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Sigma-Aldrich Reorganizes in Effort to Satisfy Customers

Sigma-Aldrich announced this week that it will restructure its business into four units in an attempt to more effectively serve its customer base.

The reorganization will divide Sigma's existing Scientific Research and Biotechnology businesses into three "customer-centric" units called Essentials, Specialties, and Biotech. Each unit will be overseen by a president, reporting to Jai Nagarkatti, the company's president and chief operating officer.

Nagarkatti said the reorganization "should enable us to ... deliver 10 percent top and bottom-line growth long-term."

The Biotech business represents 20 percent of the company's current sales and will sell certain research tools for life scientists. The group will be headed by Shaf Yousaf, most recently vice president of corporate R&D and biotech marketing at the firm. He has been with Sigma-Aldrich since 1996 and is credited with launching "many of the company's new initiatives in molecular biology and biotech," according to a company statement.

Sigma said it took the steps, which take effect immediately, after a six-month market study that included interviews with nearly 650 customers around the world.

Sigma-Aldrich Treasurer Kirk Richter told BioCommerce Week that Yousaf worked on building the biotech product line and on some recent acquisitions, such as the firm's February purchase of RNA interference reagents firm Proligo (see BioCommerce Week 2/24/2005).

The Essentials business represents 20 percent of the company's current sales and will offer "account management to largely economic buyers" in pharmaceutical, academic, and other commercial research organizations. Gilles Cottier, vice president of sales at Sigma, will head the unit.

The Specialties unit represents 35 percent of the company's current sales and will sell Sigma's products through its web site and catalogs to lab scientists. David Julien, most recently president of Sigma's biotechnology business, will run this business.

The firm's SAFC business, which already stands apart from the other research units, will not be affected, the company said. SAFC represents 25 percent of Sigma's sales, following the firm's $370 million acquisition of JRH Biosciences (see BioCommerce Week 1/20/2005) in January, and sells fine chemical products and services. SAFC will continue to be led by Frank Wicks, who has served as the unit's president since January 2003.

Sigma said it took the steps, which take effect immediately, after a six-month market study that included interviews with nearly 650 customers around the world. Although he wouldn't disclose specifics about the study, Richter said it basically was a satisfaction survey, generally asking, "How can we improve and what are your needs?" He added that the survey was done among customers across all segments and all geographies.

Richter also said that the reorganization was not in response to the firm's acquisitions of Proligo and JRH, and was being planned before those purchases were made.

Although seeking customer feedback is a routine practice, Sigma-Aldrich is the second key player in the molecular biology tools space to launch a major initiative aimed at making the company more responsive to customer needs. Invitrogen recently completed an effort to reach out to "key" potential customers worldwide to get an idea of how the firm could better reach and serve its base (see BioCommerce Week 5/12/2005).

Sigma said that it would continue reporting sales results for the three original scientific research, biotechnology, and SAFC units through 2005, and would begin breaking out specific financials for the four units in 2006.

The St. Louis-based company said that it would provide further details about the reorganization, its goals, and growth initiatives at its annual business review meeting on Aug. 16.

The firm is scheduled to release its second-quarter results on July 27. It will be looking to improve upon organic revenue growth of 2.3 percent reported for its first quarter. Although the firm reported 9 percent revenue growth overall to $400 million for Q1, 3.2 percent of that growth was attributed to JRH's contribution and 3.1 percent came from a currency exchange benefit.

— Edward Winnick ([email protected])

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