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Used Laboratory Equipment: Bringing Hand-Me-Downs to Science
By: Christine Bird, Industry Analyst, Drug Discovery Technologies
Frost & Sullivan
Among the plethora of life sciences tools companies, there exists a market for used and refurbished equipment that follows a differant business model and contains unique dynamics compared with new product sales. Never the less, it is a quickly growing market in terms of competition, customers, and revenue. The number of competitors within the market has grown considerably over the past five years, with few barriers to market entry. While the number of used equipment suppliers continues to increase, the rapidly growning number of customers buying used products has compensated for this intensified competition. The ebb and flow of laboratories shutting downa and starting up have helped the market gain customers awareness. Those reseachers that discover they can sell their used products to resellers are more likely to return to them as customers, helping to build a loyal customer base. Used laboratory equipent is an estimated $2 billion market globally and is expected to experience double-digit growth in 2010 following a 2009 plummet due to the extreme economic recession. With the awareness of refurbished and used equipment options growing, the market is expected to maintain healthy growth over the next five years.
The used equipment market relies on differant types of researchers to stock its inventory and purchase products. Most used equipment suppliers boast savings of 40-75 percent off new product prices, so they market to budget conscientious researchers as customers. To acquire inventory, vendors depend of laboratories shutting down or researchers upgrading to the latest technology. For instruments whose technology changes quickly, on to five years old is the best range for reselling. This category includes high-end analytical instruments, such as sequencers, mass spectrometers, and various kinds of microscopes, to name a few. To obtain these types of products for resell, suppliers often reply on early adopters to quickly buy teh newest technology and liquidate their older instruments. These older instruments may not contain the cutting-edge technology or novel features, but they continue to be functional for laboratories that do not necessarily need or caonnot afford the latest product. For more basic equipment or laboratory furniture with little recent technology development, used providers sell products older than five years old. This category includes products such as hoods, shakers, freezers and other low-cost or non-analytical equipment. These types of products cater to a customer base content with reliable, practical, workhorse equipment.
In an economic recession, these standard business dynamics change. In a light to moderate recession, markets targeted toward cost-conscientious end-users tend to benefit and even increase growth, as consumers seek better value in used products. Furthermore, under these conditions, new product vendors often keep prices flat or raise them slightly to accommodate lower sales volume. This maintains the significant pricing differance between new and used laboratory products necessary for end-users to see the value in buying used. However, in extreme economic recessions, like the recent one that began in fall 2008, manufacturers are more likely to drop prices and reduce the difference between new and used products to 20-40 percent. This decreases the value of buying used products. Furthermore, those researchers with sufficient budgets to purchase instruments during an extreme recession likely do not fit into the budget conscientious typecast of used equipment market in 2009. Nevertheless, the market has rebounded in 2010 due in part to the return of normal new product pricing and the restoration of more generous spending following a tight-pocketed year and a half.
The business model of laboratory equipment resellers makes it an attractive market for new entries. Competitors now include the likes of EquipNet, Bid-Service, Harlow Scientific, LabX and many others. This market is expected to grow in the number of competitors over the next several years, as several factors contribute to a simple entry process. The company does not need manufacturing capabilities, keeping spending on labor and facilities extremely low. Furthermore, the trend of consolidation among pharmaceutical, biotechnology, diagnostics, and life sciences companies continues to reduce the number of laboratories, as mergers often necessitate triaging vital R&D from superfluous or duplicate labs. As laboratories close down, this creates a surplus of equipment that can either collect dust in storage, or more intelligently, can be sold to a reseller for cash. Therefore, once a startup reseller gains brand awareness, the trend of consolidation will help make the accumulation of used equipment straightforward. Companies that offer fully refurbished instruments suchs as Harlow Scientific, collect this used equipment, recondition it through qualified service technicians, and resell them with warranties. Other vendors sell used instruments "as is", without conducting any services.
