Pet Med Outsourcing: PE’s New Doggie Bag: Not only recently but also In 2009 Huntington Capital invested in Eaton Veterinary Pharmaceutical Inc. d/b/a as Roadrunner and estimated the veterinary compounding business to be a $125 million dollar business and growing--so how much money does veterinary compounding bring in these days; and if Eaton was filling 800 to 900 prescriptions a day and shipping them around the country to 9000 nationwide clinics in 2009 (which grew to 11000 in 2012) why isn't Congress dealing with Veterinary compounding in the current legislation?

• October 29, 2009, 5:14 PM

By Beina Xu

Attention, investors: there’s a new emerging market.

Veterinary compounding pharmacies. Put simply, they’re outsourced medication pharmacies that compound, or adjust the size and dosage, of drugs for your pets. And it’s caught the attention of one mezzanine firm.

San Diego-based Huntington Capital invested a mezzanine loan in Phoenix-based Eaton Veterinary Pharmaceutical Inc., or Roadrunner Pharmacy, which specializes in compounding back-ordered and discontinued pet medications. Partner Tim Bubnack said the commitment was on the low end of the firm’s typical sweet spot of $1.5 million to $5 million.

“It’s a business that’s grown fairly quickly in a market that’s really emerging right now,” he said. “People want better products for their pets, and they’re willing to pay for them.”

Eaton fills 800 to 900 prescriptions a day and ships them around the country. The company will use the growth capital to expand its sales team and develop of its own assortment of in-house drugs that will undergo tests through clinical trials, Bubnack said. Eaton, founded in 1999, sells to over 9,000 veterinary clinics nationwide.

The market for pet medication compounding is a bit tough to measure as many vets still handle the process themselves, instead of outsourcing, but Huntington estimates it to be approaching $125 million and growing. Bubnack says vets are finding it increasingly difficult and costly to carry large inventories of drugs. “They’re there to treat the animal, not build a business around prescriptions,” Bubnack said.

“They’re moving away from handling that in-house to the outsourcing model.”

The trend has also been propped up by the increasing complexity of pet medications, including modifications for specific breeds, Bubnack said. “The regular off the shelf drug might be right for the cat you have, but maybe not for the pit bull down the street.”

quoted from here