Anticipated Changes in Laboratory Purchases
Notwithstanding the anticipated decreases in FY2009 operational research budgets and the estimated decrease in spending on instrumentation and capital equipment, life science suppliers should note that projected expenditures on consumables for FY2009 compared to FY2008 will likely increase by 5.9% for academic labs and 10.4% for industrial labs.
Industrial respondents, in particular, are anticipating a bigger decrease in spending for cell biology instruments—microscope-based (-16%) more so than flow cytometer-based (-7%)—than are academic respondents (-7% and -4%, respectively).
In contrast, academic respondents are expecting a larger decrease in spending for genomic analysis instrumentation (-14%) than are industrial respondents (-2%). High-throughput screening and analysis systems and image analysis systems will also experience spending decreases by both academic (-14% and -10%, respectively) and industrial respondents (-12% and
During this period of economic uncertainty, life science suppliers may have opportunities to attract new customers through a combination of price reductions and product promotions. This scenario may be more likely for consumable product categories where there is no single dominant supplier, i.e., cell biology kits and reagents, gene-expression analysis products, protein purification and separation products, and RNAi products.
In general, only a small percentage of study respondents indicated that they would never switch their primary supplier. For the right price savings, most scientists could probably be convinced to buy products from a different supplier in this recession. However, the cost may be too high to really be practical for most life science companies.
As a general rule of thumb, a minimum of a 10% savings would be required for scientists to switch suppliers. In a market where switching suppliers rarely occurs, this may prove to be a once-in-a-lifetime opportunity to capture share through price leadership, provided it can be sustained.
This intense interest in saving money has implications for life science suppliers hoping to interest scientists in products that they may consider nonessential or luxury items, such as kits (when they are making do with do-it-yourself reagents) or high-ticket purchases like new instrumentation.
Instead, life science suppliers may want to concentrate on emphasizing the value of essential items such as critical, must-have consumables and replacement parts for existing instrumentation or extension-to-service contracts that are still deemed lab vital. Except for cell culture media and reagents and lab plasticware where ordering in bulk is the most common cost-saving measure, buying fewer kits is the most popular choice for all other consumable product categories, especially for cell biology kits and reagents.
Despite the antikit mentality espoused by many labs, life science suppliers with persuasive sales and marketing teams may still be able to make a case for the economic value of kits, if they can effectively position their kits as tools to decrease a lab’s labor costs and maximize its productivity.