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transcript
AAHA State of the IndustryClose-Up Look at
2010 Purchasing Behavior
Copyright © AAHA 2011
MEDIMEDIA CONFIDENTIAL INFORMATIONMEDIMEDIA CONFIDENTIAL INFORMATION
Summary
• Veterinary Industry has been impacted by the Recession
• Avg. revenue decreased in 2009 vs. 2008
• Most hospitals experienced a decline in revenue for 2009
• Hospitals that experienced revenue increases were due to avg. increase per invoice, not increased
patient visits
• Revenues decreased across many categories
• Elective surgeries
• Flea/tick and HW sales
• Client visits
• Dentistry
Page 2
Summary
Industry results for 2010
• Unique patient visits declined by -1%
• Overall revenue increased 3%
• 42% of practices experienced a decline in overall revenue,
while 58% of practices experienced an increase in revenue
• Key categories Flea/tick and Heartworm experienced
declines
2
MEDIMEDIA ANIMAL HEALTH CONFIDENTIAL INFORMATION
Market Research
3
Research results provided by VetInsite Analytics
• 2261 Veterinary hospitals
•10+ Million pet records
•Sample population throughout the US
Market Research
• 3800+ U.S.Veterinary Practices (30 Canadian)
• 19+ Million pet records
• Sample population throughout North America
3
MEDIMEDIA CONFIDENTIAL INFORMATION
Economic Results: Average visit Charge
Source: VetInsite Analytics Page 4
• Average increase in average invoice
charge was 1.1%
• Changes in average invoices ranged
from -21% to +28% in 2009.
Commentary: Practices increased prices to compensate for reduction in patient visits in 2009.
Economic Results: Gross Revenue
Source: VetInsite Analytics Page 4
• Average decrease in gross revenue
was -3.8%
• 61% of all clinics experienced a
decrease in revenue.
• Practice revenue change ranged
from -34% to +57%.
Commentary: In 2009 a majority of clinics experienced a decline in overall sales revenues.
US Unemployment & Retail Sales
Source: Blytec.com
The US economic recession is exhibiting evidence of improving:
• Unemployment has stabilized from it’s peak at 10% in December 2009 and
has been reduced to 9.4% in December, 2010.
• MAT retail sales dollars trends have been improving during 2010 and are
positive (+1.4%) over the latest MAT (12/2010).
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
10.5
Oct-
08
Nov-0
8
Dec-0
8
Jan-0
9
Feb-0
9
Mar-
09
Apr-
09
May-
09
Jun-0
9
Jul-09
Aug-0
9
Sep-0
9
Oct-
09
Nov-0
9
Dec-0
9
Jan-1
0
Feb-1
0
Mar-
10
Apr-
10
May-
10
Jun-1
0
Jul-10
Aug-1
0
Sep-1
0
Oct-
10
Nov-1
0
Dec-1
0
%Civilian Unemployment Rate (%)
-10.0%
-7.5%
-5.0%
-2.5%
0.0%
2.5%
5.0%
7.5%
10.0%
MAT % Change vs YAGO
Real Discretionary Retail Sales ($)
4
MEDIMEDIA CONFIDENTIAL INFORMATIONMEDIMEDIA CONFIDENTIAL INFORMATION5
Industry Economic OverviewIndustry Economic Overview
5
Practice Patients & Revenue % Dog vs. Cat
Source: VetInsite Analytics, MAT December, 20106
70.4%
79.1%
29.6%
20.9%
# Pets Revenue
Dogs Cats
Economic Results: Gross Revenue
Source: VetInsite Analytics Page 7
• Average decrease in gross revenue
was -3.8%
• 61% of all clinics experienced a
decrease in revenue.
• Practice revenue change ranged
from -34% to +57%.
Commentary: In 2009 a majority of clinics experienced a decline in overall sales revenues.
Economic Results: Gross Revenue
• 58% of all practices experienced an increase in revenue.
