Strategy #4. Identify Hot Spots
As we wrap up our series on competing in 2012, let’s have a look at markets where innovation is occurring and where the money is being spent.
Flat or decreased public and private sector funding will not affect all parts of the market equally. Whether one visualizes the market by discipline, area of research, application, or geography—“hot spots” can be found. Public funding of life science research has increased by a modest 3% per year since the legislatively-mandated doubling of the NIH budget was achieved in 2002. Yet during this time many suppliers were still able to grow revenues at double-digit rates by being better positioned in both regions and applications.
Top-tier private universities in the US will likely continue to be funded at rates higher than many state universities. Some state-funded initiatives such as the Cancer Prevention Institute of Texas and private foundations like the Howard Hughes Medical Institute’s new campus at Janelia Farms in Virginia will be able to exercise impressive spending power. In general, we anticipate that research programs requiring genetic analysis tools and in particular, next-generation sequencing and related tools, will capture an above-average percent of public sector funding.
Contract Research Organizations (CROs) have evolved into a distinct market segment for life science products as the pharmaceutical industry continues to outsource research projects. Numerous life science suppliers are enhancing their product portfolios to support the growing sectors of ADMET, drug discovery and analytical development and for the research area-specific tools. In addition, customized solutions to address critical areas of therapeutic research (primary areas of interest include Immunology, Oncology, CNS and Cardiovascular disorders) will provide a solutions-based approach to enhance partnerships with the CROs.
Regional differences will also be apparent. Despite some decreases in funding in India and Australia, the Asia-Pacific market is expected to remain strong, driven by vibrant growth inChina, Singapore and South Korea. Life science suppliers will experience unique issues in each these regions and need to be prepared to react appropriately to each market in terms of marketing, sales and pricing. Sigma-Aldrich has implemented value pricing for sales of some products in the interior of China where customers have smaller budgets and expectations of lower prices than their counterparts in the eastern part of the country.
A cultural sensitivity to regional differences is also required: Life Technologies took a misstep when it began to add a direct sales force in China to its existing network of independent distributors. When some of the distributors learned they might not be part of Life Technologies’ plans they began destocking the company’s products leading to an $18 million drop in sales. The company has revised its strategy and is now back on track. Life Technologies, Sigma-Aldrich and others can also be expected to benefit from increased demand for high-quality cGMP products by China’s growing pharmaceutical industry as drugs sold in China are mandated to be produced within China.
Looking Forward to 2012
BioInformatics LLC has been providing market research to the Life Science Tools industry since 1997. Regardless whether your company is experiencing rapid growth, or looking for opportunities to reposition your current product lines, our experienced team of market researchers, scientists and strategists can help you find opportunities to sustain your growth.
That companies that will remain competitive throughout this time of uncertainty all share similar qualities: They are committed to innovation, to exploring new markets and to being responsive to a highly specialized customer set—the scientific consumer.
Our market research and advisory services can help you remain competitive in uncertain times. We can assist in benchmarking your performance against other companies to retain customers, predicting demand for your newly launched products to win share, highlighting which customers have the need and budget for what you offer to sustain sales andidentifying opportunities in clinical and other applied markets to expand the markets you serve. Give us a call.
