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ABI s Focus on Consumables Takes Shape with Launch of New SYBR Green Reagents

This week, Applied Biosystems launched its line of Power SYBR green reagents for real-time PCR gene-expression applications. The launch is the first major introduction of consumable products since ABI officials started saying the firm would place greater emphasis on the sale of such products, amid slumping sales for certain DNA sequencing and mass spectrometry instrument platforms (see BioCommerce Week 4/14/2005 ). Earlier this week, Jason Liu, senior product manager for the Power SYBR products, and Peter Dansky, VP and general manager of ABI's consumables division, talked with BioCommerce Week about the product launch and the firm's efforts to grow its consumables business.

How are the new Power SYBR Green Reagents different from what ABI currently offers?

Liu: The new Power SYBR is AB's next-generation SYBR Green master mix for the real-time PCR market. The key difference is the overall performance of the Power SYBR is significantly better than all of the existing products on the market right now, including AB's. Not only have we significantly improved the product performance … we improved our manufacturing processes. Based on our benchmarking study, we really came out ahead of existing products out there.

How is this different from or better than the SYBR Green sold by Roche, Invitrogen, Stratagene, etc.?

Liu: The key attribute of this product is the significantly improved sensitivity. Based on our in-house validation data, we can detect as low as two copies of a target of interest gene. It's really set up a new standard for the industry of the sensitivity for SYBR Green master mix. A second one is significant improvement in the product quality. We minimized the lot-to-lot variability, which is a key attribute to the real-time PCR market.

Can you provide an estimate for the size of this market?

Liu: We don't have it right now, but SYBR is a highly competitive and growing market.

Dansky: We don't tend to go public with that kind of information.

Can you disclose how much these new reagents sell for?

Liu: The list price for a single pack, which is a 5 ml pack, is $340. If you use 50 microliters per action, that's 200 reactions.

How does that compare with other SYBR Green reagents on the market?

Liu: The pricing is very comparable to the competitive leading brand out there. As I mentioned before, SYBR is a very competitive market, and there are a lot of other brands that may be cheaper but their quality and performance cannot match [the new reagents].

Dansky: The other thing is that everybody has their list prices, but there's a very dynamic market out there. The actual selling prices vary from list price from vendor to vendor. Then they vary based on volume of business and other business that is involved with those customers beyond just this product. So, pricing is very complicated. Certainly our strategy is to be very competitive [on price].

Can you tell me anything specifically about the product launch, and ad/marketing campaigns designed to drive early sales?

Liu: This will be a global market launch. We have extensive customer communication planned, and that's being rolled out at this very moment. We have an extensive e-marketing program rolling out right after the press release.

ABI officials have said several times over the past year that expanding consumables sales would be a key focus for the company. Can you explain how this launch plays into that? Can you discuss any other initiatives underway at the company to place greater emphasis on the sale of consumables?

Dansky: The first point that we have is that we're putting an increased focus on the consumables area in general. So, my business unit would be an outgrowth of that. We've consolidated areas within the company in molecular biology that are focused on the consumables space, and have turned it into a business unit to put a greater degree of focus [on consumables]. We first pulled that together in the middle of our fourth quarter last year. So, we're about six months into that process. This product launch is the first significant product launch coming out of that initiative.

A key part of a consumables business has to be the flow of new products. It's a very different type of business than in instrumentation platforms, where you need new products, but the cycles tend to be significant. So multi-year cycles and both upgrades and transitions of platforms. But in the consumables area, you tend to see many more products in a much shorter development cycle. So, part of our commitment is toward new product development. I'm not going to tell you what's coming next or when, but we're certainly signaling that we're putting a focus on new product releases.

The other comment relative to that is when we say [we have a] focus on consumables as a business area, it is more than just focusing on products or just focusing on sales, it's really the entire business of consumables. To put that in some perspective, we have a very strong instrumentation business, but there is also a significant consumables business. Nearly 40 percent of our revenue is in consumables. I think last year it was about 38 percent. It's not an insignificant business, but it has not been the first focus in the company. It's been more of a focus of creating complete solutions for customers, but with the focus being on instrument systems and then the consumables that work with. When you start focusing on consumables as a business in its own right, what you start to discover is that there are many business processes — from manufacturing through the way you do product development to the way you do support, generate quotes for customers — how you conduct business is different. We are in a process of evaluating our business processes across all functions, and making changes to become more effective from a consumables perspective.

Has training for sales staff placed a greater emphasis on consumables?

Dansky: Definitely. That's a key. A key part of it is sales, and if we want to talk strategy, the first focus is on being more effective at selling the products we already have, which goes to sales and marketing. And then you move toward new product flow. Then we look longer-term toward different strategies. In the sales area we're increasing our focusing on consumables, that goes toward both hiring people within sales but also the way in which they are trained and incentivized to sell the consumable products. This year we're putting a greater emphasis on consumables in the selling arena.

As a company that sells both instruments and consumables products, do you think ABI has a competitive advantage or possibly a disadvantage when it competes against certain companies that don't sell instrumentation and can focus solely on consumable products?

Dansky: It's a great question, and it's the pivotal question. I think we have enormous assets, and we run the risk of being at a disadvantage if we don't focus on the business. We have the opportunity to have the best of both worlds because we work with these customers everyday. Consumables don't operate in a world of their own. They are part of a workflow, and what we focus on is customer workflow. In the end, we're delivering information to customers through some detection platform, whether it's DNA sequencing, real-time PCR, mass spec in our sister proteomics/small molecules division, but in all cases there is an analysis that is done which is focused around a detection platform, but there's an entire workflow that represents the customer experience. It also represents a significant amount of the revenue potential. So, we have an opportunity to work with customers to optimize their solutions, and that's a huge asset.

Where you go wrong, though, is if you don't put enough focus on the consumables, because as I mentioned earlier, it is a different type of business. That's why we set up a separate business unit within our molecular biology division, which has a mandate to compete in that consumables space. I won't give you specifics on revenue, but [the consumables unit] is a sizable business relative to the independent competitors that are out there. We think it's a win-win opportunity.

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