As someone who has worked/interned in biotech (or more specifically ‘TechBio’) before, a lot of the points in the HBR article seemed familiar: patent-protected technologies being targeted by competitors when IP expires, regulatory requirements and administrative processes dictating business models, etc.
In the article, Isolde’s Siiquent targets hospitals that need gene-based diagnosis technologies. They’ve evolved to use a razor-blade model, selling instruments at cost and earning profit mainly from consumables like compounds, test kits, and reagents. Siiquent’s consumables are provided just below the fixed reimbursements hospitals get from insurers, which makes them a good deal for their customers.
Teomik, led by Emanuel, has pretty much the opposite model, where they focus on research labs and universities like the Max Planck Institutes and other names. Their profits come from selling the expensive, patent-protected machines to funders to whom money is not an issue, which is an amazing business model as long as the patents are still protected.
In the article, Peter is given the responsibility of merging these two different revenue models for the combined unit.
The positives of enforcing a single structure are that it does help to have a specific goal or revenue-generating strategy for the unit, rather than just doing whatever is needed to make money. I think of that saying: “If you stand for nothing, you fall for everything.” Not ‘standing’ for one focus can really fragment the whole unit’s attention and prevent the sort of streamlining needed to serve one specific market well. They both clearly have amazing support teams who could also guide existing and new customers through the transition to the new revenue model.
At the same time, from some personal experience with the field (obviously not as much as Isolde and Emanuel), biotech is often a game of meeting specific needs because it is an “artisanal” field, and each lab or center does things a bit differently. A lot of them are running novel experiments that don’t fit into a pre-existing assembly line. They definitely need many of the same machines or consumables, but the ways they’re using them can be quite unique. Creating a singular focus could end up serving no one, which is worse than two focuses that serve different customers very well.
If I were asked to head the merger, I would try to ensure a fair process by 1) always having both Isolde and Emmanuel in the room so neither of them feel left out. I would ask them to think of themselves as co-leaders of the whole unit. But I’d also ask each department head to talk to lots of people from the other department to kickstart cross-pollination, so they can start thinking about synergies and moving towards a more unified division.
I’m tempted to suggest a solution right here, but often in life and similarly in this situation, it will have to come from people in both departments agreeing from the grassroots instead of me (as the hypothetical leader) trying to impose a common vision without buy-in.
