October 31, 2014

Profile of a public company in Florida

PetMed Express markets like an attack dog

Discount mail-order business PetMed Express tops $200 million in revenue. Consumers love it, but vets have never gotten over the competition.

Amy Keller | 6/26/2012
Marc Puleo
PetMed Express founder Marc Puleo stepped down from the company’s executive leadership team in 2005. [Photo: Miami Herald]

Traditionally, when a veterinarian prescribed medicine for Sparky or Fluffy, the animal’s owner would buy the medication — at considerable markup — from the vet.

The vets, to their great annoyance, lost their near-monopoly in 1996 after Marc Puleo, a Fort Lauderdale anesthesiologist, set up a discount mail-order pet pharmacy, PetMed Express (more commonly known as 1-800-PetMeds) and began selling pet medications, along with flea and tick preventatives like Advantage and Frontline, for up to 25% less than what veterinarians charged. Sales spiked further after big pharma began to venture into pet medicines — in 2007, for example, Eli Lilly launched a version of Prozac for dogs.

Players in the $3.8-Billion Pet Medication Market
67%
Veterinarians
22%
Brick-and-mortar retailers
6%
PetMed Express
5%
Other online/mail-order retailers
Note: Figure includes over-the-counter and prescription drugs for pets only and does not include medications used only in a veterinary hospital setting, such as anesthetics.

Today, PetMed Express, based in Pompano Beach, has grown into an economic monument to the importance Americans put on the health of their animal companions. In 2010, the company’s annual sales reached $238 million.

Many vets still see that revenue as money that ought to be going into their pockets, however, and resentment lingers. A group of veterinarians protested after PetMed Express signed up to be an exhibitor at the 2012 North American Veterinary Conference in Orlando, calling it a slap in the face of the veterinary community.

The company withdrew from the event but participated in a panel discussion at which the veterinarians aired their concerns. The company’s director of marketing told the group it has removed negative references to veterinarians from marketing materials and says its has plans to create a veterinary advisory panel that would screen the firm’s ads.

Since many pet pharmaceutical companies will sell their medicines only to vets, many veterinarians are suspicious about where PetMed gets its products.

PetMed Express won’t comment on where it gets its products but acknowledges in its annual report that because “substantially all the major pharmaceutical manufacturers have declined to sell prescription and non-prescription pet medications directly to us” it relies on “third-party distributors” for its supply.

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