• 42% of all practices experienced a decrease in revenue
7 Source: VetInsite Analytics
% Revenue Growth in Practices
2010 vs. 2009
8.6%5.8% 5.7% 7.5%
8.9%10.9% 11.4%
14.4%
3.1% 5.2%7.9%
10.6%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
< -5% -5% to 0% 0% to 5% > 5%
Small <$1M Medium $1M-$2M Large >$2M
32.5%
20.6%21.9%
25.0%
MEDIMEDIA CONFIDENTIAL INFORMATION
Economic Results: Gross Revenue
Source: VetInsite Analytics Page 8
• Average decrease in gross revenue
was -3.8%
• 61% of all clinics experienced a
decrease in revenue.
• Practice revenue change ranged
from -34% to +57%.
Commentary: In 2009 a majority of clinics experienced a decline in overall sales revenues.
Economic Results: Gross Revenue
• 58% of the AAHA clinics increased revenue during 2010
8 Source: VetInsite Analytics
19.5%
22.5%
26.8%
31.3%
21.2% 21.4%23.7%
33.7%
0%
5%
10%
15%
20%
25%
30%
35%
40%
< -5% -5% to 0% 0% to 5% > 5%
AAHA All Other
Patient MAT Trend vs. Year Ago
9 Source: VetInsite Analytics
-0.9%
-5.0%
-3.0%
-1.0%
1.0%
3.0%
5.0%
Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10
Total Patient MAT Trend
% Change vs. YAGO
December 2010 MAT patient change vs. 2009 is -0.9%
Revenue MAT Trend vs. Year Ago
10 Source: VetInsite Analytics
3.1%
-5.0%
-2.5%
0.0%
2.5%
5.0%
Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10
Total Revenue MAT Trend
% Change vs. YAGO
December 2010 MAT revenue change vs. 2009 is +3.1%
MAT Trend vs. Year Ago
11 Source: VetInsite Analytics
3.1%
1.4%
-10.0%
-7.5%
-5.0%
-2.5%
0.0%
2.5%
5.0%
7.5%
10.0%
Jan-10 Feb-10 Mar-10 Apr-10 May-10Jun-10 Jul-10 Aug-10Sep-10 Oct-10 Nov-10Dec-10
Vet Channel Revenue Total US Real Disc. Retail $
MAT Trend
% Change vs. YAGO
MEDIMEDIA CONFIDENTIAL INFORMATION
Economic Results: Average visit Charge
Source: VetInsite Analytics Page 12
• Average increase in average invoice
charge was 1.1%
• Changes in average invoices ranged
from -21% to +28% in 2009.
Commentary: Practices increased prices to compensate for reduction in patient visits in 2009.
Economic Results: Gross Revenue
Source: VetInsite Analytics Page 12
• Average decrease in gross revenue
was -3.8%
• 61% of all clinics experienced a
decrease in revenue.
• Practice revenue change ranged
from -34% to +57%.
Commentary: In 2009 a majority of clinics experienced a decline in overall sales revenues.
