Building on an ongoing effort to expand its services capabilities, Applied Biosystems last week announced that it is teaming with Deloitte Consulting to provide joint consulting services in life science informatics.
The move is a rare example of a molecular biology tools player teaming with a major business consulting firm. “It’s a bit out of the ordinary,” said Eric Schmidt, an analyst with SG Cowen Securities, who covers ABI.
But according to ABI and Deloitte, the agreement offers very clear benefits for both parties. “They have relationships in pharma and life sciences, and we have relationships [there], but those relationships are different,” said Ramin Cyrus, senior director for marketing for ABI’s services and systems solutions group. ABI tends to work more with scientists, while Deloitte’s relationships are at a higher level — with IT directors or business executives, he said. “So we’re in the same space, but we have different Rolodexes; we have complementary services that don’t step on one another’s feet.”
Deloitte Consulting, a unit of international professional services firm Deloitte Touche Tohmatsu, generated nearly $6 billion of Deloitte’s $16.4 billion in revenues in 2004. The unit’s Life Sciences and Health Care practice claims as clients all of the top-10 pharmaceutical firms, all of the top-10 biotech firms, and more than 70 percent of the Fortune 1,000 healthcare and life science firms.
“It’s a huge practice for us,” Irwin Goverman, a partner in charge of Deloitte’s West Region Life Sciences practice, told BioInform. While Goverman hesitated to pin a number on the size of the group, he said “it’s probably one of the largest-growing practices we have.”
Deloitte’s life science consulting practice is very broad, ranging from mergers and integration, to supply chain, to corporate strategy. The group does offer IT services, but these mainly center around ERP and CRM systems, with some work in LIMS implementation, which will be the first area that ABI and Deloitte will work on together.
Goverman said that Deloitte has been working with ABI to bring the company’s SQL*LIMS and recently launched LS*LIMS “to the next level.” Deloitte is working “to develop ways that these [LIMS] can be used to do more than the traditional instrumentation hookups and data gathering — to take it to a level where we can help them adapt … everything from the policies and the processes through the technology and enable them to gather information — not just through AB instruments, but from other instruments as well.”
Cyrus said that ABI’s customers often require IT deployments that involve more than lab design or informatics infrastructure. “A lot of times a customer needs help with a market assessment, needs help in actually justifying the dollars they’re going to spend — a business justification,” he said. “Also, when we actually design a lab experiment, there [are] a lot of integration points, and a lot of those integration points are actually [linked] back to business processes.”
This may involve return-on-investment studies, or systems to automate the reordering of reagents, or even standard IT services, like migrating from a legacy database, he said. “These are the gaps that we think Deloitte can help us fill because they do a lot of just general management consulting, which is something we don’t do.”
The partners said that their joint consulting services will extend beyond LIMS, however. “It’s partially focused on LIMS, but we have a lot of bioinformatics capabilities,” Cyrus said. “We have a certain number of tools, Deloitte has a certain number of tools, and we bring them collectively into the engagement and see what makes sense for the customer.”
Goverman cited “the tremendous investment” that ABI has made in expanding its web portal as another launching pad for consulting engagements. The portal, which ABI will be re-engineering over the next year [BioInform 1-10-05], “could be used, for example, to do offsite data storage and analysis as well,” Goverman said.
The portal project actually served as the impetus for the collaboration between the two firms, Cyrus said. ABI had already been working with Deloitte to help redesign the web portal, which “gave them an inside track.”
However, he added, ABI has worked with “other large consulting firms,” and found that Deloitte “really complemented our services better, they have really good references in the life sciences, and they don’t have any preconceived notions around platforms — they’re kind of agnostic, which was a really big plus.”
Cyrus said that ABI and Deloitte are already working together on some customer sites “to try to understand how we can bring our services together.” Once the collaboration gets rolling, he said, the plan is to develop sets of services around common problems that could be deployed at lower cost at multiple customer sites — so-called “repeatable engagements” or “templates,” as Cyrus described them. “It’s been our experience that there are certain problems around data management, data integration, lab protocols — they’re pretty much the same,” he said. “And if you go to one company and listen to their problems, there’s a high likelihood that another company has the same issues.”
Ultimately, ABI believes that the partnership will help extend its reach beyond its core life science customer base into so-called “applied” markets where Deloitte already has a presence, such as forensics, environmental sciences, food and beverage, homeland security, and contract research.
“We’re really not just talking about the traditional LIMS market, which I think is pretty well known, but we’re actually talking about new markets here that are large-scale research facilities, multi-national research consortia, and potentially collaborative ventures between biotechs and the academic side,” Goverman said.
Goverman said that Deloitte is currently examining the potential market size for consulting services in this sector, but it’s still too soon to peg a number on it. Nevertheless, he said, “we believe it’s very, very significant — especially as AB’s instrumentation moves beyond the traditional research and into additional industries, and additional venues. We want to grow with them.”
Some observers were not as sanguine, however. “I don’t think [the agreement] is particularly significant from an ABI standpoint,” said SG Cowen’s Schmidt. “We’re taking a very much wait-and-see approach here. It’s hard to know what kind of impact, if anything, this will have.”