Are Single-Use Manufacturers Destined For The Recycle Bin?
By Rob Wright, Chief Editor, Life Science Leader
Follow Me On Twitter @RfwrightLSL
When ATMI’s (NASDAQ: ATMI) CEO, Doug Neugold, gave his keynote presentation at this year’s international single-use summit in Washington, D.C., it may have seemed a bit out of place to some people. After all, of ATMI’s $400+ million in sales revenues for 2012, only 10% come from the company’s life sciences division. Founded in 1988, the company has its roots in the process technology and semiconductor industry and would probably be considered a fairly new entrant into the life sciences space. What possible lessons can Neugold offer to tenured life science execs?
More than you might think.
Neugold was discussing perhaps one of the biggest trends impacting life sciences and the delivery of healthcare services — technology blurring industry boundaries. Perhaps a supposed outsider’s perspective is necessary to galvanize the single-use pharmaceutical manufacturing industry to action to avoid ending up in the recycle bin.
Is A Lack Of Industry Experience A Competitive Advantage
Prior to launching the iPod and the iTunes store, Apple (NASDAQ: AAPL) had zero music industry experience. In 2007, the company launched the iPhone with no previous cell phone manufacturing or marketing experience. Apple changed the game, demonstrating the blurring of the lines between technology companies across industries despite its supposed lack of experience. Research by Harvard Medical School has shown that an outsider’s perspective and insight can actually improve innovation. Given the recent research reported by numerous experts (i.e. EY, McKinsey, PwC) it is anticipated that smart technology will revolutionize healthcare, providing for the emergence of new and unanticipated competitors, disrupting industries and creating new business models. One report by GSV Capital describes this phenomenon as convergence — the point in which solutions can be created in the spaces between traditional disciplines. Who will heed Neugold’s words of wisdom?
What Single-Use Can Learn From Semiconductor Industry
During Neugold’s presentation to executives highly involved in the single-use drug manufacturing industry, he explained that the impact of standards in the semiconductor industry accelerated its growth by billions of dollars. According to Neugold, Moore’s Law has been realized as a result of road maps and standards, which have been driven by SEMI, the global association serving the manufacturing supply chain for the micro- and nano-electronics industries. He believes companies playing in the single-use space should study SEMI, as well as other industries, to learn how the single-use industry can improve, because the drivers of drug development will be different in the future. “The CEO of Amgen should know the CEO of Intel,” he stated. Neugold admits the microelectronics industry is primarily self-regulated and performance improvements are required, expected, and driven by the consumer. Further, he finds the life sciences regulatory issues to be stunning. “We are adding new regs and not eliminating antiquated regs that no longer apply.” Despite this regulatory handicap, Neugold believes the single-use industry has tremendous potential, because only one billion people on the planet are currently getting what they want in healthcare. The other 6 billion are presently underserved. Single-use will play a big role in changing this inequity. To do so, Neugold believes competing vendors need to get together to come up with reasonable consensus standards, as was done in the semiconductor industry. “Find the best method and move on,” he advised. The only present problem seems to be the lack of a standard-setting body willing to step up to the plate to do so. So while single-use competitors continue to fight for market share, I wonder what unexpected company is going to change the game — similar to what Netflix (NASDAQ: NFLX) did to Blockbuster and the rest of the movie rental industry.