Stephen K. Klasko M.D., MBA

Survival strategies and the most profitable options are discussed.

The biotechnology industry continues to evolve, just as the micro- and macro-organisms that fall under its purview of study do. As is the case with living organisms, biotech too is subject to environmental change, and the recent turmoil in the financial world is affecting every facet of the bioindustry.

To gauge the impact of the global business slowdown, GEN carried out brief interviews with biotech suppliers to learn what trends they see over the next year or so and how they plan to adjust to and carry on through these very tough economic times. Our respondents were: Frank Feist, executive director Advalytix Business Olympus America, Steve Siembieda ([email protected]), COO of Advanced Analytical, and Tim McGrath ([email protected]), CEO Oligo Factory.

GEN: The world’s economic landscape has changed dramatically since October, with implications for every type of company doing business globally. What revised or new strategy must a biotech R&D company, or a supplier firm, put in place to successfully compete on a global basis in this new environment?

Feist: As a global supplier of cutting-edge single-cell molecular analysis tools, the Advalytix product group of Olympus sells to clinical R&D, diagnostics, and forensics customers in academia and industry. In the U.S., federal funding for the life sciences seems relatively secure, but funding for many state university systems has been reduced. This picture is mirrored in our international markets; several European countries have issued federal stimulus packages that benefit the life sciences industries, but local academic institutions and the private sector feel the pinch.

In addition, even though budgets may be available, the psychological effects of the recession make potential buyers extremely cautious when evaluating new spending. However, the single-cell molecular analysis market that we address with our AmpliGrid platform is one of the hot growth areas within molecular diagnostics; an increasing number of oncologists, immunologists, and stem cell researchers are studying single cells to measure cell-by-cell genetic heterogeneity and understand its meaning for prognosis, diagnosis, and treatment of disease. Since being acquired by Olympus in 2005, the Advalytix team has been operating under a corporate start-up business plan, which supported a very successful introduction of our AmpliGrid single-cell analysis platform into the global marketplace. Now the key emphasis of our business strategy for 2009 is to capture the growth opportunity in single-cell diagnostics and introduce our platform to as many users as possible to increase sales productivity for both our internal sales team and our relationships with our distributors in each global market.

As part of that strategy, we are adding new products and services to our product portfolio so that customers can rely on Advalytix as an end-to-end systems provider of single-cell analysis while improving sales economics. In order to boost productivity of indirect sales, we are intensifying the dialogue with our existing distributors to increase awareness of the growing number of single-cell applications that we have developed over the past years and helping distributors to sell those applications. In addition, we are looking for new distributors and manufacturers’ reps to increase our coverage.

Siembeda: Advanced Analytical is the world leader in parallel capillary electrophoresis and flow cytometry-based microbial detection. With over 10 years of manufacturing experience, product development, customer support, and technical service to the pharmaceutical industry, Advanced Analytical is a leading innovator of products that improve throughput, reduce analysis time, and ultimately help companies achieve results.

Advanced Analytical manufactures and markets dedicated 96-channel and 24-channel parallel capillary electrophoresis analyzers for pKa and log P measurement (pKa PRO™), DNA/RNA oligonucleotide analysis (Oligo PRO™), protein (antibody) separation (Protein PRO™), and a new fluorescent-based instrument to rapidly separate DNA fragments, complex carbohydrates, and simple sugars (AdvanCE FS). These analyzers are complemented with a complete line of quality, performance-tested reagents.

Advanced Analytical also manufactures a flow cytometry-based instrument capable of rapid microbial detection and enumeration (Micro PRO™). Microbial detection kits for quantitative analysis of purified/process water monitoring (50 cfu/mL detection limit), surface swab analysis (environmental monitoring), and pure culture enumeration are available.

As an instrument supplier to the biotech industry, 2009 will bring about several changes to our strategy. First and foremost, we must take action to increase awareness of our instruments’ predominant capability. In these difficult economic times, companies will continue to ask their employees to do more with less. Products including capital equipment that aid employees by improving sample throughput while simultaneously reducing user time to get results should be a welcomed addition. Additionally as companies look to outsource both research and development, our focus will be on improving customer service to our existing customers and looking for ways to assist these companies in setting up outside vendors with products that speed results.

McGrath: Other than the obvious management of cash that a slowdown dictates, a supplier company must increase the levels of service to their customers. We must answer the phone faster, respond to inquiries quicker and more thoroughly, deliver our products on time, and maintain the customers’ expectations of quality. The economy may stall, but stellar service still stands out and is rewarded.

GEN: How will your new technology/product development plans change in light of the new global economic environment? What facets of the market will you focus on in 2009?

Feist: In order to accelerate our increase in sales productivity, we have been adding complimentary third-party products to our product lineup and are continuing to look for third-party product opportunities in reagents and equipment.

Our internal product road-map, however, has been less affected by the downturn. We continue to develop complimentary products for single-cell analysis, such as detection systems and reagents to improve single-cell sensitivity and ease of workflow. Given tight customer budgets, we will highlight the affordability of the AmpliGrid platform for single-cell analysis. We have streamlined the manufacturing process of the AmpliGrid slides, which enabled us to reduce slide prices by about 20% and offer very attractive high-volume pricing. This makes the platform even more attractive for clinical trials and screening applications. We also offer a very compelling value in terms of “data-bang per $” due to the low cost of our hardware, reagent savings, and higher success rates of single-cell experiments.

Siembeda: We plan to increase our efforts in new product development in the areas of capillary electrophoresis, microbial identification, and sterility testing for water. We believe that now is the time to place more resources on new products so that when the economy recovers, new product solutions will be ready. In 2009, we intend to launch a line of consumable products to better support our current customers and provide lower cost alternatives for single capillary users. We are also ramping up development of a new instrument, which will provide industry and academic researchers with a flexible, quality-built alternative to the existing products on the market.

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