SERVICING THE CUSTOMER
The New Collaboration
Vendors and Research
by Jay Martin
Posted December 22, 2000 · Issue 93
FROM: news.bmn.com
Abstract
Scientific vendors are doing a lot more than just vending. In this article, the author explores the new relationship labs have with vendors and how it benefits scientists.
Bagels and orange juice in the hallway is a sure sign a sales rep from a scientific vendor is introducing new products to the lab. Most grad students would assume that the wisest course is to "stick with what works." Let the other grad students try out the latest kit from a sales rep, says one graduate student. Few life scientists will turn to a vendor for inspiration - or will they?
There are, in fact, signs that some vendors do more in a lab than simply vend. "I sensed a real change," says Timothy Dawes, associate director of bioautomation at Chiron Corporation. A vendor worked with Dawes to make robotic amplification and purification of clones in 384-matrix arrays faster and cheaper. This vendor was not just trying to sell everything from his catalog. He was, in effect, telling Dawes, "We want to be a company [to work] with you. Here are some solutions from us."
Several recent interviews with vendors and their customers suggest that the traditional seller-buyer relationship is indeed changing for the better. It is becoming a more cooperative relationship between sales reps and end users, a closer relationship that could spell a major change in the scientific-goods marketplace. Life scientists who recognize this trend stand to accelerate their work in, for example, gene discovery and protein characterization while they cut their lab costs.
Growing competition to sell emerging technologies is driving its own marketplace breakthroughs. Online information indicates that the competition among scientific-supply vendors is very healthy. According to Morningstar.com, an online financial information source, the top ten scientific-equipment and reagent suppliers captured more than $42.4 billion in sales worldwide during a recent twelve-month period and a total market cap of $81.5 billion. There are no fewer than twenty competitors vying to sell scientific equipment.
Universities and big pharmaceutical and biotech companies are pushing this competition among vendors even harder. According to Cathy Smith, manager in contract manufacturing at Chiron, prices for lab goods and services are negotiated in a triangle of conflicting needs between vendors, scientists, and institutions. Smith says, "Vendors strive to become sole sources [of equipment and reagents] to a lab." Scientists, however, insist on "full access to a broad spectrum of supplies" to do their experiments. But corporations and universities push for "vendor consolidation," which means entering into cost-cutting contracts with as few vendors as possible. If a biotech company, for example, decreases the number of vendors servicing the institution from, say, ten to five, the institution may be able to negotiate healthy price concessions because of the increased volume of goods sold to the institution by the remaining vendors.
When institutions capitalize on this competitive triangle, life scientists enjoy not only significant price breaks but also greater exposure to new technologies from vendors. Due to vendor consolidation, many institutions are now typically negotiating price breaks with one or two distributors. (Distributors, who supply a broad range of goods from different manufacturers, may also manufacture their own products.) At the same time, institutions are restricting lab access - fewer sales reps are admitted than those that were just a few years ago. As a result of vendor consolidation and limited access, a growing number of manufacturers, such as Brinkmann Instruments and Corning, are partnering with big distributors, such as Fisher Scientific and VWR Scientific Products, to get into labs and ramp onto national distribution systems.
Lab workers can take advantage of the distributor-manufacturer partnerships when partnered sales reps try to maximize their exposure to less accessible labs. For example, Ann Magida, sales representative for Brinkmann Instruments, says access to labs is as valuable to her as the discounts her company offers. When she visits labs with the Fisher rep, she tells customers about pipettor trade-ins, which are now aggressively copied by Brinkmann's competitors.
The changing marketplace in the life sciences has given rise to two different kinds of products. Clontech Laboratories territory manager Annick LeGall distinguishes them. The first is scientific staples. Selling these, she says, is the same as selling other commodities. Like corn or computers, anyone who knows the business can sell them in quantity at a discount. The other class of products is technology- or process-driven. To sell technology takes more educated sales people. All of the sales reps at Clontech, for instance, hold Ph.D.s. Life scientists can now work with sales people who in some situations could be their mentors.
"Biologists are clamoring for straightforward solutions to technical problems," adds Chiron's Dawes. He illustrates one way in which vendors will go to great lengths to cooperate with researchers. It is not just offering special deals during their visits - they want to sell their customers complementary technologies over the course of a long-term relationship. Dawes describes how Beckman Coulter suggested using Millipore technology to amplify and purify PCR products in one-half the time compared to a competitor's technology. Pauline Lee, a research associate at Chiron, says that the ongoing partnership with Amersham for microarray technology has made Chiron one of Amersham's bigger customers for those products. Because of these ongoing relationships between Chiron and vendors, the company has significantly reduced the time and costs of clone amplification and high-throughput screening.
If vendors and scientists partner to find the best processes for projects rather than the best prices for commodities, "labs will become more interested in the total cost of a process rather than in the cost of an individual component of the whole process," says Tom Blackstock, sales associate at Beckman Coulter. Competition to sell processes will likely drive down the costs of doing life sciences. The deal between the National Human Genome Research Institute and the PE Corporation for gene sequencers is perhaps the best example of the evolving relationship between vendors and scientists, a relationship of technology transfer.
The question remains: If life scientists are limited to fewer vendors for technologies of limited availability due to cost or intellectual-property concerns, will this new marketplace hinder cooperation among scientists?
"E-commerce," Blackstock claims, "will fundamentally change the way customers choose products." Online commerce could make science a lot easier for nearly everyone. The Internet already plays a role in the convergence of computers and biology. After all, BLAST searches on the entire human genome are common. But Blackstock and others claim that ecommerce will do much more than merge two disciplines: It will empower researchers. The Internet will save them time and offer a universe of choices for products.
Chemdex is one vendor that maintains that the life sciences should be as much online as on the bench. Chemdex and its chief competitor, SciQuest, pioneered online buying of scientific supplies. David Weber, vice president of marketing at Chemdex, says that the company's fourth-generation procurement software promises to make buying lab supplies a "secondary" consideration for Chemdex and for life scientists. Through ecommerce, says Weber, Chemdex "will create a marketplace that will facilitate science [and] collaboration among scientists."
Chemdex will try to turn the traditional sales rep-life scientist relationship on its head. Instead of a sales rep pitching wares to a life scientist, the researcher will buy what she needs through an "invisible" portal on the Internet. Chemdex already supports the Doubletwist.com genomics portal, so a scientist can buy clones, arrays, and primers needed after an online genomic search on Doubletwist. The next step in ecommerce will be "contextual commerce." It will allow a scientist to order in a click or two all of the reagents and equipment needed to perform any experiment described in a "Materials and Methods" section of a competitor's paper.
In the end, an unseen web of vendors will offer the ultimate collaboration among life scientists as pervasive as the Internet.
Jay Martin is a full-time technical writer at Genentech. He also writes for several life-science and medical Web sites.
Julia Kuhl has done illustrations for the New Yorker and the New York Times, among others. She now lives in Heidelberg, Germany, with her neurobiologist husband and is working on a comic book - a Fulika atra (coot) version of Shakespeare's Hamlet.
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