How Will the Sharing Economy Change the Market for Life Science Products?
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How Will the Sharing Economy Change the Market for Life Science Products?
Marc Andreesen said “Software is eating the world.” Software has created markets that were previously unimaginable or impractical. AirBnB is the largest provider of rooms and Uber is the largest taxi service, but neither owns the rooms or the taxis.
Will the same thing happen in science? It’s already beginning. There are scientists doing research without owning instrumentation. The market is definitely changing. What will it mean for manufacturers and suppliers as well as the labs that have and are skilled in the use of high end instrumentation?
Keith Osiewicz shared his thoughts as the VP and Head of Marketing at The Science Exchange, the Uber of scientific experimentation.
We talked about:
How the types of instrumentation sold may change
The possibility for science to expand globally
Opportunities for manufacturers to provide new services
How life science companies can serve their customers differently
Finally, imagine how the availability of shared scientific capability at the highest levels will affect how parents compete to win their kids’ science fairs!
The Transcript
Chris: Today my guest is Keith Osiewicz. He is the Vice President and Head of Marketing at the Science Exchange. And today we’re going to to talk a little bit about science in the sharing economy. So, first of all, Keith, tell us exactly what the Science Exchange is, its purpose and how it works.
Keith: Sure. All right. Well, Chris, the idea is the world leading marketplace for scientific research, and what we are trying to do is connect buyers and sellers of scientific services. So, just to bring it back to the idea of the sharing economy, the largest, let’s say distributor, of hotel rooms is Airbnb and they don’t own any of the rooms. And you can also make the connection to Uber, as the largest, let’s say, taxi service in the world, but they don’t actually own any of the taxis. So, scientific services is a way that you can help buyers and sellers of scientific services meet, and we have an online marketplace and a sourcing service here, that allows this to happen. And that’s basically what we’re trying to do.
Chris: So, in a little more detail, how do people either become a provider or a requester of scientific services and what types of people are signing up at either end of that?
Keith: Sure, yeah. That’s an interesting thing where we’re helping two sets of customers if you will. Scientific service providers, they have instrumentation or expertise that are unique in the world or they have extensive experience. And, when I worked at previous companies, we would sell these $500,000 instruments. And inevitably, when I would go visit the labs and talk to the scientists, I’d say, ” Oh, let’s go take a look at the instrument, and I’ll show you this or help you with the software.”
And the instruments are always in the corner, oftentimes not being used. And it’s a very expensive proposition to have a half a million-dollar instrument sit in a lab that’s unused. And of course, having hired staff and they’re sitting there, and they’re not doing any research, they’re just costing money for the lab. The idea is, you can monetize that and sell those services around the world. So that’s what we’re trying to address – that side of the market where anywhere around the world if there’s unique expertise certainly or unused equipment that people can put on our service to offer to others, we’re trying to help them.
And then the other side are requesters. These are pharmaceutical, biotech companies, academic researchers, government researchers. And what they’re looking to do is, in a lot of ways what they want to do obviously is have the data, not the instrumentation. That’s ultimately what they want is the information, it’s the data so that they can move along in their research.
And a lot of the companies now are moving to a model where they’re outsourcing most of their scientific research. And the reason they’re doing that, and I’ve talked to a lot of scientists about this, is if the scientist brings a lot of experience but most of all, is the knowledge, their ability to interpret data and direct the research, and how they get the data doesn’t really matter. Obviously, they want the best providers of this data so that the data is high quality, accurate, and obviously safe and secure, meaning the service provider has passed all the legal requirements that they need to continue, but what they really want is the data.
So, they come onto our platform where they use our sourcing service, and they identify the right service provider, and often we’ll provide quotes to them from different service providers using our concierge service. And we provide a lot of confidence that they’ll be secure in their transaction. That they will not have many legal issues to deal with, they sign a master services agreement with us, and we’ve already signed master service agreements on other legal agreements with our service providers so they can get started right away.
And so they jump over the hurdles of finding and identifying a service provider because that often takes several weeks, and then, of course, there are the months, sometimes of administrative contracting and compliance processes. So they get around all that by just using Science Exchange. We have over 3000 different service providers. So they know that they’re going to get the right service provider and that they’re going to get started quickly.
So, once they identify a few service providers that they’re interested in, the service providers provide quotes, and they include all the details, including how they’re going to do the experiment, what the data analysis is going to be, what the starting materials should be. And then the requester can review all of those, pick the right ones for them and then get going. Using our platform, they can then manage the project, communicate with the service provider directly and take it all the way to completion.
Chris: That just triggered a question in my mind. Do people ever submit the same experiment to two service providers, just to check and see if they are getting the same result?
