Perception is Reality

Posted by Scott Provost, Percepta

It was a hectic close to 2010 which shows us that biotools industry is alive and healthy!  Though the future economic environment for the globe remains uncertain and public funding levels for life sciences in the US may plataue of or even dip in 2011, there were several things that we noticed at Percepta that we believe will be trending this year.  The short list of trends in no particular order is:

Trend #1 - biotools companies are increasingly looking to markets like China and Southeast Asia not just for manufacturing capabilities but also for sales revenue.

It is not surprising to see increasing interest in revenue growth in China and other Asian markets as breakneck economic growth in these geographies translates into research and development investments in academic, government and industrial life science laboratories.  Percepta recognizes the need to access current market information from these markets and is investing in the needed infrastructure now to meet the demand for market research and market intelligence in 2011 and beyond.   

Trend #2 - personalized medicine is real and growing and will require more companion diagnostics biotools.

The promise of the genomics revolution a decade ago is coming to fruition.  Pharmaceutical and diagnostic companies are now entrenched in the process of segmenting their drug markets and developing companion diagnostics to accompany there lead drug candidates whenever possible.  In doing so they are relying more and more on molecular methods and technologies common in biotool portfolios as a means to get regulatory approval as well as revenue.  This will open new application markets for biotools companies as support organizations (CROs and companion diagnostics companies) add to market demand and create new growth.

Trend #3 - with the expiration of key patents in 2011 innovation (and growth?) in Q-PCR markets will be increasing.

Does this mean all need for licensing will vanish?  No.  But as the Haguchi patents wind down there will no doubt be increasing innovation around the Q-PCR field (See this article).  This could mean more enabling technologies that have been under development in the research community could become more commercially viable and spur on a new wave of growth in the amplification segment for both research and diagnostic applications.  Percepta will be watching this closely in coming months and years so keep an eye out for the next Nucleic Acid Amplification Life Science Dashboard.

These trends will be interesting to follow in this and coming years as the biotools market naturally evolves to meets the needs of the market.  Percepta looks forward to keeping track of it for you. 

As always, your comments are welcome (no spam please).

Posted by Scott Provost

In the recent few quarters Percepta has experienced an increase in demand for studies relating to better serving the pharmaceutical industry.  The focus of the studies have varied considerably but the trend is evident.  This tells us bio-tools companies are getting more serious about tailoring an offering to the drug discovery and development market that will resonate with the end-user. 

For years the pharmaceutical companies have been telling bio-tools companies that they have all the right pieces of the puzzle and they only need to put them together to form the picture they are looking for.  Are bio-tools companies putting the individual components of their portfolio together in new ways to position them for drug development applications?  Some are and with reasonable success.  Others are discovering that there are gaps that need filling - which is also good information with which to take action.  The important thing is they are asking the end-user what they need (market driven) rather than filling a catalog or website with a pile of products and hoping they figure it out for themselves.  As Seth Godin has pointed out in many ways and in many blog posts;  ”People are moved by stories and drama and hints and clues and discovery.”  Now bio-tool company marketers need to put it all together in a story that will speak to the pharmaceutical people.

Want help figuring out what your company may need to do?  Percepta can help.

As always, your comments are welcome.

Posted by Scott Provost, Percepta

What will be the next big thing to drive growth in the bio-tools industry?  Will it be epigenetics?  Gene regulation is now a focus of many drug development programs within the pharmaceutical industry.  The past five years have seen the genesis of many new companies dedicating their focus to products and services tailored to monitoring gene regulation by methylation, histone modifications, gene copy number monitoring, and non-coding RNAs.  Though the promise is genuine it may be a bit early for epigenetics to capture the title of the next big thing on it’s own. Stay tuned.  

Then there is genetic analysis which has been heating up considerably.  As genotyping and nextgen sequencing platform technologies battle for supremacy has there been a surprise flanking maneuver by Life Technologies with the announced acquisition of Ion Torrent?  Will this break open the market with affordable mid-scale benchtop sequencing? Or will 23andme make Illumina’s genotyping platform the topic of conversations around the dinner table?  Time will tell.

Finally, the personalized medicine revolution that seemed to reach the peak of industrial hype over a decade ago with the co-launch of the HercepTest and Herceptin (Dako and Genentech) is starting to live up to the promise.  Most disease has long been recognized to be multigenic in origin and treatments are frequently not a one-size-fits-all solution.  Pharma has now embraced the long resisted concept of segmenting their markets through the use of co-marketed drug/diagnostic combos that preselect for responsive populations for their latest drugs resulting in greater efficacy and actual improvements in health care.  This is a step in the right direction and the pharmaceutical industry, the health insurance industry and patients needing the new therapy will clearly all benefit.   Pharma will get more drugs approved and be able to charge more for them because they will have higher efficacy.  The insurance industry will happily pay because they will save through improved patient care and less (costly) trial-and-error ineffective treatment regimens, and patients will only get a drug if it is known to be effective for them and their particular form of disease resulting in more targeted, tailored and effective health care.  Virtually all drug candidates include accompanying biomarker programs that may lead to a co-developed diagnostic test and this may just be the next big thing for the pharmaceutical industry and the life science industries that serve it.  The only thing left to sort out is what the regulators will do.   Things are starting to get very interesting.