Economic Results: Average Transaction Charge
Average transaction charge is 20% greater for Dogs compared to Cats in 2010
12 Source: VetInsite Analytics, MAT December, 2010
$109.26$90.73
Dog Cat
2010 Avg. Transaction Charge
% Dogs Purchasing HW from Veterinarians 2010
Total US % Dogs purchasing HW during 2010 is 37%
Mountain
20%
West
18%
Texas
47%
Mid Atlantic-SE
41%
Northeast
39%
Great Lakes
43%
Midwest
37%
FL
42%
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% Dogs Purchasing Flea/Tick from Veterinarians
Total US % Dogs purchasing FT during 2010 is 33%
Mountain
6%
West
23%
Texas
40%
Mid Atlantic-SE
41%
Northeast
33%
Great Lakes
33%
Midwest
35%
FL
44%
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% Cats Purchasing Heartworm from Veterinarians
Total US % Cats purchasing HW during 2010 is 13%
Mountain
3%
West
9%
Texas
20%
Mid Atlantic-SE
17%
Northeast
8%
Great Lakes
13%
Midwest
11%
FL
20%
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% Cat Purchasing Flea/Tick from Veterinarians
Total US % Cats purchasing FT during 2010 is 24%
Mountain
4%
West
22%
Texas
29%
Mid Atlantic-SE
30%
Northeast
21%
Great Lakes
23%
Midwest
24%
FL
31%
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-4.3%-6.8%-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Flea & Tick Heartworm
Category Dose % Change2010 vs. 2009
Flea/Tick and Heartworm Doses Trend
Average Annual Doses (2010)
18 Source: VetInsite Analytics, MAT December, 2010
• About 30% of both dog and cat patients are dispensed 6 doses of
FT and HW on an annual basis
• For cats only 6% of FT and 9% of HW patients are dispensed 12
doses/year
Annual Doses % PatientsFT Dog FT Cat
1 19.9% 28.6%
3 14.0% 14.0%
6 29.9% 26.0%
12 10.3% 5.6%
Other 25.9% 25.8%HW Dog HW Cat
1 8.5% 27.5%
3 5.5% 9.9%
6 32.0% 29.7%
12 36.8% 8.8%
Other 17.3% 24.1%
Puppy MAT Doses by Month
19
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
FT HW(M)
Source: VetInsite Analytics, MAT December, 2010
• Both FT and HW categories are experiencing a decline in MAT
puppy doses
Kitten MAT Doses by Month
20
-
1.0
2.0
3.0
4.0
5.0
6.0
FT HW(M)
Source: VetInsite Analytics, MAT December, 2010
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• A study yielded 2234 total complete responses
• 1272 dog owner respondents
• 962 cat owner respondents
• The study was fielded December 2010.
• Margin of Error:
• Dog owners +/- 2.8%
• Cat owners +/- 3.2%
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Alternative Channel Shopping Behavior
Veterinary Channel
32%
Alternative Channel
39%
Both Alternative
and Traditional Channels
29%
Veterinary Channel
44%
Alternative Channel
28%
Both Alternative
and Traditional Channels
28%
Veterinary Channel
39%
Alternative Channel
32%
Both Alternative
and Traditional Channels
29%
Dog Owners
Cat Owners
Base: All Respondents (dogs n=1272) (cats n=962)22
Flea/Tick, HW, NSAID purchases
―Veterinary Channel‖—purchased exclusively from their veterinarian during the P12M.
―Alternative Channel‖-- purchased products from locations other than a veterinarian during the P12M.
―Both Alternative and Veterinary‖-- made at least one purchase from a veterinarian and an alternative
channel during the past 12 months.
Alternative Channel Shopping Behavior
Expected Purchase of F/T, HW in the next 12M
93% B
2%
2%
1%
0%
1%
0%
Veterinary Clinic
Pet Specialty Store (Such as PETCO or PetSmart)
Online Pet Store or Pharmacy (Such as 1-800 PetMeds)
Mass Merchandiser or Discount Store (Such as Walmart or Target)
Grocery Store
Club Store (Such as Sam's Club or CostCo)
Pharmacy
Traditional Channel(n=392) (A)
Q4. Still thinking about the coming year, from which location do you expect you will purchase the majority of your flea/tick medication(s)?
Base: Purchased Flea and/or tick medication for Dog (n=1053)
Base: Purchased Flea and/or tick medication for Cat (n=888)
91% B
6%
1%
1%
0%
0%
0%
Veterinary Clinic
Online Pet Store or Pharmacy (Such as 1-800 PetMeds)
Pet Specialty Store (Such as PETCO or PetSmart)
Mass Merchandiser or Discount Store (Such as Walmart or Target)
Grocery Store
Club Store (Such as Sam's Club or CostCo)
Pharmacy
Traditional Channel(n=264) (A)
Dog Owners Cat Owners
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9-in-10 Veterinary Channel buyers indicated they expect to continue to purchase from the
veterinarian. Among those who have made at least one purchase through an alternative
channel, relatively few indicate intention to purchase from a veterinarian.