Keith: Well, what they typically do is they’ll send in, well, they’d submit the request to multiple service providers only to compare quotes. Once the project is up and running, they typically stick with one service provider because they can include controls to make sure that the data is consistent with the experiments that have happened in other situations or data that they’ve done themselves.
And yeah, we also, just to touch on a couple of other options when finding service providers and using them, we have ways that people can filter by instrumentation or even location. So for instance, if somebody has used a particular mass spec to get the data previously, and they would like to compare it, using the same instrumentation, and the same data output. Then they can search on our website using that parameter and once they find that, those service providers, then they can get quotes from them. So they have a richer experience on our platform so that they can get the multiple service providers that are tailoring their project just for them. And then that provides that data consistency with things that they’ve done before and then they can make that direct comparison.
Chris: Nice. Okay. So this is really, I just like talking about this and this is how I got interested when I found out about what you were doing. It’s really a shift in how science gets done, and as you mentioned, scientists have knowledge and what they are looking for is data. And so now investigator interests and curiosity, to some extent, could become the limiting factor. And now, for example, younger scientists will spend less time perhaps, figuring out how to adopt a new technique. I know when you’re starting out, and you need to do something different where the expertise isn’t your lab, and you try to do it yourself a lot of time can be, I won’t say wasted because there is a learning there, but in the long run, some people just aren’t good at certain experiments.
We always talked about the people in the lab who had good hands. And then, there were people who would come up with an infinite number of ideas to test. And now, there’s a possibility in, I don’t know how many years down the road, where some people are looking at data and thinking up new experiments. And I know some of this is happening already and the skill is outsourced somewhere else, not to mention, the optimization of capacity for instrumentation.
Keith: Yeah, absolutely. And in fact, I mean, when I was in the lab doing gels. Certainly, you could waste a whole day doing it incorrectly. And I remember, running gels and using the wrong gel or dropping the gel when I was early on in my career there. And yeah, you bring up some really good points and the fact that it’s optimizing what people do best. And it optimizes the service providers because they’re the experts, they do this depending on the experiment, dozens of times a day.
They’ve got all of the equipment calibrated, they’ve got a whole workflow that’s validated every day, and they can just go. They get the samples, and they do it. And yeah, you can see…and there are, I mean let me tell you what some of our requesters are doing, they do have virtual labs. People who they have an office, they have computers, they have meeting rooms, and they have absolutely no scientific equipment whatsoever, no laboratory space.
And what they’re doing is, they’re essentially outsourcing all the experiments that they need to do in order to prove a drug candidate is good and able to go to the next stage of drug development. So this is very early stage drug development and what they’re doing is they’re doing a proof and they take these NDA’s and they will either try to sell it to pharmaceutical companies and saying, “Hey, look at the data that shows that this is worth pursuing.” Or maybe they eventually get their own laboratory and do some of the work themselves, but now the innovation that’s happening is really amazing. And there isn’t a scientist that I talk to who doesn’t say at some point in the conversation, “I sure wish this was there when I was doing research.” Because it’s absolutely true, it optimizes what you do best and not everybody is meant to be hands on and doing the actual work themselves.
And honestly, think about just doing academic research, if you are to follow your research through its normal path. You might start in immunology, and then you have to prove something using x-ray crystallography and then you could be doing cell culture, and then you could go into an animal model. I mean, there’s no way that you can be an expert in all those things. So you have to start learning all of those things, and that takes incredible amount of time, and if you don’t have a vivarium or other facilities to maintain animal colonies, then you have to start collaborating.
And what Science Exchange is there for is to help you really concentrate on the research itself and less about the logistics of finding all of these things, trying to become an expert in all these fields. And really, you focus on the research itself so that you can focus. And that’s what we’re really trying to do is let everybody do what they’re best able to do so that the research happens faster, happens cheaper. And eventually, I think this is the future. I think more and more science is going to be going in this direction.
Chris: Yeah, I can’t see how it won’t. So I want to get to the ideas around what life science companies and the marketers listening to this podcast, how they can incorporate this thinking into whatever they’re doing. Whether it’s whatever they’re going to offer as a product or service. But before that, let’s talk a little bit, what are the implications for the funding agencies and labs that are looking for funding? How does this model change how they’re going to be thinking about experimentation in the future?
