Becton Dickinson & Company: VACUTAINER Systems Division


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Becton Dickinson & Company: VACUTAINER Systems Division

  1. 1. Becton Dickinson & Company: VACUTAINER Systems Division Nina Cowley Zach Evans Sean Zemek
  2. 2. The Beginning <ul><li>Maxwell W. Becton and Fairleigh S. Dickinson met on a sales trip in 1897. Months later, they decided to go into business together, sealing their partnership with a handshake. They named their medical device import company Becton, Dickinson and Company. </li></ul>
  3. 3. Product Breakdown <ul><li>Becton Dickinson (BD) manufactured: </li></ul><ul><ul><li>Medical </li></ul></ul><ul><ul><li>Diagnostic </li></ul></ul><ul><ul><li>Industrial safety products </li></ul></ul><ul><li>For: </li></ul><ul><ul><li>Health care professionals </li></ul></ul><ul><ul><li>Medical research institutions </li></ul></ul><ul><ul><li>Medical industry </li></ul></ul><ul><ul><li>General public </li></ul></ul>
  4. 4. Business Segments
  5. 5. Medical Products Division
  6. 6. Becton Dickinson VACUTAINER Systems (BDVS) <ul><li>Formed as a business unit in 1980 </li></ul><ul><li>Consisted of three main products </li></ul><ul><ul><li>Venous blood collection tubes and needles sold under the VACUTAINER name (70% of sales) </li></ul></ul><ul><ul><li>Capillary blood collection tubes and lancets sold under the MICROTAINER name </li></ul></ul><ul><ul><li>Microbiology tubes and specimen collector systems </li></ul></ul>
  7. 7. BDVS Segment Facts <ul><li>1984 sales were $90 million </li></ul><ul><li>Each product group accounted for 33% of operating income </li></ul><ul><li>Pioneer in converting market to evacuated tubes </li></ul><ul><li>Estimated 80% market share in U.S. </li></ul>
  8. 8. Market Trends <ul><li>7,000 hospitals performed 70% of all blood tests in 1985 </li></ul><ul><li>700 commercial labs performed 25% of all blood tests </li></ul><ul><li>5% of all blood tests performed in non-hospital health care centers </li></ul><ul><li>Market had seen a decline in hospital blood testing between 1983 & 1985 </li></ul><ul><li>Projected that by 1990, 40% of blood testing would be done in commercial labs and physician offices </li></ul>
  9. 9. Market Trends (cont.) <ul><li>Shifting purchasing patterns </li></ul><ul><ul><li>Chief lab technician historically asked for certain brands </li></ul></ul><ul><ul><li>Professional purchasing agents are now making decisions </li></ul></ul><ul><ul><li>VERY price sensitive </li></ul></ul>
  10. 10. Market Trends (cont.) <ul><li>Cost-containment pressures in health care markets have forced: </li></ul><ul><ul><li>Reduction in use of hospitals for blood testing </li></ul></ul><ul><ul><li>Continued cost shaving within facilities by often choosing lowest-cost supplier </li></ul></ul><ul><ul><li>Reduction in employment within healthcare industries </li></ul></ul>
  11. 11. BDVS & APG <ul><li>BDVS is main supplier of blood collection products to APG-member hospitals </li></ul><ul><li>APG has announced beginning of single-supplier purchasing for blood collection products </li></ul><ul><li>APG is negotiating with BDVS as well as competitors </li></ul>
  12. 12. BDVS & APG (cont.) <ul><li>Major issues are: </li></ul><ul><ul><li>Pricing and terms for BDVS’ major products </li></ul></ul><ul><ul><li>Use of distributors </li></ul></ul><ul><ul><li>APG’s request for BDVS to manufacture private-label products </li></ul></ul>
  13. 13. What is the problem? <ul><li>What is the best price and distribution strategy for BDVS in a market that is experiencing such dramatic changes? </li></ul>