As always, your comments are welcome.

Posted by Scott Provost

We hear all the time that elements of traditional molecular biology reagent portfolios have become increasingly commoditized. Dictionary.com defines commodity as “any bulk good traded in an exchange…”. By that people generally mean that the reagent is not differentiated by anything other than price.  One bag of tips or tubes is the same as the next so why pay premium prices?  It is an argument that is not without its merits.  There probably are some research products that really are not differentiated.  However, I argue that they are few and far between and the exception and not the rule.  Let’s take the aforementioned tips and tubes example - have you ever used a lower cost tip that did not make a good seal on the Rainin multi-channel pippet? The volumes drawn are not consistent for all of the tips and it is visible evidence that is hard to ignore.  What about a micrrocentrifuge tube that pops its lid in a hot water bath?  Has that ever happened to you?  If it has I will bet you it was not from Eppendorf.  A commodity is not something that performs differently each time you use it.

Lets consider Taqpolymerase, a reagent that is used every day in hundreds of thousands of labs around the world.  It is notorious for being described as a commodity reagent.  Why pay more if Taq is Taq?  Sometimes that may be true.  If you only need 80% success in screening thousands of samples for presence or absence of a sequence then I would agree.  But if you need it to be a robust and reliable reagent for important experimental determinations then we all know one commercial Taq is not the same as the next.  So how do we know?  Branding.

Scientists often turn up their noses to issues of brand but such as response is ingenuine.  Of corse brand matters.  Evidence abounds!  The Taq polymerase patents began to expire 5 years ago and anyone can make and sell Taq.  But what company still sells more than anyone in all its various configurations and blends?  Life Technologies through its Applied Biosystems and Invitrogen brands (NASDAQ: LIFE). 

Greg Lucier, Chairman and CEO of Life Technologies undertands the value of brand.  In a recent quarterly investors call on July 29th 2010, investment analyst Jonathan Groberg of Macquarie Research asked Lucier the following question:  

“You’ve often talked about one of the strengths of the portfolio is that it’s not that price-sensitive, and in terms of when you tried lowering prices, it hasn’t really stimulated a lot of demand and that’s why you get … a lot of good pricing ability. Then I’m just curious, specifically within the PCR portfolio, have you tried that overtime? I’m just curious, there’s been … a lot of announcements around people trying to get more into that business. I’m curious just your view of how effective price is as a mechanism in the PCR space.”  

Greg Lucier’s response was all about brand when he replied:

“I think what gets highlighted in that particular space, is there’s a lot of the very low end reagents and otherwise. And actually, they’ve always been around, at least for the last several years, kind of the low end of that segment. We have products from that segment as well. So my comments really still pertain globally to this business, that the relationship between price and volume is not a direct connection …. And when you have market leadership like we certainly do in the PCR business, people are inclined to stay with their products, and so we benefited from that.” 

That is a practical example of the value of branding in the scientific reagents space.  Brand reputation is important to scientists whether they admit it or not.

Need help with branding?  Percepta can help you with a brand platform that will build equity for your reagent brands.   As always your comments are welcome (no blogspam please).

Posted by Scott Provost, Percepta

We see it over and over again.  Large bio-tools companies are often cited in surveys by market research participants as the suppliers of research products that they don’t even sell.  What is this telling us?  The cynical might think it means researchers are just clicking on buttons to get to the end of the survey - and we know that does sometimes happen.  But when all the other answers to all the other questions seem to make sense (i.e. not the pattern of random clicking) then it means something else is going on.  We at Percepta believe it is a function of brand awareness. 

Bio-tools companies that have very high brand awareness get more than their share of credit from the research community.  That is because these companies are “first to mind” for many researchers when making a mental list of who might have a specific product offering.  That perception may not even be accurate if the company does not sell that particular product, but brand awareness can bring potential customers to a web site before they even look at search engine results. 

So what’s a niche company to do?  You have the product the customer is looking for but they are looking on some big bio-tools company web site.  The error many smaller companies make is to focus too much on selling (tactics) and ignore completely brand.  That is because many people don’t understand the power of a brand platform.  The brand platform is the road-map to brand consistency.  It includes several important elements of your brand architecture and will guide all internal and external brand messages. Many may not remember when Invitrogen was a small and virtually unknown company - but 15 years ago that’s what they were.  They started a brand building campaign that began in the mid 90’s and continued to evolve as the company evolved.  Today as part of Life Technologies they are one of the most recognized brands in the industry.  Same story applies to the Qiagen brand.  They have consistently built on a brand platform that has allowed them to evolve but yet remain recognizable and true to their brand.

