DIAGNOSTICS

Diagnostics have a reputation for being a particularly difficult business. In 2003, Abbott Laboratories' 200 diagnostics generated $3B in sales, averaging $15M per product. Pioneering companies rarely enjoy more than a few years of market exclusivity before others jump the low regulatory hurdles and launch me-too products, often forcing the innovator to lower prices and, consequently, profit margins to remain competitive. In certain cases, diagnostics require novel instrumentation and must justify the expense of purchasing the instrument and allocating space in the lab for it. Promoting your instrument as having a smaller "footprint" (area it takes up on the floor or bench) can differentiate it from competing products. When customers are sensitive to capital equipment cost or footprint size, they may be more receptive to buying diagnostics that can be read without instruments or by instruments they already have.