Becton Dickinson & Company: VACUTAINER Systems Division

1. Becton Dickinson & Company:
VACUTAINER Systems Division
Nina Cowley
Zach Evans
Sean Zemek

2. The Beginning
•Maxwell W. Becton and Fairleigh S.
Dickinson met on a sales trip in 1897.
Months later, they decided to go into
business together, sealing their
partnership with a handshake. They
named their medical device import
company Becton, Dickinson and
Company.

3. Product Breakdown
•Becton Dickinson (BD) manufactured:
–Medical
–Diagnostic
–Industrial safety products
•For:
–Health care professionals
–Medical research institutions
–Medical industry
–General public

4. Business Segments
L a b o r a t o r y I n d u s t r i a l S a f e t y M e d i c a l P r o d u c t s
B e c t o n D i c k i n s o n
B u s i n e s s S e g m e n t s

5. Medical Products Division
N e e d l e s , s y r i n g e s a n d
d i a b e t i c p r o d u c t s
P h a r m a c e u t i c a l
s y s t e m s
V A C U T A I N E R b l o o d
c o l l e c t i o n s y s t e m s
B e c t o n D i c k i n s o n
M e d i c a l P r o d u c t s S e g m e n t

6. Becton Dickinson VACUTAINER
Systems (BDVS)
•Formed as a business unit in 1980
•Consisted of three main products
–Venous blood collection tubes and needles
sold under the VACUTAINER name (70%
of sales)
–Capillary blood collection tubes and lancets
sold under the MICROTAINER name
–Microbiology tubes and specimen collector
systems

7. BDVS Segment Facts
•1984 sales were $90 million
•Each product group accounted for 33%
of operating income
•Pioneer in converting market to
evacuated tubes
•Estimated 80% market share in U.S.

8. Market Trends
•7,000 hospitals performed 70% of all blood
tests in 1985
•700 commercial labs performed 25% of all
blood tests
•5% of all blood tests performed in non-
hospital health care centers
•Market had seen a decline in hospital blood
testing between 1983 & 1985
•Projected that by 1990, 40% of blood testing
would be done in commercial labs and
physician offices

9. Market Trends (cont.)
•Shifting purchasing patterns
–Chief lab technician historically asked for
certain brands
–Professional purchasing agents are now
making decisions
–VERY price sensitive

10. Market Trends (cont.)
•Cost-containment pressures in health
care markets have forced:
–Reduction in use of hospitals for blood
testing
–Continued cost shaving within facilities by
often choosing lowest-cost supplier
–Reduction in employment within healthcare
industries

11. BDVS & APG
•BDVS is main supplier of blood
collection products to APG-member
hospitals
•APG has announced beginning of
single-supplier purchasing for blood
collection products
•APG is negotiating with BDVS as well
as competitors

12. BDVS & APG (cont.)
•Major issues are:
–Pricing and terms for BDVS’ major
products
–Use of distributors
–APG’s request for BDVS to manufacture
private-label products

13. What is the problem?
•What is the best price and distribution
strategy for BDVS in a market that is
experiencing such dramatic changes?

14. What are the alternatives?
•Target the growing physician market
that includes surgicenters, emergency
centers, diagnostic centers, and
physician's offices
•Accelerate new product development
and quality standards while maintaining
the current distribution model
•Reject APG’s private label, pricing and
distributor affiliation requirements
•Partner (or merge) with APG

15. Target Growing Markets
Pros
•Untapped market,
high growth
potential
•Potential for new
product
introductions
Cons
•Lower
prices/margins,
compete on price
•Currently only 5%
of entire market
•Different type of
sales approach

16. Product Development/Quality
Pros
•Market/product
innovator
•Maintain good
distributor
relationships
•Premium pricing
for higher quality
Cons
•High R&D costs
•Increased risk
associated with
new products

17. Reject APG’s Requirements
Pros
•Maintain brand
identity/awareness
•Maintain good
distributor
relationships
•Maintain control
Cons
•Loss of significant
market share &
revenues
•“Inflexible” image
to other
purchasing
groups

18. Partner with APG
Pros
•Maintain significant
source of market
share & revenues
•Economies of scale
through higher
volume
•“Flexible” image
•Potential for
inclusion of
additional products
Cons
•Low price/margins
•Loss of control
•Strained distributor
relationships
•Same concessions
demanded by other
purchasing groups

19. Becton Dickinson Today
•2002 Revenue: $4,033,069,000
•2002 Net Income: $479,982,000
•Generates close to 50 percent of
revenue outside of the U.S.
•Marketed in the U.S. through
distributors and directly to end users
•Marketed in the internationally through
distributors, sales reps and, in some
markets, directly to end users

20. Becton Dickinson Today (cont.)
•BD manufactures and sells:
–Medical supplies
–Devices
–Laboratory equipment
–Diagnostic products.
•BD serves:
–Healthcare institutions
–Life science researchers
–Clinical laboratories
–Industry
–General public

21. Becton Dickinson Today (cont.)
•Company is broken down into three
main business segments:
–BD Biosciences
–BD Diagnostics (the VACUTAINER line is a
part of this segment)
–BD Medical

22. VACUTAINER Systems Today
•VACUTAINER product line broken into
five subcategories:
–Venous Collection
–Capillary Collection
–Urine Collection
–Critical Care Collection
–Molecular Diagnostics

23. The end.