Synopsis: Pharmaceutical Process Equipment Manufacturer — Market Growth Opportunity Assessment
Our client was looking to expand their process equipment business within the pharmaceutical and biotechnology markets. Historically it had sold its pharmaceutical product lines through the same distribution that sold its industrial lines. However, the products were radically different in that the pharmaceutical products went into applications that required specialized pharmaceutical knowledge and often custom designed skids.
Our client was exploring the possibility of developing a “solutions sales channel” for pharmaceutical products. This channel would be comprised of systems integrators, who built total solutions for the pharmaceutical customers.
QDI consultants sized the global market for pharmaceutical process equipment and the portion that comprised each type of sale; MRO, System, New Plant. The MRO market could be served and was being served by the traditional industrial distribution channel. However, the systems sales were being made by evolving solutions providers. QDI sized the portion of the market that was driven by solutions sales and also helped identify and profile the major solutions providers in the market.
The client had a key strategy decision to make; either develop the solutions providers as a channel (either as a distributor, or acquire them as part of a direct sales function, or build its own direct solutions sales / skid building channel) or work with the existing distribution channels to try to increase their capability to design / build and sell engineered systems to the pharmaceutical industry.
Research with pharmaceutical companies indicated that their requirements for solutions vendors were extremely high, both in terms of technical and design capability but also in manufacturing customer designed skids for their applications. Substantial trust had to be built between the pharmaceutical manufacturer and the skid supplier for the skid supplier to even be invited into the conversation about what the customer needed, as their systems were highly proprietary. Thus, the chances of building this capability in industrial distributors were extremely low and the client either had to accept lower penetration in this market or embark on a channel strategy that was not popular with its industrial distributors.
The client used QDI’s research and market sizing to make its decision. Based on the projected growth rates of the pharmaceutical industry and the industrial market QDI projected the impact of each strategy. This evidence helped the client choose the strategy it felt would best meet its growth objectives.