How To Introduce A New Product In Your Clinic
Veterinarians need to evaluate whether a new drug meets the medical needs of their patients or fills a void.
When an elderly couple visited Animal Hospital of Smithson Valley in Spring Branch, Texas, they complained about fleas covering their German shepherd. Dr. Roy Madigan confirmed the infestation and said, "Let’s put him on a dose of the new Frontline Tritak while we’re talking.”
Five minutes later, fleas on the dog’s rear legs were seizing and falling off. By the end of the exam, they all saw a pile of dead fleas on the floor. "We decided to use Frontline Tritak for its quick flea-killing time,” says Dr. Madigan. "We also need strong tick control in our area.”
Although the flea/tick category saw 15 new entrants between 2011 and 2012, manufacturers know veterinarians’ recommendations drive consumer demand. Last winter was the fourth warmest winter on record and prolonged the need for flea-and-tick products.
"At the end of the day, we are all racing toward the same goal—to get more pets protected,” says Shawn Hooker, director of parasiticides long-term strategy at Merial Ltd. in Duluth, Ga.
Before expanding pharmacy shelves, veterinarians need to evaluate whether a new drug meets the medical needs of their patients or fills a void, set pricing strategies, and create marketing plans.
Decisions About New Drugs
Don’t add a drug to your pharmacy just because it’s new.
"The first thing you have to do as a doctor is convince yourself there is a need for the drug in your practice—be convinced independent of the drug rep,” Dr. Madigan advises.
On-hand inventory should average $10,000 to $16,000 per full-time-equivalent doctor, including preventives but excluding foods, according to Denise Tumblin, CPA, of Wutchiett Tumblin Associates in Columbus, Ohio. Drugs, medical supplies and lab expenses typically make up 18 percent of revenue.
When adding a new drug, practice the "one in, one out” rule. If a new drug is added, what will it replace?
I coach practice owners on consolidating inventory so they have consistent product recommendations and effectively manage inventory. Too many choices may put compliance at risk. When analyzing 11 compliance areas for a Midwest clinic using our Compliance Coach service (www.csvets.com/books), I identified eight brands of canine flea products. Only 13 percent of active dogs were compliant that have the hospital’s 12-month protocol for flea protection.
The average number of doses that all active dogs received during a 12-month period was 1.5, with 28 percent sold as singles. I advise consolidating from eight brands to three with distinct differences.
When consolidating inventory, list drugs you carry in categories, such as preventives, NSAIDs and antibiotics. Next to each product name, note what makes this product unique, whether it’s your first choice, and what was last year’s revenue from each drug. You’ll identify duplicate drugs and sluggish sellers.
Because 20 percent of dogs are testing positive for tick-borne diseases at Betty Baugh’s Animal Clinic in Richmond, Va., veterinarians introduced Seresto, Bayer’s new flea/tick collar for dogs and cats that lasts eight months.
Questions to Discuss Before Considering a New Drug
When doctors are considering new medications, discuss questions such as:
• How is this drug different from similar drugs we stock?
• What is our cost for the drug? What is the expected retail price to clients?
• What profit do I want to make to be sure it’s worth stocking and selling an item?
• How often will we use this drug?
• What is our probable inventory turn, or how often will we sell this item?
• If a new drug is added, what medication will it replace?
• Does the drug have any side effects?
• Does the drug require medication monitoring if used long term?
• What is the shelf life or expiration of the drug?
• What form is the drug available in (liquid, tablet, etc.)?
• What dose sizes are available? Consider how many inches of pharmacy shelf space will be needed, along with the need to split tablets.
Purchasing and Assistant Manager Katie Washington says doctors added the collar because it was different from topical flea control. "We saw an increase in flea-and-tick infestations last year,” says Washington. "The eight-month collar should help clients better manage the flea lifecycle.”
Ticks drove the decision at Healthy Petz Veterinary Hospital in Spring Hill, Tenn.
One of Dr. John Zavaro’s five dogs has Ehrlichiosis. In Williamson County, one of 15 dogs is testing positive for Ehrlichiosis, according to the Companion Animal Parasite Council (www.capcvet.org). "Pet owner compliance is good because if you put on the Seresto collar, it stays on,” says Dr. Zavaro. "I also wanted a tick product for cats.”
Get Buy-in From Staff
Before introducing Frontline Tritak, Dr. Madigan had his Merial representative train staff on the product. At a second meeting, staff members discussed client education, pricing and marketing. Dr. Madigan created a decision-making tree to guide employees on which preventive to recommend based on patient need. Frontline Tritak is the first choice for flea-allergic pets, flea infestations or tick concerns. If clients want year-round flea control, he reaches for Trifexis or Revolution for Cats.
When considering Seresto, Dr. Zavaro had a lunch-’n’-learn for employees with his Bayer rep, and then had staff use the product on their own animals before rolling it out to clients. "Your staff has to believe in the product,” advises Dr. Zavaro.
Set Pricing Strategies
Because preventives, NSAIDs and long-term drugs are shopped items, offer competitive prices. Research prices at area retailers, veterinary hospitals and online pharmacies.
According to the AAHA Veterinary Fee Reference, 7th edition, prescription drug markup averages 129 percent while heartworm preventives average 87 percent.
When setting prices, factor in the retail value of free doses and rebates. Retailers and online pharmacies don’t always cost less. At Animal Hospital of Smithson Valley, a three-pack of Frontline Tritak has a $15 coupon—lowering the retail price for a 44-pound dog from $45.05 to $30.05 or an average of $10 per dose.
A Seresto collar costs $75 for a 40-pound dog at Healthy Petz Veterinary Hospital. With the $20 manufacturer rebate, the price drops to $55 or an average of $6.88 per month. Dr. Zavaro priced the collar similar to six-packs of flea/tick topicals.
Have a Marketing Plan
Inventory is not an investment that appreciates over time. Your goal is to buy products and sell them as quickly as possible. A marketing plan is key to successfully launching a new drug. Many veterinarians fail to go beyond the brochures and point-of-purchase displays that pharmaceutical reps provide.
Use a combination of internal and external promotions such as:
• Email blast to clients
• Featured on your website home page as "what’s new” and in your online store
• In-clinic brochures, exam room posters and point-of-purchase displays
• Facebook promotion (be sure to follow Facebook rules)
• Message on hold
• Refill reminders in your practice-management software
• Footers on invoices, postcards and email reminders
• Marquee or yard signs
Discuss sales goals with staff. Measure your progress at 30, 60 and 90 days. After 90 days, evaluate clients’ acceptance of the new product and whether it should continue to be part of your inventory. Every three to four months, Washington analyzes product sales at Betty Baugh’s Animal Clinic and has doctors reassess whether they want to continue carrying slow sellers.
Adding a new drug could delight clients, but make sure you’ve made an informed decision and created a marketing plan so your practice equally benefits.
Next issue: Selling the value of diagnostics
Wendy S. Myers owns Communication Solutions for Veterinarians and is a partner in Animal Hospital Specialty Center, a 10-doctor AAHA-accredited referral practice in Highlands Ranch, Colo. She helps teams improve compliance and client service through consulting, seminars and webinars. You can reach her at firstname.lastname@example.org or www.csvets.com.
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