By Adrienne Burke
A colleague describes Peter Coggins as shy — not one for basking in spotlights. And with his deep dimples, big blue eyes, and soft-spoken British accent, the 54-year-old zoology PhD and president of PerkinElmer’s Life and Analytical Sciences business is not the most imposing corporate exec you’ll meet.
Yet since making the leap from his post as VP of global sales and marketing at Amersham Biosciences last July, Coggins has made a deep impression at PerkinElmer. In the four months between the time he was hired and sat down for the GT interview that follows he has doubled his domain. Recruited at first to run PerkinElmer’s life sciences division, in October Coggins was handed responsibility for combining his unit with the analytical instruments division, nearly doubling his staff to 4,500 and ratcheting his revenue responsibilities up to $1 billion.
One of three business unit heads reporting to CEO Gregory Summe (others oversee Opto Electronics and Fluid Sciences), Coggins says he will manage his global operation with the help of a 10-person team that he has handpicked from among the company’s top ranks.
In this interview — conducted in late November at PerkinElmer’s Wellesley, Mass., HQ, which he visits weekly from his downtown Boston office — Coggins talks about differences between PerkinElmer and Amersham, where he had an on-again, off-again career since 1973. He also reveals his plans for getting the company through the remaining days of slow pharma spending, and tells how he will make the most of what he sees as his competitors’ big weakness: customer service.
How would you say that the sales and science cultures at PerkinElmer differ from those at Amersham?
There are a lot of similarities between the two. If you’re asking specifically about the genomics market, both companies are striving for a high-quality leadership position. It is very competitive. PerkinElmer has more focus on the customer, is more outward looking and closer to the immediate customer needs.
The offering that PerkinElmer has is a little bit broader in that we have a liquid handling capability, particularly for sample preparation, which Amersham doesn’t. We also have a much stronger package in informatics, so we have more of a systems solution to all of the issues within the genomics area. Amersham is more focused on DNA sequencing where we are less focused, and of course we both have the microarray gene expression systems.
As I say, I think we’re more customer-orientated. One of the first things that I did when I got here was to go out and meet customers and I’ve encouraged all of my direct reports to get out and work with customers.
I’m sure the people at Amersham would take umbrage with your comment that PerkinElmer is more customer focused. What makes you say that?
We’re getting senior-exec-level individuals out to the customer to hear about their needs and requirements firsthand. There’s more of a realization that you should be listening to what your customers want rather than work in isolation in R&D and then develop products and bring them to the marketplace, although I want to be very careful not to come across as knocking Amersham. We are both striving for the same quality leadership, but if anything, on the PerkinElmer side there is more customer focus.
How do you see PerkinElmer ranked among the big instrument companies?
A lot depends on how you define the genomics marketplace, but if you take classical DNA sequencing and gene expression, then I’d say ABI is one, Amersham is two, and PerkinElmer is a strong third. The bulk of the sales for ABI and Amersham are coming from DNA sequencers, or were. That market has pretty much gone away, or it’s over capacity. That’s certainly where their growth has come from over the last five years or so.
Everything is moving more and more toward functional genomics and functional biology. Jumping in this late to DNA sequencing probably isn’t a good thing to do. We wouldn’t want to jump into DNA sequencing just in order to compete with ABI and Amersham. We’d rather invest in some of the growth segments that are now developing on the back of the human genome project. A lot of the effort we’re putting in right now is in gene expression and proteomics.
What has been your single biggest undertaking in your new job so far?
My biggest undertaking is the integration of the two businesses. Especially for life sciences, this comes on the back of the Packard merger, which to some extent was still ongoing.
Working in the industry for a long time, I’ve known PerkinElmer from the outside … from a competitive standpoint. So what I wanted to do when I first came on board heading up the life science [business unit] was to get out to all the sites, see what happens at each site, get to know the key players, get to know the employees. So I did a global tour and got ’round to all the sites within the first two months and at each site had a business review, employee meetings, a tour of the R&D manufacturing site.
Was there a particular message that you were delivering?
Mainly it was for me to see what was there, get to meet the people, [and to find out] what are the critical issues, how does it all fit with the overall strategy, where are the priorities?