Unless your company has a plan to build a brand platform that will establish brand awareness, your cusotmers will continue to go to who they know.  In this game it’s not so much what or who you know - but rather who knows you?  If you want help building a brand platform for your biotools company, Percepta can help.   Your comments are welcome.

Posted by Scott Provost

Did you realize recently that the 1st quarter is over and you have not hit the revenue target?  If so, do you know why the company missed the number?  If you don’t know - is that your problem?  Is it someone else’ problem? 

What is the plan?  Is it panic time or do you know the next steps?   Does your R&D department lob new products over the wall at the Marketing and Sales Departments without any warning or are you pushing them for the long overdue product?  How does your job feel to you - is it a proactive role or a reactive role?

How you answer these questions can tell you a lot about your future. 

Bioscience companies need a plan. There should be a strategic planning process in place that happens every year on a schedule.  It should focus on long term plans (3-5 years) and short term plans (next 12 months).  Leaders from every department should be involved in this process - Marketing, Sales, R&D, Business Development, IT, Manufacturing, HR.  

Few companies do this but ALL need to.  Emphasis on ‘all’.  If you are staring at a missed revenue target at the end of Q1 something went wrong.  Be honest with yourself - was there a plan?

Years ago there was a book by Steven Silbiger call The Ten Day MBA.  Fine idea for its day.  I would like to give you the 21st century version.

Ten Second MBA: The PLAN should start with STRATEGY (Sell what to who…) and be followed by TACTICS (marketing plan) that play to your strengths and core capabilities and fit your budget.  Everyone needs to be on the same road and following the same road map.  Do this every year.

OK ten seconds is not enough time to learn much.  If you want some help getting started Percepta can help.

As always, your comments are welcome.

Posted by Scott Provost, Percepta

If you are in the business of selling research products to life scientists then chances are good you have probably sent out promotional information or conducted market research using email.  It is an efficient and cost effective way to reach lots of potential customers quickly.  If you are using your customer lists to communicate new products or promote special pricing via email then you are tapping into one of your most powerful resources - the people who have already proved they are interested by buying your products.  Well done.

However, your customer list may not always be the best choice for some activities for a variety of reasons.  Maybe you have questions and want answers from researchers other than your customers. You know the questions I mean - like who are you - what do you want? - and why aren’t you buying from me?  In that case the customer lists are not going to give you the answers you are looking for.  Many turn to third party rented emial lists from vendors that offer them for anywhere from a US$50 to US$500 or more per thousand email address names.   It all sounds like a great idea - and it would be except there is a great deal of difference in the quality of various life science lists when it comes to response rates and price is not necessarily a good indicator so caution is required.  Some are pretty good and some are just awful.  Beware of reports of high click through rates. Lets face it - “click throughs” are not all that good a measure of success.  You need answers, not click throughs!  A good quality list should deliver at least 1% response rates for a few hundred dollars per thousand names.

We conducted a little experiment last week and tried several rented lists for an online survey we were performing.  We chose to use a “list broker” - someone that consolidates life science lists.  We selected the categories we needed, paid in advance and they agreed to send our email invitations to roughly 11,000 rented names.   The invite we provided offered $25 in exchange for completion of a 10-15 minute survey.   When all was said and done we confirmed a total of 26 responses.  Put another way that is a 0.24% response rate!  That is not even one quarter of one percent!  We call that an “eFail list”. If you have had similar experiences give us a call and we will compare notes. 

Oh - and as a control (yes we are scientists as well as marketers here at Percepta) we sent out about 6,500 of the same invitation from the Percepta Panel, which we maintain for market research projects, and confirmed a total of 158 completed surveys which is a 2.4% response rate.  CAVEAT - Percepta normally gets about 10% response rates but this project was not perfectly in our sweet spot which is why we chose to source from 3rd party lists in the first place. 

The lesson here is just another version of Buyer Beware.  Maintaining a quality mail list is a lot of work.  People change jobs, change email addresses, sign-up even though they are not scientists.  Some lists also get blacklisted which means they have been SPAMMing.  All of this means your email never makes it to the researcher and then you don’t get the answers you need.  Instead you get “click-through rates”.   We at Percepta know it’s a big bad world and we work very hard to maintain our list and our response rates are a testament to the quality of the Percepta Panel.  We only give access to the panel through our Life Science Dashboard reports and commisioned projects.  We promise that if we conduct market research for your company we will give you answers and not click-through rates.