  14. 14. What are the alternatives? <ul><li>Target the growing physician market that includes surgicenters, emergency centers, diagnostic centers, and physician's offices </li></ul><ul><li>Accelerate new product development and quality standards while maintaining the current distribution model </li></ul><ul><li>Reject APG’s private label, pricing and distributor affiliation requirements </li></ul><ul><li>Partner (or merge) with APG </li></ul>
  15. 15. Target Growing Markets <ul><li>Pros </li></ul><ul><li>Untapped market, high growth potential </li></ul><ul><li>Potential for new product introductions </li></ul><ul><li>Cons </li></ul><ul><li>Lower prices/margins, compete on price </li></ul><ul><li>Currently only 5% of entire market </li></ul><ul><li>Different type of sales approach </li></ul>
  16. 16. Product Development/Quality <ul><li>Pros </li></ul><ul><li>Market/product innovator </li></ul><ul><li>Maintain good distributor relationships </li></ul><ul><li>Premium pricing for higher quality </li></ul><ul><li>Cons </li></ul><ul><li>High R&D costs </li></ul><ul><li>Increased risk associated with new products </li></ul>
  17. 17. Reject APG’s Requirements <ul><li>Pros </li></ul><ul><li>Maintain brand identity/awareness </li></ul><ul><li>Maintain good distributor relationships </li></ul><ul><li>Maintain control </li></ul><ul><li>Cons </li></ul><ul><li>Loss of significant market share & revenues </li></ul><ul><li>“ Inflexible” image to other purchasing groups </li></ul>
  18. 18. Partner with APG <ul><li>Pros </li></ul><ul><li>Maintain significant source of market share & revenues </li></ul><ul><li>Economies of scale through higher volume </li></ul><ul><li>“ Flexible” image </li></ul><ul><li>Potential for inclusion of additional products </li></ul><ul><li>Cons </li></ul><ul><li>Low price/margins </li></ul><ul><li>Loss of control </li></ul><ul><li>Strained distributor relationships </li></ul><ul><li>Same concessions demanded by other purchasing groups </li></ul>
  19. 19. Becton Dickinson Today <ul><li>2002 Revenue: $4,033,069,000 </li></ul><ul><li>2002 Net Income: $479,982,000 </li></ul><ul><li>Generates close to 50 percent of revenue outside of the U.S. </li></ul><ul><li>Marketed in the U.S. through distributors and directly to end users </li></ul><ul><li>Marketed in the internationally through distributors, sales reps and, in some markets, directly to end users </li></ul>
  20. 20. Becton Dickinson Today (cont.) <ul><li>BD manufactures and sells: </li></ul><ul><ul><li>Medical supplies </li></ul></ul><ul><ul><li>Devices </li></ul></ul><ul><ul><li>Laboratory equipment </li></ul></ul><ul><ul><li>Diagnostic products. </li></ul></ul><ul><li>BD serves: </li></ul><ul><ul><li>Healthcare institutions </li></ul></ul><ul><ul><li>Life science researchers </li></ul></ul><ul><ul><li>Clinical laboratories </li></ul></ul><ul><ul><li>Industry </li></ul></ul><ul><ul><li>General public </li></ul></ul>
  21. 21. Becton Dickinson Today (cont.) <ul><li>Company is broken down into three main business segments: </li></ul><ul><ul><li>BD Biosciences </li></ul></ul><ul><ul><li>BD Diagnostics (the VACUTAINER line is a part of this segment) </li></ul></ul><ul><ul><li>BD Medical </li></ul></ul>
  22. 22. VACUTAINER Systems Today <ul><li>VACUTAINER product line broken into five subcategories: </li></ul><ul><ul><li>Venous Collection </li></ul></ul><ul><ul><li>Capillary Collection </li></ul></ul><ul><ul><li>Urine Collection </li></ul></ul><ul><ul><li>Critical Care Collection </li></ul></ul><ul><ul><li>Molecular Diagnostics </li></ul></ul>
  23. 23. The end.