~ The Role of Distribution Companies in the Laboratory Products Market

For manufacturers and analysts looking at the laboratory products market there is a constant tension between selling products directly to end-users or going to market through distributors.

On a macro-basis these are key factors in the decision between the two channels to market:

  • The sheer number of laboratories and research decision-makers in pharmaceutical and chemical research
  • The price and technical complexity of the product(s) being sold
  • Whether the products being used are narrow in type and technology or if the end-user has a broad range of products demanded.

This blog will address the first point: The sheer number of laboratories and research decision-makers in pharmaceutical and chemical research.

U.S. companies active in pharmaceuticals and medicine research and development (R&D) employ approximately 117,000 scientists, researchers, managers, technicians, support staff and other R&D workers. Additionally, the US chemicals industry employs about 165,000 people in R&D.

As a manufacturer, imagine trying to make contact, through your sales force or within your marketing budget, with almost (U.S.) 300,000 users and decision-makers for the identification and selection of your product or service.

And this is just the US. Europe is a similar size and complexity, and Asia is even more fragmented.

As a solution, manufacturers utilize the “multiplier” effect, which is working through distributors and their number of customer-facing representatives (between Thermo-Fisher and VWR alone there are over 4,000 employees with customer-related responsibilities) and other national and regional distributors add roughly a similar number).

Therefore, having a strong position at these distributors is extremely important to a manufacturer addressing a broad-based customer/prospect marketplace.