17 Jul Can sales outsourcing grow Wisconsin biotechs?
Madison, Wis. – When CEO Deven McGlenn of NeoClone secured equity money early this year to grow his life science company, he made a commitment to his investors to take a more aggressive approach to marketing.
In the past, NeoClone, a seven-year-old manufacturer of monoclonal antibodies, has grown its revenues and built a customer base organically, through word-of mouth, and by using trade show advertising, but McGlenn knew that he had to do more to maximize his relatively small marketing budget.
Four months ago, McGlenn turned to VWR BioSciences, a contract service organization that pitched its broad market reach as an effective resource for maximizing marketing dollars and introducing small life science companies to biotech hotbeds.
“They have more contacts covering more regions,” McGlenn said.
VWR BioSciences, an independent division of VWR International, operates units in Europe and North America. Sales managers in those areas use connections from the parent company to access a large percentage of biotech clients worldwide that would be difficult for a company like NeoClone to reach alone.
“Although we do a very good job of servicing the market and our customers,” McGlenn said, “the reality is that there is still a lot of competition out there.”
McGlenn entered an agreement that would provide him with the kind of market access that no single, in-house sales representative could provide. In return, VWR BioSciences will receive royalties on the sales contracts they provide.
VWR BioSciences was constructed approximately five months ago by Zishan Haroon, who saw an opportunity to link bioscience companies with relatively small research organizations capable of providing outsourcing solutions and cutting-edge life science services.
“My proposal was to build an industry-first, end-to-end solution from basic science to clinical trials,” said Haroon, general manager and global vice president, VWR Biosciences.
VWR BioSciences is a service provider for its clients, while simultaneously acting as a marketing agent for contract research organizations (CROs) like NeoClone.
“It’s an organization which represents these mid-tier CROs that don’t have the capacity to represent themselves,” Haroon said. “The companies I went after were open to a change in their business plans. This is a new business format for them.
“We make money when they make money, so we help them to grow without having to spend huge numbers on sales and marketing.”
No quick deals, no worries
After four months, the arrangement has not yielded any new work for NeoClone, but McGlenn considers the wait an expected part of the sales process.
The “bind cycle” for biotech companies ordering custom antibodies is extremely long, McGlenn said. The time between initial discussions and the closing of a deal normally spans two to three months and can take up to a year.
“If I don’t see anything by six to eight months, I’ll start to get nervous,” McGlenn said. But he added that he already has distributed quotes to interested companies, and is confident that he will close his first deal through VWR’s efforts within two weeks.
VWR BioSciences establishes contact and passes the sale to NeoClone. Sales representatives are not expected to be experts on specific technologies, and NeoClone manages customers start to finish.
“We depend on our CROs’ technical expertise to sell,” Haroon said. “But it’s the sales experience that gets clients’ attention and brings them to our CRO. After that, the technical discussions take over.”
NeoClone’s agreement with VWR BioSciences contains incentives for sales representatives who advance NeoClone’s reputation beyond its now outdated, early-stage, low-cost provider image.
Representatives earn an additional premium for each sale that is $1,000 over the contract price that NeoClone sets. A larger sale means larger royalties for VWR BioSciences and a better reputation for NeoClone.
“My goal is to pay more on commission,” McGlenn said.
To assuage potential NeoClone concerns that the stable of VWR BioScience partner companies might someday contain other antibody providers, McGlenn received a contractual option to pre-empt VWR’s representation of direct competitors in the U.S.
However, he ultimately decided that instead of increasing his exposure through preventative legalese, he would perfect his products and services and let the market take care of the rest.
“If I’m doing good work and I’m servicing client needs, [customers] don’t have any reason to go looking anywhere else,” he said.
Haroon said that he will prevent such competition within his consortium of CROs by hand-picking each partner and limiting his overall portfolio, which already contains 30 to 35 companies. Among them are businesses involved in chain-reaction technology, gene expression services, and protein identification.
“The key principle is I don’t want an overlap. My solution is good for only 40 to 50 companies at the maximum.” Haroon said. “Having run my own CRO, I would never want somebody coming between the CRO and the potential client.”
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