
- Sri Lanka shows phased transition to organics and biofertilizers is vital
- Mixed impacts across the food sector as inflation hits consumer spending
- Europol warns of rising fake pesticide trafficking in EU