(A Green Circle Capital White Paper)
by Bakley Smith, CFA, Director – VMS, Green Circle Capital Partners
October 2021 ©
Takeaways
- Leading companies in the practitioner channel have taken corrective actions against the threat of unauthorized online re-sellers, or what we call “channel bleed.”
- Coupled with strong tailwinds, including the behavior changes related to COVID-19, the sector may be poised for continued robust growth.
- The leaders in the channel must continue to iterate and strengthen their position against the threat of unauthorized online resellers. They must also work to broaden the definition of the channel to adapt and change with constantly evolving consumer behavior.
- The industry needs a way to track and report sales via medical practitioners. It is currently held back by the lack of an AC Nielsen or SPINS-like data service.
What Is the Practitioner Channel?
The practitioner channel, as traditionally defined, is a sales route for dietary supplements where the seller (or retailer) is a practicing doctor, nutritionist, or other accredited healthcare practitioner. These products, though sold through the practitioner channel, are still regulated by the FDA as dietary supplements and are not FDA-approved as pharmaceuticals. They do not require prescriptions or the involvement of pharmacists as required for prescription pharmaceutical products. Practitioners traditionally buy the products directly from manufacturers at wholesale prices, and then sell the products to their patients, either in their clinics or via dedicated online dispensaries. We should note that some leaders in the space see the frame more broadly – they include products sold on the 2 recommendation of a practitioner, but not necessarily by the practitioner as part of practitioner brands’ opportunity set.
While we know that practitioner sales represent billions in annual revenue…