Isolde targeted the market of large hospitals and labs which operated under budgetary concerns, whereas Emanuel targeted the research market, which were able to front higher costs for cutting edge machines but also already had access to compounds and reagents. The difference in how both of these markets approached making purchases and allocated budgets informed how each company’s revenue . Since large hospitals had tight budgets, they couldn’t afford to buy test instruments at high costs – however, because they had access to fixed reimbursements from insurers and the national health service and had to abide by health regulatory bodies, they would be willing to pay up for the consumables needed for the gene diagnostics. Thus, Isolde would focus on driving revenue from those consumables. On the other hand, since large research institutions could afford the up-front costs of cutting edge devices, Emanuel would sell machines to them at a far higher margin and thus receive its profits that way.
By allowing Siiquent-Teomik to continue operating with a flexible revenue model, it allows it to continue adapting to customer needs and react to changes in the marketplace – something that was already occurring, seeing how their markets had begun to overlap with each other. However, the downside of this is the lack of consistency and potential risks/consequences created by immediately caving to the desires of certain customers, such as how the pay-per-test created a moral hazard of efficient equipment usage. Having a single revenue model also consolidates resources and creates a clear identity and understood service for customers. Personally, the way I would scaffold the discussion/decision-making process would be to evaluate the existing sales data, and if it’s possible, to test potential single revenue structures against the existing flexible methodology, and use that data to guide discussion during the merging process. I would also like them to determine the current direction of the market – if it is true that the separation between their two markets will only continue to grow less distinct, then it’s important to consider that when evaluating whether or not a flexible, reactive revenue strategy is even necessary.
I also had a few personal questions and areas of confusion for this market. Why is it the case that hospitals were not able to obtain compounds and reagents from the same providers as those who provided for research institutions?
