The Competition and Markets Authority (CMA) has initiated a comprehensive review of veterinary services within the UK. This stems from growing concerns that pet owners might not be fully informed or receiving value for their money when seeking vet services for their household pets.
Currently, the veterinary market in the UK is valued at over £2 billion. The CMA’s review aims to determine the effectiveness of this market for pet owners, especially in terms of whether they are presented with necessary information at the appropriate time for the best possible care for their pets.
An evident surge in pet ownership has been observed during the Covid-19 pandemic, with nearly two-thirds of UK households now owning a pet. In this context, the CMA has expressed worries that pet owners might not easily access crucial information about pricing and treatment options. This makes it challenging for them to make well-informed decisions about veterinary services. Further intensifying this concern is the observation that vet services’ costs have outpaced the rate of inflation. The CMA intends to delve into this matter as a segment of its review.
It’s noteworthy that the landscape of vet practice ownership has witnessed significant shifts in recent times. In 2013, 89% of the veterinary sector in the UK comprised independent practices, a figure that dwindled to roughly 45% by 2021. It’s not uncommon today for a single firm to own numerous practices. Consequently, it might not always be transparent to the public if a vet is associated with a larger conglomerate.
A lack of awareness that a vet is part of a larger entity owning multiple other vet practices in a locality could influence pet owners’ decisions. Such scenarios might diminish the motivation for local vet practices to maintain competitive standards.
The CMA is eager to gather insights regarding:
- Awareness and clarity about the pricing of services and payment methods.
- The arrangement and sale of pet prescriptions and medication.
- The process of selecting a vet surgery and understanding its ownership status.
- The accessibility and choice of out-of-hours and emergency vet services.
Sarah Cardell, chief executive of the CMA, emphasised the financial strains that can arise from caring for a sick pet. She noted, “Caring for an ill pet can create real financial pressure, particularly alongside other cost of living concerns. It’s really important that people get clear information and pricing to help them make the right choices.” Ms Cardell also highlighted the recent consolidations in the vet industry and the urgency of the review.
The CMA invites feedback from a wide range of individuals and entities including pet owners, veterinary surgeons, veterinary nurses, practice managers, and veterinary businesses. Interested parties can share their insights through the dedicated case page.
Further insights regarding the review, its identified issues, and proposed future actions are slated to be released by the CMA in early 2024.
CVS and Pets at Home Share Price Tumbles
One immediate impact of the announcement was to wipe 11% off the share price for Pets at Home Group PLC (LSE:PETS), the owner of Companion Vets Care and Vets4Pets. The price feel from around 380 to 340 per share before recoving a little and by the end of the week it was trading around 348.
Analysts at Shore Capital argued that Pets at Home, which brings in a third of its profits from veterinary services, is a “disruptor” to the industry and is instead a “leader in affordable pet care” rather than a perpetrator of sky-high prices.
“Pets at Home has actively sought to innovate within the veterinary sector, exemplified by the Vets4pets care plan—a cost-effective scheme covering routine care and insurance,” the capital markets group said.
“Furthermore, PETS adopts a more conservative investment approach per clinic, which mitigates the pressure to deliver immediate returns, distinguishing it from its corporate-led peers.”
Shares in CVS Group, which owns around 500 vetinary practices, also fell 29.1% following the announcement.
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