 Notes from the East Woods musings on opportunities in the life science marketplace March 2012
|
|
|
| Greetings! |
The roaring wind helps us think about penetrating competitive markets. Please have a read and feel free to let me know what you think.
Regards,
Paul Danis Founder and Principal
|
|
|
|
|
|
Howling Winds and Herfindahl
|

The wind was howling last night in the East Woods - it sounded like a 747 coming in for a landing as the wind whipped the trees back and forth. After a minute or two the gust would subside, until another came roaring through a moment later. If there was anything else making noise last night, it was drowned out by the big blow.
This situation is similar to some of the life science markets which are dominated by a few large companies, making it difficult for anyone else to be heard above the din they create. Additionally the strength of several large companies holding sway on the marketplace does make it challenging for new market entrants.
If we look in more detail at the research products marketplace, there are ten companies that control over 60% of the action. Being analytically inclined, I decided to calculate the Herfindahl Index to see the actual concentration of the market. This gives a quantifiable sense of the concentration and is actually what the anti-trust guys use to determine if an acquisition or merger is bad for customers (decreases competition too much.) So I calculated a value of about 16% which is "moderate" concentration.
So what does it mean for you? If you are looking to bring new products in to the market there are a few things to consider.
- The place to start is the segmentation. Though the overall market may look like a tough nut to crack, there are some segments that are not well served or are undergoing big growth. These are places to attack.
- Second is to leverage the noisemakers. You can build products and services that take advantage of the installed bases of the large companies. These can be add-on products, sample prep, software or services using the popular products.
- Another is to piggy-back on top of the big vendors. These strategic relationships take time to develop, but can pay big dividends. When your products are brought to the customers by a Thermo or Agilent salesperson, you are in great shape.
- The final suggestion it to create something totally new. You will have few rivals and will be under the radar of competitors for a while. Easy to say and hard to do, this can be a lucrative approach, assuming you can fund the enterprise (but that's another story).
Though the roar of the wind does drown everything out, you still can break through the noise. Take a close look at the marketplace and come up with your own unique approaches. After all, the wind eventually will die down, leaving you a chance to be heard.
|
Life Science Market Update
|
|
Index
|
Feb. Value
|
Change 12mo.
|
12 mo. High
|
12 mo. Low
| |
EC BioTools
|
631
|
-4%
|
722
|
532
| |
EC BigPharma
|
925
|
9%
|
934
|
821
| |
EC Biotech
|
745
|
19%
|
745
|
624
|
BigPharma was mixed, up 4% for the month and with Novo up 18% on positive earnings driven by their diabetes drug Victoza and haemophilia drug NovoSeven. In the tools sector Perkin Elmer continues to surge, up 35% this year, while Bruker is up 29%. Both are growing on overall strength as opposed to specific events. Biotech was volatile with 7 companies moving up or down over 10%, and the index setting a new 12 month high. Amylin was up 20% on FDA's approval of its diabetes drug Bydureon. EC BioIndex March 2012
---------------------
Many of the life science indices currently available are a mixture of various types of companies. In order to better assess the situation in the different segments, Eastwoods Consulting has created these price-weighted indices for the sectors of large pharmaceutical companies, biotech companies, and life science research tools companies.
- EC BioTools Index - A, ACCL, AFFX, BIO, BRKR, HBIO, HLCS, ILMN, LIFE, LMNX, PKI, QGEN, SIAL, TECH, TMO, WAT
- EC BigPharma Index - JNJ, PFE, GSK, NVS, SNY, LUN, ABT, LLY, AZN, WYE, BMY, NVO, BAX, TEVA, VRX.TO, ROG.VX
- EB Biotech Index - ALKS, AMGN, AMLN, BIIB,BMRN, CPHD, DNDN, GILD, HGSI, IDXX, ITMN, NKTR, PDLI, REGN, SGMO, SHPGY, THRX, VRTX
- Prices are taken at the close of each month.
|
|
| About Eastwoods Consulting
|
Translating Innovations into Profits for the Life Science IndustrysmEastwoods Consulting helps life science companies grow their businesses. Please visit our web site or contact us to learn more about how we help companies succeed in competitive markets.
|
Copyright © 2012, Eastwoods Consulting. This publication may be freely redistributed in full or in part as long as full attribution including our contact information and web address, are included. Eastwoods is a registered servicemark of Eastwoods Consultng.
|
|
|
|
|