24 planned cost-saving measures anticipated by research labs: highlights from “Prospering in a Down Market: Strategies for Life Science Suppliers

The life science industry is not immune from the global financial crisis. Pharmaceutical, biotechnology, academic and government labs are bracing for budget freezes and staff reductions.

During this tumultuous time in our industry, the opportunity for life science suppliers to thrive — rather than survive will be predicated on a detailed understanding of how labs will allocate 2009 funds. A new report just released this week provides guidance on how scientists plan to cut corners, modify experiments and change purchasing behaviors in response to shrinking budgets.

The report from BioInformatics, LLC is entitled Prospering in a Down Market: Strategies for Life Science Suppliers and it analyzes the broad scope of how scientists plan to control lab costs, what products will be affected, and the degree of concern scientists have about the economic climate.

Providing a roadmap for the life science supplier, this study compares and contrasts FY2008 (actual) and FY2009 (projected) budgets, revealing anticipated trends and changes. Expenditures for capital equipment (greater than $25k), instrumentation ($25k or less) and consumables are detailed, and sources of funding for research and drug discovery are listed for both years.

Some 14 product categories are examined using multiple variables, including current suppliers, price points that increase likelihood of switching and projected expenditures through FY2010. Additionally, the respondents will provide insight as to how their labs are adapting to this crisis through hiring freezes, modifying or delaying experiments and calculating ways to make resources go farther.

Quick responders will win in this tight economy. “Prospering in a Down Market: Strategies for Life Science Suppliers is not only a compilation of how life science customers are planning to allocate 2009 budgets; it also outlines in detail how scientists expect suppliers to respond. Scientists share their opinions about how suppliers can differentiate themselves, and what types of incentives, discounts and packaging would entice a lab to purchase more. The study also includes feedback as to whether or not scientists will turn to vendors for advice on how to conserve reagents, how to preserve the shelf-life of instrumentation and how to go green,” thereby counting on suppliers to become more involved in promoting efficient operations in the lab.

Specifically, the report covers 24 planned cost-saving measures anticipated:
1. Bulk ordering
2. Change direction of inquiry
3. Conservation measures
4. Decrease/stop long-term experiments
5. Defer capital equipment purchases
6. Delay/cancel nonessential purchases
7. Downsize staff
8. Halt new initiatives
9. Increase energy efficiency
10. Increase the use of core facilities
11. Lease instrumentation
12. Outsource work
13. Participate in “reagent rental” programs
14. Postpone or suspend projects
15. Postpone or suspend specific experiments
16. Purchase through alternative channels
17. Purchase/acquire used instrumentation
18. Purchasing groups
19. Reduce/cease experiments with animals
20. Rent instrumentation for the duration of a project
21. Reuse products
22. Share resources with other labs
23. Standing orders
24. Switch to less expensive alternatives

Beyond these steps, there is interest in used lab equipment, service contracts, special offers, assistance and advice from suppliers, more credibility of supplier advice, and environmentally friendly products.

"Nearly half of respondents surveyed said they are VERY worried that a recession will make it difficult for them to conduct their research and close to two-thirds indicated that their research has already been affected by the current economic recession," notes Tamara Zemlo, Ph.D., Vice President of Advisory Services. According to Zemlo, life sciences will likely fare better than other sectors of the economy, but she points out that scientists are employing a variety of ways to stretch their budgets. “Understanding how and where scientists intend to cut back will be essential for suppliers developing effective marketing and sales strategies.”

To learn more about this BioInformatics report, a complimentary Executive Summary of Prospering in a Down Market: Strategies for Life Science Suppliers is available at http://www.gene2drug.com/reports/200/

Or contact me to review the specifics findings and implications for your health, science, or technology brand.