BioTactics in Action: Start Page

Vol. 1, Issue 1
May 1998 

Index of Issues
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Online Newsletter for
Biotech Marketing and Business Development

Please visit this month's sponsor: Celebrus Consulting Group


Competitive Intellegence: Resources on the Web, Sharon Locken, President, Locken Information.

More Sales and Profits from Existing Customers.
Cay Villars, President, Market Value Concepts.

Importance of Brand: Research Products. Bill Kelly, President, BioInformatics.

Consolidation: New Marketing Strategies in Research Products.  An interview with Bruce Lehman, President, Lehman Millet, Inc.

BioTactics Parners program - how it benefits your business.

New Job Postings

border.gif (871 bytes) Consolidation: New Marketing Strategies for Thriving in Research Products, p 1.
an Interview with Bruce Lehman, Lehman Millet, Inc.
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The Life Science Industry has been following a solid consolidation over the last few years. What purpose does this serve the companies (and the customers) in Life Science?
t.gif (892 bytes)here is clearly a trend to widen the gap between the increasingly larger companies and the small companies. This trend mirrors the consolidation occurring throughout the health care industry. In diagnostics, devices, pharmaceuticals, hospitals and distribution, large companies are building more mass, a greater market presence. With regards to Life Science, consolidation appears inevitable, not only because of pricing pressure from more centralized purchasing and the fact that an increasing number of products are becoming "commodities,"but also due to the increasing pressure to innovate.

Consolidation provides for cost efficiencies, of course, the benefits of which should be found in growing R&D budgets or the bottom line ... or both. More important, perhaps, the deal-makers believe in strategically synergistic opportunities that can be gained from a variety of technology platforms. This should enable them to drive more innovation to market.

At the same time, small companies in the industry, particularly the drug discovery and development variations like Affymetrix, ArQule and Dyax, have done very well. They provide a wellspring of innovation that remains an essential element of true growth in the industry. Opinion leaders in the research community learn about innovation via literature, scientific meetings, and increasingly, the Internet, etc. not just from the field sales. Small companies can move quickly and are opportunistically responsive to thought leaders’ ideas for new products and process improvements. However, distribution and market reach is a challenge for these small companies. It is natural that they will continue to license their products, partner, or be sold to larger companies in order to reach their customers.

What are the key benefits to consolidation?
f.gif (900 bytes)or those who sit in the driver's seat of the consolidator companies, there is a greater ability to profitably respond to pricing pressures because major customers can realize economic benefit in the bundling of a broader portfolio and the opportunity to bring innovation to the distribution of products that can be provided by very large companies. At least as important, the larger players can come much closer to offering truly integrated total solutions to their pharmaceutical and biotech customers by bringing to them up and downstream integration in a way not done before. This should lead to more solid, defensible, longer term customer relationships than those simply based on price or single product innovation. However, there is concern among customers that consolidation will actually drive prices up.


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