Dr. Eugenia Jones signing in for this month’s look at bioechnology and medical device markets for the technology marketing center. I usually discuss a particular market dynamic of interest; today's post is not so much about a market as it is about habits and embracing change. I hope you enjoy.
It's been a rough year if you sell consumables to the drug discovery market. Big Pharma has changed their discovery process; gone are the days of distributed R&D development groups at every branch office, each looking at different targets, using similar techniques. The tough economy, and the drive for faster, less expensive development has driven centralization and outsourcing. As a result your big Pharma customer is ordering fewer consumables. In addition, big and medium Pharma are teaming up with academic institutions to run compound screens, and that nice discount you give academics is impacting your ASP and margin, as academics account for a greater percent of your sales. This change in how big Pharma runs it's R&D should have come as no great surprise, but some large life sciences consumables companies seem to have been caught napping, as demonstrated by their failure to deliver their Q1 and Q2 revenue numbers.
What if you were a product manager in this position? What would you do? I've always liked Kenny Rogers song "The Gambler"- the lyrics resonate: you have to know when to hold them, know when hold them, know when to walk away, and know when to run. What I would do is look across my product portfolio that addressed this customer segment and ask should I (Hold, Fold, Walk, Run). Hold products are differentiated, high margin, number 1 or 2 sellers on the market. Fold products have a small market share, the margin may not be as good but they generate pull through of high margin products. Talk to your competitors and see if they would like to purchase your fold products to round out their portfolio. Walk away from products that are not differentiated, you are 1 or 2 in the market, there are a lot of competitors, some who are competing on price. By walk away continue selling until such a time as the product becomes a "run away" from product. Run away from products that are low margin, low market share, and old. These products need to be culled from the list so that you and your sales team can spend time more wisely. As the song says "The secret to surviving is knowing what to throw away and knowing what to keep."
The trick lies in knowing what to throw away, what to keep and what to build. Throwing away things can be hard, but if you can't find a new market for an old product fold it. All too often in times of plenty, like the past 10 years in the biotech consumables market, products never see an end-of-life. Teams are too busy building the next latest and greatest thing to think about getting rid of the old products, whose production clogs manufacturing and whose presence litters the catalog. Discontinuing products is a great opportunity to talk to your loyal customers and find out what needs the product fills, and what alternatives you have available; in other words gather voice of customer information. Every once in a while, a conversation with a loyal user can reveal benefits and features you and your sales team were unaware of, prompting you to try different tactics. Alternatively you can find out what the customer needs from an alternative to get him to change and build that alternative.
It's time to start gearing up for next year, think about including a little Kenny Rogers review of your portfolio, it will do it's health a world of good.
Until Next Time.
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