Friday, August 22, 2008

Inside Life Sciences

Dekker's view on Mass. life sciences industry depends on perspective

By James M. Connolly

Marijn E. Dekkers is in a position to get a good view of the life sciences environment in Massachusetts, and the view from his offices overlooking the Cambridge Reservoir in Waltham isn’t too shabby either.

As president and CEO of Thermo Fisher Scientific Inc., Dekkers can watch what’s going on not only on the tools and materials side of life sciences, but what is happening in the labs of his customers in giant pharmaceutical companies, tiny Cambridge biotech startups, hospitals and universities. Asked for his viewpoint on life sciences in Massachusetts, he said, “From the 30,000-foot view, it’s excellent. We have tremendous academic hospitals, great biopharma research capabilities, life sciences companies and medical device companies. There even are big health-care insurers here, big hospitals. Every aspect of health care and life sciences is represented.”

The mix of institutions provides a fertile ground for innovation, where developments in one sector spawn ideas in other industries.  Dekkers said,  “You have all these ideas in the big companies, universities and hospitals that generate opportunities for startup companies. Then there is a slew of people who meet in all these breakfast rooms along Route 128 every morning talking about new ideas on where to put money to work.”

Dekkers cites the example of its RNAi products as an area where Thermo Fisher (NYSE: TMO) can drive innovation. “What is really exciting is that we are a catalyst for tremendous innovation. If we come up with something better, there are 300 customers in their own fields who can come up with something better as a result,” he said.

Dekkers oversees a firm with 33,000 employees, and 2007 earnings per share of $2.65 on revenue of $9.7 billion. Thermo raised its status in 2006 when test equipment maker Thermo Electron Corp. bought lab supplier Fisher Scientific International for $10.6 billion.

The pairing leads Dekkers to position Thermo Fisher as a tool seller. He draws on the image of the California gold rush. “We sell the picks and shovels and some of the jeans, like Levi Strauss. We supply everybody. So, in the end we don’t really care who finds the gold, as long as people are looking for it,” he said.

The Fisher acquisition allowed the new company to address the challenge of a very fragmented customer base. While many companies selling to an enterprise deal with one decision maker, Thermo Fisher’s customers may be hundreds of individual scientists spread across a company. In fact, Dekkers says a list of 350,000 customers negates a direct sales model. So, one key to the Fisher deal was Fisher’s six-inch-thick product catalog and accompanying online catalog. “Now, 350,000 people have that thing on their desk, and we can reach all of these people in a very simple way,” he noted.

The merger, while successful, according to Dekkers, did present challenges. The new company —  like other big mergers — focused inwardly, working on matters such as branding and consolidated payroll systems, causing a loss in customer focus. “We got into that a year ago, six or seven months after the merger, where our own people began to say let’s make sure that we don’t forget there is a customer out there. It was time to move on,” he said.

Because Thermo Fisher does business on a global basis, Dekkers doesn’t expect a significant impact on the company from the commonwealth’s life sciences initiative. “Are we going to get more sales out of it? No, because if North Carolina gets all these startups, we will sell our tools in North Carolina, or even Shanghai. It doesn’t help us from a sales point of view, but I do think it reinforces this we-are-in-the-center-of-the-world feeling, and that, because we are headquartered here, is good,” he said.

For all of the energy and ideas that Dekkers sees in Massachusetts life sciences, he also identifies some negatives that show up when he gets below his 30,000-foot view.

Looking out toward Route 128, he noted, “Look at those cars. It’s only 4:15, and it’s already backing up. The traffic and the cost of living here are huge problems. Secondly, creating a pipeline of future employees for all these companies that have an inclination toward sciences is another problem.”

Drawing young people into science and engineering calls for efforts by both government and industry, according to Dekkers. “Somehow the government has to take the lead and then solicit the support of companies,” said Dekker, noting that firms who launch their own educational initiatives may see their efforts “disappear into a black hole.”