Genetic Engineering NEws

enews enews at
Sun Aug 14 14:47:10 EST 1994

The featured article from the July issue of Genetic Engineering News 
looks at the future of the molecular biology reagents market. Here 
is an excerpt from "Market for Molecular Biology Reagents Expected to Grow 
12-16% Annually" by Joseph Coco.
The market for biotechnology reagents is highly competitive and
in constant flux. Products, companies and opportunities come and
go, contributing to a challenging environment for bioreagent
companies. Key factors explain why the leading bioreagent
companies remain successful in a market that is growing at an
estimated 9-12% per year. This growth is supported by new users
of bioreagents in the pharmaceutical, diagnostic, and
environmental areas. Bioreagents range from common, mundane
products to exotic, unique compounds used during the course of
biotechnological research to detect, measure, examine or produce
other compounds. 

     The market is served by more than 100 bioreagent supply
companies that have annual bioreagent sales ranging from $1
million to in excess of $80 million. However, most fall into two
general groups - those with annual revenues in excess of $65
million and those with annual revenues below $30 million. Revenue
figures represent sales of bioreagents only, exclusive of related
equipment.(See "Demand for Biotechnology Reagents Expected to
Increase in U.S. & Abroad," GEN, December 1993, p. 6.)

Market Future

     Among suppliers there is some consensus concerning the
future of bioreagents in certain areas of the market. Use of
bioreagents in molecular biology is expected to grow
approximately 12-16% per year near-term, which is faster than
projected growth in the general bioreagent market.
Commercialization times, discovery to market roll-out, are
shrinking to under six months. The Human Genome Project is
fueling a large proportion of the growth in bioreagents. The next
expanding market is expected to be in reagents used in
large-scale purification processes. But this is where agreement
ends. Opinions regarding strategies and future growth differ
depending upon a company's participation in the bioreagent

     Each company within the industry has its own strategy and
predictions for growth that are dependent upon resources and the
breadth of the market that they serve. Companies in the upper
revenue range rely on name recognition, reputation, broad product
offerings and sheer size to maintain market share and grow. The
wealth behind these upper-end companies allows sizeable budgets
for research and development, growth by acquisition of
underperforming companies or small established companies with
promising products as well as advertising.

     Smaller companies, those with annual revenues below $30
million, do not have the resources to be everything to everybody,
as do the larger suppliers. Because of limited resources, their
primary strategy is to carve out specialty markets that require
specific expertise, thus creating a small, focused market. Their
strength lies in being innovative, flexible, committed to
entering new markets with unknown potential and accepting greater
risks. Once established, they grow through horizontal integration
based on their strengths as well as the increased usage of their
base product lines. Small, innovative companies become targets
for acquisition when the larger companies are not quick to
innovate or refuse to take a level of risk in what had been an
unproven market niche.

So begins this issue's featured article from Genetic Engineering News.

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