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Chasing Thermo, Agilent and ABI Hope to Expand Service. Will Customers Ante Up?

ORLANDO, Fla. — Agilent Technologies and Applied Biosystems have launched pilot programs exploring the expansion of their services offerings, the companies announced this week at Pittcon 2005, held here through Friday.

On Monday, Agilent rolled out a pilot version of its Laboratory Resource Management services, formalizing a program that places its engineers on-site in to maintain and repair its equipment — and most other common laboratory instruments — as well as provide regulatory compliance, workflow consultation, and reporting services.

Concurrently, Applied Biosystems announced an informatics-based business collaboration with Deloitte Consulting with the goal of creating a service offering for laboratory and instrument integration, protocol and application development, workflow integration, and data management and integration, ABI said. This is also a pilot project.

The companies are following the lead of Thermo Electron, which purchased US Counseling Services of Brookfield, Wis., in April for $75 million as part of a strategy of targeting the business of laboratory-equipment asset management (see BCW 01/12/2005).

Services are an essential part of the molecular biology tools industry — instruments require maintenance, and users require hand-holding. Some sales require more value-add than just the placement of a new instrument on a bench-top. High-end users demand more than just a machine — they want help managing the data that spews out of the high-dollar beige boxes, and they are turning to the companies that sold them the instrument for that assistance.

So, this move might come more as an opportunity to put a price tag on something that customers previously may have considered part of the sale. "This market is complex," said Kip Peterson, segment executive, devices and diagnostics, at IBM Life Sciences. "No on company can do it all; partnering critical."

For Agilent, the new service targets the biggest customers of its Life Sciences and Chemical Analysis unit.

"It's aimed at the pharmaceutical industry," Chris van Ingen, general manager of the unit, told BioCommerce Week. "More and more people don't want to spend a lot of time looking at their complex installed base comprised of multiple venders and wonder: 'How are [we] going to manage that?'"

Agilent's program is in early stages, with a mix of undisclosed single- and multi-site customers. Van Ingen said at least 15 pharmaceutical companies are interested in the idea.

Agilent, however, would like to test the program before rolling it out widely, van Ingen said.

"We are learning a tremendous amount of what you need to do," he said. "It seems like these are all custom deals. We have to learn to be very flexible and understand the value we provide — and how to price for it. We have to learn how to make a profit from it."

Similarly, ABI and Deloitte Consulting are taking a measured approach.

Over the past year, the two companies have engaged with undisclosed customers, and ABI said Monday it plans to create a template of services and pricing for the combined services before the end of its fiscal year — that is, if there is enough response, Ramin Cyrus, senior director of marketing for ABI's services and systems solutions division, told BioCommerce Week.

"We are moving beyond saying, 'Here's an instrument, go figure it out,'" Cyrus said. "Customers are asking us to help them design a program, optimize it, help in the lab, help analyze the data, work on business processes, and on regulatory issues."

The service may expand new markets for ABI, he said.

"For the forensics market, we could say, 'There are the types of instruments you can use, the protocols you may want to run, and the data systems you will need for whatever agency that regulates you,'" Cyrus said. "'You tell us what you want and we will get a packaged solution up and running.'"

For Deloitte, which is part of professional services company Deloitte Touche Tohmatsu, the partnership is a unique undertaking, said John Maddalon, senior manager of the company's healthcare and life sciences practice.

"It will be a joint approach," he said. "We saw a need that goes beyond traditional consulting and a need to go further into the lab."

Deloitte has a life sciences strategy and technology integration consultancy and customer relationships with pharma and biotech and the briader healthcare industry. Maddalon said those relationships made for a good pairing with ABI's tools and knowledge.

Maddalon said the two companies will decide on pricing for services provided on a case-by-case basis.

"We will listen to what the client wants and craft a solution," he said. "I don't think anyone can offer the breadth of services that we can together."

The companies said they will offer instrument integration and management services, and tools for knowledge development, information deployment, workflow customization and automation, program and project management, data modeling, and database integration.

The services are an additional layer on the LIMS market, where Thermo is the leader with a 22 percent share, while ABI has 11 percent, according to a Frost and Sullivan study. Agilent was not listed in the study.

Marijn Dekkers, Thermo's CEO, said these types of services are financially attractive to tool makers.

"In some industries, margins for services are not higher than they are for instruments, but not in our industry," he said. "It's repeat business. Through economic cycles, there are always services. So, from that point of view, they are like a consumable. But consumables are usually a lot more profitable than services. Because with services, you need to actually show up."

— Mo Krochmal ([email protected])

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