Becton Dickinson at a Crossroads: Diagnostics on the Fence
BD has been doing well recently, but CEO Clateo Castellini wants to do even better--doubling revenues and profits in the next five years. That puts pressure on a company known for exploiting mature product lines. BD's diagnostics business, in particular, faces the challenge of keeping up in a rapidly consolidating segment as it goes head-to-head for the first time with the industry's heavy hitters.
You may also be interested in...
Recent legislation requiring hospitals to convert to safety devices to prevent needle-stick injuries has come as a kind of validation for Becton, Dickinson, the market leader in needles and syringes, whose efforts to develop safety products began well before customers or the government required them. Critics have charged that like all big companies with strong market share positions, BD has lagged in technology innovation, preferring to spend its time and energy defending its existing products. BD officials insist that just the opposite is true. But creating meaningful innovation is difficult in the kinds of high volume, low margin product lines that needles and syringes became over the 1980s and 1990s. For one thing, clinician input into new technology designs is rare; at the same time, the statistical data to back the importance of safety product conversions is scant. Perhaps most daunting, in a cost-constrained hospital market, the economic pay-off is still small, at least relative to other medical device innovation. Still, BD officials say, they persevered, leading the way in safety device innovation at a time when the company's interests, arguably, would have been better served defending its core line of conventional devices.
Having already collaborated with Millennium Pharmaceuticals to find marker candidates for its molecular oncology program, BD is now tapping TriPath Imaging to help build an imaging system to analyze the markers. Its strategy of relying on partners means it has to give up some profits, but BD is confident that the results will yield a value high enough to make the program economically feasible. It's a model that other companies are likely to emulate as they move into molecular diagnostics.
If J&J’s gamble on a single dose pays off, it could rapidly advance the fight against SARS-CoV2 – but a second study will provide a safety net.