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Jan 15, 2010 (Vol. 30, No. 2)

OEMs Redefine Role in Biotech Sector

Modern-Day Original Equipment Manufacturers Do More than Provide Private-Label Instruments

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    Life Technologies’ OEM products include PCR instruments, software, fluorescent dyes, quantum dots, enzymes, buffers, and magnetic particles.

    OEMs—original equipment manufacturers—have existed in the life sciences for decades but are becoming increasingly popular with providers of microfluidics, liquid-handling, and assay systems and components that are used for drug development, as well as other biotech applications.

    Drug developers are using OEMs in three ways. The most common is to buy a system, assay, or reagent that includes some OEM components. In the second approach, drug developers buy a product directly from the OEM, but in custom packaging or custom quantities. The third approach licenses intellectual property from the OEM, sometimes in partnership or consultation with the OEM. Clearly, the definition of OEM is changing.

    Historically, OEM referred to the companies that make private-label products or components for products. In the biotech industry, individual OEM manufacturers have their own interpretations, sometimes blurring the distinction between OEMs, contract manufacturing, and custom work. The commonality is that they all engage in volume, business-to-business transactions and thrive on long-term relationships.

    What constitutes an OEM product depends upon the OEM. Just as many of the computers that provide combinatorial libraries for developers bear the “Intel Inside” label, many other pieces of equipment bear such labels as “Caliper Driven” or “Pall Partner.” And, many others include components that work quietly, known only to the manufacturers and their OEMs. The reason for their popularity is simple. OEMs help manufacturers expand product lines without also increasing their research, development, or specialized manufacturing expenses.

    At Life Technologies, potential OEM markets include “all of the companies and customers to which we could supply raw materials, technologies, and products,” according to Vicki Singer, Ph.D., global head of out-licensing.

    That includes instruments, enzymes, fluorescent dyes, chemiluminescent substrates, antibodies, and magnetic particles, and the associated intellectual property, along with off-the-shelf and customized solutions that incorporate all of those tools. According to Dr. Singer “in PCR, the OEM products we supply could encompass patent rights, components used in a PCR device, software, whole instruments, fluorescent dyes, quenching pairs, oligonucleotides, enzymes, buffers, or a complete kit.”

    Hamilton Robotics, in contrast, focuses more narrowly on components for liquid-handling workstations and robotics. Hamilton Robotics tends to build complete systems, which may be integrated into third-party devices, while Hamilton Dealer Products handles components, according to Scott Eaton, director of OEM diagnostics sales.

    Hamilton Robotics supports reagent customers, providing a liquid-handling workstation that allows those companies to offer a complete system to their customers. “For example,” Eaton says, “in HIV testing of blood, reagents are validated on our equipment for processing the assay. That platform and assay are sold together. Sometimes, the equipment is part of a lease,” managed by Hamilton’s client.

    Caliper Life Sciences sells both equipment and licenses as OEM transactions. “They account for about 10 percent of our total revenues,” CEO Kevin Hrusovsky reports. Caliper’s core application areas include biologicals, vaccines, next-generation  sequencing, and molecular diagnostics.

    Tecan’s OEM business encompasses platform-based solutions, detection devices, and dedicated solutions sold under the partner’s brand, as well as components and plastic consumables. Its OEM business already accounts for more than 25% of total revenues.

    Promega’s approach produces both OEM and custom products. The main difference tends to be the end user and the packaging—customers using Promega enzymes internally may want larger volumes in a single container, explains Arlene Silveira, director of marketing, sales, custom, and OEM products.

    In similar fashion, BioTek Instruments segments its markets into direct-to-market and OEM—which it calls contract sales—categories. As an OEM, “We can do private label or volume sales to a business partner,” says Gary Barush, director of marketing and sales. BioTek Instruments’ OEM business is tightly focused on microplate instrumentation. “We partner with chemical companies that make reagent kits, adding the instrumentation. They then package this as a total solution.” The total solution is what drug developers are most likely to see.

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