Your comments are always welcome.

Posted by Scott Provost, Percepta

There are times each year when our clients just need a little extra help to get things done.  There are a lot of reasons that this is true – internal staffing shortfalls, impending strategic planning, management pressing project time lines, initiative de jour  – you name it.  This of course always causes stress for the marketing manager that needs to get things done within a defined time frame. 

In a former life, when I was a marketing manager at a well known biotools company, I had a project that required some “voice of customer” market research and I had no one and no time to do it.  I looked externally for the help I needed and hired a large local consulting firm with a group that could conduct telephone interviews.  I learned the hard way that, while they were well meaning, they were not familiar with the biotools industry and I ended up working very hard to help them get the interviews done.  Even with that, they botched many of the interviews by mispronouncing the technical terms which looked bad and irritated the participants.  Worse yet, I learned too late that they missed the truly valuable customer cues because they didn’t know when or how to ask a follow up question.  They just blindly moved onto the next question like a robocaller.   It would have been better if I had done it all myself which sort of defeated the purpose of getting help.  

When you need help it really pays to get someone with specific experience.  Just because a plumber works on pipes and water doesn’t mean he is qualified to fix your hydraulic lift (if you had one).   Ok maybe that is an odd example but the point is - for biotools companies seeking help with things like strategic planning (including product development), brand development, market research, public relations and social media planning you need someone with the right experience.  These are NOT cookie cutter undertakings that just any old marketing consultancy can take on successfully for a biotools company.  

While Percepta is very comfortable with most of these activities, we would not claim to be qualified in Public Relations or Social Media Planning (but we know who is and would happly refer you to them).

The lesson here is to be sure you are vetting your external support carefully and when you find a good firm, think seriously about sticking with them.  You will both benefit. 

As always, your comments and thoughts are welcome.    

Posted by Scott Provost, Percepta

We have all been so busy as the year (and the decade) draws to a close at Percepta that I have been pulled from these blog posts for the better part of two months.  But that is a welcome sign that the biotools industry is alive and relatively healthy.

Considering all that we encounter in the industry as a marketing consultancy we probably have a somewhat unique perspective on the wants, needs, and desires of the collective biotools segment (companies and customers alike).  The list can essentially be summed up in three main wants, needs, and desires. 

The Wants: The number one thing researchers want from the products they use is that they perform as promised.  Researchers are most tolerant if they try some product for an off label application and it fails, but they rightfully expect it to deliver results as advertised.  Assuming most biotools companies have learned and understand this well, it is still too common to see some products rushed to market before they are really ready for prime time.  A bad first impression for a product (or worse yet - a company) is a hard burden to overcome.  Avoid this like the kiss of death.

The Needs: This need is so obvious but so important that we couldn’t leave it out.  Here goes – biotools companies need to honestly recognize that if the product isn’t obviously and distinctively different from other products then it is perceived by researchers as a commodity and that perception is the reality. That’s it.  How you define the “obvious and distinctive difference” will vary greatly depending on your skills as a marketer and on your product and/or company but it better actually mean something to your target audience or it is sure to just lie there disappointingly.   When that happens, companies have only one effective lever to pull – price - which is just fine. Winning on price is perfectly respectable, just ask Walmart.  But don’t kid yourself into thinking about premium pricing if you are not truly differentiated in some meaningful way.  The emphasis is on meaningful.  Marketing and pricing managers need to remember this important reality.

The Desires: Researchers desire that suppliers treat them with respect.  Seems obvious but companies sometimes fail to realize that poor or non-existent technical support, or unknowledgeable field representatives, or even poorly designed automated phone systems  leave researchers feeling like they are not important.  Ask yourself honestly the next time you are navigating an automated telephone systems for three or four minutes only to be told the offices are now closed.  The problem isn’t that the offices are closed – it’s that they wasted your time.  Why?  Because you must not be very important – or so it seems.

Let’s agree that 2010 is going to be the year that biotools companies shine like never before because they are getting much more in touch with their customers and really understand their needs, wants, and desires.  Happy New Year!

I Want You - to tell us what you want

Posted by Scott Provost, Percepta

Percepta offers a lot of different marketing services besides market research, but market research seems to be a popular area of interest.  We offer a series of segment specific market research reports that are popular (The Life Science Dashboards), but we also like to publish complimentary reports a few time a year for our colleagues in the industry.  Recently we published a report on the stimulus funding for life science research in the US as a result of the American Recovery and Reinvestment Act.  Previously we published a report on the customer’s perspective on life science manuafacturing in low cost countries.  Now we want your input.

What would you like to see Percepta focus on in the next free report?  Give us your comments below and we will choose from the best suggestions. Then we will conduct the research, write the report and post if for a free download.  The next topic is up to you so now is the time to let us know.