Keith: Yeah, it’s a good question. I think, let’s start with the academic field. Many times, when you put in an application for funding, you have to prove that you have the capability to do what you are putting in the proposal in a request for funding. And oftentimes you’ll get denied funding if you can’t prove that you can do animal models. And I’ve talked to scientists specifically about this. So what we’re helping you do is to say, here’s a way that you can find a scientific service provider that has a vivarium or has a certain microscope that you need to have and you can immediately start the project with them. So in that way you’re proving to the funding agency that you’re ready to go. So I think the implication there is you’re much more likely to get the funding that you’re requesting if you use Science Exchange.
And let’s take a look at the indications for pharmaceutical, biotech, government labs things like that. I think they’re further along in the outsourcing process. I think the funding questions are less important for them because if you’re a pharmaceutical company, and you need to develop a drug, and if you’ve got the…I think it boils down to essentially, if you’ve got the data to prove that this drug candidate can move along the drug development pathway, your program is going to get funded.
And, I guess this touches upon the idea of internal competition for funding, and at any one point in time, pharma or biotech companies will have multiple drug candidates. And people need to be able to prove that a certain drug candidate is the one to pursue. And I think we help there. I think scientific researchers that want to get that data have better availability when they use Science Exchange so that they can prove that point and move their drug candidate further along the pipeline.
Chris: All right. So then let’s go back to the companies that are producing instrumentation or kits or whatever. How can they think about how they could serve their customers differently? Maybe about how they would market their product differently. Perhaps someone actually needs a fair amount of capacity, but they’re interested in a particular instrument, a mass spec for example like you said. Maybe they could try with a…you could possibly hook them up with somebody who is already using it on a revenue basis, not just being a nice guy and saying “Oh, yeah, sure, we’ll let you do this experiment.” Or their internal applications people, is there a potential revenue stream for them?
Keith: Yeah, those are all good angles. I mean, I spent most of my career working for instrumentation manufacturers and reagents and consumables and manufacturers. And they’re smart people. I think a lot of them have figured this out in a way, but it’s just going to get a little bit further. So let’s look historically at how this is shaped the market. I know that Applied Biosystems back in the 80’s was one of the first companies to say, “The instrumentation that we’re going to make is going to be pretty expensive, and it’s going to be a little too expensive for your average independent researcher and academic institution.”
So they got the idea to group academic researchers into these core facilities. So they would go to a University, a research university, and they would say, “Okay, you can’t afford it but, there are five other people that also want this instrument, what if you got together, combined funding, purchased the instrument and set up a core facility. It’s a shared space within the university.” And it worked, and most of the DNA sequencers that they eventually were selling were bought this way. And most universities now have core facilities where they do DNA sequencing, specifically, but also mass spec work, cell culture work, and certainly microscopy.
So this already happened, that the instrument manufacturers adapted what they were doing to the market. And then along came, I would say when I saw this in my own career, where certainly in the 90’s in the 2000’s a lot of the countries that were not traditionally research powerhouses like United States, Germany, UK, and Japan. Those are the typical powerhouse countries that were able to afford some of the higher end instrumentation. But the research expanded beyond those countries, and you had India, China, Brazil. A lot of these countries were coming up and trying to purchase the instruments that the other countries already had.
And the equipment manufacturers realized this, and they’ve started making cheaper instrumentation for those countries that didn’t quite have the purchase power that Western Europe and the United States had. So what I see happen, the result of both of those trends is that most instruments come in two varieties. They come in the high-end, high-throughput very expensive variety, and then the version that is low end, introductory, so in Europe and the US, they would maybe sell an introductory instrument to a small lab, and then that would be the main instrument in Brazil or India or China. And so you have this bifurcated market let’s say, where you have a high-end feature rich, high-throughput, the low-end, low-throughput, not so many features.
And I guess how Science Exchange will keep driving that, in essence, the high-throughput instrumentation will be sold to the service providers on Science Exchange, that can do the most business. So it’s essentially a concentration of the high-end so that they’ll get even more feature rich, they’ll become even higher throughput. And you’ll have instruments that before maybe like a mass spec. I would say is not typically run every day, 24 hours a day, but I think the service providers give it a worldwide market on Science Exchange. They will be able to run the instruments every day, seven days a week and have remote monitoring and all the features that would come with that kind of a high-throughput instrument.
And then on the low end, you would have probably maybe fewer of them, this is a speculation, I don’t know where this would necessarily go but, we see service providers in India and China now, and Brazil, in Mexico that are as high-throughput as anywhere in the world. They often leverage the cost advantage that they have.
So I think you’re going to see more sales on the high end and I think maybe fewer sales at the low end. And I think instrumentation manufacturers will be able to maintain their revenue by looking at the high end and obviously, charging a higher margin. Because, you’ve got more features and honestly that market will expand as more and more labs in India, in China, in Brazil and countries still to come buy those instruments. So I see that happening, I see the bifurcation of the market that’s happened in the last 30 or 40 years. I see that continuing and I see the instrumentation manufacturers doing just fine, honestly.