Some of those issues, for example, were, “We’re not doing a good job servicing our customers from an engineering standpoint, we need more service engineers.” And I’d say, “Well, if you look two blocks away there’s an analytical instruments division and they have a lot more service engineers. What are you doing to utilize that capability?” In most cases the answer was, “Nothing.”
That’s what led to the proposal that we should really drive service as a business. There are 900 service engineers on the analytical instruments side and 300 on the life science side. Why not put the two groups together and just set up service as a profit center and cross train the engineers?
My concern was having a single face to customers. If an AI sales rep goes into a big pharma company and says, “I represent PerkinElmer,” it’s true, but they only represent a piece of it. Then you’ve got the life science sales rep or service engineer going to the same account. We looked at the top 20 accounts on both sides and there was complete overlap.
We also found there’s no single person accountable for a major account like GlaxoSmithKline. Who does the customer go to if they have an issue? So we’re moving more and more towards key account management with support from product specialists. Now we’ll have one person accountable and on those global accounts we’ll have one person accountable on a global basis.
ABI has also talked about its efforts to become more customer oriented, as has Affymetrix. What has prompted life sciences instrument vendors to want to be friendlier?
There are companies like ABI and Affymetrix that have a real issue with the customer base in that they kind of have a monopoly but they’re not very customer friendly. ABI and Affy wanted to change that.
It was refreshing to hear the chairman when I was being interviewed here talk about his interactions with customers.
What are your goals for the coming year?
The goals for 2003 really have to be a seamless integration of the analytical instruments and life sciences business and, whilst completing that, to deliver the operating profit goals. That’s going to come from meeting sales [goals] and then trying to improve things from an operational standpoint in terms of lean manufacturing. We’ve got Six Sigma being introduced and there’s a lot of sharing of best practices.
Could you be more specific about your operating profit goals?
Well, I can’t tell you what they are!
The markets are soft. There are some signs that things have bottomed out and there are some signs that things are now improving, but we’re assuming that sales will be reasonably flat. We’re not looking to drive the profit by having a huge hike in sales, but we see, particularly through the integration, having some efficiencies.
For example the two organizations were buying similar components for instrument production but they’ve each got their own set of vendors. By pooling resources we can buy better, whether that be components [or] travel. We put marcoms together. We’ve got more horsepower now in terms of buying. So there are a lot of efficiencies.
Also if you look around the globe we have a lot of sales offices, but in very few instances are we actually sharing infrastructure between AI and life sciences, so virtually every country you go to has got two sales offices. They’re often quite close but run totally separately.
If you put the two together, you can have better efficiency — you’ll have more people … probably less rent per person if you’re on a single site.
You’ve talked a little bit about a broader functional biology approach. Does PerkinElmer have any specific products or programs in the pipeline now?
There’s a lot in the research pipeline that I’d rather not talk about. One is so close to coming out I think we should mention it and this also is a good example of why we want to put analytical instruments and life sciences together.
The life sciences business has an offering in proteomics for 2D gel electrophoresis. At the front end there’s the 2D electrophoresis itself, there’s reagents, there’s analysis software, there’s a scanner for reading the gels, there’s a digester, there’s liquid handling equipment, and what’s missing really is a MALDI-TOF to do the protein identification and informatics for handling all the data.
It just so happens that our colleagues at AI are just about to come out with a MALDI and have an informatics package. Their intention was to sell this into the life science market on the back of what was already there, but now we’re in a position where we can pull the whole package together and we can have a system solution sale to people interested in proteomics by bringing the two organizations together.
AI’s got a lot of background in mass spec; life science has no background in mass spec but absolutely has to have a MALDI to go into proteomics. So that’s going to get launched early [in 2003] and will be a very complete proteomics package. (This month PerkinElmer unveiled the prOTOF 2000 MALDI O-TOF.)
Is this your first mass spec for proteomics?
For proteomics it is. We also have a tandem mass spec that we use in the genetic screening business. In addition to that we have a full research portfolio, which is aimed at development of higher information, higher content technologies in the area of functional biology — getting a lot more data out of a single sample.