Still other vendors choose to take a lesser role in the reselling process, only serving as a means for buyers and sellers to connect. Vendors such as LabX serve as Internet marketplaces for laboratory products, but do not buy or sell any of the equipment that changes hands. These companies function as auction sites reminiscent of the eBay business model and/or posting sites similar to newspaper classifieds sections. These companies generate a portion of their revenue by charging sellers for posting ads. This hands-off approach creates a rapid and inexpensive startup process, allowing for easy entry into the market. We expect several new vendors of this kind to enter the market over the next few years.
As the market for used laboratory equipment grows, in terms of competitors, customers, and revenue, new product vendors are still fumbling with how to react. Some companies have take the approach, "if you can't beat them, join them." Thusm new product vendors are starting to partner with resellers to offer new and demo equipment, often at reduced prices. When new product sales are slow and inventory stocks up, resellers provide a simple option for liquidation. Despite these positive relationships, other new equipment manufacturers continue to view used product vendors as competition and throw roadblocks in their way. Manufacturers may refuse to sell instrument parts, so used vendors cannot refurbish the used equipment. Others simply want to keep their competitors' old equipment off the market and take competitors' instruments as trade-ins when customers upgrade and dispose of them. Used laboratory vendors hope this mindset changes, as they view their recycling efforts as green-minded. Ultimately, the relationship between new and used vendors continues to evolve, and time will tell if new manufacturers begin to see the benefits of partnership.
While the used laboratory equipment market has existed for decades in various forms, it has more recently emerged with a much larger presence in the life science tools market. With customer awareness and acceptance growing, the market is expected to maintain strong growth over the next several years. Furthermore, with attractive, simple business model options, competition is likely to increase with new companies finding few entry barriers. With such an outlook, new product vendors should find ways to take advantage of the trend, rather than fight it.
Harlow Scientific, a privately-held company based in Arlington, Mass... purchases, refurbishes and resells pre-owned scientific laboratory equipment. This unique company, founded in 2007 by Justin Frey, provides reliable refurbished laboratory instruments, furnishsing and surplus consumables at affordable prices.
Harlow differentiates itself from other used equipment companies by providing top quality products that are refurbished by qualified technicians, rather than resellting instruments is "as is" condition. The company provides its standard six month warranty on all parts and workmanship, and can arrange to service a broad range of technology for its customers. These practices assure customers that their Harlow purchases will function properly and are well worth their investment. Harlow is diligent about earning the trust of its customers and prides itself on maintaining a stellar relationship with the scientific community. Harlow's Commitment to customer satisfaction has contributed to the company's rapid growth and market success.
Harlow's products range from basic laboratory equipment, such as balances and chillers, to very high-end analytical instruments including mass spectrometers, flow cytometers and sequencers. Harlow Scientific sells refurbished products for 40-80 percent less than new models.
In addition to its refurbished business, the company partners with industry manfacturers to sell new and demo products at a 20-60 percent discount. Eppendorf, IlShin, Adam Balances, PG Instruments are some of the cmpanies that Harlow collaborates with for this business model. Harlow also offers renting and leasing options, allowing researchers the flexibility to rent instruments for short-term projects. All of these options provide researchers savings and confidence in the reliability of their purchases.
Harlow's figures are impressive for a three-year-old company. An approved vendorf for more than 100 universities in the Us and most hospitals and universities within Massachusetts. Harlow boasts 21,500 registered customers and counting. Internationally, the company has generated business in 17 countries, demonstrating its tremendous potential for expansion into global markets. The company has already achieved a 40 percent increase in sales gross for three consecutive years. With a unique business model and fervent commitment to customer satisfaction, Harlow Scientific is poised to maintain strong growth into the future.
2007 Harlow Scientific was founded in Arlington, MA by Justin Frey
2008 Harlow launched industry's first online digital catalog
2009 Moved to current location and hired three full-time sales reps
2009 Invited to join Laboratory Products Association
2010 Launched new service campaign hiring a service manager with 22
years of industry experience to focus on repairs and service contracts
2010 Expanded is facility from 3,500 square feet to newly expanded 6,500
of warehouse, service department, storefront and dedicated
showroom allowing customer to walk-in and peruse.
Justin Frey, President
Phone: (781) 641-0300 x 201