Chris: I see what you’re saying. I hadn’t really thought about that. But as you say, and this is exactly the type of answer regardless of what your actual answer was, and I’m not disagreeing, that I was looking for. Now how can companies think about, given this sharing economy, if they see it taking off, where their production’s going to shift, how they’re going to market, and putting more high-end instruments into labs that are now going to be generating their own revenue. So there’s another way that they’re going to capture some revenue, maybe in a highly concentrated market. Because there’s going to be, I would think, some limit to the number of labs who are really good at something. And it’s just going to go that everyone who needs a certain experiment is going to go to one of those premier labs for that type of experiment.
Keith: Yeah, I do see that, but I also see the availability of science increasing. I think the activation energy to start your research was so much higher if you had to buy your own instrument.
Chris: Oh, sure.
Keith: But suddenly, they’re going have more customers. So any instrument manufacturer will be able to sell more, and obviously, the revenue stream from consumables will be increased because people that weren’t thinking of science now can do science. And we do have citizen scientists who want to test their water or we even have people going on to the site who are interested in helping their child with their science test. Oh, a lot of citizen science that’s happening, a lot of science that wasn’t getting done before is now getting done.
And I want to touch on one thing you said about the instrumentation manufacturers getting into the services market. I really think that’s going to happen more and more, I mean, see because what happens, and this did happen already with the “Human Genome Project.” If you remember the history of that, the DNA sequencers made by Applied Biosystems were so feature rich and so that the managers at Applied Bio said that, “No one’s really taking advantage of this, they’re not scaling up the way we expected.” So they started Celera Genomics, and Celera Genomics’s goal was to sequence the human genome, and they used Applied Bio-instrumentation, and they were sister companies. They’re owned by the same holding company.
So they got into the services business, and that, of course, spurred the public effort to go even faster and of course they sold more instruments. I do think that there is a robust need for the instrumentation manufacturers to get into services. I think it’s a very lucrative business. I think they’re going to be the best sometimes in using their instrumentation. They’re going to know the customers, they’re going to, of course, augment their instrument sales with service revenue.
And there is, of course, a question about why would you compete with your direct customers for your instruments but I think they can maneuver through that question. I am seeing more interest from manufacturers that I’ve worked with in the past and the companies that I’ve either worked for or done business with to get into the services industry.
I think it follows just kind of a general trend. I get a little philosophical here, I mean, Marc Andreessen has a good line that “Software eats everything.” The idea is you’re de-materializing a lot of human activity, where something could have been done with lots of equipment in the past and lots of people. Now it’s done with software and fewer people, or less equipment I guess is best to say. And I think that’s happening to science it’s just a general trend that you don’t need to buy as much material, you don’t need as many atoms, you need bits. And I think that that’s happening in science too but maybe it’s not bits, it’s just services are replacing instruments, and I think that’s just a general trend outside of our industry too.
Chris: Yeah, nice. Well, I’ve really enjoyed this conversation, it’s thought provoking, and I think will definitely stimulate marketers in life sciences to think about what the future’s going to hold.
I’ll give a pitch for the ACPLS. I was just at the annual meeting last week. And one of the sessions was really about what’s our job going to look like in five years? And this was for marketers but, and there were lots of opinions and I know there’s going to be some blog posts on the ACPLS blog about it, and we’ll definitely share those results. But it’s really fun to think about how the whole world of how science gets done is changing. And then just to end on a little bit of a humorous note. I think you mentioned this, talking about science fairs and I’m imagining this ridiculous escalation of what kids are going to show up with. “Oh yeah, I have a full genome here, what do you got?”
Keith: Yeah. I sequenced all my pets or I sequenced all the plants in my garden, yeah. I mean, it’s exciting. And I’d just like to add one thing about how to help marketing. So I mean this is obviously Life Science Marketing Radio I just want to put a pitch in for my own particular services through Science Exchange. I mean, we do marketing on Science Exchange to our customers, and if people have a service that they want to offer, we can help them get out there. I think there are a lot of scientists wondering, well how do I get started? How do I get my customers? How do I…we joke sometimes here that it’s two guys in a fume hood, and they’re very interested in getting customers and doing some science. And we can help get people started, so I mean, we’re very excited about science and very excited about helping people achieve their dreams.
Chris: Very cool. All right well, Keith Osiewicz, it’s been a pleasure talking to you today and thanks very much for your time.
Keith: Thanks, Chris. I enjoyed it.
Chris: All right, bye bye.
Keith: Bye bye.