One example is the area of protein chips. The first product has just been launched — the protein array workstation. When we have our protein chips together with the array station we can have a direct link between gene expression through our microarray and protein chips so you could get information in terms of gene expression and proteomics from the same sample. As I said, we’re not there yet, but it’s on the horizon and an array workstation has come out.
Who would be the main customer for your new mass spectrometer?
Academia first, then biotech and big pharma. We have a lot of diversification in terms of products, but we also have a lot of diversification in terms of market segments. In the area of academia we’ve seen an upturn in spending. They are better funded than they were last year.
Big pharma is down in capital spending, but they are buying a lot of consumables and a lot of reagents. When I say we are very diversified in terms of products, we’re not just an instrument company, we’re not just a reagent company, we’re trying to sell systems and trying to develop the hardware, the software, the reagents, the consumables — and selling it as a system.
Now having sold some of the systems in the past to big pharma, they’re not buying new platforms but they are continuing to run the old platforms, which is very good news for the reagent side and the consumables side, but it’s also very good news for the service business because now they’re trying to eke out better utilization of the existing platforms so they’re more interested in buying service contracts.
And that’s why I think there’s a crying need for good service in the marketplace and that’s why we decided to pull out service as a standalone business — to merge the elements from the AI side and the life science side. With 1,200 service engineers we can drive a lot more efficiency.
Would your service team work on instruments from vendors other than PerkinElmer?
Our service people are prepared to service anybody’s instrument. We’ve already signed a major contract with a big pharma company to service a particular lab. It’s a huge contract, and our equipment isn’t even involved. It’s over a $1 million service contract. That’s why there’s such an upside to the service for us.
You still need to do preventative maintenance: even if the thing’s working reliably, to keep it working reliably then you should buy a preventative maintenance contract.
It can’t be too long before a competitor like ABI wises up and tries to do the same thing.
I don’t know how many service engineers they have, but I think it’s less than 1,200 and that’s where we see our major advantage. I don’t think anybody out there has got a very good reputation, certainly in the life sciences side, for service. We see this as a business opportunity and we really want to drive it.
Would you envision getting cooperation from the other companies whose instruments you are servicing, for instance, where ABI goes in and sells an instrument and says, ‘For service you ought to call PerkinElmer’?
That would be nice, but I think we’re unlikely to get to that. It’s still early days. What’s important is to give a very efficient service to our customers first of all and if we can expand on that by adding in other platforms then we have the elements in place.
If we can generate a good reputation for service, if we can continue to improve on that, then customers who are in the market for new equipment are more likely — I mean, happy customers are more likely to come back than ones that are disgruntled. There are a lot of disgruntled customers out there where service hasn’t been maintained and that was the real driver for bringing the service group together.
Are you optimistic that pharma sales will pick back up?
We’re assuming it’s going to be a flat year. If we have any surprises they’re going to be positive surprises and there are some indications that it’s picking back up. But I wouldn’t want to come out saying we’re going to drive our operating profit by delivering much higher sales growth next year from the big pharma area through capital equipment.
We’ve got other areas that are totally unaffected by the downturn in big pharma, like the genetic-disease-screening business, which is growing very strongly, and also the environmental and chemical business, which is not impacted. It’s more industrial applications, which is not impacted by the downturn in big pharma.
Is genetic disease screening a diagnostics business, or do you see developing a diagnostics business?
It is already a diagnostics business, but we need to develop that. The tools that [pharmas] are looking for would include the diagnostic to go with the drug discovery tools and that’s where we’re putting some R&D dollars to try and capitalize on that.
You raised a question about acquisitions and that’s another area where we would be very keen to try to fill some of the gaps through acquisition rather than trying to develop everything ourselves. It means targeting a company in this area or technology or IP.
Then I think you’ve answered my next question — how are you insulating yourself from the market turmoil?
Yes, we’ll focus on the areas that are growing or have potential for growth. We’re less affected than some organizations because we don’t have all our eggs in one basket. We’re not just selling into big pharma and we’re not just selling capital equipment to big pharma. So, we have seen strong growth in our reagent sales. There are some indications that it’s not only bottomed out but we are picking up some significant orders now from big pharma for capital equipment. Either it’s turning around or it’s end-of-year spend.