Source Ever Consulted for Flea and/or Tick
Medication
84% B
36% B
10%
6%
7%
0%
1%
0%
2%
54%
25%
27% A
22% A
18% A
5% A
2%
1%
17% A
74%
39%
20%
16%
15%
0%
2%
1%
12%
Veterinarian
Veterinary Technician
Friend or Colleague
Pet Store Employee
Web site
Mass Merchandiser/Discount
Store Employee
Pharmacy Employee
Grocery Store Employee
Other/None-of-the-above
Traditional Channel(n=392) (A)
Alternative Channel(n=316) (B)
Both Alternative and Traditional Channels(n=345) (C)
Q8. Which of the following sources have you ever consulted with or used to help determine which specific brand of flea/tick medication you should purchase?
Base: Purchased Flea and/or tick medication for Dog (n=1053)
Base: Purchased Flea and/or tick medication for Cat (n=888)
87% B
45% B
9%
3%
8%
0%
0%
0%
0%
54%
27%
29% A
23% A
19% A
3% A
2% A
3%
16% A
78%
51%
27%
27%
23%
8%
8%
5%
4%
Veterinarian
Veterinary Technician
Friend or Colleague
Pet Store Employee
Web site
Mass Merchandiser/Discount
Store Employee
Pharmacy Employee
Grocery Store Employee
Other/None-of-the-above
Traditional Channel(n=264) (A)
Alternative Channel(n=356) (B)
Both Alternative and Traditional Channels(n=268) (C)
Dog Owners Cat Owners
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Regardless of segment, veterinarians and veterinary technicians are the most frequently
consulted source on flea/tick medication. Among those who purchase from alternative
channels, friends/colleagues are a leading source, followed by pet store staff and/or websites.
Degree of Influence of Source for Flea and/or
Tick Medication – Dog Owners
88% BCD
67% CD
25%
32%
40%
12%
32% A
70% AB
62% AB
57%
1%
1%
5% AB
6% AB
3%
Veterinarian(n=760) (A)
Veterinary Technician(n=358) (B)
Pet Store Employee
(n=143) (C)
Web site(n=137) (D)
Friend or Colleague
(n=190) (E)
A high degree of influence A moderate degree of influence Very little or no influence
Q9. [GRID SUMMARY] Please indicate the degree of influence each of the following sources have on the brand of flea/tick medication you purchased?
Base: Consulted with a source
In terms of influence over brand purchased, veterinarians and veterinary technicians are by far
the most impactful when it comes to flea/tick purchases.
Associations with Purchasing Pet Health
Products from your Veterinarian (Dog Owners)
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TOTALTraditional
Channel
Alternative
Channel
Both Alternative
and Traditional
Channels
Positive (Net) 68% 80% 44% 72%
Experts/ they know what's best for my pet 27% 32% 19% 27%
Trustworthy 11% 13% 6% 12%
Good/ quality products 8% 9% 6% 10%
Receive good/ helpful advice 6% 6% 4% 6%
Comforting/ I have confidence in them 5% 8% 2% 3%
The vet knows my pet/ my pet's history 5% 8% 2% 3%
Safety/ security 5% 6% 2% 5%
Negative (Net) 32% 15% 50% 40%
Costs more than other places 15% 8% 23% 18%
Expensive 14% 5% 25% 19%
Q20. What, if anything, do you associate with purchasing pet health products from your veterinarian?
Base: All Respondents (dogs n=1272)
When asked open-ended for specific associations with purchasing pet health products from
veterinarians, dog owners were more likely to have positive mentions (68%) than negative
mentions (32%)
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Conclusion
• Overall revenues increased slightly while unique
patient visits declined slightly
• Cats represent an opportunity for growth
• Your clients are very aware of alternative channels
for purchasing products and this trend will continue
• Veterinarians and staff are viewed as a trusted
source and have a significant degree of influence
• Veterinarians must actively communicate and
educate their clients to strengthen this relationship
and continue to add value
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