Marketing Audit - Agilent Technologies

Marketing Audit of Agilent Technologies, Inc.’s Microarray Business

Organizational Overview – Agilent Technologies

Agilent Technologies is a global organization focused on being the premier supplier of test and measurements solutions. The company is largely composed of two main divisions – Electronic Measurement Solutions and Bio-Analytical Measurement Solutions – supported by Agilent Labs, the primary internal innovation driver (Fig. 1). This marketing audit will focus primarily on the DNA microarray business, which is nested within the Life Sciences section of the Bio-Analytical Measurement Solutions division. As described by Agilent, a microarray is “a glass slide holding thousands of bits of genetic material used to analyze the processes of life. The category also includes scanning instruments for reading microarrays, chemical reagents, data analysis software and instruments for checking the quality of genetic material used in this type of analysis.“ I have chosen to profile this particular strategic unit because I currently consult for Agilent’s microarray business and their service providers.

Microarray Business and Marketing Environment Analysis

Political and Legal Context

As is presently the case with most biotechnology-related businesses, the DNA microarray landscape is well-covered in terms of patents and intellectual property, which in turn affects the types of products that can be offered and where. Some of the main technology patents in this area have established the types of microarrays available to the customer. The ink-jet method for depositing DNA onto the glass slides, developed by Agilent, is one such patent; others include a photolithography-based deposition of DNA developed by Affymetrix and an affinity, bead-based system developed by relative newcomer Illumina. Other patent areas that impinge upon the microarray business include those that cover specific assay and detection schemes utilizing microarrays, and so-called “prophetic” patents for proposed but as yet unrealized scientific methodology. Complicating the intellectual property picture is the inconsistent application of patent law across international borders.

Economic Considerations

DNA microarrays were originally introduced in the late 1980s, and they are becoming an increasingly common tool used by genomic scientists world-wide. While the academic segment is the largest customer base, scientists from both industry and academia use and directly compare microarray results. In the USA, much of the academic research budget available to spend on microarrays is determined by grant funding levels of federal organizations such as the National Institutes of Health (NIH) as per budget mandates set down by the US President and Congress. The NIH budget for grants has been declining in recent years, meaning less money is available for academic research and thus for microarrays. Industry customers depend on their company’s strategic direction and divisional funding levels to determine their level of interest and investment in microarray platforms.

Current Competitive Landscape

In the DNA microarray market, Agilent currently faces four major competitors. Affymetrix was the first to introduce commercial DNA microarrays for gene expression (GE) applications in the late 1980’s and continues to lead that segment, with Agilent ranking second in sales. Iceland-based Nimblegen was started by American scientists to offer a service-based business model, and has since introduced its own microarray consumables for all four of the market segments targeted by Agilent. Illumina utilizes a bead-based microarray detection system, and offers products mainly in the GE segment. The final competitor is termed a “homebrew” DNA microarray, where individual laboratories use their own array printer to create their own custom microarrays. According to Agilent, “just over 40% of all microarrays are �homebrew’”.

There are significant barriers to entry for other potential competitors in the DNA microarray market. First, a competitor must have sufficiently novel intellectual property involving new methods of microarray manufacture and use, or they must have the resources to license existing patents and methods. Secondly, the ability to produce microarrays in large production batches with stringent quality-control mechanisms would require a great deal of capital investment. And lastly, while scientists can be fairly fervent early adopters of technology, there exists a sizeable burden of proof to satisfy peer-reviewed